The Employment Relationship And The Psychological Contract
Contents
The employment relationship defined
The dimensions of the employment relationship
Nature of the employment relationship
The psychological contract defined
The nature of the psychological contract
The significance of the psychological contract
The psychological contract and the employment relationship
Operational model of the psychological contract
Ten ways in which HR can contribute to the development of a positive employment relationship and psychological contract
THE EMPLOYMENT RELATIONSHIP DEFINED
The term employment relationship describes the links between employers and employees in the workplace. These may be formal, eg contracts of employment or procedural agreements. Or they may be informal in the shape of the psychological contract (see slide).
They can refer to individual contracts and expectations or they can refer to the collective relationships between management and trade unions or joint consultative bodies.
THE DIMENSIONS OF THE EMPLOYMENT RELATIONSHIP
Parties
managers
employees
employee representatives
Substance
Individual
job
reward
career
communications
Collective
trade unions
consultative committees
Structure
formal rules/procedures
informal
understandings and expectations
Operation
level
process
style
NATURE OF THE EMPLOYMENT RELATIONSHIP
The basis of the employment relationship is an undertaking by an employee to provide skill and effort to an employer in return for which the employer provides a salary or wage, a safe workplace and an obligation to act in good faith towards the employee.
The three types of contracts defining the employment relationship are:
Transactional contracts which have defined terms of exchange with specified
performance requirements.
Relational contracts which are less well-defined with more abstract terms.
The psychological contract which expresses the beliefs of an employer and
an employee of what they expect from one another
THE PSYCHOLOGICAL CONTRACT DEFINED
The psychological contract expresses the combination of beliefs held by an individual and her or his employer about what they expect of one another. These expectations are reciprocal but they are unwritten.
THE NATURE OF THE PSYCHOLOGICAL CONTRACT
The psychological contract is implicit – it is based on unarticulated assumptions and dynamic – it develops over time. It can provide some indication of the answers to two fundamental questions about the employment relationship which concern individuals:
What can I expect from my employer?
What does my employer expect from me?
But because it has not been articulated, the answers to these questions may be obscure.
THE SIGNIFICANCE OF THE PSYCHOLOGICAL CONTRACT
‘The psychological contract creates emotions and attitudes which form and control behaviour.’
‘A balanced psychological contract is necessary for a continuing harmonious relationship between the employee and the organization. However, the violation of the psychological contract can signal that the parties no longer share (or never shared) a common set of values and goals.’
THE PSYCHOLOGICAL CONTRACT AND THE EMPLOYMENT RELATIONSHIP
Aspects of the employment relationship covered by the psychological contract
From the employee’s point of view
From the employer’s point of view
how they are treated in terms of fairness,
equity and consistency
competence
security of employment
effort
scope to demonstrate competence
compliance
career expectations and the opportunity to develop skills
commitment
involvement and influence
loyalty
trust in management to keep their word
OPERATIONAL MODEL OF THE PSYCHOLOGICAL CONTRACT
Causes
Organizational culture
HRM policy and practice
Experience
Expectations
Alternatives
Content
Fairness
Trust
The delivery of the deal
Consequences
Organizational citizenship
Organizational commitment
Motivation
Satisfaction and well-being
TEN WAYS IN WHICH HR CAN CONTRIBUTE TO THE DEVELOPMENT OF A POSITIVE EMPLOYMENT RELATIONSHIP AND PSYCHOLOGICAL CONTRACT
Define expectations during recruitment interviews, presenting the unfavourable as well as the favourable aspects of a job in a ‘realistic job preview’.
Communicate in induction programmes for new starters the organization’s core values and HR procedures, indicating the standards expected of employees in such areas as quality and customer service.
Issue and keep up-to-date employee handbooks that confirm and reinforce the information and messages delivered in induction programmes.
Manage expectations by ensuring that performance management processes are in place, which provide for the communication and agreement of expectations as part of a continuing dialogue.
Adopt a policy of transparency on company policies and procedures.
Give employees a voice on matters that concern them about the employment relationship.
Persuade management to treat people as stakeholders, relying on consensus and co-operation rather than control and coercion.
Ensure through manager and team leader training that they understand what is expected of them in maintaining a positive employment relationship with their staff.
Ensure that the reward system is developed and managed to achieve fairness, equity and consistency in all aspects of pay and benefits.
Develop a climate of employee relationships which generate mutual trust.
