The Psychological Contract & Commitment

SUCCESS IN BUSINESS = TRUST

Creating a Good Place to Work
● Sharing Information Broadly - Share information about such matters as daily sales
results from each store with all of the employees
● Accessibility to Employees - Top executives go to great lengths to meet with
ordinary employees whenever possible. Top managers make sure that people within
the organization see them as fellow human beings rather than figures living in an
ivory tower.
● Willingness to Answer Hard Questions - Management makes itself available for
genuine dialogue with employees. Instead of concentrating on one-way, top-down
communication, the emphasis on two-way communication is what distinguishes the
best employers.
● Delivering on Promises - People do not believe someone, no matter how good that
person's communications skills are, unless they follow through on what has been
said will be done.
● Showing Recognition and Appreciation - The best employers make a special
effort to say "thank you" in a variety of ways to employees.
● Demonstrates Personal Concern - people are especially concerned with how they
will be treated when faced with a personal event of significance-an illness, a death in
the family, births, etc. The best employers find ways to show genuine concern in
those circumstances.
Psychological Contracts: an individual's beliefs, shaped by the organization regarding the
terms and conditions of a reciprocal exchange agreement between individuals and their
organization (The mutual expectations employees and employers have of each other)
- Assuming you won't have to do pushups in a lecture
- The psychological contract is constantly being updated based on our perceptions

Social Exchange Theory: People enter into relationships in which not only economic but
also social obligations play a role and that people are most comfortable when the exchange
is balanced

Assumption Grounds: Preexisting beliefs about why people behave in certain ways
False Consensus Bias: Thinking that your bias is everyone's bias

Committed employees advantages for employers: higher performance and job

satisfaction, greater ability to adapt to unforeseen circumstances, higher attendance, longer
job tenure, and more organizational citizen behaviour

Ways to earn employee commitment: clarifying and communicating the organization's

mission, guaranteeing organizational justice, creating a sense of community, and supporting
employee development

Incivility: low-intensity deviant behaviour that violates workplace norms for mutual respect; it
may or may not be intended to harm the target. Ex: rudeness, sarcasm, public reprimands,
to bluntly refusing demands for extra help from coworkers and supervisors. Results are
decreased work effort, time spent at work, productivity, performance, motivation, creativity,
and helping behaviours, and less OCB.
Seven values found in such organizations: (1) commitment to self-knowledge and
development (continuous learning), (2) firm belief in decency (fair treatment, equity), (3)
respect for individual differences (celebration of diversity), (4) spirit of partnership (strong
belief in community, shared effort, teamwork, widespread participation), (5) high priority for
health and wellbeing, (6) appreciation for flexibility and resilience (change is managed well),
and (7) a passion for products and process (concern for both what is produced and how that
happens, balancing stakeholder interests-family support, community responsibility, and
environmental protection)

Violations to the Psychological Contract

Breach: An employee's cognition that they have received less than promised. When we
perceive a breach, we assess the ability and intent of the other party.
Violation: An emotional state that may result from the perception of the psychological
contract breach
Responses

Self-Fulfilling Prophecy: The phenomenon that occurs when people perform in accordance
with a rater's expectations of them (A manager's expectations for an employee cause the
manager to treat the employee differently; therefore, the employee responds in a way that
confirms the manager's initial expectations)

Manifesting?????

What is the practical significance in the workplace of understanding the self-fulfilling

prophecy?
• Employees who are expected to do well will likely perform better than those who are not,
even though there may be no differences between them.
• Supervisors and managers who have high expectations of their employees will be more
likely to have their expectations met.

The Pinch Model

 1. Sharing of Information and Negotiating Expectations: Suppose that a manager
interviewing job candidates informs them that they'll be expected to attend frequent
company events on weekends. If this does not appear to be a reasonable
expectation to some candidates, they will deselect themselves, the equivalent of a
planned termination in the model.
2. Role Clarity & Commitment: Both the new employees and manager understand
and accept the role the other party expects them to play and are motivated to meet
those expectations.
3. Pinch: Pinches have a habit of growing into larger problems if they are not handled
in a planned manner (An employee may have been willing to put in overtime and
cover weekend shifts when they were single and new. But a marriage involving
certain expectations about the time a couple should spend together might change the
employee's attitude toward demanding hours and the automatic assumption that this
particular employee is available)
4. Disruption of Shared Experience: Since the "rules" that were accepted initially
have been upset, one or both parties experience heightened ambiguity and
uncertainty which invariably result in resentment and anxiety.
5. Crunch: The straw that broke the camel's back (ex. the boss who unfairly accuses a
dedicated employee of not working hard because the boss is misinformed, or a job
promotion that goes to another employee who is clearly less qualified)
- Return to the way things used to be: The parties apologize for the
misunderstanding, smooth over the conflict, and attempt to renew their commitment
to one another under the terms of the old contract.
- Resentful Termination: The termination may be either psychological ("I'll be darned
if I'm going to do any more than I'm required to on this job" or 'That's the last thing I
ever do for that employee") or physical (absenteeism, tardiness, quitting, or firing).
- Renegotiation under duress: Sharing information and negotiating their
expectations again

Theories of Managing People (Ask if we need to know all 7 theories for exam)

Process Theories: Focus on how motivation is evoked, what should companies do and how
should leaders and employees behave to evoke motivation?
Scientific Management Theory: Late 1800’s, entire focus on efficiency, productivity and
output, resulted in poor working conditions, Taylor's scientific management emphasized the
efficient division of labor into small, standardized jobs that were matched to the capabilities
of trained workers who received wage incentives.
Administrative Theory: Late 1920’s, Focused on understanding the basic tasks of
management-planning, controlling, organizing, and commanding-and developed guidelines
or principles for managing large organizations and bureaucracies effectively.
Theory X and Theory Y: Theory X is based on the assumption that humans are inherently
lazy, dislike responsibility, and prefer to be led. Theory Y is based on opposite perceptions of
human nature-that humans are responsible, motivated to work hard and develop skills, and
capable of self direction.
Individual & Organizational Learning
Kolb’s Individual Learning Styles: Everyone learns by going through a 4 step process.

Adaptive learning (single-loop learning): Has a coping orientation, focuses on solving

problems or making incremental improvements in the current way of doing business.
Generative learning (double-loop learning): Has a creative orientation, involves surfacing
and reviewing the underlying assumptions about the prevailing mental model. Generative
learning involves continuous experimentation and feedback in an ongoing analysis of how
organizations define and solve problems.
Management Functions: Planning, Controlling, Leading, Organizing
Performance = Ability x Motivation

Maslow's Hierarchy of Needs

McClelland's Need Theory

According to McClelland, high achievers:

a. Like to set their own goals.
b. Tend to avoid either extremely difficult or extremely easy goals.
c. Prefer tasks that provide immediate feedback on their performance

Job Characteristics Model

Skill variety - The degree to which a job requires a range of personal competencies and
abilities in carrying out the work.
Task identity - The degree to which a job requires completion of a "whole" and identifiable
piece of work, that is, doing a good job from beginning to end with a visible outcome.
Task significance - The degree to which the job is perceived by the employee as having a
substantial impact on the lives of other people, whether those people are within or outside of
the organization.
Autonomy - The degree to which the job provides freedom, independence, and discretion to
the employee in scheduling the tasks and in determining the procedure to be used in
carrying out the task.
Job feedback - The degree to which carrying out the job-related tasks provides the
individual with direct and clear information about the effectiveness of his or her performance.

Critical Psychological States

(I) experienced meaningfulness of the work
(2) experienced responsibility for the work
outcomes
(3) knowledge of the actual results of the
work
 Job rotation: programs move people from one job to another periodically to decrease their
boredom and allow them to learn different skills.
Job enlargement: Increase of the number of tasks performed by an individual. In an
assembly-line example, a worker would perhaps install an entire door panel rather than
securing only one tiny part of the door.
Job enrichment: Attempt to change the nature of the job by broadening responsibilities,
giving more autonomy for decision making, creating client systems and direct feedback
systems, and generally enlarging the scope of jobs.
Equity theory: Employee motivation is affected by the perceived fairness of
what people contribute and receive.

Decoding Behaviour and Personality

Personality: The relatively stable set of psychological characteristics that influence the way
someone interacts with their environment and how they think, feel, think and behave.

C A N O E

Conscientiousness Agreeable Neuroticism Openness Extraversion

- Dependable - Kind - Moody - Curious - Sociable

- Organized - Helpful - Emotional - Imaginative - Assertive
- Reliable - Cooperative - Jealous - Creative - Bold
- Hardworking - Sympathetic - Nervous - Complex - Passionate
- Preserving - Warm - Insecure - Refined - Dominant
- Ambitious - Flexible - Talkative

Big 5 Construct
Conscientiousness
- Accomplishment Striving: Exceed work requirements, Goal-setting, spend more time
on task, build job knowledge
- Predicts career success, health (more conscious of things that would decline health)
- Best predictor of job performance
Agreeableness
- Prioritize communion striving: Seek to gain acceptance in personal relationships
- Focus on getting along and not getting ahead
Extraversion
- Prioritize status striving: A strong desire to obtain power and influence within a social
structure as a means of expressing personality
- Tend to be high in positive affectivity: Tend to experience engaging moods like
enthusiasm and excitement
Neuroticism
- Tend to be high in negative affectivity: Tendency to experience unpleasant moods
such as nervousness, annoyance, hostility
- Associated with differential exposure to stressors: More likely to appraise day to day
situations sd stressful
- Associated with differential reactivity to stressors: Less likely to believe they can cope
with stressors that they experience
Openness to Experience
 - Valuable in jobs that require high levels of creativity
- Predictive of cross cultural sensitivity and success in international assignments
The Forgotten One - Honesty Humility
Four dimensions
- Sincerity: Unwillingness to be manipulative/dishonest
- Fairness: Unwillingness to cheat, steal, use fraud
- Greed Avoidance: Less concerned with wealth and status
- Modesty: Acknowledge Limits, keep accomplishments in perspectives, low self focus

Core Self-Evaluation (“Positive Self Concept”)

- Encompass 4 traits: Self-esteem, self-efficiency, locus of control, emotional stability
- Linked to higher job satisfaction and performance

Proactive Personality
- Identifies opportunities, shows initiative, takes action, and preserves to completion
- Creates positive change in the work environment

Social Dominance Orientation

- A preference for hierarchy in social system and inequality between groups
- Sample Items from SDO scale: “To go ahead in life, sometimes it's necessary to step
on other groups”
- Associated with: More prejudiced views, discriminatory, more aggressive in the
workplace and group conflict

The “Dark Triad”

- Three interrelated traits sharing a component of callousness and manipulative
behaviour
- Linked to destructive workplace behaviours: Workplace harassment and bullying,
theft
- Machiavellianism: A pragmatic, emotionally distant power player who believes that
the end justifies the means
- Narcissism: an arrogant, self centred, entitled person who needs excessive
admiration
- Psychopathy: Prone to deviant behaviour due to high levels of thrill seeking,
impulsivity and selfishness

Myers Briggs Type Indicator

Each of the 16 possible combinations has a name, for instance:
- Visionaries (INTJ) – original, stubborn, and driven
- Organizers (ESTJ) – realistic, logical, analytical, and businesslike
- Conceptualizer (ENTP) – entrepreneurial, innovative, individualistic, and resourceful

Emotional Intelligence
- The capacity to monitor one's own and others feelings and emotions, to discriminate
among them, and to use this info to guide one's thinking and actions
4 core dimensions
- Self-awareness: the appraisal and expression of emotions in oneself
- Other-awareness: the appraisal and recognition of emotion in others
- Emotional regulation: being able to recover quickly from emotional experiences
- Use of emotions: being able to harness emotion to enhance performance
Predicts key work-non-work related outcomes
- Stronger social relationships
- Higher well being
- Higher job satisfaction and performance
- Effective leadership
 - Elevated group performance

Interactionist Perspective
- More complex views of relationships between personality and behaviour than trait
theory

Theoretical Models/Framework
- Reciprocal Determinism: Three way influence →
- Conditional Reasoning: People interpret and act on
events differently depending on their personality
- Trait Activation: Certain situational cues are needed
to evoke the display of personality traits → ex. Proactive

Workplace Applications
- Employee Selection
- Succession Planning
- Training and Development
- Career Counselling
- Team Building
- Conflict Management

Culture and Values

Organizational Culture - The pattern of basic assumptions that a given group has
invented, discovered, or developed in learning to cope with its problems of external
adaptation and internal integration, and that have worked well enough to be
considered valid. Therefore, to be taught to new members as the correct way to
perceive, think and feel in relation to those problems. - EH Schein
Schein Refers to 3 levels of culture:
1. Artifacts that are visible or tangible
2. Espoused values, such as strategies, goals and philosophies (The company mission)
3. Assumptions, which are unconscious, taken for granted beliefs, perceptions,
thoughts, and feelings
Culture - Values, norms, beliefs, unwritten guidelines

Power and Influence

Power - A has power over B to the extent that A can get B to do something that B would not
do otherwise
Influence - Successfully persuading others to follow your advice or orders
Authority - Power granted to an employee recognized as legitimate (legitimate power)

Seven Sources of Power:

1. Coercive Power (Command and Control)
- The ability to influence through threats, punishment, or sanctions
- Use to ensure others stick to the rules, policies, and procedures
- Downsides are that you can only use this type of power in short bursts and if
it's used to much it tends to push people away
 2. Charismatic Power
- Power to attract others
- Influence over others
- Acquired from being well liked or respected
- Empowers followers to action through empathy for a cause and clear
communication
- Use their exceptional personal qualities to bring about change
3. Expertise Power
- Knowledge that is respected and valued
- Those with this power are valued in organizations for their problem solving
skills
- Seen as candidates for promotion
4. Legitimate Power
- Comes from the position the person holds (CEO)
- Power may be unstable - If the person loses the position, the power
disappears
5. Reward Power
- Comes from being able to offer and influence incentives in an organization
- Salaries increase or promotion
- Can be used to motivate employees to perform tasks
- The problem with this power: Can't always deliver on rewards, not everyone
is motivated by rewards
6. Referent Power
- Comes from the interpersonal relationships someone builds with others
- Helps if others respect and like them as a person
- Allows the person with power to influence others
7. Right Place at the Right Time
- Taking advantage of an opportunity presented
- Building on the opportunity

Win-Win: Everyone gains power

Win-Lose: One person gets what they want

Positive Power: Uses power to make others feel stronger

Negative Power: Uses power to make others feel weaker

Nine Influence Tactics:

1. Rational Persuasion - Logical Argument
2. Inspirational Appeal - Appeal to others aspirations
3. Consultation - Support or assistance
4. Ingratiation - Praise and flattery
5. Personal Appeals - Loyalty and friendship
6. Exchange - Exchange of favours
7. Coalition Tactics - Aid of others
8. Legitimating Tactics - Use of authority or right
9. Pressure and Threats - Demands and threats
Six Influence Strategies:
1. Reciprocity
 - Repay in kind
- Includes gifts, favours, and concessions people make to one another
2. Social Proof
- Follow the lead of similar others
3. Consistency
- Align with clear public commitment
4. Scarcity
- Want scarce items (Limited time offer)
5. Expertise and Authority
- Relevant expertise and experience persuades
6. Liking
- Respond to those who are pleasant, likeable, and charismatic

Milgram Experiments
E: Experimenter/Expert
T: Teacher
L: Learner

A Process of Influence
Level 1: Polite Request
Level 2: Stronger
Level 3: Statement of Consequences
Level 4: Consequences

Four Influencing Styles - Berlew and Harrison

1. Assertive Persuasion: Use of facts, logic, rational argument, and persuasive
reasoning
2. Reward and Punishment: Use of bargaining, incentives, pressures, and demanding
certain behaviour
3. Participation and Trust: Get results by getting people involved
4. Common Vision: Identify a common vision for the future
An Influence Plan
1. What is your objective
2. Whose cooperation do you need
3. What drives the people you want to influence
4. What relationship do you have with the person and what do you want
5. What source of power/influence do those you need help with have
6. What source of power/influence do you have
7. Select the best strategy to implement
Ways to Reduce Efforts at Influence and Political Jockeying
1. Use clear evaluation criteria and reward accordingly
2. Keep competition for scarce resources to a maximum
3. Increase interdependence among employees
4. Set norm that political jockeying is not acceptable
5. Apolitical approach to promotion
6. Train how to positively use influence and power
Characteristics of a Successful Boss
- Have energy, endurance, physical stamina
 - Able to focus their energy
- Sensitive to others
- Flexible : Find different ways to reach a goal
- Willing to engage in conflict
- Able to control ego to support others
- A team player
Characteristics of an Unsuccessful Boss
- Insensitive, abrasive, intimidating
- Cold, aloof, arrogant
- Betrays others trust
- Overly ambitious and political
- Unable to delegate or build a team
- Overly dependant on others
Power and Empathy: Hubris Syndrome
- A disorder: Excessive pride or self-confidence
- Gets worse the longer a person has power
- Self-absorption in all its forms kills empathy and compassion
- Possession of power associated with overwhelming success
- Displays ways that suggest power = problem
E.g.
- Contempt for others
- Loss of contact with reality
- Restless or reckless action
- Display of incompetence

Teamwork
Team - A collection of individuals who are interdependent in their tasks, who share
responsibility for outcomes, who see themselves and who are seen by others as an intact
social entity in one or more larger social systems, and who manage their relationships
across organizational boundaries

What is teaming? - Teaming is a verb. Managers need to stop thinking of teams as static
groups of individuals who have ample time to practice interacting successfully and efficiently.
Today's businesses require teamwork skills that allow you to be on teams that band and
disband by the minute, requiring a more dynamic approach to how teams develop and
perform
Are you good at teaming? - Connect quickly, comfortable with diversity, flexible skills,
critical thinking

Team Effectiveness Criteria

- Output (Performance)
- Social Processes (Viability)
- Learning (Satisfaction)
Inputs
KSA’s (Knowledge, skills and abilities)
Task (Design, Identity, Interdependence)
Team Size
Functional Diversity
Personality, Values
Propensity to work in a team
Experience
Interpersonal Skills
Organizational Support
Individual Goals
How do we get the inputs we need? Develop and Recruit
7 Traits of Elite Team Leaders
1. They are relentless
2. They play to the limits of the rules
3. They do thankless jobs
4. They communicate in a ‘low-key, practical and democratic way’
5. They motivate through nonverbal displays
6. They know when to stand up for their convictions
7. They are in total control of their emotions

Reframing - A frame is a set of assumptions or beliefs about a situation. On teams, frames

happen automatically and are shaped by each person's past experiences, personality and
individual goals. Research suggests that teams that can resume their task from a
performance orientation will be more effective when it comes to complex or innovative tasks.
Emergent States
- Cohesion
- Team Efficacy
- Collective Affect
- Psychological Safety (Trust)
- Team Faultiness
- Effort
- Social Loafing

Five Stage Model: FSNPA

Forming, Storming, Norming, Performing, Adjourning
How to be a Great Teammate
- Be Authentic: Who you are and what you can do
- Show Respect: Culture, processes, people (everyone has the power to influence the
outcome dramatically)
- Communicate: Teams that engage perform better
- Develop Skills that the team needs, this will earn you respect

Ethics
Ethics: A branch of philosophy that deals with standards of right and wrong.
Standards of conduct that indicate how one should behave based on moral duties and
virtuesarising from principles about right and wrong They:
- Define things we should and shouldn’t do
- Reflect how we should treat one another
- Help guide our behaviour a lot of the time (unless one is a psychopath)
- Underlies our evaluations of the appropriateness of our own and others’ behaviour
Values: Core beliefs or desires that determine attitudes and actions
Value Congruence: Shared systems of values between two entities
Terminal Values: Desirable end states that existence or the goals that a person wants to
achieve during his or her lifetime. (Personal Values, Social Values)
Instrumental Values: Preferable modes of behaviour ir the means to achieving one terminal
values (Moral Values, Competence Values)
Ethical Values: Directly relate to beliefs concerning what is right and proper or that
motivates a sense of moral duty
Unethical Values: A belief or principle rooted in immoral behaviour based on a sense of
wrong
Non-ethical Values: Deals with things we like, desire, or find personally important (The
value itself)
Business Ethics: A form of “applied ethics” wherein ideas from the field of ethics are
applied to business contexts and issues.
Subjective things exist in people’s heads (e.g., I perceive that I’m sitting on a chair. I believe
that torturing people is wrong.
Objective things really exist “out there” in the world, whether or not anyone perceives them.
(e.g., There really is a chair below me; torturing people really is wrong.)
Ethical Subjectivism is the position that there are no objective ethical standards (So,
saying that torture is “wrong” is merely another way of saying “I don’t like torture,” or “It is my
opinion that people shouldn’t be tortured”)
Cultural relativism is the view that, since different cultures have different points of view
about ethics, members of each culture should just do what’s considered right in their own
culture.
Utilitarianism argues that your decisions should always be aimed at creating as much
“happiness” (or satisfaction, or well-being) as possible
Generalizability concerns the rationality of the principle underlying a proposed action

Kohlberg’s Moral Reasoning Framework

Level 1: Self-centred
- Stage 1: Obedience and Punishment (act based on negative consequences)
- Stage 2: Instrumental (whats in it for me?)
Level 2: Conformality
- Stage 3: Conformality (be a good boy/girl)
- Stage 4: Law and Order (do your duty)
Level 3: Principled
- Stage 5: Social Construct/Individual Rights (comprimise for social harmony)
- Stage 6: Universal Ethical Principles (act based on conscience, not laws)

Strategic Decision Making

Govt agencies: Stats Can, IMF, OECD, IEA, BoC, GoC, WTO, Federal Reserve
Primary Data = producers of the original info, it is empirical
Secondary Data = Academics, Journalists, Websites, it is judgemental
Business & govt rely more on primary data
5 Generic Sources of Data
1. Corporation Audited Annual Rpt
- publicly traded firms regulated by OSC in Canada & SEC in USA
- Incl ANY disclosures eg executive speeches
- USA, EU & Canada have most stringent transparency & disclosure laws in
world
- MD&A, Exec salaries, stock options, etc
2. Public Sector Sources
- US & CDN Govt depts eg US BEA, Stats Can, BTS, CIHI
- Finance, Industry, health, transportation, Energy ministries
- Monetary e.g. Fed Reserve, ECB, BoC
- Intl Govt Orgs eg IMF, OECD, WTO, IEA, FAO, UNCTAD, UNDP, ITU, ICAO
3. Private Commercial Databases
 - Bloomberg, Business Source Premier, Mergent
- they source audited F/S, commodity prices
- Used by corps, govt & researchers
- Bloomberg is gold standard
4. Intl Accounting and Consulting Firms
- Deloitte, KPMG, E & Y, PwC,
- McKinsey, BCG, Mercer, Gartner
- Industry studies eg pharma are FREE
- Policy studies eg climate change are FREE
- Contracted by corps, OECD govts, IGOs
5. Quality Business Media
- Bloomberg.com
- Reuters.com
- Wall Street Journal wsj.com
- Financial Times (FT.com); NYT, Globe
- Economist, Forbes, Fortune, Fin Post

Tax Act of Canada: All 2 MILLION corporations must file a tax return for every tax year
even if there is no tax payable
This includes:
● non-profit organizations
● tax-exempt corporations
● inactive corporations