Surprises in Psychological Contract Research: I-deals Revealed

1. Surprises in Psychological Contract Research: I-deals Revealed Denise M. Rousseau Carnegie Mellon University rousseau@andrew.cmu.edu 1-412-268-8470 (voice) 1-412-268-5338 (fax) www.andrew.cmu.edu/user/rousseau

2. Definitions • Psychological Contract: Beliefs individual worker (or employer) holds regarding obligations in employment. • Idiosyncratic Deal (I-Deal)–specific terms of employment bargained for by a given worker.

3. Some surprises in psychological contract research • Seldom find significant between-unit differences in psychological contracts • In contrast, related measures do yield between-unit differences (e.g., POS, Justice-PJ/DJ/IJ) • Workers in same department, reporting to same boss, have different psychological contracts

4. Possible Explanations for Absence of Between-Work Unit Differences • Measurement Error (NO. Robust pattern across Spanish, Chinese, and English measures.) • Psychological contract is a highly subjective experience (NO. Sels et al. find position, level, job class effects in Belgian workforce. Dabos & Rousseau find manager-worker agreement.) • Individual Difference Effects (YES. Johns et al. find Big 5 personality effects.)

5. Possible Explanations cont’d • Social Influence (SOMETIMES. Ho et al. and Dabos and Rousseau find network position and social ties impact psychological contracts. Effects are weaker as organization becomes more structured.) • Cohort Effects (SOMETIMES. De Vos et al. find effects of time of hire; other studies don’t.) • Managers Manage Individuals Differently (YES. LMX literature, Dabos and Rousseau find worker-manager agreement but not within-unit agreement.)

6. Implications • Organization-Level Effects on Psychological Contract (Tied to HR practices, degree of systematic implementation. Organizations include formal and informal hierarchies and individual psychological contract affected by his/her relative standing. Accounts for Cohort and Social Network effects.) • Individual-Level Effects on Psychological Contract (Individuals seek and are rewarded with different psychological contracts. Accounts for Individual Difference effects.) • Interaction Effects (Worker/Organization or /Manager) (Worker and employer mutually influence the exchange, creating cycles of inducements and contributions that across workers)

7. THE EMPLOYMENT ARRANGEMENT “COMPENSATION BUNDLE” Idiosyncratic Position-Based Standardized

8. THE EMPLOYMENT ARRANGEMENT “BUNDLE” Down plays status difference Idiosyncratic Position-Based Signals common fate and identity Standardized

9. THE EMPLOYMENT ARRANGEMENT “BUNDLE” Rewards must be bargained for Idiosyncratic Employees have few common rewards Employer is not generous Position-Based Standardized

10. Studies • Rousseau, Ho & Kim: 220 MBAs reporting on their last employer • I-deals and their relationship to Psychological Contract Inventory measures • Rousseau & Kim: 166 hospital workers • I-deals and employment relationship (Social and Economic Exchange, LMX, POS)

11. Examples of I-deals(Rousseau, Ho & Kim) Advancement Career development :Taking off work two hours early each Friday to attend advance degree program Visibility: Junior employee negotiates contact with corporate executives Job Content Interesting work: Working on one large project rather than many small ones  Workload: Reduced work volume to help worker cope with job stress Time Flexible work hours :Shift from full to part-time work Leave of absence: Unpaid time off to pursue personal hobby

12. Ex Ante HIRING Ex Post PERFORMANCE Ex Post RETENTION/ TERMINATION Recruiting I-deals Proactive I-deals Threat-Based I-deal Types of I-deals Timing • Employee Negotiates on the Job • Basis: • 1. Relationship Quality • 2. Employer Dependence on • Worker • 3. Opportunity afforded by transfer, promotion, etc. • Content: Widely diverse--Economic, Socioemotional, two-sided • Basis: • 1. Market-power of Worker • 2. Employer Dependence on Worker • Content: Economic • Worker Negotiates at Hire • Basis: Market Power of Worker • Content: Economic (money/hours,duties). Worker Initiates

13. Which I-Deals Impact Psychological Contract?

14. Which I-Deals Impact Psychological Contract?

15. Timing of I-deals • Ex Ante (at Hire): Worker and employer bargain Attribution: Market value • Ex Post (on the job) • Proactive: Worker seeks out special arrangement • Reactive: • Opportunity: Employer creates opportunity for worker to request I-deal (transfer, performance review, job change) • Equity Turn-taking: Worker makes special contribution and employer now owes (“work yourself out of a job”) Attribution: Quality relationship

16. I-deals and the Employment Relationship: Impact of Timing and Content(Rousseau and Kim) Setting: Tertiary care hospital in northeastern United States (#beds: 154) Method: Interviews, survey, and archival data Survey Sample: 166 employees (nurses, therapists, clerical, etc.) Response rate : 45% (350 total employees) Demographics: Ave. Age 42, Ave. LOS 7 years, 88% Female, 76% Fulltime

17. Hypotheses H1:Ex Ante Negotiation is positively related to Ex Post Negotiation H2: Ex Post Negotiation is positively related to belief that employment relationship is Social Exchange H3: Economic-content I-deals are positively related to belief that employment relationship is an Economic Exchange H4: Relational I-deals are positively related to belief that employment relationship is a Social Exchange. H5: Ex Post Negotiation is positively related to POS. (a) POS will mediate the relationship of Ex Post Negotiation with Social Exchange (b) H6: Ex Post Negotiation will be positively related to LMX.

22. Final model and path coefficients Ex Ante Negotiation .32*** Ex Post Negotiation .21*** I-Deal 6 .23*** I-Deal 1 I-Deal Development .20*** I-Deal Flexibility I-Deal 7 I-Deal 2 I-Deal 8 .21*** I-Deal 3 .25*** Leader Member Exchange I-Deal 4 I-Deal Workload .16** .14*** I-Deal 5 .39*** -.15* Perceived Organizational Support Economic Exchange Social Exchange .81*** -.41***

23. Structural Model Comparisons

24. Person-Specific Arrangements Worker Value to Employer Idiosyncratic “Negotiated” Unauthorized “Usurped” Preferential “Favored” Breaking the Rules Relationship with Boss

25. Blurry Boundaries Between Person-Specific Employment Practices Research Supervisor retitles his job “Research Director” to elevate his standing when he testifies as an expert witness. A program coordinator is paid at a higher rate than her peers after she asks a boss for a raise but equally capable others are not offered the same. Idiosyncratic “Negotiated” Unauthorized “Usurped” Preferential “Favored” Boss tells workers it is okay to help himself to store’s food when working nights.

26. When are Idiosyncratic Deals Seen as Fair? • CHOICE: peers could have made the same choice -- Cafeteria plans -- I-deal acknowledged to peers • NO COST: peers experience no negative consequences -- Deal involves hours/activities others do not want -- Peers aren’t interdependent with person with I-Deal • WIN-WIN BENEFITS: peers benefit from another’s special arrangements -- Bragging rights: I-Deal allows employer to retain a “star” performer. -- Enhanced employer reputation: “Great Place to Work” • INDIFFERENCE TO TYPES OF RESOURCES INVOLVED:Particular resources matter less to peers than Universal ones -- Particular resources (support, mentoring) -- Universal resources (money, goods) • FRAMED AS EXPERIMENT: Special arrangement is presented as a way for employer to innovate

27. Managing I-deals • SUPPLEMENTS NOT SUBSTITUTES--Broadly available support signals quality of employment relations • EXPERIMENT--Use I-Deals as source of innovation and flexibility • GOOD NEIGHBORS--Require I-Dealer to maintain good relations with coworkers as basis for I-Deal • DON’T MAKE ME ASK--Assess and provide job-related supports (only special needs should require negotiation) • BUILD ORGANIZATIONAL MEMORY--Keep track of I-Deals for future innovation, policy change, and equity. • DON’T REWARD DISLOYALTY--Repeat bargainers erode their value to the firm and antagonize coworkers.

28. The Future of I-Deals • Basis of Network Organizations • Looser ties reduce 3rd party comparisons • Demographic Shifts • Need to retain older workers • Follows the growth of the economy • Increasing with % critical workers

29. Bottom Line Idiosyncratic arrangements: • Increasing as knowledge work expands across sectors • Endemic to start-ups • Useful as first step to identity innovations for broader workforce • Can erode trust if used in place of standardized rewards