Friday, May 7, 2021

Psychological Contract for sustained employee motivation and commitment

Although the concept of the psychological contract originates from outside the Human Resource Management (HRM) field, it has nevertheless become a major analytical device in propagating and explaining HRM. There is a considerable amount of interest in the psychological contract from academics and practitioners alike, as both search for the factors likely to contribute to sustained employee motivation and commitment (Cullinane & Dundon, 2006). As cited in (Guest, 2004), Blau (1964) states that the concept of the psychological contract is commonly traced back to the early work of Argyris (1960) and to social exchange theory.

The relationship between employees and their employers has been conceptualized as involving a "psychological contract." At a general level, the term "psychological contract" is used to refer to a set of beliefs regarding what employees are to give and receive with respect to their employer (Roehling, 1996). As cited in (Schalk & Roy, 2007) Levinson and colleagues applied Menninger’s (1958) concept of the “psychotherapy contract,” which ascribes the intangible aspects of the contractual relationship that exists between psychoanalysts and patients, to the work setting. They define the psychological contract, or “unwritten contract,” as the sum of all mutual expectations between the organization and the employee.

As cited in (Roehling, 1996), Rousseau (1989) initially described the psychological contract as follows:

The term psychological contract refers to an individual's beliefs regarding the terms and conditions of a reciprocal exchange agreement between the focal person and another party. Key issues here include the belief that a promise has been made and a consideration offered in exchange for it, binding the parties to some set of reciprocal obligations.

Video 1 - Inspiration Session: The Psychological contract

Source: (Briner, 2011)

How the concept of the psychological contract is related to organizational commitment is a fundamental question (Schalk & Roy, 2007). The existence of a psychological contract implies that the employee is in a certain state of commitment; he or she is willing to accept work roles and tasks offered by the  organization and to carry them out in accordance with certain standards (Schalk & Roy, 2007).

 Psychological contracts are established at a certain point in time, and they are assumed to be able to change over time. Psychological contracts can be breached or violated, and can be abandoned or deserted (Schalk & Roy, 2007). Events that violate expectations about obligations that are included in the psychological contract (negative as well as positive) probably occur quite frequently (Schalk & Roy, 2007). Although the psychological contract is always present, it receives full attention only in response to certain situations. The psychological contract seems to include a standard for evaluating whether changes are, or are not, important enough to respond to (Schalk & Roy, 2007). As cited in (Schalk & Roy, 2007), Schein (1965) stated that the psychological contract is therefore not “operating at all times”.

 I work in the IT industry, psychological contracts with employees is one of the significant success factors for the business. There are terms and conditions mentioned in the employment contract, however for the organization to perform better, achieve growth, organization require employees to be committed and motivated to deliver extraordinary results. Such engagement levels have been a key factor to the success of the current business status. Therefore, it is critical for the businesses to understand what leaders to strong and positive psychological contracts and cultivate a culture that facilitate commitment from both employee and employer. At the same time it is vital that the psychological contract expectations are deliverable and minimize the breach of contracts.

Below video further elaborates as to how such organizational cultures are created by the leaders of organizations with practical examples such as military soldiers.

Video 2 - Why good leaders make you feel safe

Source: (Sinek, 2014)

References

Briner, R., 2011. Youtube - Inspiration Session: The Psychological contract: MSc Organizational Psychology. [Online]
Available at: https://www.youtube.com/watch?v=iD9jLSWUlC8
[Accessed 07 05 2021].

Cullinane, N. & Dundon, T., 2006. The psychological contract: a critical review. International Journal of Management Reviews, 8(2), pp. 113-129.

Guest, D. E., 2004. The Psychology of the Employment Relationship: An Analysis Based on the Psychological Contract. Applied Psychology: An International Review, 53(4), pp. 541-555.

Roehling, M. V., 1996. The Origins And Early Development Of The Psychological Contract Construct. Academy of Management Proceeding, pp. 203-206.

Schalk, R. & Roy, R. E., 2007. Towards a Dynamic Model of the Psychological Contract. Journal for the Theory of Social Behaviour, 37(2), pp. 167-182.

Sinek, S., 2014. Youtube - Why good leaders make you feel safe. [Online]
Available at: https://www.youtube.com/watch?v=lmyZMtPVodo&t=91s
[Accessed 08 05 2021].

 

12 comments:

  1. Agreed with your views Chamara, it would be interesting to investigate the consequences of contract fulfilment specifically in such a work context that demands continuous employee innovativeness and to study the role of work engagement in these relationships. Such a study could include a qualitative exploration of what innovative employees expect and what their psychological contracts are alike, or capture quantitatively the outcomes of perceived contract fulfilment in terms of innovative performance(Parzefall & Hakanen, 2008).

    ReplyDelete
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    1. Yes Indeevari. The psychological contract has offered an alternative reading of the employment relationship outside of the narrow legalistic frame of reference – one that expresses the subjective and indeterminate aspects of employment relations and HRM (Cullinane and Dundon, 2006)

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  2. Agreed with you Chamara, Adding to your article Wan, (2013) suggested that psychological contract had three functions: (a) it could reduce insecurity concerns between employees and organizations; (b) it can make employees feel his influence in the organizations, namely, employees understand their roles expected by the organizations; (c) it can shape employee behaviors.

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    1. Yes Sachith. The foundation of PC is an individual employee’s belief that the organization has made a promise of future return and has the obligation to reward their contributions. PC is subjective and is recognized as an individual perception (Rousseau and Tijoriwala, 1998).

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  3. Hi Chamara,

    Very well-articulated. Psychological contract is indeed employees’ perception of an implicit agreement between themselves and the organization which establishes a shared responsibility between these two parties (Anggraeni et al., 2017). I agree on your point that psychological contract and employee commitment are linked. But, it is identified that psychological contract focusing on career development influences effective commitment of employees. Psychological contract includes transactional and relational contracts (Thomas et al., 2016). Transactional contract is related to short-term financial liabilities. Thus, does not develop a long term relationship between employees and the organization. For instance, the employer pays salary limiting to the contribution of the employee as per the job description. On the other hand, relational contract is long term oriented and includes broader components including socio-emotional commitment of employees and employee trust. Further, psychological contract is in place to build stability in the workplace and enhance organization-employee relations (Low et al., 2016). The types of psychological contract and its negative impacts could have been linked to the IT industry.

    Apart from the above suggestions, it was a very interesting read.

    References
    Anggraeni, A., I., Dwiatmadja, C. & Yuniawan, A. (2017). The role of psychological contract on employee commitment and organisational citizenship behaviour: A study of Indonesian young entrepreneurs in management action. SA Journal of Industrial Psychology, http://dx.doi.org/10.4102/sajip.v43.0.1409

    Low, C.H., Bordia, P., & Bordia, S. (2016). What do employees want and why? An exploration of employees' preferred psychological contract elements across career stages. Human Relations, 69(7), 1457-1481. https://doi.org/10.1177/0018726715616468

    Thomas, D.C., Ravlin, E.C., Liao, Y., Morrell, D.L., & Au, K. (2016). Collectivist values, exchange ideology and psychological contract preference. Management International Review, 56(2), 255-281. https://doi.org/10.1007/s11575-015-0275-2

    ReplyDelete
    Replies
    1. Yes Sathaharan. According to Guest (2004), for the psychological contract to be a suitable tool for analysing the employment relationship, it needs to realise the employment relationship is a two-way exchange, with the focus squarely upon the perceptions of reciprocal promises and obligations of both parties.

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  4. Agree with you chamara. Psychological contracts are often defined as employees' perception of the assured agreement between themselves and the company, which encompasses the shared responsibilities of both parties. (Festing & Schafer, 2014).

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    Replies
    1. Yes Harsha. Shared understanding aligns behaviour, reduces insecurity and encourages reliance on anticipated future exchanges (Rousseau, 2004).

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  5. While agreeing with you, I suggest that psychological enhances employee retention. Guest & Conway (2002) confirm that a positive psychological contract induces commitment, satisfaction and willingness to stay with the organization by the employee. The violation of a psychological contract results in a decline in willingness to contribute and intentions to stay in an organization (Nelesh & Sanjana, 2014). The psychological contract breach impacts negatively on employees’ willingness to contribute to the organization and his or her desire to stay (Robinson, 1996; Coyle-Shapiro, 2002).

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    Replies
    1. Yes Gagana. The breach occurs unavoidably in the workplace because contracts are based on the perception of exchange for promises (Lester et al., 2002).

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  6. Psychological contact is a timely topic that every organization should look into. Maintaining the psychological contracts between an employer and an employee is important for an organization to have a satisfied workforce. However, the "state" of a psychological contract is rarely explored. A proper examination of psychological contacts may provide an idea about the level of engagement present in the workplace. To maintain the state of a psychological contract following should be considered (Gottschalk, 2013).
    1. Building trust.
    2. Communication.
    3. Practicing transparency.
    4. Feedback and recognition.
    5. Aligning work with strengths.

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    Replies
    1. Yes Oshadee. Psychological contact primarily focuses on the relationship between employees’ perceived work experiences and the favorableness of perceived treatment from the organization (Aselage and Eisenberger, 2003).

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