Chapter 1 The Psychological Contract and Commitment

Objectives Define the psychological contract and discuss the obligations of the contract currently in place Explain the importance of the psychological contract and what happens when it is violated Explain the benefits of committed employees and what employers can do to foster commitment Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -1

…Objectives Describe external influences that affect workplace expectations Explain the self-fulfilling prophecy and how managers can apply this concept Explain the pinch model Make a psychological contract with your professor Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -2

Mental Maps - Defined Our images, assumptions, and stories about every aspect of the world, which determine what we see and how we act. Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -3

Psychological Contract - Defined An individual’s beliefs, shaped by the organization, regarding the terms and conditions of a reciprocal exchange agreement between individuals and their organization Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -4

Social Exchange Theory - Defined People enter into relationships in which not only economic, but also social obligations play a role People are most comfortable when the exchange is balanced Psychological Contract Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -5

Importance of Psychological Contracts Link individuals to organizations Reflect the trust that is a fundamental feature of the employment relationship Motivate individuals to fulfill their obligations (if they believe the other party will do the same) Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -6

Psychological Vs. Employee Contract Psychological Contracts Dynamic relationship defining employees’ psychological involvement with employer Reflects perceptions of expectations Interpretations may not be similar Employee Contracts Formal contract that specifies agreements such as hours and type of work in return for compensation and benefits Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -7

Sources of Experienced Violation Inadvertent Disruption Breach of contract Able and willing (divergent interpretations made in good faith) Willing but unable (inability to fulfill contract) Able but unwilling (reneging) Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -8

Consequences of Broken Contracts Causes Outrage, shock, resentment, anger Decreased trust and good faith Decreased job satisfaction Decreased productivity Decreased attendance Turnover Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -9

Realistic Job Previews - Defined RJPs are a recruitment technique that give accurate information about job duties, and especially about the major sources of job satisfaction and dissatisfaction prior to organizational entry Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -10

Employee Commitment - Defined Emotional attachment to, involvement in, and identification with organization Strong belief in and acceptance of organization’s goals and values Willingness to exert considerable effort on behalf of organization Strong desire to remain in organization Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -11

Advantages of Committed Employees Higher performance Higher job satisfaction Adapt better to unforeseen circumstances Better attendance records Stay with the company longer More organizational citizenship behavior Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -12

Organizational Citizenship - Defined OCB refers to discretionary contributions that are organizationally related, but are neither explicitly required nor contractually rewarded by the organization, yet contribute to its effective functioning Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -13

Workplace Incivility - Defined Low intensity deviant behavior that violates workplace norms for mutual respect; it may or may not be intended to harm the target Work effort Productivity Motivation Creativity Helping behaviors OCB Causes decreased Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -14

Business-Related Changes Impacting Psychological Contracts Technological change Rate of change in the business environment Global economy Changing economic conditions Uncertainty for workers Demands for performance, flexibility and innovation Reengineering Downsizing Mergers & acquisitions Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -15

Job-Related Changes Impacting Psychological Contracts Outsourcing, off-shoring, subcontracting of work Contingent and temporary employment for peripheral employees Fewer full-time jobs and core employees Relatively low union representation Less job security Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -16

External Factors that Impact Psychological Contracts Demographics Swings in employment Nomadic nature of the workforce Changing complexion of the workforce Changing value trends Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -17

Projected Year 2012 Workforce 47% Women 65% White non-Hispanics 15% Hispanics 12% African Americans 6% Asians Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -18

A Nomadic Work Force 13 different jobs in the career of the average high school or college graduate 10.2 different jobs from ages 18-38 Only a third (31%) of workers 25 and up have worked 10 years with the same employer Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -19

Value Changes Affecting the Workplace Shifting breadwinner and parenting roles What else? Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -20

Generations at Work Baby Boomers (1946-1964) - self-fulfillment at work; fought against hierarchical authority; demand a voice in work decisions; work is central to lives; significant loyalty to corporate employers Gen X (1965-1976) - Work less central and family; nonwork activities more important; identity less tied to work; less expectations of organizations and career stability Gen Y (1976-2001) – prefer fun environment and teamwork; flexible work hours; looking for work with significance; idealistic Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -21

Cultural Differences in Psychological Contracts Promises Intention can equal follow through Uncertainty/fate can reduce binding aspect Zone of negotiability Variation in type of employee conditions open for negotiation Group identity How “we” and “they” are defined influences trust/promise making Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -22

Self-Fulfilling Prophecy - Defined People perform in accordance with a rater’s expectations of them Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -23

The Pinch Model Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -24

What’s Your Decision? Which decision have you made about your workplace? About this course? Join Participate How do you get employees to participate? Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -25

Responses to Violation Organizational Behavior: An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 1 -26