---
title: "Layoffs and the psychological contract: Unilever, Ford"
description: "Unilever cut about 7,500 jobs, Ford 800 in the UK. Both announcements read through Theory E, Theory O and the psychological contract, with a table."
url: "https://staging.khoi.co.uk/en/blog/cat-giam-nhan-su-hop-dong-tam-ly"
lang: en-GB
author: "Lê Quốc Khôi"
date: 2026-11-03
updated: 2026-11-03
topics: ["Ethics & corporate governance"]
tags: ["Layoffs", "Psychological contract", "Theory E and Theory O", "Unilever", "Ford"]
---

# Layoffs and the psychological contract: reading Unilever and Ford

## Key takeaways

- On 19 March 2024 Unilever announced about 7,500 job cuts worldwide in a three-year cost-saving plan, mostly office staff, more than 5% of its 128,000 workforce, aiming to save about €800m; shares rose 5% after the announcement (BBC News, 2024).
- On 20 November 2024 Ford announced 800 UK job cuts over three years, within 4,000 posts across Europe, hoping to deliver most through voluntary redundancy; it was the second round in the UK in under two years (Leggett, 2024).
- A psychological contract, per Rousseau's abstract, is an individual's belief in a reciprocal obligation with the organisation (Rousseau, 1989). Beer and Nohria write that employees distrust leaders who alternate between nurturing and cutthroat behaviour (Beer and Nohria, 2000).
- The BBC does not say what employees believed or how they reacted. The reading of the psychological contract and "Company T" are my inference and a hypothetical example.

Two announcements in 2024 show how two rounds of job cuts were put to the public. The post's working assumption: for the owner of a 60-person firm weighing a few cuts, the audience that matters most is not the people leaving, who are told individually. It is the people who stay, who are reading whether the old promises still hold. This post reads the two announcements through Beer and Nohria's Theory E and Theory O and Rousseau's psychological contract. Both announcements come only through BBC reports, so the post can say only what the reports say.

## What did Unilever and Ford announce?

The table draws on the two BBC reports. "Not stated" means I did not find that detail in the report I read.

| | Unilever (19 March 2024) | Ford (20 November 2024) |
|:--|:--|:--|
| Scale | About 7,500 jobs worldwide; more than 5% of 128,000 staff (BBC News, 2024) | 800 UK jobs over three years, 15% of a 5,300 workforce; 4,000 across Europe, including 2,900 in Germany (Leggett, 2024) |
| Who is affected | Mostly office staff (BBC News, 2024) | Mostly administrative or product-development roles; the Dagenham and Halewood plants and the Southampton transport operation are protected (Leggett, 2024) |
| How | Not stated | Hope to deliver most through voluntary redundancy (Leggett, 2024) |
| Reason given | Doing fewer things better; about €800m savings over three years; ice cream split-off (BBC News, 2024) | Difficult trading conditions, intense competition, weak demand for electric vehicles (Leggett, 2024) |
| Market reaction | Shares up 5% (BBC News, 2024) | Not stated |
| History | Not stated | Second round in the UK in under two years; March 2023 was 1,300 jobs, a fifth of the workforce, mostly at Dunton (Leggett, 2024) |

On Ford, Lisa Brankin, managing director of Ford of Britain and Ireland, told the BBC that nobody wants to make such an announcement and that it would have a very significant impact on employees, so the aim was to try to deliver it through voluntary redundancy (Leggett, 2024). The Unilever ice cream split is covered separately in the [BCG matrix post](https://staging.khoi.co.uk/en/blog/unilever-tach-kem-ma-tran-bcg).

## Is this a Theory E move or a Theory O move?

Beer and Nohria (2000) separate Theory E, which treats shareholder value as the only legitimate yardstick, from Theory O, which treats organisational capability as a legitimate one too. They describe E as typically leaning on economic incentives, drastic layoffs, downsizing and restructuring, and as driven from the top (Beer and Nohria, 2000). The post on [Theory E and Theory O through the Asda case](https://staging.khoi.co.uk/en/blog/thuyet-e-thuyet-o-asda) goes into the framework in depth.

> **Figure:** [Theory E and Theory O of change](https://staging.khoi.co.uk/en/framework/theory-e-theory-o) Theory E, Theory O and the combined approach (redrawn from Beer and Nohria, 2000).

On my reading, both announcements carry E marks: cutting jobs, stating a cost-saving or competitive goal, and deciding from the top. At Unilever the market rewarded the announcement with a 5% rise in the share price (BBC News, 2024); that is E's yardstick. But the two BBC reports give only the announcement. They do not say whether either firm has any culture or capability programme, so I do not conclude that the two do E alone.

## What is a psychological contract, and why does it reach the people who stay?

Rousseau (1989) describes a psychological contract as an individual's belief in a reciprocal obligation between themselves and the organisation; an implied contract is a mutual obligation at the level of the relationship (Rousseau, 1989). I read only the abstract. The site's term [psychological contract](https://staging.khoi.co.uk/en/glossary#psychological-contract) describes unspoken, two-way expectations about effort, job security and fair treatment.

Beer and Nohria use the idea in several places. They write that firms following O, such as Hewlett-Packard, typically have strong, long-held, commitment-based psychological contracts with employees, and that managers there are likely to see the risks in breaking them. At Champion International, by their account, no one was laid off in a decade of reform, and the freeze on firing helped create a culture of trust and commitment. They add that E then O is more workable than O then E because of the sense of betrayal: it is hard to imagine how a draconian programme of layoffs can leave intact the psychological contract and culture a company has built up. And they warn that employees distrust leaders who alternate between nurturing and cutthroat behaviour (Beer and Nohria, 2000). That is a judgement drawn from the cases they studied, not a measured result.

For those who stay, the implication is that they watch how the firm treats the people who go and take it as data about the firm's own promises. That is my inference from the sources above. The BBC does not say what Unilever or Ford employees believed, and I have no data that measures it.

## What can those who stay read in the two announcements?

What follows is my reading, not what the firms or the BBC said. First, Unilever gave the purpose (doing fewer things better), the group affected (mostly office staff) and a time frame (three years). For those who stay, that answers why and who, the two questions they will ask themselves. Second, Ford named the places that are protected and the method (a hope of voluntary redundancy). That tells those who stay where they carry least risk and what the firm is trying to avoid.

Third, Ford's second round came in under two years after the first (Leggett, 2024). Extending Beer and Nohria's logic (my inference), what leaders said and did the first time is what employees use to read the second. But the BBC does not say what they read, so I do not conclude that the second round damaged trust further.

## What should Company T say to the people who stay?

This example is entirely hypothetical; "Company T" and its figures are mine and belong to no real business. Company T has 60 employees. Its largest customer, 35% of revenue, has just ended its contract, so the owner is weighing 8 cuts, about 13% of staff. The table is the set of questions I propose for the all-staff announcement, drawn from the reading above. It is not a recommendation from Beer, Nohria, Rousseau or the BBC.

| Those who stay will ask | What to make clear | What not to do |
|:--|:--|:--|
| Why are you cutting? | A concrete figure: which customer, how much revenue | Use "restructuring" without a number |
| Who is affected, and who is not? | The criteria for choosing posts, and which posts are safe | Leave staff to guess from a leaked list |
| What do you still promise, and which promise do you drop? | What stays (pay, bonus, training) and what you no longer promise | Repeat a long-term job promise you cannot keep |
| When will you speak again? | A specific date for an update | Stay silent until there is new news |

The post on [two-way communication in change](https://staging.khoi.co.uk/en/blog/truyen-thong-hai-chieu-khi-thay-doi) covers listening after an announcement, and the one on [four theories of resistance to change](https://staging.khoi.co.uk/en/blog/bon-ly-thuyet-khang-cu-thay-doi) places the psychological contract among four causes of resistance. This post does not cover the employment rules of any country.

This reading suits you if you are an owner or HR lead preparing an announcement, or you want to understand why a round of cuts leaves those who stay quiet. It does not suit you if you want to predict financial results after cuts: the sources I read have no data tracking how Unilever or Ford fared after the announcement.

## Going deeper: what did I read, and what could I not check?

I read both BBC reports in full: the one on Unilever of 19 March 2024 and Theo Leggett's on Ford of 20 November 2024. I read Beer and Nohria (2000) in full in Harvard Business Review. For Rousseau (1989) I read only the abstract; I do not know what the paper says about terms, measurement or the effects of breach.

Three limits. First, the BBC reports are news, and I read no statement or annual report from Unilever or Ford, and no study of either firm's employees. Second, Beer and Nohria write from the cases they studied and give no data measuring employee trust. Third, the reading for those who stay, Company T and the question table are my own inference and assumptions, untested on a real business.

## Frequently asked questions

### What is a psychological contract?

According to Rousseau's abstract (1989), it is an individual's belief in a reciprocal obligation between themselves and the organisation, as distinct from an implied contract, which concerns mutual obligations at the level of the relationship (Rousseau, 1989). I read only the abstract, so I say nothing more about its terms or how to measure it.

### Do layoffs always break the psychological contract?

The sources I read do not say so. Beer and Nohria write that in firms with long-held, commitment-based psychological contracts, managers are likely to see the risks in breaking them, and that a draconian layoff after a period of culture-building is hard to square with keeping that contract intact (Beer and Nohria, 2000). That is a judgement drawn from the cases they studied, not a measurement taken from employees.

### Are the Unilever and Ford announcements Theory E change?

On my reading both carry E marks: job cuts aimed at cost or efficiency. The BBC reports give the announcements, not the whole programme of change, so I do not conclude that the two firms have no O component (BBC News, 2024; Leggett, 2024).

### Is this legal advice on making redundancies?

No. The article does not cover the employment rules of Vietnam or any other country. Before announcing, an owner should ask a lawyer or the labour authority where the firm operates about procedure, notice periods and what leavers are owed.

## References

- BBC News (2024) *Unilever is cutting jobs and splitting off its ice cream unit*. BBC News. Available at: https://www.bbc.com/news/business-68595206 (Accessed: 2026-11-01).
- Beer, M. and Nohria, N. (2000) *Cracking the code of change*. Harvard Business Review. Available at: https://hbr.org/2000/05/cracking-the-code-of-change (Accessed: 2026-11-01).
- Leggett, T. (2024) *Ford cuts 800 jobs claiming weak demand for electric cars*. BBC News. Available at: https://www.bbc.com/news/articles/c20626dy9d6o (Accessed: 2026-11-01).
- Rousseau, D.M. (1989) ‘Psychological and implied contracts in organizations’, *Employee Responsibilities and Rights Journal*, 2(2), pp. 121–139. https://doi.org/10.1007/BF01384942

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