The Psychological Contract and Good Employment Relations

1
The Psychological Contract and Good Employment
Relations
University of London

• David Guest
• Kings College, London

2
Features of Contemporary Employment Relations

• Unions sometimes marginalised at the workplace
  despite legislation
• Rise in individualism/individual negotiation
• Greater concern for individual employment rights
  equal opportunities
• Blurring of boundaries of work eg location
• Management increasingly in control
• Emphasis on human resource management
• Persisting issues of trust and fairness

3
Some Reasons for Change in Employment Relations

• Workplaces getting smaller
• Flexibility and fragmentation of the workforce
• Pervasiveness and urgency of change
• Feminisation of workforce and growing interest in
  issues such as work-life balance
• Influence of American culture/individualism at
  work

4
Rousseaus Framework

• Old IR

• New IR

Idiosyncratic
Positional
Standard
5
The Need for a New Conceptual Framework

• The traditional collective model is less relevant
  in many workplaces
• Need a model that can accommodate rise in
  individualism and flexibility
• Need a model that can address core issues in the
  employment relationship of trust, exchange and
  control
• The psychological contract can meet these
  requirements

6
Reasons for Interest in the Psychological Contract

• Breakdown of the traditional deal
• A career in return for loyalty
• A fair days work for a fair days pay
• Loss of professional autonomy
• Individualisation of the employment relationship
• Organizational change and violation
• Search for new ways of managing employment
  relations to meet the interests and concerns of
  both employees and the organisation

7
What is the psychological contract?
The Transactional Deal
The Implicit Deal
The Inferred Deal
8
Defining the Psychological Contract
The perceptions of both parties to the
employment relationship, organization and
individual, of the reciprocal promises and
obligations implied in that relationship

• The state of the psychological contract is
  concerned with whether the promises and
  obligations have been met, whether they are fair
  and their implications for trust.

9
The Psychological Contract Framework
The Good Employer The High Quality Workplace
Satisfied And Productive Workers
The Deal
10
The Deal
Employer Delivers on Promises
Employees Deliver on Promises
Fairness Trust Commitment Well-Being Performance
11
Framework for applying the psychological contract
to the employment relationship
Contextual and Background Factors
Policy and Practice
State of the Psychological Contract
Psychological Contract
Outcomes
Attitudinal Consequences Organizational
commitment Work satisfaction Work-life
balance Job security Motivation Stress
Individual Age Gender Education Level in
organisation Type of work Hours worked Employment
contract Ethnicity Tenure Income   Organizational
Sector Size Ownership Business strategy Union
recognition
HR policy and practices   Leadership/ Climate   Em
ployment relations   Quality of workplace
Reciprocal promises and obligations
Delivery of the deal
Trust
Fairness
Behavioural Consequences Attendance Intention to
stay/quit Job performance OCB
12
The Good Employer
Progressive Human Resource Practices
The Good Employer
High Quality Workplace
Climate of Positive Organisational Support
Flexible Employment Practices
Employee Partnership
13
The High Quality Workplace

• Reasonable demands/manageable workload
• Some personal control over work
• Support from supervisors and colleagues
• Positive relationships at work
• A reasonably clear role
• Involvement in changes affecting you

14
The State of the Psychological Contract

• Overall, to what extent has the organisation kept
  its promises and commitment to you?
• fully 45
• partly 49
• not at all 6

15
The State of the Psychological Contract

• Do you feel fairly paid for the work you do?
• Yes, definitely 30
• Yes, probably 30
• No, probably not 19
• No, definitely not 21

16
The State of the Psychological Contract

• To what extent do you trust your senior
  management to look after your best interests?
• A lot 25
• Somewhat 34
• Only a little 23
• Not at all 18

17
Exploring the Links
High quality workplace
.40
.35
Human Resource Management
State of the psychological contract
.44
Effective supervisory leadership
.12
.37
Flexible Practices
.08
.47
.16
Number of promises
.12
18
Exploring the Links cont
Organisational commitment
.32
Job satisfaction
.28
Work-life balance
State of the psychological contract
.13
Life satisfaction
.24
Loyalty to supervisor
.19
.16
Excitement
.11
Organisational Citizenship
-.09
Intention to quit
19
The Employers Perspective

• Survey of 1306 senior UK HR managers
• 36 said they used the psychological contract
  concept to help them manage employment relations
• Senior managers acknowledge that the exchange is
  not always fair and favours the employer
• Union recognition associated by managers with a
  range of negative outcomes. More of a hindrance
  than a help

20
The Policy Challenges

• Consider actively managing the psychological
  contract as a means of maintaining effective
  employment relations
• Recognise it is a two-way deal
• Address the outer context of human resource
  management and employment relations policy
• Address the inner core of the deal at the local
  level