THE IMPACT OF CONTRACT PERMANENCY AND

PSYCHOLOGICAL CONTRACT ON EMPLOYEE WELL-BEING AND

RELATED OUTCOMES

José M. Peiró*, Hans de Witte**, Francisco Gracia*, Nele de Cuype**

*University of Valencia. Spain**University of Leuven. Belgium

INTRODUCTION: CONTRACT PERMANENCY AND PSYCHOLOGICAL WELL-BEING

• Job flexibility is one of the ways companies use to adapt to global competition

• Temporary employment is a form of numerical flexibility since it concerns the fluctuation of the number of employees who do not actually belong to the company

• Effects of contractual flexibility on employees. In the literature they are viewed mainly as problematic based on several theories: Deprivation theory (comparison between primary and secondary labour market), psychological contract and job stress theory

INTRODUCTION: CONTRACT PERMANENCY AND PSYCHOLOGICAL WELL-BEING

• Temporary employment. Can it be used as an ‘objetive’ indicator of job insecurity?

• If this would be the case and it has a negative impact on well being, temporary workers should present lower levels of job satisfaction, life satisfacction and work self efficacy and higher levels of proensity to leave.

• However, results from the literature are not unequivocal. Revision of 24 studies on temporary employees from the point of view of their occupational health and safety found a negative association 14 out of 24 (Quinlan et al. 2000).

INTRODUCTION: THE ROLE OF VOLITION

• Under certain circumstances flexibility is also of interest for employees and produces benefits for them.

• Volition of flexible types of contract could eliminate the negative effects of temporary contracts on psychological well being.

• Thus, control of volition is foreseen in our study, when testing the effects of contract flexibility on well-being.

INTRODUCTION: PSYCHOLOGICAL CONTRACT AND WELL-BEING

• Psychological contract (fairness and trust relationship) is expected to have a positive relation to well-being and self-efficacy.

• Reseach has demonstrated that violation of PC are associated with a variety of negative outcomes.

• However, no much research is available on the effects of psychological contract (fairness and trust) on psychological well being

INTRODUCTION: MODERATING ROLE OF PSYCHOLOGICAL CONTRACT.

• One critical question of our study about the effects of temporary contract on psychological well being is the one related with the moderating role of psychological contract.

• Does the PC buffer the negative effects of temporary, non preferred, contracts on psychological well being?.

• If relationships between the employee and the company are perceived as fair and trustful, we expect that the negative effects of the flexible contract be buffered

AIMS OF THE STUDY

• To set any association between types of employment contract and employee well-being and related outcomes

• Assess the relationship between the state of the psychological contract and employee well-being and related outcomes

• Test the moderating role of psychological contract between type of contract and employee well-being and related outcomes

METHOD: SAMPLE

• 1675 employees – from 7 countries: Belgium (37.9%), Germany (12.1%), Israel

(3.3%), Netherlands(3.2%), Spain(22.8%), Sweden (9%), U.K.(11.7%).

– 3 sectors: Health care (35.5%); Retail (19.6%); Temporary Agencies (21.3%). Others (8.2%)

– Type of contract• Permanent (69.7%)• Flexible contracts (fixed term, hourly based. Probation, other) (30.3%)

– Sex: Male (33.7%) Female (66.3%)– Age: 35.02 (Sd= 10.21)– Education: Primary school (6.5%) Lower secondary (16.3%)

Upper secondary (25.7%) College-university (no degree) (27.3%) College degree or higher (24.1%)

METHOD: VARIABLES• Sex: (0) Male; (1) Female• Contract: (0) Temporary; (1) Permanent • Volition: 3 items (Ellingson, 1998; Krausz (p.c. 2002)

(alpha .73)• Psychological contract, Trust: 4 items (constructed)

(alpha .78)• Psychological Contract, Fairness: 4 items (constructed)

(alpha .84)• Job satisfaction: 5 items (Price, 1997) (alpha .82)• Life Satisfaction: 6 items (alpha .83) • Turnover intention: 2 items (Price, 1997) (alpha .72)• Work- related Self-efficacy: 6 items (Schyns & Collani,

2002) (alpha .86).

RESULTS: descriptive

N Mean SD Age 1644 35.02 10.21 Sex 1669 0.66 0.47 Volition 1652 3.60 1.00 Type of contract 1654 0.70 0.46 Trust 1667 4.09 1.32 Fairness 1668 4.05 1.42 Job Satisfaction 1673 3.88 0.77 Life satisfaction 1670 5.32 1.00 Turnover intention 1656 2.14 0.95 Self-efficacy 1673 4.72 0.78

RESULTS: correlations 1 2 3 4 5 6 7 8 9 10 1.Age

1

2.Sex

-0.05* 1

3.Volition

0.24** 0.05* 1

4.Type of contract

0.33** 0.03 0.34** 1

5.Trust

-0.001 0.04 0.14** -0.01 1

6.Fairness

-0.008 -0.04 0.18** -0.06** 0.65** 1

7.Job Satisfaction

0.11** 0.11** 0.19** 0.07** 0.30** 0.25** 1

8.Life satisfaction

-0.02 0.08** 0.09** 0.02 0.13** 0.13** 0.27** 1

9.Turnover intention

-0.01 -0.02 0.113** 0.02 -0.25** -0.25** -0.40** -0.09** 1

10..Self- efficacy

0.16** -0.02 0.10** 0.03 0.05* 0.04 0.25** 0.26** -0.06* 1

RESULTS: job satisfaction

Step 1 Step 2 Step 3 Step 4 Age 0.061** 0.074*** 0.080*** 0.079*** Sex 0.098*** 0.099*** 0.099*** 0.099*** Volition

0.221*** 0.239*** 0.160*** 0.163***

Contract

-0.050# -0.014 -0.016

Trust 0.219*** 0.168*** Fairness

0.083*** 0.060

Contract*trust 0.060 Contract*fairness 0.025 R2 .070*** .072*** .145*** .147*** R2 .002# .073*** .002

RESULTS: life satisfaction

Step 1 Step 2 Step 3 Step 4

Age -0.047# -0.047# -0.044 -0.044 Sex 0.062** 0.062** 0.064** 0.066** Volition

0.070** 0.070** 0.027 0.030

Contract

0.000 0.021 0.021

Trust 0.078* -0.027 Fairness

0.080* 0.144**

Contract*trust 0.133* Contract*fairness -0.087 R2 .010*** .010** .029*** .032*** R2 .000 .019*** .003#

RESULTS: LIFE SATISFACTION Interaction contract*trust

5,00

5,05

5,10

5,15

5,20

5,25

5,30

5,35

5,40

5,45

5,50

Bajo Trust AltoTrust

Life

Sat

isfa

ctio

n

PermanentTemporal

RESULTS: Propensity to leave

Step 1 Step 2 Step 3 Step 4 Age -0.048# -0.074** -0.080*** -0.078** Sex -0.054* -0.058* -0.063** -0.062** Volition

-0.227*** -0.262*** -0.171*** -0.173***

Contract

0.100*** 0.053* 0.056*

Trust -0.170*** -0.147** Fairness

-0.165*** -0.126**

Contract*trust -0.025 Contract*fairness -0.047 R2 .063*** .071*** .156*** .158*** R2 .008*** .086*** .001

RESULTS: Self-efficacy

Step 1 Step 2 Step 3 Step 4 Age 0.149*** 0.165*** 0.166*** 0.163*** Sex -0.004 -0.002 -0.004 -0.005 Volition

0.085*** 0.107*** 0.098*** 0.100***

Contract

-0.061* -0.059* -0.062*

Trust 0.053 0.047 Fairness

-0.013 -0.089

Contract*trust 0.000 Contract*fairness 0.095 R2 .036*** .038*** .040*** .043*** R2 .003* .002 .003

DISCUSSION AND CONCLUSIONS

• Volition plays a significant and positive role in predicting psychological well-being. Having a contract of preference, be it temporary of permanent, has a possitive effect on job and life satisfaction, self-efficacy and negative on propensity to leave

• More research is needed to explore the different effects of distinct types of temporary contracts on employees’ well-being

DISCUSSION AND CONCLUSIONS

• Temporary contracts in our sample do not have a negative effect on psychological well being, and in some cases have a positive one. Two issues for further study– Types of temporary contracts in different countries– Stability in temporary contracts– Control for other job characteristics and HR practices in

permanent and temporary jobs

DISCUSSION AND CONCLUSIONS

• Psychological contract positively contributes to job satisfaction and life satisfaction and reduces propensity to leave. It has no impact on self efficacy

• The interaction between contract and trust has only be found in the case of life satisfaction.– Trust plays a significan role in enhancing life satisfaction

in permanent employees.• In order to contribute to life satisfaction it is not

enough to have a permanent job it is also needed to experience trust in the relations with the employer.