The Nature of the Employment Relationship and The

The Nature of the Employment Relationship and The Psychological Contract 11 h April 2013 Elspeth Woods

Aim The aim of today’s session is to consider the Psychological Contract and it’s impact/influence on the employment relationship

THE DIMENSIONS OF THE EMPLOYMENT RELATIONSHIP Parties: • managers • employee representatives Operation: • level • process • style The employment relationship Substance: Individual: • job • reward • career • communications Collective: • trade unions • consultative committees Structure: • formal rules/ procedures • informal • understandings and expectations Source: S Kessler and R Undy, The New Employment Relationship: Examining the psychological contract, IPD, 1996 This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Human Resource Management Practice , 11 th edition, as part of their course. For more academic resources and other FREE material, please visit www. koganpage. com/resources and then click on

Basis of the Employment Relationship � An undertaking by an employee to provide skill and effort in return for salary or wage � Employer should provide safe working environment and act in good faith � Employee should be obedient, competent honest and loyal

Contracts � Relational Contract –usually explained in abstract terms that refer to open-ended membership of the organisation � Transactional Contract – usually expressed in financial terms � Psychological Contract – Combination of beliefs held by employee and expectations

Developments in ER �New forms of management �Task discretion/management control �The higher the level of skill, the more people are involved with their work Gallie et al, 1998

Developing High Trust �Management is honest with its people, practises what it preaches, keeps its word �Trust created and maintained by managerial behaviour and mutual understanding of expectations

What is the Psychological Contract? �A set of unwritten expectations that exist between individual employees and their employers � A system of beliefs that encompass the actions employees believe are expected of them and what is expected form them in return and vice versa

Theories explaining the E R’ship � Labour Process Theory: Karl Marx’s theory that capitalists appropriate surplus from labour by paying it less than the value it adds to the labour process � Agency Theory: The role of managers of a business is to act on behalf of its owners as their agents � Exchange Theory: Organisational behaviour can be explained in terms of the rewards and costs incurred in the interaction between employers and employees

OPERATIONAL MODEL OF THE PSYCHOLOGICAL CONTRACT Causes Organizational culture Content Consequences Fairness Organizational citizenship HRM policy and practice Experience Trust Expectations Alternatives Organizational commitment Motivation The delivery of the deal Satisfaction and well-being Source: D E Guest, N Conway, R Briner and M Dickman, The State of the Psychological Contract in Employment, Institute of Personnel and Development, 1996 This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Human Resource Management Practice , 11 th edition, as part of their course. For more academic resources and other FREE material, please visit www. koganpage. com/resources and then click on

Expectations � Fair treatment � Security � Scope to show competence � Career expectations � Skills development � Involvement and influence � Trust � Competence Employer � Effort � Compliance � Commitment � Loyalty

Can it be measured? � Yes, it can in terms of fairness of treatment, trust and the extent to which the explicit deal or contract is seen to be delivered Can it be changed? � Yes, and it is can and does change in responses to external and internal change. Think about mutuality!

How does the Psychological Contract Develop? � Evolves � Difficult to impose it � Intangible or is it? � Can be multifaceted � It is first defined in the recruitment and selection process including induction � Continues to develop through the way communications are transmitted and received � Company policies consolidate matters � Are employees stakeholders in the broadest sense ? � Negotiation, consensus, cooperation or coercion and control