The Psychological Contract and Good Employment Relations

1. The Psychological Contract and Good Employment Relations University of London David Guest King’s College, London

2. Features of Contemporary Employment Relations • Unions sometimes marginalised at the workplace despite legislation • Rise in individualism/individual negotiation • Greater concern for individual employment rights – equal opportunities • Blurring of boundaries of work eg location • Management increasingly in control • Emphasis on human resource management • Persisting issues of trust and fairness

3. Some Reasons for Change in Employment Relations • Workplaces getting smaller • Flexibility and fragmentation of the workforce • Pervasiveness and urgency of change • Feminisation of workforce and growing interest in issues such as work-life balance • Influence of American culture/individualism at work

4. ‘Old’ IR ‘New’ IR Rousseau’s Framework Idiosyncratic Positional Standard

5. The Need for a New Conceptual Framework • The traditional collective model is less relevant in many workplaces • Need a model that can accommodate rise in individualism and flexibility • Need a model that can address core issues in the employment relationship of trust, exchange and control • The psychological contract can meet these requirements

6. Reasons for Interest in the Psychological Contract • 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 interests and concerns of both employees and the organisation

7. What is the psychological contract? The Transactional Deal The Implicit Deal The Inferred Deal

8. Defining the Psychological Contract The state of the psychological contract is concerned with whether the promises and obligations have been met, whether they are fair and their implications for trust. “The perceptions of both parties to the employment relationship, organization and individual, of the reciprocal promises and obligations implied in that relationship”

9. The Psychological Contract Framework The Good Employer The High Quality Workplace Satisfied And Productive Workers The Deal

10. The Deal Employer Delivers on Promises Employees Deliver on Promises Fairness Trust Commitment Well-Being Performance

11. Framework for applying the psychological contract to the employment relationship Contextualand Background Factors Policy and Practice State of the Psychological Contract Psychological Contract Outcomes Attitudinal Consequences: Organizational commitment Work satisfaction Work-life balance Job security Motivation Stress Individual: Age Gender Education Level in organisation Type of work Hours worked Employment contract Ethnicity Tenure Income Organizational: Sector Size Ownership Business strategy Union recognition HR policy and practices Leadership/ Climate Employment relations Quality of workplace Reciprocal promises and obligations Delivery of the deal Trust Fairness Behavioural Consequences: Attendance Intention to stay/quit Job performance OCB

12. The Good Employer Progressive Human Resource Practices The Good Employer High Quality Workplace Climate of Positive Organisational Support Flexible Employment Practices Employee Partnership

13. The High Quality Workplace • Reasonable demands/manageable workload • Some personal control over work • Support from supervisors and colleagues • Positive relationships at work • A reasonably clear role • Involvement in changes affecting you

14. The State of the Psychological Contract Overall, to what extent has the organisation kept its promises and commitment to you? % fully 45 partly 49 not at all 6

15. The State of the Psychological Contract Do you feel fairly paid for the work you do? % Yes, definitely 30 Yes, probably 30 No, probably not 19 No, definitely not 21

16. The State of the Psychological Contract To what extent do you trust your senior management to look after your best interests? % A lot 25 Somewhat 34 Only a little 23 Not at all 18

17. Exploring the Links High quality workplace .40 Human Resource Management .35 State of the psychological contract .44 .12 Effective supervisory leadership .37 Flexible Practices .08 .47 .16 Number of promises .12

18. Exploring the Links cont… Organisational commitment .32 Job satisfaction .28 Work-life balance State of the psychological contract .13 .24 Life satisfaction .19 Loyalty to supervisor .16 Excitement .11 Organisational Citizenship -.09 Intention to quit

19. The Employers’ Perspective • Survey of 1306 senior UK HR managers • 36% said they used the psychological contract concept to help them manage employment relations • Senior managers acknowledge that the exchange is not always fair – and favours the employer • Union recognition associated by managers with a range of negative outcomes. More of a hindrance than a help

20. The Policy Challenges • Consider actively managing the psychological contract as a means of maintaining effective employment relations • Recognise it is a two-way deal • Address the outer context of human resource management and employment relations policy • Address the inner core of “the deal” at the local level