Motivated employee blindness: The impact of labor market instability on judgment of organizational inefficiencies

• We examine impact of economic instability on employee’s defense of organizational inefficiency.
• We manipulate employees’ perceptions of external labor market favorability.
• We measure employees’ tendency to ignore or diminish organizational inefficiency.
• Exposure to unfavorable market data led to less recall and reporting of inefficiency.
• Lack of job alternatives may enhance employees’ desire to defend organizational flaws.

While employees might be expected to be especially vigilant to problems within their organization during times of economic instability, we build on motivational perspectives put forth by System Justification Theory to propose the opposite effect, namely that economic instability enhances employees’ tendency to defensively ignore and diminish organizational problems. We experimentally manipulated perceptions of labor market trends and asked participants to report on problems within their own actual organization. As predicted, an ostensibly weak external labor market led employees to perceive their organization as less inefficient (Study 1), identify fewer organizational efficiency problems (Study 2), downplay the impact of organizational inefficiencies (Study 3), and generate a greater ratio of pros to cons regarding how their organization is run (Study 4), compared to employees exposed to relatively favorable labor market information. Results suggest an enhanced motivation to deny the existence of organizational flaws when employment alternatives are perceived to be scarce.