CHANGING OBLIGATIONS AND THE PSYCHOLOGICAL CONTRACT: A LONGITUDINAL STUDY

Submitted By: Group 2 Madhumitha(30) Shikha(50) Shruti(150)

SANDRA L. ROBINSON MATTHEW S. KRAATZ DENISE M. ROUSSEAU

Psychological Contract

...there is an unwritten set of expectations operating at all times between every member of an organization and the various managers and others in that organization... (Edgar Schein 1965) Mutual obligations Employee Loyalty

Psychological Contract Model

vc = visible contract pc = psychological contract R= relationship references

Source: http://www.businessballs.com/psychological-contractstheory.htm

Psychological contracts 'iceberg' model

Left side of iceberg = employee inputs (and employer needs). Right side of iceberg = rewards given by employer (and employee needs). Above the water level: factors mostly visible and agreed by both sides. Work | Pay = visible written employment contract. Black arrows = mostly visible and clear market influences on the work and pay. Red arrows = iceberg rises with success and maturity, experience, etc., (bringing invisible perceived factors into the visible agreed contract). Below the water level: factors mostly perceived differently by both sides, or hidden, and not agreed. Left side of iceberg = examples of employee inputs, which equate to employer expectations - informal, perceived and unwritten. Right side of iceberg = rewards examples and employee's expectations. Blue arrows = influences on employee and employer affecting perceptions, mostly invisible http://www.businessballs.com/psychological-contractsor misunderstood by the other side.

Source:

Obligation

Belief Implicit or Explicit promises Social exchange relationships Psychological contract

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Transactional Relational

How do perceived mutual obligations change during the first few years of an individual's employment?

Reasons

Development of the exchange relationship coupled with employee's perceptual biases Behaviours of the parties(Social information processing) Norm of reciprocity

Positive imbalance Trust Equity between contributions and rewards(selfserving biases)

Instrumental perspective

How do employers' failures to fulfill their obligations affect employees' beliefs in obligations?

VIOLATIONS AND CHANGES IN OBLIGATIONS

Failure of one party to fulfil its obligations to the other Erode relationship Affected party's beliefs

Different effects upon different types of obligations

Transactional Obligations
Creating inequity in the economic exchange Negative experience Feelings of injustice and betrayal

Hypothesis 1a: Employer violations are associated with a decrease in employee transactional obligations. Hypothesis 1b: Employer violations are associated with an increase in employer transactional obligations.

Contd...

Relational Obligations
socio-emotional

concerns (trust and beliefs in good faith and fair dealing)

Hypothesis 2a: Employer violations will he associated with a decrease in employee relational obligations. Hypothesis 2b: Employer violations will be associated with a decrease in employer relational obligations.

Hypothesis 3: Employer violations will be more strongly associated with change in relational obligations than with change in transactional obligations.