Recent findings published in the Global Strategy Journal highlight the strategic advantage of hiring workers with highly specialized skills who are globally mobile, especially those who have been laid off due to their previous employer’s failure. This perspective is novel because it considers the dual aspects of legitimacy and mobility that such workers bring, even after being part of a failed enterprise. The study reveals that individuals laid off under these circumstances often face a significant loss of legitimacy, mainly if they were part of a division or located in a region implicated in the company’s downfall. Despite their rare and sought-after skill sets, this association weakens their negotiating leverage with potential new employers.

The research conducted by Kristina Vaarst Andersen from the Technical University of Denmark, Mark Lorenzen of Copenhagen Business School, and Agnieszka Nowinska from Aalborg University Business School employed a case study methodology. It examined the aftermath of a bankruptcy in the global bunker industry (OW Bunker). Their work provides a theoretical lens through which to view the mobility of workers across multinational corporations.

This study was propelled by the abrupt and highly publicized bankruptcy of a large Danish firm with a global footprint, alongside findings from an Organization Science study detailing the adverse career impacts on displaced lawyers in Boston. The case of OW Bunker was particularly intriguing to Vaarst Andersen and her colleagues because, contrary to expectations based on existing literature, traders from the bankrupt firm were highly sought after in the industry. This discrepancy from previous research findings, which typically outlined negative career trajectories following organizational failure, sparked further investigation.

The research focused on the importance of specialized workers with crucial technical expertise, external knowledge, cultural experience, social relations, or other unique skills. Such individuals are integral to the performance of multinational corporations and are in high demand, creating a competitive hiring environment. This demand turns into a strategic opportunity when such workers are laid off from another multinational company.

By analyzing LinkedIn job data and conducting interviews, the research team could pinpoint that the loss of legitimacy was specifically significant among those traders who were part of organizational units or geographic locations blamed for the company’s bankruptcy.

The study outlines a strategic window for multinational corporations to hire these specialized, laid-off workers. The previous employer’s failure affects these job candidates’ legitimacy and negotiating power. Hiring a candidate with diminished industry legitimacy might initially impair their performance in roles requiring extensive trade, communication, or negotiation within the industry, and it also means these candidates may accept lower wages or fewer promotions than high-legitimacy candidates. Thus, while high-legitimacy candidates are likely to be hired first, managers have a unique opportunity to recruit valuable yet less-legitimate candidates at a reduced cost.

Vaarst Andersen advises managers not to be swayed solely by social evaluations during hiring. She emphasizes assessing candidates based on their merits rather than assumptions linked to their past associations with former employers, colleagues, or locations. This approach underscores the need for a merit-based evaluation system that can identify and leverage candidates’ unique skills and experiences, even those coming from failed organizations, as part of a strategic hiring strategy.

More information: Kristina Vaarst Andersen, Mark Lorenzen et al, Scarce resources or damaged goods? On the legitimacy of laid-off workers following MNC failure, Global Strategy Journal. DOI: 10.1002/gsj.1497

Journal information: Global Strategy Journal Provided by Strategic Management Society