Is There a Right Way to Lay Off Employees in Times of Crisis?: The Role of Organizational Justice in the Case of Airbnb

Sanghyun Lee, Sounman Hong and Bong Gyou Lee ()
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Sounman Hong: Department of Public Administration, Yonsei University, Seoul 03722, Republic of Korea
Bong Gyou Lee: Graduate School of Information, Yonsei University, Seoul 03722, Republic of Korea

Sustainability, 2023, vol. 15, issue 5, 1-16

Abstract: The COVID-19 pandemic has negatively affected the tourism and services sector. Using the example of Airbnb’s recent layoff of 25% of its workforce, we focused on the role of organizational justice in mitigating the negative psychological impacts of layoffs. Based on a unique survey of Airbnb employees who survived the layoffs, as well as those who left, we employed an ordinary least squares regression to show that employees’ perceptions of organizational justice were positively related to their job satisfaction and trust in management, while being negatively related to their emotional exhaustion and cynicism. We discovered the crucial importance of interactional justice (i.e., interpersonal and informational justice). The respect, dignity, and politeness shown by management (i.e., interpersonal justice), as well as truthful and adequate communication about the procedure (i.e., informational justice) were pivotal to successfully conducting layoffs, especially during unprecedented economic uncertainty.

Keywords: downsizing; Airbnb; sharing economy; organizational justice; distributive justice; procedural justice; interpersonal justice; informational justice; COVID-19 (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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