This research examines the experience of employees working in the electric utility industry during a time when it was undergoing significant transformation. It was undertaken to examine this phenomenon in the context of how the history and nature of the industry’s environment, and specifically regulatory effect of regulation, led to an organizational form characterized by stability, structure and inertial resistance to change. A case study approach was used to examine the effect of deregulation on an organization in the industry, and specifically how their actions impacted employees working there.

A phenomenological approach was used to explore employee perceptions of the organizational culture and employment relationship there both prior to and after implementation of a reorganization and downsizing that resulted in the first significant employee layoffs in the history of the organization. Data gathering consisted of conducting semi-structured interviews with current and former employees of the company who experienced the phenomena.

Analysis of the data show that employees in this organization perceived an unusually strong psychological contract for stable employment and the expectation that it would continue, despite the prevalence of corporate downsizing and restructuring at the time. This psychological contract and the importance of career employment was found to be particularly significant for women who were hired during a period of time when gender and pregnancy discrimination was prevalent. Findings demonstrate that, given the historical stability and strong inertial resistance in the organization, company leadership did not effectively communicate the need, or prepare employees sufficiently for the significance of the changes or the effect they had on the organization. Findings also revealed that employees perceived the methods used to select individuals for layoff and exit from the company violated principles of organizational justice for distributional, procedural, and interactional fairness.

This research illustrates the need for leaders to consider the culture in their organizations and its readiness for change prior to implementation of significant transformation.