Psychological Contracts - Organizational Performance and Elicit Employee Commitment - Coursework Example

Psychological Contract Name: Professor: Institution: Course: Date: According to Armstrong (2009) psychological contracts are referred to as unwritten set of expectations which exist between employers and their employees. This are beliefs that include the obligations individual employees believe are expected of them and what they expect in return from the employer. This also encompasses the obligations employers feel are expected of them and what they expect from their employees reciprocally. Basically, the psychological contract is about whether obligations and promises are fair, whether they have been met and their implication on trust and the employment relationship (Guest 2004). According to Katz and Kahn (1966), every role within organizations is generally a set of behavioural expectations which are often not defined in the employment contract (implicit). Models of motivation like the operant conditioning (Skinner 1974) and the expectancy theory (Vroom 1964) insist that individual employees act in ways they believe will produce outcomes that are positive but they are not particularly sure of what they expect. This essay will particularly focus on how Psychological contracts are at the heart of gaining both organizational performance and elicit employee commitment to the objectives of the organization. The main function of a psychological contract is to reduce cases of job insecurity. Since all aspects of the employment relationship cannot be addressed in the written employment contract, the gap in this relationship is filled by the psychological contract. This contact also shapes behaviour; individual employees weigh their expectations towards the organization against the expectations of the organization towards them and adjust in accordance to the outcome. Also, the contract gives the employees that they are fully involved in determining what happens to them in the organization which increases their motivation, commitment and hence increases their performance (McFarlane &Tetrick 1994 and Schalk et al 1998). Employees expect to be treated fairly, provided with task that utilize their abilities and skills, to be in a position to display their competence, to be rewarded in accordance to their contributions, to know what is expected of them by their employers, to have security of employment, to provide them with opportunities for growth and to get feedback most preferably positive on their progress at their place of work. On the other hand, employers expect their employees to do their very best for the organization through full commitment to the company’s value, to be loyal and compliant, and to improve the image of the organization to the suppliers and the customers. These assumptions are sometimes justified and other times they are not. Some mutual misunderstandings between the two parties can cause stress which will lead to poor performance, termination of employment relationship and recrimination. Even though employees want what they always wanted,-a career, security, interesting work and fair awards, employers feel they are no longer obliged to provide them and instead they are demanding a lot more from their employees in regard to greater input, flexibility to change, tolerance to uncertainty, while they provide less for in return and in particular limited career prospects and less job security (Guest et al 1996). The Psychological Contract model formulated by Guest et al (1996) indicates that the importance of a contract can be measured in relation to trust, the extent to which the deal is perceived to have been delivered and fairness of treatment. The model is as illustrated below: Cause Content Consequences Source: Guest et al (1996) Individual employees’ beliefs generally originate from their expectations from the perception of the organizational culture and their interactions with organizational representatives. During socialization, organizational human resources managers and recruits make clearly defined promises to the employees on what they may expect from the organization (Feldman, 1976; Van Maanen, 1976). Secondly, standards operating procedures and the employees’ perception of their organizational culture also shape the employees’ belief in regard to their psychological contract, from expectations created along the recruiting process and early experiences within the organization, then, this contract develops. Within the four to six month after joining the organization firs principal of the psychological contract will be brought into reality (Anderson & Thomas 1998). Rousseau (1995), states that new employees have a positive prospects of the labour relationship where their initial point of view are characterized by lower expectations of themselves and high expectations towards the employer (Louis 1980). As they gain more experience in the organization, the newcomers adopt their expectations to reality. Other causes of having a psychological contract include having other alternatives and the organizations HRM policies. In organizational theory and management, employees’ attitudes like trust, commitment, faith, satisfaction and enthusiasm heavily depend on a balanced and fair psychological contract. Where employees regard the contract to be unfair or broken, this intangible yet very important constituents of good organizational performance can quickly evaporate and where employees regard the contract as fair and right, the positive attitudes thrive. The traditionally, the advantageous and dominant position of an employer compared to the employees means that the organizational leadership determines the quality of the Psychological contract and not the followers. An individual employee or a work group may decide to abuse or break the psychological contact but under normal circumstances employees are always dependent on the leadership for quality of the psychological contract. It’s important to note that the worker’s attitudes and feelings are greatly influenced by the way they are treated at the work place and at the same time, the workers attitude and feelings greatly influence the way they see themselves as well as their behaviour and relationship towards their employer. The employers should therefore focus on helping workers feel happy and good because this creates a healthier view of the contract as well as positive outcomes. Employers who ignore the importance of employee happiness and the contract itself find that workers view the psychological contract more negatively and consequently employees are reluctant to corporate and support the leadership. Another major significance of the psychological contract is speed at which businesses and organizations are changing. This rapid change in organizations and its consequences gets many managers unaware and they do not know how to handle it. Managing change has been a challenge to many organizations today and is very important to psychological contract as organizational change puts a lot of pressure on this contract. The ability of the management to understand and manage these changes greatly depends on their ability to understand as well as manage the vital drivers with the psychological contract. Leaders in organization generally see change from their point of view but to effectively manage change, must view changes in terms of the effect it has on the workers and must understand how workers feel about it. Read More