Current Topics in HRM

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Current Topics in HRM
Psychological Contract and its Breach
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Definition

• Psychological Contracts are beliefs, based upon
  promises expressed or implied, regarding an
  exchange agreement between an individual and an
  organization
• Employees expectations of what the org owes them
  and what they owe the organizations

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A typical Psy Contract?

• Promises regarding
• Promises regarding
• Promises regarding
• Promises regarding
• Promises regarding
• Promises regarding
• Promises regarding

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A typical Psy Contract?

• Obligations regarding
• overtime working
• volunteering to do nonrequired tasks

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Two Types of Psy Contracts

• Transactional
• Focuses on short-term relationships
• Involves strict and clearly-defined terms
• Relational
• Focuses on long-term relationships
• Involves more open exchange

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Mutuality of Psy Contract
Transactional - Transactional Relational -Transactional
Transactional - Relational Relational - Relational
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Nature of Psy Contracts

• Perceptive, no written contracts
• Mutuality of psy contract
• Psy contracts are motivating
• Self-serving bias often exists
• Affected by personality

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Nature of Psy Contracts

• Contracts evolve (change) over time
• Supervisors are often seen as the execution
  agents
• Employees that are close often share similar psy
  contracts
• Some employees have more idiosyncratic deals in
  the contract

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Breach of Psy Contracts

• Empirical studies have shown that breach of psy
  contract leads to a number of negative outcomes
• The consequences are more pronounced (serious)
  when

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HRM Implications

• Shaping psy contracts via HRM practices
• E.g., interviews, socialization, and training
• Assessing the types of contracts held by
  employees
• E.g., through discussion of shared beliefs
• Managing losses when contract fails
• Restoring trust after breach
• Managers own psychological contract

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Obligations vs. Entitlements
Employees Perspective Companys Perspective
Their obligations (e.g., arrive at work punctually) Their obligations (e.g., job security)
Their entitlements (e.g., job security) Their entitlements (e.g., arrive at work punctually)