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

2. 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

3. 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

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

5. 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

6. 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

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

8. 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.

9. The Psychological Contract Framework
The Good
Employer
The High Quality
Workplace
Satisfied
And
Productive
Workers
The
Deal

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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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