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

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

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

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

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

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

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

Defining the Psychological Contract “The perceptions of both parties to the employment relationship, organization and individual, of the reciprocal promises and obligations implied in that relationship” 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 Psychological Contract Framework The Good Employer The High Quality Workplace Satisfied And Productive Workers The Deal

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

Framework for applying the psychological contract to the employment relationship Contextual and 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

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

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

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

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

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

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

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

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

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