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The Psychological Contract

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mingxuan xu

on 22 August 2013

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Transcript of The Psychological Contract

Iceberg Model
What is it ?
Managing Psychological Contract
Lizzie & Royal
23 AUG 2013
an introduction of the psychological contract
The importance of Psychological Contract Breach
Case study & Discussion
You make
“psychological contracts”
in your head all the time !
how to manage psychological contract
'In simple terms, the sychological contract encompasses the actions employees believe are
expected of them and what response they expect in return from the employer.
' (Rousseau and Greller 1994:386)

'The psychological contract is individual
, shaped by the organization, regarding terms of

exchange agreement
between the individual and their organization.' (Rousseau 1995:9)

'The perceptions of both parties to the
employment relationship
, orgnization and individual, of the
implied in the relationship.' (Herriot and Pemberton 1997:45)

'An employee's
about the reciprocal
between that employee and his or her organization, where these obligations are based on
perceived promises
and are not necessarily recognised by agents of the organization.' (Morrison and Robinson 1997:229)

Deliver on promises
Delivers on promises
'The Deal'
Left side of iceberg = employee inputs (and employer needs).

Right side of iceberg = rewards given by employer (and employee needs).

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).

Blue arrows = influences on employee and employer affecting perceptions, mostly invisible or misunderstood by the other side.

Lead in
(Guest and Conway 2004)
Source: http://www.businessballs.com/freepdfmaterials/psychological-contracts-iceberg-diagram.pdf
•Breakdown of the traditional ‘deal’
–A career in return for loyalty
–A fair day’s work for a fair day’s 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 interest sand concerns of both employees and the organisation
Reasons for Interest in the Psychological Contract
The importance of Psychological Contract Breach
Defining breach and violation
The idea of a breach of the psychological contract is a metaphor taken from legal contracts where a breach is taken to be a less than perfect performance by one of the parties regarding contract terms
(Cheshire, Fifoot, and Furmston 1989)
Violating psychological contract is associated with increased anger, frustration and intentions to quit
(Robinson and Rousseau 1994)
The Consequences of Breach
Things a person might feel, think, and do following psychological contract breach
Q: What is the distinction between breach and violation?
Sarah had been with her company for 
some time and was well respected. 
One day, her boss called her into the 
office to discuss a high profile, high 
level and visible piece of work …
Sarah's Story
Activity :
Managing the contents by communicating promises
- recruitment (Guest and Conway 2002:38)
- informal day-to-day interactions
- induction and initial training
Managing Psychological Contract
Monitoring for early signs of breach
Managing Breach and Fulfillment
levels of
in the organization (Robinson 1996)
Cynical attitudes towards the organization (Johnson and O'Leary-Kelly 2003)
Thinking about, and in some cases actually
, the organization (Robinson and Rousseau 1994)
Reduced psychological well-being
(Conway and Briner 2002a)
Specific moods and
such as feeling anxious, violated, depressed and hurt (Conway and Briner 2002b)
Job dissatisfaction
(Tekleab and Taylor 2003)
(Lester at al. 2002)
Lowering their obligations
towards the organization (Robinson, Kraatz and Rousseau 1994)
levels of
, including self-reported in-role performance (Robinson 1996), supervisor-related in-role performance (Lester et al. 2002), and various organizational citizenship or extra-role behaviors (Robinson and Morrison 1995)
Source: http://www.sturesearch.ch/?p=109
A case study of Southwest Airlines
Three major forms of breach
misunderstandings between the employee and their organization
deliberate reneging
breaches due to circumstances beyond the organization's control
Managing the contents through negotiation
Managing the contents through imposing change
Four stages that the organizations should go through in order to successfully transform psychological contracts: (Rousseau 1998:50)
1. Challenge the old contract
2. Prepare for change
3. Generate the new contract
4. Live the new contract
Redressing breach
Preventing breach from happening
Inferring employees' beliefs about their psychological contract from their displayed emotions
Strategies for reducing misunderstanding:
1. organizations can focus employees' attention on the most important terms of the deal by promoting a common frame of reference (Rousseau 2001)
2. managers and employees could engage in critical self-reflection to reduce the effects of cognitive biases that serve to distort perceptions of the psychological contract (Morrison and Robinson 2004)
Conway, N & Briner, R.B 2005. Understanding psychological contracts at work: A critical evaluation of theory and research. Oxford, UK: Oxford University Press.

Guest, D., & Conaway, N. 1998. Fair­ness at work and the psychological con­tract. London: Institute of Personnel and Development.

Guest, D., & Conway, R. 2002. Communicating the psychological contract: An employer perspective. Human Resource Management Journal, 12 (2): 22-38.

Morrison, E.W. and Robinson, S.L. 1997, “When employees feel betrayed: a model of how psychological contract violation develops”, Academy of Management Review, Vol. 22 No. 1, pp. 226-56.

Morrison, E.W., & Robinson, S.L. 2004. The employment relationship from two sides: Incongruence in employees’ and employers’ perceptions of obligations. In J. A.-M. Coyle-Shapiro, L. M. Shore, M. S. Taylor, & L. E. Tetrick (Eds.), The Employment Relationship: Examining Psychological and Contextual Perspectives: 161-180. Oxford, UK: Oxford University Press.

Robinson, S.L., Kraatz, M.S. and Rousseau, D.M. 1994, “Changing obligations and the psychological contract: a longitudinal study”, Academy of Management Journal, Vol. 37 No. 1, pp. 137-52.

Robinson, S., & Rousseau, D. 1994. Violating the psychological contract: Not the exception but the norm. Journal of Organizational Behaviour, 16, 289­298

Rousseau, D. M. 1989. Psychological and implicit contracts in organizations. Employee Responsibilities and Rights Journal, 2, 121-139

Rousseau, D. M. 1995. Promises in action: Psychological contracts in or­ganizations. Newbury Park, CA: Sage.
Reference List
As the nature of the workplace is changing dramatically, more and more part-time and temporary contracts are signed within organizations.

Do you have any thoughts on how to manage them under the framework of psychological contracts?

(Guest 2002)
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