The Psychological Contract

Proud Uncle Moment!

On a recent visit to see my niece, Charlotte, who is studying Psychology and Business at Uni in Birmingham, over one too many wines, we got talking about an essay she was working on relating to The Psychological Contract and its impact when attracting new staff.

This is a very interesting topic and Charlotte kindly sent on her essay to me……

 

The concept of psychological contract provides a useful lens for us to understand employee attitudes within the organisation. How can the psychological contract play a crucial role in maintaining productive employee attitudes

within the workplace?

 

By Charlotte Louise Brenchley,

Final Year Student at Aston University, studying BSc Psychology & Business

 

Summary

It is important for employers and employees to consider the following main ideas on this issue of the psychological contract:

  • Both employee and employer must ensure to fulfil promises or obligations from the very start of employment to avoid potential
  • Employers must ensure to provide Realistic Job Previews when creating job
  • Employers need to consistently review and improve HRM practices to ensure they are as efficient and productive as
  • Employers need to recognise the importance of socialisation, ensuring interactions during the early stages are positive and informative for the
  • Employers need to recognise the importance of investigating past experiences of new employees, in order to be able to deploy specific techniques tailored to the individual when establishing the employment

 

During this modern business day, with uncertain and apprehensive environments, maintaining healthy and progressive employment relationships has never been so crucial (Curwen, 2016). The success to this lies in creating clear, unwritten expectations between employer and employee, otherwise known as the psychological contract (PC).

Implicit and idiosyncratic in nature, the PC is shaped by the individual’s beliefs. A growing number of studies (Bakker & Leiter, 2010) have shown there is a strong correlation between the PC and productive employee attitudes, such as job satisfaction, commitment and performance (Gottschalk, 2019). This essay will explore how the PC plays a crucial role in maintaining productive employee attitudes, more specifically from its initial development at the beginning of the Employee Lifecycle. It is believed that these early experiences not only help to shape employees’ expectations of the future of their employment relationship (Curwen, 2016), but also considerably impact employee job satisfaction, attitudes and productivity (Kotter, 1973).

The employee’s relationship with the organisation commences with the recruitment and selection stages (Rousseau, 2001). The employee is beginning to think about their PC and forming their attitudes, which may be influenced by the fulfilment of the initial schemas the employee has during the recruitment process (Aggarwal & Bhargava, 2009). Literature on the Stages of the PC Formation (Rousseau, 1995), argues the employee is now entering the interactional stage, as their opinions and planned relationships are already undertaking change due to the interactive influence of individual and organisational factors (Rousseau, 1990, cited in Aggarwal & Bhargava, 2009).

Therefore, it is crucial for the employer to manage the recruitment and selection process closely to corroborate a productive influence on the employee’s attitudes and behaviours (Kotter, 1973) and to effectively influence the initial development of the PC.

During the recruitment stage, it all begins with the advertisement (Rousseau, 1995).

Employers must ensure to provide Realistic Job Previews (RJPs), as it will supply employees with accurate expectations of both the role and organisation (Meglino et al., cited in Aggarwal & Bhargava, 2009). This is pertinent to my placement as when I was initially settling into my position,

I believed the advertisement for my role did not specifically relate to the tasks I was being assigned. Upon reflection, this negative impact on my opinion of my role decreased my productivity and motivation, highlighting the influence the unrealistic advertisement had on my employee attitudes.

Moreover, research by Wanous et al. (1992) found that by producing RJPs, the new employee’s met expectations will increase and this will have a positive effect on commitment, performance and job satisfaction. Alternatively, the effects of unrealistic job advertisements can be seen within research conducted by Kotter (1973) which found this type of advertisement negatively affected employee progression and productivity. Whilst producing RJPs may lead to the role being less appealing to the job market, it does in fact lead to a better quality of candidate.

Concluding on this, it is suggested HR make it their priority to guarantee accuracy when developing job advertisements, ensuring they provide new employees with sufficient amounts of correct information on both the job and organisation. This will not only help the employee to find the right person for the role, it will also set the foundations for a stable and beneficial PC, which is crucial for maintaining productive employee attitudes in the workplace.

Past experiences are another connection between the recruitment and selection stage and the development of the PC and productive employee attitudes. In new employees, feedback loops may still potentially exist between past and future cognitions, such as, if an employee has felt betrayed in a previous job, they may tend to negatively evaluate future PCs (Arain, Hameed & Farooq, 2012).

Research by Boswell et al. (2005), found the previous experience and materials of a new employee significantly impacted their next PC of their new job, due to the interplay of expectations. However, it can be argued that the personality type of the new employee can effect this, such as, if the new employee is optimistic, they may view the new role positively regardless of past experiences.

Nevertheless, by employers investigating the past experiences of new employees, they will be able to deploy specific techniques tailored to the individual when establishing the relationship.

Once the new employee has been recruited and selected, the induction process will commence. Within research by Woodrow and Guest (2017), the induction process into the new work environment can potentially affect the new employees’ attitudes and perceived employment relationships, which are crucial to the positive development of the PC. However, the employer must regularly review and improve upon this process, for example, ensuring the new employees are being provided with accurate information regarding their role, team and organisation (Woodrow & Guest, 2017), in order to reap the benefits this stage can bring.

Additionally at this stage, the employee will begin to form ideas about the organisation due to socialisation, with literature suggesting the PC to be an outcome of socialisation (Woodrow & Guest, 2017). Research on organisational newcomers found effective integration into an organisation requires socialisation, particularly extensive knowledge provision and active employee knowledge procurement (Woodrow & Guest, 2017). Therefore, the employer must recognise the importance of socialisation, ensuring interactions during these early stages are positive and informative for the employee, in order to successfully assist the PC with maintaining productive employee attitudes.

Following the induction, the initial appraisal will then take place. This stage can be useful for the employee and employer to discuss expectations, and when these expectations match, stronger employment relationships will follow (Robinson, 1996, cited in Aggarwal & Bhargava, 2009). This discussion will help with avoiding ambiguity related to the exchangeable terms of employment, which in the long-run, will help the employer to accurately utilise the PC in providing suitable guidance for monitoring the individuals’ actions and attitudes (Estreder et al., 2019).

Overall, it is clear that successful initial appraisals require effective organisational communication, with research showing effective organisational communication in this initial introduction is crucial for shaping and evaluating the PC of employees (Aggarwal & Bhargava, 2009). Through offering open communication and creating this initial opportunity for the employee to negotiate the employment relationship and PC, this can help to foster positive employee attitudes in the workplace (Estreder et al., 2019).

Regarding the stages in the development of an individual’s PC (Rousseau, 1989), the reciprocal expectations begin to form here. Whilst these expectations do tend to adjust in the first few months or years, these will eventually create the stability for the PC development. Therefore, this stage is important for the employer to set-up and begin managing the PC by effectively and accurately communicating with the employee to shape their reciprocal expectations.

During this process the employer must ensure they discuss promises and obligations which they are able to fulfil in a fair, systematic and equitable manner, as this discussion can directly promote engagement and productive attitudes (Parzefall & Hakanen, 2010). The employer must also make sure the actions discussed are aligned with the purpose of the organisation, as this has failed Facebook on many occasions, and with legal battles and security concerns overriding their daily mission, employees tend to only stay for two years on average (Stover, 2019). Additionally, it may also be constructive for managers to communicate the value and talent of the employee, as research conducted by Bjorkman et al. (2013) found that informing individuals of their talents had a motivational effect and these individuals were more likely to display productive attitudes, compared to those who were not identified as talented individuals (Dickmann, Brewster & Sparrow, 2016).

At this early point of the Employee Lifecycle, employers must ensure they are able to fulfil promises or obligations they have made to the employee, which will avoid potential breaches in the PC. Breaches in an employee’s PC are defined as being sparks of violation (Pate, Martin & McGoldrick, 2003) which not only leads to an employee’s hurt feelings, but also, according to research, breaches are linked to poor performance and undesirable attitudes (Turnley & Feldman, 1999). Therefore, if an employer allows breach to occur during these early stages, it can cause lower employee contributions (Conway et al., 2014) and weakened ‘affective commitment’ to the organisation (Estreder et al., 2019), which all contributes to how effective the PC will be in the future for maintaining productive employee attitudes.

Reflecting on this, research by Estreder et al. (2019) suggests from the start of employment, HR managers need to be aware of the extent to which employees perceive their employer’s PC fulfilment (Morrison & Robinson, 1997, cited in Estreder et al., 2019). To achieve this, HR must reinforce the signals they send regarding their commitment to helping employees meet their needs in the workplace, such as, by utilising high involvement HR practices like inductions and initial appraisals (Estreder et al., 2019). Therefore, it is crucial at these stages for HR to consistently review and improve processes, in order to prevent the negative effects of not fulfilling the PC and creating unproductive employee attitudes (Estreder et al., 2019).

We are currently in a time of increased transparency where there is a drive to create a more honest and diverse workforce. As discussed throughout this essay, it is crucial for the employer to be aware of the PC and how it can impact employee turnover, motivation and productivity. HR and employers must ensure they remain honest and realistic during these initial processes, for example by creating RJPs, in order to form strong and positive PCs. This, in time, will dramatically impact not only the strength and stability of the employment relationship, but will play a crucial role in maintaining productive employee attitudes within the workplace.

 

References

Aggarwal, U., and Bhargava, S. (2009) ‘Reviewing the relationship between human resource practices and psychological contract and their impact on employee attitude and behaviours: A conceptual model’, Journal of European Industrial Training, 33(1), pp. 4–31. doi: 10.1108/03090590910924351.

 

Arain, G. A., Hameed, I. and Farooq, O. (2012) ‘Integrating workplace affect with psychological contract breach and employees’ attitudes’, Global Business & Organizational Excellence, 31(6), pp. 50–62.

 

Bakker, A. B. and Leiter, M. P. (2010) Work engagement. [electronic resource]: a handbook of essential theory and research. Psychology Press. Available at: http://search.ebscohost.com/ login.aspx?direct=true&db=cat00594a&AN=aston.b1862487&site=eds-live [Accessed: 5

December 2019].

 

Conway, N., Kiefer, T., Hartley, J. and Briner, R. (2014). Doing More with Less? Employee Reactions to Psychological Contract Breach via Target Similarity or Spillover during Public Sector Organizational Change. British Journal of Management, 25(4), pp.737-754.

 

Curwen, R. (2016). The Psychological Contract. [online] The University of Auckland. Available at: https://cdn.auckland.ac.nz/assets/psych/about/our-people/documents/ Rosie%20Curwen%20-%20The%20Psychological%20Contract%20-

%20White%20Paper.pdf [Accessed 5 Dec. 2019].

 

Dickmann, M., Brewster, C. and Sparrow, P. (2016) International human resource management. [electronic resource] : contemporary HR issues in Europe. Routledge (Routledge global human resource management series). Available at: http:// search.ebscohost.com/login.aspx? direct=true&db=cat00594a&AN=aston.b1761992&site=eds-live [Accessed: 8 December 2019].

 

Estreder, Y., Tomás, I., Chambel, M. and Ramos, J. (2019) ‘Psychological contract and attitudinal outcomes: multilevel mediation model’, Personnel Review, 48(7), pp. 1685–1700. doi: 10.1108/PR-07-2018-0237.

 

Gottschalk, M. (2019). If You Want Engaged Employees, Offer Them Stability. [online] Harvard Business Review. Available at: https://hbr.org/2019/08/if-you-want-engaged- employees-offer-them-stability [Accessed 5 Dec. 2019]

 

Kotter, J. P. (1973). The Psychological Contract: Managing the Joining-up Process.

California Management Review, 15(3), pp.91-99. doi: 10.2307/41164442.

 

Parzefall, M. and Hakanen, J. (2010). Psychological contract and its motivational and health- enhancing properties. Journal of Managerial Psychology, 25(1), pp.4-21. doi: 10.1108/02683941011013849.

 

Pate, J., Martin, G. and McGoldrick, J. (2003). The impact of psychological contract violation on employee attitudes and behaviour. Employee Relations, 25(6), pp. 557-573. doi: 10.1108/01425450310501306

 

Rousseau, D. (1989). Psychological and implied contracts in organizations. Employee Responsibilities and Rights Journal, 2(2), pp.121-139. doi: 10.1007/bf01384942.

 

Stover, K. (2019). Three ways to form lasting psychological contracts with your employees. [online] Innovation Enterprise. Available at: https://channels.theinnovationenterprise.com/ articles/3-ways-to-form-lasting-psychological-contracts-with-your-employees [Accessed 5

Dec. 2019].

 

Turnley, W. and Feldman, D. (1999). The Impact of Psychological Contract Violations on Exit, Voice, Loyalty, and Neglect. Human Relations, 52(7), pp.895-922. doi: 10.1177/001872679905200703

 

Woodrow, C. and Guest, D. (2017). Knowledge acquisition and effective socialization: The role of the psychological contract. Journal of Occupational and Organizational Psychology, 90(4), pp.587-595. doi: 10.1111/joop.12178.

 

Charlotte Brenchley

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