The Psychological Contract BUA5BAM

The PsycHOlogical Contract

BUA5BAMAnthony SmolicChris MurphyRoy SharmaStephen WoosterThe PsycHOlogical ContractTrust & the Psychological ContractPsychological Contract?What is a Psychological Contract?

Contract BreachFail to deliver on perceived promise.Could result in:negative response reduced loyalty, Decrease in productivity, Commitment Lack of motivation.

Perception VS Reality More of a Gentlemans agreement as suppose to legally binding.Ongoing as suppose to for a term in a written contract.Fills the perceptual gaps in employment relationship and shapes day-to-day employee behaviour in ways which might be hard in a written agreement.

TrustRelianceonandconfidenceinthetruth,worth,reliability,etc,ofapersonorthing:faith (Jackson.K, 2011, Pg. 12 of 354).

The PsycHOlogical ContractCritical Nature of the contract between n organisation and its employeesDefinitionThe psychological contract is individual beliefs, shaped by the organization, regarding terms of an exchange arrangement between the individual and their organization.

(Rousseu, DM 1995, p. 6)Five key areasBeliefs and Perceptionthe psychological contract is based on beliefs or perceptionsImplicitythe psychological contract is implicit rather than explicit. It is thought to be inferred from the promises made or implied by the organisation or the employee. Perceived vs Actualthe psychological contract is based on perceived agreement rather than an actual agreement. Exchange and Reciprocitythe psychological contract is based on an exchange and is therefore founded on the principle of reciprocity. Evolutionthe psychological contract is ongoing and evolving. Employee expectsSafe work environmentJob securityAdequate trainingOrganisation expectsEmployee to work contracted hoursHonestyLoyalty

The PsycHOlogical ContractManagements influence on the psychological contract Anything managers do or are perceived as doing affects the interests and performance of employees and will modify psychological contracts.

(Randmann, 2013 pp.126).Recruitment and Performance AppraisalsEffective recruitment and performance appraisal techniques.eg: behavioral interviewing

Rousseau (1995), managers as agents of the organisation are directly responsible for an employees psychological contract.

Human Resource Strategies: Follow the LeaderManagers as the link between HR strategies and employee awareness.

Katou & Budhwar (2012), mangers mediate the relationship between the psychological contract and organisational performance.

Psychological contract violations.eg: managers actively seeking new roles.

Company violations were significantly correlated with manager violations. (Ballicci, 2003 pp. 5)

My managers influence on my Psychological ContractPre-Social Rule BreakingThe bi-product of PSRB on an employees psychological contract.

Paul et al (2000) argue that PSBR can at times lead to a violation in the psychological contract and feelings of anger by employees.

The PsycHOlogical ContractHow a clearly understood contract results in higher team performanceHigh Performing TeamsDoes the clearly understood psychological contract result in higher team performance levels?

Need for employers to understand the value of this on their organisationCommitment Commitment DEFINITION

Commitment is different from Motivation & Attitudes

Results in effective workforce and high performing team

Three-Component Model (TCM)Observation of characteristics displayed in individuals

Grouped into three groups based on common observationsAffectiveContinualNormative Affective CommitmentStrongly related to turnover and job performance

Commitment towards targets (organisational or personal)

Strengthen in an environment promoting flexibility and participation within their teamContinual CommitmentTenure in an organisation can lead to increased belief & loyalty between employers & employees

Low staff turnover helps build productivity and efficiency within the team

Strong performance occurs as a result!Normative CommitmentCommitment to organisational goals tied with personal achievement

Strong performance generated from meeting obligations of the psychological contract

Performance driven by understanding the WIFM

Results of Strong CommitmentResults are often quite specific including:

Lower Staff TurnoverReduced Absenteeism Improved Performance

Other benefits:Knowledge RetentionReduced training costsGenerational DifferencesBaby BoomersLess of an emphasis placed on psychological contract to increase performanceGeneration X Considered in line with factors like work life balance and job security and autonomyGeneration YLower commitment to the organisations High staff turnover when the contract is not metResults & ActionsA clear understanding of the psychological contract can lead to strong returns via

Increased participation Improved productivity Engaged workforce

Thankyou!Any questions