Hrm: Psychological Contract

Hence, there has been changes formulated to the social contract between employers and employees. This new social contract appears that it does not provide stability to employees. However, there are some positive contributions of the new social contract. For instance, the younger employee crowd enjoy the expectation of responsibility and mobility embedded in this new social contract. Additionally, the new social is built on the perception of employability rather than lifetime employment. Thus, both the employee and employer can benefit from the new social contract, it can be an excuse for the employer to treat people as economic factors. Meaning that employees are being used by the

Meyer and Allen (1997) propound normative commitment as “a feeling of obligation to continue employment”. Many organisations build a work culture with internalised norms, values, beliefs and obligations. To a certain extent these internalised norms makes employees normatively committed so that they become obliged to stay in the organisation rather than leaving. Naturally these internalised norms and values creates a feeling of obligation in employees and they think that they are ought to stay in organisation. Wiener and Vardi (1980) have described normative commitment as “the work behaviour of individuals, guided by a sense of duty, obligation and loyalty towards the organisation”. The institutions working in mental healthcare services can impart certain genuine internalised norms and obligations to their work culture. Once the employees get moulded with these norms and values they become normally committed to the organisation and feel obliged to remain in the organisation whereby mentally ill persons can utilise their treatment

Most employees, whether part-time or full-time are legally entitled to 5.6 weeks of paid annual leave. More annual leave may be agreed as part of an employee’s contract. A week of leave should allow workers to be away from work for a week - i.e. it should be the same amount of time as the working week. If a worker does a five-day week, he or she is entitled to 28 days leave. If he or she does a three-day week, the entitlement is 16.8 days leave. If a worker's employment ends, he or she has a right to be paid for the leave time due and not taken. Paid public holidays can be counted as part of the statutory 5.6 weeks of holiday.

The traditional psychological contract is generally described as an offer of commitment by the employee in return for job security provided by the employer  - or in some cases the legendary 'job for life '. The recession of the early 1990s and the continuing impact of

A psychological contract An employee’s perception of his or her exchange relationship with an organization, outcomes the organization has promised to provide to the employee, and contributions the employee is obligated to make to the organization. The three determinants of such a contract are direct communication, observation, and written document. (p.213)

In the post WWII period employment patterns are characterised by clear career progression paths while employees are likely to stay within the same company their whole working lives. While in contemporary times employees may move between companies changing jobs, possibly changing locations numerous times, due to lack of progression prospects. Sennett describes this as due to changes in organisational structures which make employees jobs project based little in the form of ‘linear progression’ in terms of promotion. In this system employees are seen as more dispensable pieces of organisational projects rather than a direct part of the company. As Beck (2000) states this system aims towards maximising organisational flexibility. However as Beck states (p. 3) this places workers in the heart of a system of ‘endemic’ and ‘incalculable risk’. The effects of this are apparent interviews conducted by William S. Brown (2005) on final year students at a business school. When the subjects were asked if contemporary working patterns made them feel ‘at risk’ the majority of respondents answered yes. This is a market in which employees are increasingly open to change jobs and where employers are more likely to remove an individual from the company. This means employees are individuals are unable to plan for their future due to an inability to assume both working positions and

Denise Rousseau (1989) develops the concept psychological contract. It is a mutual understanding, and unofficial obligations between employer and employee. It is different from the formal contract which identifies mutual duties and responsibilities. For example, remuneration, the provision of training, security, interest and work-life balance in exchange for flexibility, effort, loyalty, commitment and innovation from the employee. There is strong positive relationship evident between the perception of a balanced psychological contract and employees’ commitment to the organization (Coyle-shapiro and Kessler, 2000) and their trust in the organization (Robinson, 1996). But there is also negative effect like the neglect of in-role job duties (Turnley and Feldman, 2000) and turnover intentions (Turnley and Feldman, 1999) associated to this too. In term of change management perspective, psychological contract can cause different views on the contract by employee and employer as the content of the contract is informal, implicit and unwritten. So the degree to which each party has fulfilled their obligations could be questionable. For example, in a study by Coyle-Shapiro and Kessler (2000) it was found that managers were more positive in their assessment of the employer’s fulfilment of their obligations than the employees were. Clear communication and open working environment by the manager can ensure that the expectations of both employees and the

According to this model, HRM practices are interrelated and directed towards organizational performance. It also identifies the existence of a human resource cycle with inherent HRM practices carried out in all organizations. Unlike the Harvard Model, the Michigan Model lends more weight to control than influence in managing human resources. Put another way, it does not consider the distinct nature of human resources as compared to the other organizational resources.

Critically evaluate the utility of the psychological contract for understanding the contemporary employment relationship. (2500 Words)

It is clear that these employees, who are fulfilled with good welfare and a work life balance, are more likely to perform well. Companies, which succeed in maintaining employee commitment, may retain competitive employees and make more profits. However, some external factors such as economic recession may bring about negative effect on psychological contract. An example of this is the global economy recession in 2008. This recession has generated bad influence on employee attitudes, including job dissatisfaction and insecurity. Organization leaders may have challenge to fulfill employee commitment. (The psychological contract, n. d.)

The purpose of the report is to discuss the theory of psychological contracts in organizational employment and to see its evolution by discussing various theories of different authors, its present form, issues related to it and its importance in training and apprenticeship programs.

Employee’s satisfaction and involvement. Employees are more likely to accept change if they understand the reason for the change as well as the benefits of the change. Therefore, it is important for management to have open and frequent communication with employees. The information, however limited it might be, must be provided to the employees. The communication must include the employee benefits that may occur as a result of the change; some of them being increased job satisfaction and reward. According to Iljins, Skvarciany & Gaile-Sarkane (2015), having an open communication creates a level of trust and job security for the employees. As a result, these ones are more receptive to the changes.

As a result, many organizations are now developing employment agreements (contracts) that bind employees to the organization, ensuring loyalty on both sides. For the workers, this practice requires new skills of contract awareness and negotiation.

Psychological contracts in the workplace are even more important than employment contracts in that they can be nebulous, evolving, emotional, and based in personal beliefs. Unlike an employment contract, the psychological contract can shift at any time without written agreement, warning or clarification. Understanding how narrative identity plays out in the workplace can help give us insight as to clues to listen for in language that might increase our understanding of another individual’s experience in the work environment. Since narrative can be understood by the stories that employees tell in the workplace, managers can encourage storytelling from their team to better understand how to improve employee commitment and engagement. Organizations have an opportunity not only to pay attention to the language that is used to create these stories to observe how it reflects company aims and values, but to create stories that help build an authentic collective identity for the organization as a whole.

All organizations face the basic challenge of mongering psychological contract. They want value from their employees, and they must give employees the right inducements. If psychological contracts are created, maintained, and managed effectively, the result is likely to be