Characteristics of the psychological contract
According to Rousseau (1989, p. 123), the psychological contract represents one’s belief that a promise has been made and the consideration offered in exchange for it binds the parties “to some sort of reciprocal obligations”. This suggests the psychological contract involves perceived explicit and implicit promises by an employer. George (2010) argues that psychological contract is characterized by a subjective perception that differs between people. This means it is not only individual but also unique. The model of contract violation proposed by Morrison and Robinson (1997) proposes multiple conditions that may cause people to perceive that psychological contract has been breached. The model identifies reneging, which relates to when agents of an organization recognize an obligation to act in a given way but fail to meet the obligation. A particular strength of the model is that it shows a key characteristic of the psychological contract from a workers’ perspective in that many employees perceive their employer has reneged and failed to live up to previous promises. In connection, the theory of social exchange (Thibaut and Kelley, 1959) offers the foundation for characteristics of psychological contract by proposing a cognitive model in which exchanges reciprocally impact the employee-employer relationship.
Furthermore, the characteristic involving respect lies at the core of the psychological contract, as it underpins the relationship between workers and an organization. A case study by Argyris (1960) analyzing the situation in multiple factories utilized data from interviews with workers as well as their supervisors. In particular, the researcher identified the notion of psychological work contract concerning the association between workers and supervisors in a factory. Argyris (1960) asserts the relationship was that the supervisors recognized their workers tend to produce optimally under passive leadership. Since the workers agree, a relationship can be hypothesized to evolve between them and supervisors in the form of a psychological contract. Thus, the study found employees would maintain positive practices such as improved production if the supervisors guarantee as well as respect the norms of workers’ informal culture. A particular strength of the explanation is that it promotes the need for rising employee engagement within organizations, which supports joint decision-making and control (Marchington et al., 2016).
The concept of psychological contract violation, Chrobot-Mason (2003) asserts, represents an increasingly perceptual as well as a subjective interpretation of events. In a case study examining the psychological contract held by minority workers concerning diversity as well as the implications for violating the contract on the employees, Chrobot-Mason (2003) collected data from 88 minority workers from 4 university campuses in the United States. The case study focused on two key interpretation procedure variables involving trust and fairness judgments. The findings of the research by Chrobot-Mason (2003) evidenced the belief that violation of employer promises about diversity causes a rather strong positive influence on minority workers’ perceptions concerning breach of the psychological contract. This also includes an impact on employee dissatisfaction, organizational cynicism, as well as lack of commitment. A renowned real-world case typifying the psychological contract includes Texaco in the United States. Fisher (1998) states the high-profile lawsuits included the $140 million settlement by the company to resolve a racial discrimination case initiated by black workers. In support of the view, a case study by Agbozo et al. (2018) examined the impact psychological contract has on organizational behaviour and organizational commitment. The study gathered data from 65 participants from a Ghanaian public university and utilized quantitative and qualitative data analysis. Agbozo et al. (2018) found that commitment between employees and an employer hinges on the fulfillment of the underlying expectations. Crucially, the investigation found evidence that many employees would leave a workplace if their perceived expectations are unfulfilled.
Psychological contracts are underpinned by perceptions concerning exchange agreements in which employees believe they stand to gain from their inputs contributing to organizational outcomes. Abela and Debono (2019) affirm employment relations are typified by workers’ beliefs that a mutual obligation exists between them and an organization. More so, the subjective perspectives are not only formed but also reinforced throughout workers’ tenure and thus suggesting the beliefs usually shift in the process. George (2009) confirms that it is widely agreed the psychological contract represents a dynamic construct that is likely to change during workers’ organizational life. In view of that, the psychological contract is attached to obligations and promises especially from an employees’ point of view. In other words, workers can feel deceived by their workers if mutually agreed terms, as well as obligations, are unmet. This is especially the case when the employees have kept their end of the bargain in terms of enhanced productivity and performance. Rousseau (1989) confirms workers in situations in which there is a social exchange relationship breach may attempt to get even by decreasing commitment and teamwork to cause adverse effects of overall performance.
In connection, the theory of social exchange (Blau, 1964) can explain the idea of organizational commitment as social exchange entails the co-operation between individuals for mutual gains including the relationship between workers and employers. The understanding is that employees seek to meet their interests even as they work to achieve organizational goals. A case study by Abela and Debono (2019) on the relationship between the breach of psychological contract and job-related attitudes in a manufacturing plant in Malta surveyed 258 workers. The survey took about 15 minutes to complete and the multiple measures were undertaken utilizing the five-item PCP measure and ten-item scale among others. The findings included that the positive link between the breach of psychological contract and intention to leave, which was rather strong among employees with longer tenures than others were. A positive outcome is that it shows the notion of reciprocity to underlie the worker-organization relationship. To this end, it can be said the idea of reciprocal exchanges links to the core element of the psychological contract in that employees have their needs as well as expectations that must be met. In turn, doing so allows workers to commit themselves towards achieving organizational as the relationship is designed in a way to allow workers to exchange enhanced productivity in return for acceptable rewards. Crucially, Agbozo et al. (2018) argues employees are increasingly satisfied when the difference between the inducements offered by an organization and their contribution is rather large.
Employment relations are typified by the workers’ beliefs that an organization has mutual obligations. Abela and Debono (2019) argue that the psychological contract is founded in large part on the employees’ attitudes and personality. Whereas some firms are lauded for innovative diversity strategies, many have failed to move beyond expectations concerning assimilation. This can be understood to imply psychological contract entails elements of expectations placed by workers on their employers. Al-Abrrow et al. (2019) affirm majority of cases linked to psychological contract issues stem from the failure by organizations to keep a promise that is usually stated in a contract. For this reason, a psychological contract breach reflects the perception of unmet obligations by the organization. Al-Abrrow et al. (2019) add that a breach of psychological contract is usually seen as a negative element in an organization because of the adverse influence on employees. As an example, Pohl et al. (2016) conducted a case study on the relationship between the fulfillment of psychological contract and affective commitment as well as job satisfaction. It hypothesized that perceived supervisor support mediates the all-vital relationship between the fulfillment of psychological contract and affective commitment as well as job satisfaction. The case study sampled 337 soldiers. The findings of the research include that developmental psychological contract is linked to affective as well as normative organizational commitment and job satisfaction. In particular, the outcomes showed perceived supervisor support plays a mediating function in psychological contract procedure (Pohl et al., 2016). A key implication is that organizations must encourage supervisors to create positive working relationships with workers.
A key characteristic linked to the psychological contract includes fairness and justice, which are imperative especially from workers’ perspective. According to Blancero et al. (1996), says workers usually perceive the upholding of an intact psychological contract as a fair and just condition. On the other hand, they tend to view a violation of the psychological contract by an employer as an unfair as well as unjust practice. Blancero et al. (1996) add that fairness and organizational justice can be perceived by workers to include compensation, performance appraisals, complaint systems, and parental leave. In support of this view, Samad (2006) argues that negative experiences within a workplace can play a role in workers’ decision to quit and remain. This suggests employees can perceive they are unfairly treated by an organization, which may make them to start resisting and eventually exit the organization. A positive outcome of this explanation is that it reveals employees may perceive unfair treatment at a workplace leading to feelings of procedural as well as distributional discrimination.
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