New research from Copenhagen Business School reveals that hiring workers with special skills who can work anywhere is a smart move. This is especially true if these workers were laid off because their old company failed. The study found that these workers have more credibility and flexibility in finding new jobs.
The research shows that workers who get laid off face a big credibility problem if they stay in the same team or place where their colleagues are suspected of causing the company’s failure. Even if these workers have unique skills that are in high demand, their position in negotiations with potential employers becomes weaker.
Picking over the scraps
The study used a real-life example of traders who lost their jobs when the big company OW Bunker went bankrupt in the global bunker industry. The researchers also looked at how workers move between different global companies.
The research was inspired by the sudden bankruptcy of a big Danish company with operations around the world. The researchers also took cues from a study in Organization Science that looked at the tough times faced by lawyers in Boston who lost their jobs. Overall, the study helps us understand how workers with special skills, company failures, and job opportunities are all connected.
“When we discussed the failure of OW Bunker, we were surprised that the OW Bunker traders were in high demand in the industry,” the researchers explain. “This went against the findings of [the Organization Science] study as well as other previous studies of organizational failures: They all found employment with a failed organization to result in negative career outcomes. So that sparked our curiosity.”
Specialized skills
The research honed in on specialized workers—those with crucial technical or external knowledge, cultural expertise, strong social connections, or other standout skills. These individuals play a key role in the success of multinational corporations and are in high demand.
In the global job market, there’s fierce competition to hire such specialized workers. The study found that when another multinational company lets go of these workers, it’s a rare chance for others to scoop them up.
The researchers used data from LinkedIn jobs and interviews to show that the loss of legitimacy was mainly seen in laid-off traders who worked in specific parts of the organization and in locations where other employees were seen as responsible for the company’s bankruptcy.
Gaining an advantage
The study identified a strategic advantage for multinational corporations wanting to hire laid-off workers with specialized skills. The legitimacy and bargaining power of these candidates are affected by their previous employer’s failure.
Sure, hiring a candidate with low industry legitimacy might impact their performance, especially in roles involving trade, communication, or negotiation within the industry. However, the upside is that these candidates can be hired at a relatively low cost, as their reduced legitimacy makes it harder for them to negotiate for higher wages or promotions. While high-legitimacy candidates might be preferred initially, managers could still bring in valuable but low-legitimacy candidates at a more affordable rate.
“The key takeaway for managers is to not allow themselves to be blinded by social evaluation when hiring,” the authors conclude. “The assessment of any candidate should ideally be based on the candidate’s merits, and not on assumptions based on the candidate’s association with prior employers, colleagues, and geographical locations.”
