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European Journal of Work and Organizational Psychology Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/pewo20

Implications of differences in psychological contracts for human resource management a

Charissa Freese & Rene Schalk

a

a

WORC at Tilburg University , The Netherlands Published online: 14 Jan 2008.

To cite this article: Charissa Freese & Rene Schalk (1996) Implications of differences in psychological contracts for human resource management, European Journal of Work and Organizational Psychology, 5:4, 501-509, DOI: 10.1080/13594329608414875 To link to this article: http://dx.doi.org/10.1080/13594329608414875

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EUROPEAN JOURNALOFWORKANDORGANIZATIONALPSYCHOLOGY,1996,5(4),501-509

Implicationsof Differences in Psychological Contracts for Human Resource Management Charissa Freese and Rent5 Schalk

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WORC at Tilburg University, The Netherlands This article addresses the role psychological contracts can play in human resources management. Differences between part-time and full-time workers, male and female employees, and supervisors and subordinates concerning the psychological contract are presented. The implications of using the psychological contract in human resources practices are discussed.

THE PSYCHOLOGJCAL CONTRACT For many years the influence of the relationship between employer and employee on the interpretation of human resource practices has been neglected by human resources managers. Today, more and more researchers and consultants use the notion of the psychological contract to explain the variation in behaviour between employees. The psychological contract is defined as “an individual’s beliefs regarding reciprocal obligations” (Rousseau, 1990, p. 390), which arise in the context of the relationship between the organisation and the employee and shape this relationship. The amount of agreement between the expectations of the employee (with regard to reciprocal obligations between the employee and the employer) and the realization of these expectations determines how the relationship is appraised. Expectations are formed through interaction with the organization, through observing others, and through human resource practices (Rousseau & Greller, 1994). Human resource practices convey messages to employees, messages which may or may not be intended by the organization. Career planning, for example, implies that the contract extends over a period of time, even though the organization may have never explicitly mentioned this. Performance standards can be more or less explicit about what is expected from employees. This may lead to different kinds of expectations and behaviours. Some expectations are more explicit than others. Requests for reprints should be addressed to C. Freese, WORC at Tilburg University. P.O. Box 90153,5000LE Tilburg, The Netherlands. ~~

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@ 1996 Psychology Press, an imprint of Erlbaum (UK) Taylor & Francis Ltd

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Employees may have a clear opinion on how much they should earn or how much work they should do, but other expectations are more vague and concern the way someone wants to be treated. These kinds of expectation are usually only revealed when the expectations are not fulfilled. If psychological contracts are violated strong reactions, such as anger, hostility, and aggression occur (Rousseau, 1990). Employees will act as if something is denied or forbidden that was promised in the past (Levinson, Price, Munden, Mandl, & Solley, 1962). On the other hand, indicators for individual acceptance of the psychological contact are job satisfaction, productivity, the intention to stay with the organization (Kotter, 1973; Nelson, Quick, & Joplin, 1991), and the absense of stress experience (Nelson et al., 1991).

AN EMPIRICAL INVESTIGATION Psychological contracts are idiosyncratic, which means that the same events o r practices may be interpreted in different ways by different employees. In this investigation it is hypothesized that it is possible to discern different groups of employees who have different kinds of psychological contract. Because the number of part-time employees is growing fast in the Netherlands (about one out of every four employees works part time at the moment), we decided to study the differences between part-time and fulltime employees. Nkomo and Fields (1994) found that part-time employees prefer different job attributes than full-time employees. A “Good salary” was not in the top five of their list of most important job attributes, whereas “Boss I can work with” was the most important job attribute. Because part-time work is closely related to gender and leadership (part-time employees are more often female and non-supervisory employees), gender and supervision are also taken into consideration. Several researchers found gender differences in work values (Elizur, 1994; Mason, 1994; Singh, 1994). Women, for example, were more interested in being treated with respect and making money, whereas men were more interested in higher job levels, social status, and autonomy. Researchers in six different countries found differences between supervisors and non-supervisory workers in work centrality and valued work goals (Coetsier & Whitely, 1995; Lundberg & Peterson, 1994). The following hypotheses will be tested: 1. Part-time and full-time employees differ with respect to the psychological contract. 2. Male and female employees differ with respect to the psychological contract. 3. Supervisory and non-supervisory employees differ with respect to the psychological contract.

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Sample Employees of six organizations in the Netherlands with activities in the field

or recreation, education, and health care participated in the investigation. The response rate was 40%. The research group consisted of 338 employees (of which 70% were female, 56% held part-time jobs, and 25% had supervisory tasks) with a position with tenure on all levels of the organizations.

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Instruments Since no well-established measure of psychological contracts exists, a questionnaire was developed (Freese, 1994; Van Den Bosch, 1993). This questionnaire was based upon a list of expectations drawn up by Kotter (1973) and on a list of work values derived from the Minnesota Importance Questionnaire (Lofquist & Dawis, 1969). Psychological contract items were classified into five categories: Job content; Opportunities for personal development; Social aspects; HRM policy of the organization; and Rewards (Schalk, Freese, & Van den Bosch, 1995). Respondents were asked whether a certain work-related aspect was sufficiently provided for by the organization and whether the employee felt that it was the task of the organization to take care of this aspect. In Table I some examples of items in the questionnaire and the response format are presented, listed below the corresponding categories of the psychological contract. If a certain aspect was perceived by the employee as not being sufficiently provided for by the organization and the employee felt that it was the task of the organization to do so, there was a bad fit on this item of the psychological contract. In all other cases a good fit was assumed on a certain item TABLE 1 A Sample of Items from the Psychological Contract Questionnaire

Jobcontent Challenging work Opportunities for personal development Opportunitiesfor promotion Social aspects Being part of a team Appreciationfor my work HRM policy Clarity of rules Absenteeism guidance Rewards Bonuses

My organization provides suficiently for this

My organization shouldprovideforthis

YeslNo

YesINo

YeslNo

YeslNo

YeslNo YesINo

YesINo YesINo

YeslNo YesINo

YesINo YesINo

YesINo

YesINo

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in the psychological contract between the individual and the organization. Subsequent analyses were based on difference scores, whereby the degree of fit for a respondent is calculated by the difference between the number of items where the same response is given for the two columns and the number of items where a different response is given. To be able to make some statements about what will happen if a psychological contract is violated, some work-related attitudes and behavioural intentions were also measured. Items on commitment (“willingness to work overtime if the work has to be finished”), intention to turnover (“if I get the chance I will take a job at another organization”), identification with the organization (“1 am proud to tell others I work for this organization”), and absenteeism (“I often come in late”) were for the greater part translated into Dutch from existing questionnaires (Allen & Meyer, 1990; Mowday, Porter, & Steers, 1982; see Freese, 1994).

Results Principal axis factoring confirmed a subdivision of items into five aspects of the psychological contract: Job content (five items, a = .71); Opportunities for personal development (four items, ci = .61); Social aspects (four items, a = .67); HRM policy (16 items, a = .82); and Rewards (nine items, ci = .80). Principal axis factoring on the work-related attitudes and behavioural intentions resulted in the following scales: Identification with the organization (eight items, 01 = 237); Commitment to work and organization (six items, a = .69); Intention to turnover (nine items, cx = .87); and Absenteeism (five items, a = .65). By means of ANOVA we examined whether part-time and full-time employees, male and female employees, and supervisory and non-supervisory employees had significantly different fit scores on the five separate psychological contract variables and the psychological contract as a whole. There was no significant main effect for part-time/full-time work with a = .05. There is a significant main effect of gender on Opportunities for personal development ( F = 4.59, P < .05) and a significant interaction effect between part-time and full-time work and gender on Social aspects ( F = 3.50, P < .05). This means that it makes a difference for male and female employees whether they work part time o r full time with respect to their expectations concerning obligations about Social aspects. Comparisons of the means of different subgroups by means of t-tests revealed the following differences: 1, Female part-time employees differ significantly from female full-time employees with respect to the experienced Opportunities for personal development ( t = -2.03, P < .05). The expectations of part-time employees are fulfilled less than those of full-time employees.

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2. Part-time employees with supervisory tasks differ from full-time employees with supervisory tasks with respect to Opportunities for personal development (t = -2.12, P < .05). Also, the psychological contract as a whole differs among part-time and full-time employees with supervisory tasks ( t = -2.11, P < .05). In both cases, the expectations of part-time employees with supervisory tasks are fulfilled less than those of full-time employees with supervisory tasks.

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By means of linear regression analyses we examined if the kind of psychological contract (good or bad) employees have could predict how much they identified with the organization, how committed they were, whether they intended to leave the organization, and how often they were absent. We found the following relationships: 1. The better the psychological contract, the more employees were committed to their work and organization (p = .21, P = .001). 2. The better the psychological contract, the more employees identified with the organization (p = .70, F = 148.47, P = .OW). 3. The worse the psychological contract, the more employees intended to leave the organization (p = - S O , P = .OOO). 4. There was no relationship between the kind of psychological contract and absenteeism ( P = .97).

HUMAN RESOURCES MANAGEMENT AND THE PSYCHOLOGICAL CONTRACT Part-time and full-time employees did not score differently on the psychological contract. However, if gender and supervisory activities are taken into consideration some differences do arise. Among female employees and supervisors working part time, the expectations regarding personal development are perceived as being less fulfilled by the organization than is the case with female or supervisory full-time employees. Also the psychological contracts of part-time employees with supervisory tasks were on the whole being fulfilled less than those of full-time employees with supervisory tasks. We also found a gender difference: male employees were more dissatisfied with opportunities for personal development than female employees. We also investigated the relationship between the psychological contract and work-related attitudes and behavioural intentions. Possible consequences of violations of psychological contracts as identified in this investigation are job and organizational commitment, identification with the organization, and the intention to turnover, These results imply that if the psychological contract of an employee has been fulfilled less, commitment to work and the organization and identification with the organization is less and the intention to turnover is greater.

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The results mentioned above mean that violation of psychological contracts may have serious effects for the organization and that different groups of employees will respond differently to the same organizational policy. These different reactions to the same organizational action can be explained by exploring the motives of why employees take a certain job. Employees work for different reasons and value certain aspects of the job accordingly. In our research project we found that part-time employees often work because of the social aspects of the job. They value meeting other people and building good relationships. In a study of the introduction of a new planning system in a department store, we found that part-time employees showed a greater decline in job satisfaction than full-time employees. The planning system not only resulted in different working hours, but also in variable breaks. This meant that employees would almost every day have breaks with different people. This made it harder for employees to build good relationships. Of course this was unpleasant for all employees, but the part-time employees were affected more deeply, because the main reason for which they worked could no longer be fulfilled. The same organizational action may affect different aspects of the psychological contract. Thus to compensate for a violated contract differentiated actions must be taken by the organization. All over the western world “the flexible workforce” is an issue. Employers expect employees to change their attitudes and their behaviours. Employees have to learn to deal with customer demands more effectively, they have to be more goaloriented and not just concentrate on their own work, and they have to be willing to work on non-traditional working hours, i.e. start earlier, work evenings and weekends, or work on variable days (Van der Vlis, 1996). Also, life-time employment is not longer guaranteed. Since job security is a very important issue for most Dutch employees, this is a major violation of the psychological contract. As mentioned above, different groups of employees will respond differently to this violation, depending on what they value in their jobs. Therefore they should be compensated in different ways. For example, young people with little job experience could be offered extensive training, so they are able to find another job more easily. Older people may be offered more flexible and higher pension benefits, so they wouldn’t have to worry so much about their income after they retire. Part-time employees, who also take care of their children, could be compensated for working flexible hours by providing a day-care centre that accepts children for variable hours and days. To be able to compensate for violated psychological contracts, the supervisor or HR manager must have insight into the psychological contract of a certain employee or group of employees. In a consultancy project, employees and their supervisors were asked to fill in a questionnaire on psychological contracts. The employees had to describe their own psycha-

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logical contract and the supervisors were asked to describe what they thought the psychological contracts of their subordinates were. The outcomes were strikingly different. All supervisors, for example, supposed that their subordinates wanted to have more responsibility. The subordinates however didn’t want to have more responsibility, because they argued: “You can only lose; you are not compensated for the extra responsibility and when you fail, you get the blame.” In this case and in many others, supervisors don’t have a correct impression of the psychological contracts of their subordinates. The keyword in managing psychological contracts is communication. By communicating with employees an HR manager can find out what the expectations of employees are, how these expectations have been created, and what his or her role has been in the process of psychological contract making. This is vital during the selection phase of employees and just after they have been hired. Giving a realistic job preview is a useful way to communicate the organization’s expectations. Employees may re-evaluate their expectations to create a better fit with those of the organization. The HR manager who knows which aspects are important to the employee can anticipate changes in behaviour if one of these aspects is violated. There are two other occasions when it is crucial to discuss the psychological contract, because it is likely that the contracts will change at these occasions. These occasions are represented in the model in Fig. 1. Psychological contracts are likely to change when the organization changes or when the individual changes. For example, getting a new supervisor or becoming a parent may change the psychological contract. To find out what the psychological contract of a particular employee looks like, three methods can be used: day-to-day interaction, group sessions, and surveys. Day-to-day interaction is a very informal way of getting insight into psychological contracts. By asking employees specifically about what a certain action by the organization means for their feelings and behaviours, important aspects of the psychological contract may be revealed. Also, translating remarks employees make about the organization into psychological contract terms may give insight into the psychological

Organizationalchange Changes in psychological contracts

Changes in workrelated attitudes and behaviours

Individual change

FIG. 1. Occasions to discuss the psychological contract.

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contract. In a consultancy project an employee told us: “The only way to make promotion here, is to push your boss under a train.” Another employee said: “A dispute can only be resolved by waiting twenty-five years, then either you or the other party retires.” These remarks may tell the HR manager something about the psychological contract of the employee. Group sessions and surveys are more formal ways to establish the kind of psychological contract an employee has. Group sessions are very useful when a work team has to start a new project. Expectations and responsibilities can be expressed. Surveys are useful when many employees are involved. For example, if an organizational change has taken place, the psychological contract can be measured to determine how successful this change was in the eyes of the employees, It is important for an organization and its employees to be aware of possible differences in expectations between the organization and (groups of) employees. An expectation about reciprocal obligations is important for employees to fulfil their expectations, this may lead to demotivation. The psychological contract may be a reflection of whether the HRM policy of an organization is effective in reaching its aims. If the HRM policy of an organization takes differences in psychological contracts between (groups of) employees into account, this may lead to a policy that is better in tune with the expectations of employees, and which will have positive effects on attendance, productivity, and turnover.

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Nelson, D.L., Quick, J.C., & Joplin, J.R. (1991). Psychological contracting and newcomer socialization. Journal of Social Behaviour and Personality, 6 , 55-72. Nkomo, S.M., & Fields, D.M. (1994). A field study of demographic characteristics and job attribute preferences of new part-time employees. Journal of Business and Psychology, 8 , 365-375. Rousseau, D.M. (1990). New hire perspectives of their own and their employer’s obligations: A study of psychological contracts. Journal of Organizational Behaviour, 11,389400. Rousseau, D.M., & Greller, M.M. (1994). Human resource practices: Administrative contract makers. Human Resource Management, 3, 385401. Schalk, R., Freese, C, & Van den Bosch, J. (1995). Het psychologisch contract van parttimers en full-timers. Gedrag en Organisatie, 8(5),307-317. Singh, S. (1994). Gender differences in work values and personality characteristics among Indian executives. Journal of Social Psychology, 134,699-700. Van den Bosch, J. (1993). Her psychologisch contract. Unpublished master’s thesis, Tilburg University, The Netherlands. Van der Vlis, M.D. (1996). Her psychologisch contract en organisatieverandering. Unpublished master’s thesis, Tilburg University, The Netherlands.