Motivating and Retaining

Employees through an

Understanding of the

Psychological Contract

Ross Hayes (MSc, B.A(Hons)

Overview

• Why motivation and staff retention?

• Why psychological contract?

• Background to idea

• Understandings

• Content of Psychological Contract

• Different Types of Psychological Contracts

• Managing healthy Psychological Contracts

The Need to Motivate and

Retain Staff • ASEAN Community would launch on 31

December 2015

• Shortage of skilled labour

• “More than 12,000 striking workers from

30 Yangon factories gathered in Hlaing

Tharyar township on June 9 to protest

against their wages and working

conditions” (Noe Noe Aung, 2014?)

• High staff turnover

• High employee absenteeism

• Motivational and commitment problems

• Brain drain

• Myanmar is going through a transition

phase so to be successful „old‟

employement Psychological contracts

need to change with it

Why the Psychological

Contract? • A useful way of understanding and managing

changes to the employer-employee relationship.

Changes include: – Foreign competition

– Down (up)sizing

– Temporary workers

– Demographic diversity

– Retaining „knowledge workers‟

– “A survey of 1,300 senior UK Human Resource managers 36 per

cent reported that their organizations use it to manage the

employment relationship and 90 percent agreed that it is a useful

concept” (Guest and Conway 2002 cited in Conway and Briner,

2005).

(Conway and Briner, 2005)

Understanding the

Psychological Contract Psychological Contract

• Informal relationship(s)

• Reciprocal

• Dynamic not static

• Voluntary

• Perceived expectations,

obligations or promises?

• How and why do

employees come to

believe that certain

promises have been

made by management in

the first place?

Legal Contract

• An agreement between

two or more parties

enforceable by law

• Written or oral

• Narrow in scope

• Rules that will govern

employment relationship

• Lacking in ambiguity

• Encourage compliance

Background to the

Psychological Contract • Roots come from social exchange theory.

Based on the idea that:

“individuals exchange resources (money,

information, and services) with each other

to maintain a relationship” (Jensen et al.,

2010, p.556).

Establishing the Psychological

Contract • “the notion of a psychological contract

implies that the individual has a variety of

expectations of the organization and that

the organization has a variety of expectations of him” (Schein, 1965)

Establishing the Psychological

Contract • „A psychological contract is an individual‟s

belief in mutual obligations between that

person and another party‟ (Rousseau and

Tijoriwala 1998, p. 679).

• Guest and Conway (2000): “The

perceptions of both parties to the

employment relationship, organisation and

individual of the reciprocal promises and

obligations implied in the relationship”

Typical Contents of the

Psychological Contract

Employer

• Turn up on time

• Uphold corporate image

• Respect the authority of

senior members of staff

• Demonstrate loyalty and not

betray positions of trust

• Maintain harmonious

relationships with work

colleagues

Employee

• Provide safe and hygienic

working conditions

• Job security

• Try and give satisfying work

• Treat staff fairly

• Opportunities for personal

development and advancement

Key question: why are these the contents of the Psychological Contract?

(Mullins, 2005)

Psychological Contract Breach/

Violation • Fulfilling psychological contracts is associated with

increased trust and cooperation (e.g., Conway & Briner, 2002).

• Violating psychological contracts is associated with increased anger, frustration, and intentions to quit (Robinson & Rousseau, 1994). Causes of violation include:

• Management reneging on deals

• Inadequate HRM policies and practices

• When violated, contracts become more transactional and less relational

Psychological Contract

Breach/Violation (Cont.) A number of questions that are important to our understanding of the Psychological Contract remain unanswered:

• Not every contract violation leads to the dissolution of the employment relationship so when and how do employees/employers forgive one-another?

Different Types of Psychological

Contracts

Key question: Is it possible to have relational contracts without first satisfying

transactional obligations?

But…

• Different psychological contracts exist in

different companies. Example: John Lewis

• Different Psychological contracts also exist

for different workers: • Unskilled/unqualified

• Middle managers

• „Knowledge workers‟

– Balance of power in the employment relationship has shifted

creating a position where trust might be difficult (see for

example: Cullinane and Dundon, 2006; Ehin, 2008).

Influencing Employee

Psychological Contracts

• Recruitment stage - make sure job advertisements are sending

out consistent messages and intended messages about

company expectations

• Selection stage – provide a realistic job preview to give

accurate as opposed to inflated beliefs about the job

• Appraisals – set formal objectives, clarify any

misunderstandings

• HRM policies/organisation-wide strategies should reflect reality

References Conway, N., & Briner, R. B. (2002). A daily diary study of affective responses to psychological contract breach and

exceeded promises. Journal ofOrganizational Behavior, 23, 287-302.

Conway, N., and Briner, R.B. (2005). Understanding psychological contracts at work: A critical evaluation of theory

and research. Oxford: Oxford University Press.

Cullinane, N. and Dundon, T. (2006). The Psychological Contract: A critical review. International Journal of

Management Reviews, 8, (2), 113-129.

Ehin, C. (2008) Un-managing knowledge workers, Journal of Intellectual Capital, 9, (3), 337-350.

Hui, C., Lee, C. and Rousseau, D.M. (2004), “Psychological contract and organizational citizenship behavior in

China: investigating generalizability and instrumentality”, Journal of Applied Psychology, 89 (2), pp. 311-21.

Jensen, J.M., Opland, R.A. and Ryan, A.M. (2010) Psychological contracts and counterproductive work

behaviours: Employee responses to transactional and relational breach. Journal of Business Psychology,

25(1), pp.555-568.

Mullins, L. (2005). Management and Organisational Behaviour. 7th edn. Harlow: Financial Times / Prentice Hall.

Noe Noe Aung. (2014). Workers strike over wage demands, Myanmar Times [online]. Available from:

http://www.mmtimes.com/index.php/national-news/yangon/7150-thousands-of-workers-protest-in-hlaing-

tharyar.html [Accessed: 22/08/2014].

Robinson, S. L. and Rousseau, D. M. (1994). 'Violating the psychological contract: not the exception but the norm',

Journal of Organizational Behavior, 15, 245-259.

Rousseau, D. M. and Tijoriwala, S. A. (1998). Assessing Psychological Contracts: Issues, Alternatives and

Measures. Journal of Organizational Behaviour, 19, 679-695.

Schein, E. (1965). Organizational Psychology. Englewood Cliffs, NJ: Prentice Hall.

Thank you!

Questions