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HUMAN RESOURCE (HR) ASSIGNMENT SAMPLE

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TABLE OF CONTENTS

1. Introduction.....................................................................................2

2. Phases in Psychological contract......................................................3

3. Consequences of broken psychological contract...............................4

4. How the psychological contract came into existence?......................4

5. Measurement of psychological contract............................................5

6. Bridging the Employee-employer Relationship..................................5

7. Impact of psychological contract.......................................................7

8. Conclusion.........................................................................................8

9. References.........................................................................................9





1. Introduction: Psychological contract and the organizations

“Psychological Contract” has become increasingly significant feature of workplace relations

and deeper human behaviour. It was first used in early 1960s but gained momentum after

the economic downturn which occurred in early 1990s. It is defined as the perceptions of

two parties, employee and employer and their mutual obligations towards each other. These

obligations can be informal and imprecise. They can be inferred from the actions and from

things that have happened in past, or from statements of the employer .Some of these

obligations can be taken as 'promises' and „expectations‟. The more significant thing is that

they are considered by an employee as a part of a employer- employee relationship.

Therefore, psychological contracts are defined as the philosophy which the individuals hold

about the terms & conditions of exchange contract between them and their business groups.

Primarily, Psychological Contract is the relationship involving an employer and employees,

and distinctively concern joint expectations of inputs and outputs. This mentions the

employees‟ views in relation to what they look forward to from the establishment and also

what they owe to the organization. (Cullinane, 2006)

Psychological contract is completely different from a legal contract .The latter in many

cases, offers only limited representation of an employment relationship. On the other hand,

psychological contract takes the reality of situation as it is perceived by the two parties.

Hence, psychological contract is far more influential than a formal contract. It is this

psychological contract which efficiently tells employees what they should do to meet their

bargain and also, what to expect from their respective jobs.

Simply, Psychological Contract balance between:

In what way, the employee is being treated by employer, and

What employee put into his job for the organization

At the core, Psychological Contract is a philosophy and not a method, tool or formula. This

reflects its significant and ever-changing dynamic nature. The method in which we define,

understand and manage Psychological Contract, and apply the underpinning philosophy in

our dealings - inside or outside the work - in essence defines our civilized outlook. Fairness,





Compassion, trust, respect, empathy, virtues like these exemplify the true meaning of

Psychological Contract. (Ven, 2009)

2. Phases in Psychological contract

Early phase

As the psychological contracts deals with the employee‟s beliefs about mutual obligations

amid themselves and employers, it can be viewed as the grounding of employee-employer

relationships . Basically, individuals generally shape their outlook from two major sources

which includes their communications with their organisational representatives and

perceptions of organisation‟s culture. In the “anticipatory socialisation,” at the time of

recruitment, organisational recruiters and human resource professionals make detailed

promises to workforce about what could be expected from a organisation Secondly,

employees‟ perceptions of organisation‟s culture and the standard functional procedures

shape the employees‟ viewpoint as regards to psychological contracts. Recruitment and

early years at the organizations shape the psychological contract of the employees.

(DelCampo, 2007)

Development

In first four to six months after becoming the part of organisation, the simple psychological

contract is brought to reality. According to a study, newcomers generally have an

exceedingly positive view about the labour- employee relationship. Their preliminary

perceptions could be characterised by tall expectations towards their employer and lesser

expectations from themselves. As new employees gain more and more experience with the

organisation, they try get used to the environment and they settle their expectations close

to reality.

Dimensions

Specific promises which are made by both the parties on commonly accepted promises

based on the common obligations of employees and employers formed the basis

psychological contract. Though, even if the organization has not made definite promises,

every member of staff will welcome fairness, clarity, and good communication. On the other





hand, every employer appreciates employees doing good work and dealing with confidential

data properly. In addition these common obligations, psychological contract are further

augmented with the written agreements which include employment contracts.

There are number of things which affect the psychological contract in an organization.

Firstly, the degree to which organization take on people management practices directly

impact the psychological contract. Secondly this contract is based on workforce/ employee

sense of trust and fairness and also on their conviction that the employer is honouring the

contract between them. Hence the business organizations where psychological contract is

positive, better employee commitment and satisfaction is there which have a positive

impact on business. (Anon, 2010)

3. Consequences of broken psychological contract

In all cases this psychological contract must be respected and if it gets broken then it could

impact:

job satisfaction

commitment of an employee

Employee engagement.

Hence the manger should understand that employment relationships between employer and

employee may deteriorate in spite of the management‟s best efforts. Hence it is better to

prevent the breach than to repair the damage afterwards. In cases in which, breach can‟t be

avoided it is better to negotiate.

4. How the psychological contract came into existence?

Changes in workplace are majorly responsible for it. These include:

More employees doing part-time work.

Organisations downsizing coupled with delivering

Technology, markets and products changing constantly.

Finance and technology becoming less worth-while than human resources

More fluid organizational structures





The outcome of all these changes is that employees are widely recognized as main business

drivers. The ability of businesses to add value lies on front-line employees or 'human

capital'. Organizations who wish to be successful have to get most out of this resource. In

order to achieve this, organizations have to know what employees expect from the

organization and their work. The psychological contract presents a framework for monitoring

employee priorities on these dimensions which tends to influence the performance.

(Coyle,2007)

The traditional meaning of the psychological contract is described as commitment by the

employee in lieu of job security offered by the employer. The continuing and increasing

impact of globalization have destroyed the basis of traditional deal as the job security is no

more there. The new deal is set on an offer of its fair pay and also on treatment by the

organization plus the opportunities based on training and development.

5. Measurement of psychological contract

A psychological contract could be measured by one of the following methods:

1. Psychological Contract Inventory – these are the scales for the measurement of

Short term psychological contract. (This is basically a type of the transactional contract),

Security (type of the Balanced contract), performance requirements contract (this is a type

of balanced contract), Loyalty contract (this is a type of relational contract), Career

Development (internal and external) (This also is a part of the balanced contract),

(Rousseau, 2000; vers.3).

2. M_DOQ 10 i.e. MAJER_D'AMATO ORGANIZATIONALQUESTIONNAIRE 10 – This is

a test which takes into account 10 factors to get an idea about the employee‟s perception of

the organization. These 10 factors include satisfaction. Development, Team, Autonomy, Job

description, Communication, Job involvement, Reward, Fairness, Leadership, Innovation;

3. Quality System (ISO9000:2001) provides a scale to quantify the satisfaction of the

employees in a particular organization. The satisfaction level is calculated by a scale which

has 6 dimensions that includes relation with others, general satisfaction, organisational and

environmental features, training satisfaction, equipments available, professional role). After





this survey the coordinator also interview the employees on perception. After the analysis,

all the data is given to a group and ultimately conclusions are validated by employees

themselves as well by the coordinators.

6. Bridging the Employee-employer Relationship

Every organization has some responsibilities towards its employees. If the organization fulfil

these promises then it could lead to huge amount of employee satisfaction .Below are the

some of the promises made by the contemporary organization to its employees:

1) Development of Career - Organizations should give all the possible opportunities to

the employees for their development within the organizations. Their efforts should be

recognized and there should be ample opportunities for the promotion.

2) Good Job Profile - The job offered by the organization should be challenging and

interesting. Job should not be monotonous and employee should be given continuous

challenges to preserve their interest in the job.

3) Good work Culture – The organization should offer an environment with the good

working environment. There should be good communication and cooperation within a group

4) Good Compensation – employees of the organization should be offered an appropriate

compensation according the jobs they do. Incentives should be given for high

achievements.

5) Work and private life Balance- there should be proper understanding of the personal

situation of an employee and in some situations flexibility in working hours could be

provided. (Lars, 1996)

Psychological contract in contemporary organization is a two –way role. Following are the

kind of commitments which could help in bridging the employee- employer psychological

contract:





Employees Employer

Hard Work Compensation in accordance with

performance

Upholding the company reputation good training and development

Punctuality Opportunities and promotion

Loyal Recognition

Flexible An attractive package

Honest job security

Innovative safe environment

According to a research while organizations have de-layered and reduced the number of the

middle management posts many still continue to offer good careers and therefore most

employees have adjusted the expectations o downwards. Many of them will be increasingly

satisfied if they believe and know that their organizations are handling issues about their

promotion fairly.

The recession had increasingly negative impact on the employee attitudes, especially with

regard to job satisfaction and security. This suggests, managers will have to face great

challenge to restore and maintain employee‟s commitment as corporate emerge from the

recession. A positive psychological contract can greatly help as it supports a high level of

employee involvement. However this concept of involvement goes beyond the employees‟

attitudes and assets the need for managers to draw out the employees' behaviour.

Managers should manage expectations, through the fair systems of performance

management which accounts for regular employee appraisals. Good HR practices

communicate important messages about what the organisation seeks to offer .Employee

attitude surveys are effective tool for exploring what employees think and feel about the

organization on a range of issues affecting them at the workplace. In times of rapid changes

senior executives and employees hold different opinions. Two-way communication, formal

or informal, is important to form a reality check and act as a basis for building the mutual

trust. (Guerrero, 2005)





7. Impact of psychological contract

The psychological contract may have the following implications

Fairness of Process: employees want to identify and understand that their welfare

will be taken care when vital decisions are made. They would like respect and

consequently they are more contented with their jobs.

Communications: an efficient two-way conversation between employer and

employees is a compulsory means of giving importance to employee‟s „voice‟.

Management style: organisations managers can no longer manage business 'top

down' - they actually have to take up „bottom up' approach. Critical information is

known by employees from their communications with customers and suppliers.

Expectations managing: organizations need to make apparent to what the

employees can expect from their job. Managing expectations is particularly

necessary when bad news is probable.

Measuring attitudes: organizations should monitor employee attitudes on regular

basis as it is a means to identifying where action is needed to improve the

performance.

Therefore, Breach of this psychological contract can critically spoil the employee-employer

relationship. It is not always possible to avoid a breach but damage is contained if

managers and senior executives are open with the employees about the issues which need

to be addressed.(Mao, 2008)

8. Conclusion

Public attention to psychological contract has been infused by uncertainties about job

security. Organization should make certain that trust and faith remains with the workforce

i.e. clarifying what is on the offer, honouring commitments, or if required explaining what

has gone wrong, and monitoring the employee attitudes on a habitual basis. Employee

engagement strategy can make available a useful structure for this point. (Feldman, 1999)





The psychological contract does not provide a comprehensive model of employee/ workforce

associations but it offer key clues about how to uphold employee commitment. Amid the

decline in collective bargaining more attention is focused on dealings between the

organisation and the employee. The psychological contract reinforces the need for the

managers to turn out to be more efficient in communication and the consultation, which

helps in adjusting potential and if required renegotiating the contract.

The psychological contract offers a realistic foundation for 'soft HRM' or behaving as a

superior employer. It offer a viewpoint based on insight from the psychology and also from

the organisational behaviour rather than economics. It emphasises that the employment is

a association in which the joint obligations of the employer and employees may be vague

but have nonetheless to be respected. The cost of failing to fulfil or handle expectations may

cause serious damage to the relations and to the organisation. (Thomas, 2001)

9. References

1. Coyle, S. (2007). The employee-organization relationship: where do we go from

here? Human Resource Management Review. Vol 17, No 2, June. pp166-179.

2. Cullinane, N. (2006). The psychological contract: a critical review. International

Journal of Management Reviews. Vol 8, No 2, June. pp113-129.

3. Ven, C. (2009). The Psychological Contract; a big deal? Accessed on 14th August

2010 from: http://www.internationalmta.org/Documents/2004/2004024P.pdf

4. DelCampo, R. (2007) "Understanding the psychological contract: a direction for the

future", Management Research News, Vol. 30 Iss: 6, pp.432 – 440.

5. Anon, (2010). The psychological contract. Accessed on 12th August 2010 from:

http://www.cipd.co.uk/subjects/empreltns/psycntrct/psycontr.htm

6. Lars, K. (1996). Organizational employment versus self-employment. Accessed on

11th August 2010 from : http://www.allbusiness.com/human-resources/594122-1.html





7. Guerrero, S. (2005). Measurement of the Psychological Contract in a French Work

Context. Accessed on 14th August 2010 from:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1635325

8. Mao, H. (2008). Evading Tactics of Psychological Contract Violations. Accessed on

12th August 2010 from:

http://www.ccsenet.org/journal/index.php/ass/article/viewFile/784/758

9. Feldman, D. (1999). The impact of psychological contract violations on exit, voice,

loyalty, and neglect. Accessed on 11th August 2010 from:

http://www.accessmylibrary.com/article-1G1-55438376/impact-psychological-contract-

violations.html

10. Thomas, B. (2001). An Investigation Of The Relational Component Of The

Psychological Contract Across Time, Generation, And Employment Status. Accessed on 11th

August 2010 from : http://www.accessmylibrary.com/article-1G1-74942455/investigation-

relational-component-psychological.html

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