Psychological Contracts Notes

Psychological Contracts

Definition

• Heriot et al: the ‘perceptions of mutual obligations to each other held by the two parties in the employment relationship, the organization and the employee’.

• Difficulty in that each could have different expectations.

• Reciprocity is central – fulfillment of obligations by one party is conditional on the fulfillment by the other.

• Sims: Balancing the contract determined by the degree to which expectations on both sides match, and an agreement on what is to be exchanged between the employee and the organization.

• Rousseau: must understand the context in which they arise.

Breach/violation

• If individuals perceive the org to have broken its side of the bargain they will cut down effort and commitment in return.

• Heriot et al: Immediate and predictable responses to contract violation – injured party withdraws obligations, consequences of violation are severe necessary for organizations to devote resources to discovering and agreeing what it is and keeping it wherever possible. Employees should be involved in renegotiation.

Can be seen in how they have changed over time

• Sims: the traditional psychological contract is no longer valid, employees have moved away from the belief that hard work and loyalty will necessarily be rewarded with job security and steady rewards. Change and uncertainty basic tenets like beliefs in fairness, equity and justice have been violated, company loyalty is becoming extinct.

• Heriot et al: globalization + intense competition led to widespread restructuring, flexibility and focus on the short term. Shifted emphasis of psychological contract away from relational factors and towards transactional ones previously perceived obligations have been violated by companies removing managerial grades, reducing promotion opportunities and forcing redundancies.

• Moorman: this breach creates feelings of deception and betrayal due to high importance of reciprocity, employees retract their side of the bargain and lower perceived obligations of employer in future.

• Heriot et al: employees movement away from relational factors like recognition and humanity, and focus on tangible elements of work instead like pay and hours, more easily met.

• Orgs may have to demonstrate that they can keep transactional deals before mutual trust and commitment are restored.

OCB

• Robinson and Morrison: Organisational Citizenship Behaviour – employee behaviour that is extra-role, that promotes organizational effectiveness and that is not explicitly recognized by an organisation’s reward system. Exceeds the contracted agreement. Necessary to org survival.

• Employees engage in OCB when they define their employment relationship as one based on social exchange, and to reciprocate their organization for equitable treatment, withholding OCB when employer provides inadequate outcomes.

• Organ: 5 dimensions – altruism, conscientiousness, courtesy, sportsmanship and civic virtue.

• Failure to fulfil contract undermines the trust that created it violated party feels less bound to the relationship less likely to engage in OCB as they doubt extra role contributions will be reciprocated.

• Morrison: boundary between in-role and extra-role behaviour is ill defined, tends to vary from one relationship to another. Different employers have different requirements for their employees, and employees themselves hold different definitions of...

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