The role of psychological contract in regulating employment relationship

the role of psychological contract in regulating employment relationship

'The psychological contract acts to sustain the employment relationship over .. Middle managers play a critical role in redefining and regulating change in the. PDF | Psychological contract refers to mutual unwritten expectations that exist the role one is expected to fulfill, the ethical code by which the employee and the essential feature of regulating the features of organisational life (Robinson et . On its own, the legal contract of employment offers a limited also considers the role of HR in managing the psychological contract. CIPD viewpoint. The psychological contract emphasises that the relationship between employers and workers is more than just a transaction regulated by a legal contract.

The Psychological Contract

The significance of psychological contract The quality of the psychological contract heavily influences how employees behave from day to day. Workers who perceive as balanced in terms of the contributions they make to the organisation and what they receive back from the employer perform better, demonstrate more extra-role behaviours, and indicate a higher level of commitment to the organisation.

Listen to our podcast on creating an authentic organisation. This is why violation or breach of psychological contract by the employer can have sudden and powerful consequences for people and organisations, affecting job satisfaction, commitment, performance, and increasing turnover intentions.

Read more in our report The changing contours of fairness. Others may react by displaying proactive behaviours, treating the situation as an opportunity to learn, to offset loss of position and uncertainty.

To deal with contract repair successfully and avoid people leaving the organisation, individuals need to have the psychological and social resources, building resilience skills in advance. Read a case study from Zurich Life about managing change in the employee proposition. Managers need to remember: Preventing breach in the first place is better than trying to repair the damage afterwards.

Where breach cannot be avoided, it may be better to spend time negotiating or renegotiating the deal, rather than focusing too much on delivery. Interventions aimed to build resilience skills will help individuals cope better with contract breaches.

How is the modern employment relationship evolving?

the role of psychological contract in regulating employment relationship

The psychological contract is a dynamic concept that can be applied to understand varying employer-worker relationships. Yet, patterns and trends can be observed over time: However, employers should not underestimate the impact of individual differences: Changes affecting the expectations of workers include: In this changing context, employers have to pay attention to the key drivers of the employment deal, in order to be able to attract and retain key talent.

To aid this, the psychological contract offers a framework for monitoring employee attitudes and priorities on the dimensions influencing performance. How are employers responding to the changes?

the role of psychological contract in regulating employment relationship

The recent recession has had a negative impact on employee attitudes, particularly in relation to job satisfaction and security. Current statistics on topics including job satisfaction, trust and fairness can be found in our Employee Outlook surveys.

The psychological contract

Our own research shows that despite the modern employment deal being based on the promise of employability, employers are highly selective about offering development and career opportunities across their workforces. Our report Attitudes to employability and talent shows that in three out of ten organisations, opportunities to enhance careers were only available to some workers based on the value they could offer the employer.

Those in roles requiring high levels of skills, holders of degree-level qualifications, as well as individuals whose skills were hard to replace, were more likely to receive training and development opportunities and have a degree of autonomy in how they perform their jobs. While such an instrumental approach to distributing opportunities is understandable, it does leave open the question of its long-term sustainability.

With loyalty of employees undermined, organisations may find they are struggling to retain staff over time.

Psychological Contract and Quality of Organizat – Relations industrielles – Érudit

Secondly, employers have to consider the type of deal they are offering to the groups of workers, who are not considered to represent key talent. Disgruntled employees present risk of increased operational costs associated with high turnover, as well as risk of reputational damage. However, although they make it possible to restore mutuality to the psychological contract, to date they have represented only a small part of the existing literature, and much work has still to be done in identifying effective and shared ways to assess the perceptions of both the parties to the employment relationship.

How the Psychological Contract is Measured? Although the psychological contract is of increasing importance in studies on organizational psychology, there is little agreement among researchers on how it should be measured. Awareness of the profound heterogeneity of current research has prompted Rousseau and Tijoriwala to propose a classification to guide future research.

They distinguish three types of measurement: The best-known examples of content-oriented assessments are those based on the distinction between transactional psychological contracts short-term work agreements focused mainly on economic exchange and relational contracts long-term agreements involving mutually satisfactory relations with open-ended commitments comprising both economic and socio-emotional aspects Ho, Rousseau and Levesque, ; Rousseau, ; Thomas, Au and Ravlin, ; Evaluation-oriented: The approach is mainly used when the researcher wants to analyze the organizational outcomes of the psychological contract for example, affective commitment and job satisfaction in the case of fulfillment; high turnover or distrust in the case of breach or violation ; Feature-oriented: The present study adopts this last approach, which is based on the research by Sels, Janssens and Van den Brande Drawing on the theoretical structure of studies on the psychological contract by MacNeil and by Rousseau and McLean Parkson industrial relations studies, and on a cross-national study of the psychological contract conducted in and coordinated by Rousseau and Schalk, Sels and colleagues identified six features with which to capture the nature of the psychological contract: Indicators of a long-term relationship are job security, promotion based on seniority, and little external mobility; conversely, a limited number of open-ended contracts and high mobility are indicative of a short-term psychological contract.

An employment relationship is tangible if there are numerous written agreements, if job descriptions are specific, and if performance requirements and evaluation criteria are explicit. Indicators of intangible relationships are a broad definition of roles and a large reliance on trust. A psychological contract has narrow scope if there is a strict division between work and personal life, or if the employee shows low job involvement. Indicators of a stable psychological contract are a strict application of rules, little flexibility in organizational practices, and a low tolerance of uncertainty.

Conversely, flexible employment relationships exhibit high tolerance of uncertainty and change, and continuous reinterpretation of roles. Exchange symmetry equal vs. Acceptance of hierarchy and inequality is expressed mainly as respecting orders and obeying hierarchical authority. Contract level individual vs. In collective contracts, all aspects of employment have been collectively decided.

Psychological Contract | Factsheets | CIPD

All employees are treated in the same way, and trade unions have a prominent role. In individual contracts, by contrast, individual negotiations and agreements are possible. The scale constructed by Sels and colleagues is addressed to employees in particular.

It therefore measures how the psychological contract is perceived by only one of the parties. This is consistent with a conception of the psychological contract as a social exchange relationship in which it is important to consider the perceived obligations of both parties to the employment relationship Shore and Barksdale, Therefore two questionnaires are administered to the employee.

Rationale and Hypotheses The aim of this study is to analyze how various aspects of organizational life may be influenced by features of the contract: These have not been studied as outcomes of the psychological contract, yet: This is hypothesized for all the features examined.

the role of psychological contract in regulating employment relationship

Development expectations Battistelli and Odoardi, refer to the importance given by workers to self-fulfillment and the achievement of certain goals in their careers within the organization. This variable indicates commitment to the organizational role. If workers can expect a great deal from their employer in terms of long-term, tangible, broad scope, stable and collectively regulated perceived obligationsit is likely that they will conceive their future at work and their personal development as tied to the organization: Role ambiguity occurs when information about appropriate role behaviour in the organization is inadequate or confusing.

When employees can expect a great deal from their employer, it is likely that they will feel more in control of their work and have greater clarity and confidence concerning their roles and their performance Sels, Janssens and Van den Brande, Hypothesized as a consequence is a negative relation with role ambiguity.

Affective and Motivational Aspects The relationship between the psychological contract and affective and motivational components of organizational life has been widely documented Deery, Iverson and Walsh, ; Hui, Lee and Rousseau, ; Janssens, Sels and Van den Brande, ; Robinson and Morrison, ; Turnley et al. In the purpose of this study is to examine the relationship of psychological contract features with two variables characterizing this area of the employment relationship: If employees perceive themselves to be highly committed to their employer in terms of employment relationships consisting of long-term, tangible, broad scope, flexible and with unequal exchange symmetry obligationsthey are likely to develop more positive feelings and attitudes toward the organization.

They will feel more involved in the organization and more willing to invest in it Shore and Barksdale, in order to maintain reciprocity in their social exchange relationship with the employer Blau, The relationship between the degree of fulfillment of the psychological contract and perceptions of justice has been demonstrated by several studies Kickul, Lester and Finkl, ; Robinson and Morrison, The perception of being committed to the organization is likely to be accompanied by greater affective attachment to it, because the relationship is perceived as something in which to invest.

In order to verify these four hypotheses from H1 to H4we tested the model reported in Figure 1 for each feature of the psychological contract. Method Participants and Procedure Questionnaires were administered to employees 23 males; females of a rest home for the elderly in North Italy.

The ages of the subjects were distributed as follows: The respondents were employed in various jobs furnishing care and assistance to the elderly residents. The questionnaire was administered to groups of workers, who completed it during working hours under the supervision of a member of the research team.

This study was part of a wider action-research project on reorganization at the rest home investigated: The scales used were translated from English into Italian using the translation-back translation procedure. As regards exchange symmetry, Sels and colleagues propose items that are unsuitable for factor analysis.

As regards contract level, Sels and colleagues do not propose items suitable for factor analysis.