HRM AND THE WORKER

TOWARDS A NEW
PSYCHOLOGICAL
CONTRACT

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 The The
Transactional Implicit Inferred
Deal Deal 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 Satisfied
And
The
The High Productive
Deal
Quality Workers
Workplace
 The Deal

Employer Employees
Delivers on Deliver on
Promises Promises

Fairness
Trust
Commitment
Well-Being
Performance
 Framework for applying the psychological
contract to the employment relationship
Contextual
and Policy State of the
and Psychological Outcomes
Background Contract Psychological
Factors Practice Contract
Attitudinal
Individual: Consequences:
Age Organizational
Gender commitment
Education Work satisfaction
Level in HR policy and Work-life balance
organisation practices Job security
Type of work   Motivation
Reciprocal Delivery
Hours worked Leadership/ Trust Stress
promises of the
Employment Climate
and deal
contract  
obligations Fairness Behavioural
Ethnicity Employment
Tenure relations Consequences:
Income   Attendance
  Quality of Intention to stay/quit
Organizational: workplace Job performance
Sector OCB
Size
Ownership
Business strategy
Union recognition
 The Good Employer
Progressive Human
Resource
Practices
Climate of Positive
Organisational
The High
Support
Good Quality
Employer 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
.40 quality
Human workplace .35
Resource
Management .44
.12 Effective State of the
supervisory .37 psychological
leadership contract
Flexible .08
Practices .47
Number .16
.12
of
promises
 Exploring the Links
cont…
Organisational commitment
.32
Job satisfaction
.28
Work-life balance
State of the .13
.24 Life satisfaction
psychological
contract .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