Effect of Psychological Contract Violation on Organizational Commitment - Essay Example

Article Analysis: Effects of Psychological Contract Violation Number Department Introduction Psychological contracts refer to the unwritten, informal part of rules guiding the relationship between an employer and their employees. Shahnawaz and Goswami (2011) have argued that psychological contracts play an important role in employee turnover, their productivity, and the general viability of an organization. The authors argue that a violation of psychological contract can make an organization less productive. By keeping the sanctity of psychological contracts in an organization, employers will rest assured of retaining employees at strategically vital positions and thus achieve a higher level of productivity. Shahnawaz and Goswami (2011) basically outline the negative outcomes of psychological contract breaches on employers and employees in an organization. Background of Psychological Contracts Epitropaki (2013: 67) describes an employment contract as a document which can control the activities of employees in an organization, and help them to realize the business goals. Such a contract details what employees are expected of by their employer and the gains that they are entitled to as payment for their effort. On the other hand, Wei and Si (2013: 544) concurs with Shahnawaz and Goswami on the definition of the less formal psychological contract as the beliefs of an individual employee as influenced by the business conditions guiding the interaction between employees and the employer. Alternatively, psychological contract can be construed to mean the perception of individual employees of their duty to their employer and their entitlements (Chiang et al 2012:81). Importance of psychological contracts Although, many people view the formal contract as more important to the success of an organization, Shahnawaz and Goswami’s assertion that psychological contract is a mutual commitment which plays an equally pivotal role in forging organizational commitment and the greater productivity is based on scientific evidence (Kraft & Kwantes 2013: 139; (Randmann 2013: 134). But Shahnawaz and Goswami’s argument that it is obvious for either party to fulfill their duty such contracts fails the implementation test. Notably, Zribi and Souaï (2013: 11) say the understanding of the psychological contract terms between an employee and the organization may be different because both parties have diverse interests and the practice is massively perceptual. Liang and Liu (2014: 56) also note these conflicting understandings of the mutual duties may create an understanding that the other party has reneged on the contractual terms. In addition, employees’ beliefs about of the duties set up at the time of their hiring may evolve over the employment period and create a sense of breach within them (Randmann, 2013: 125). As Kraft and Kwantes (2013: 140) have said, owing to the superior position of employers in terms of resources and their capacity to sway the implementation of psychological and formal contracts in their favor, employees usually associate a greater level of perceived lack of commitment to such contracts with lack of organizational commitment toward them. Change of employee behavior Shahnawaz and Goswami’s (2011) concur with Epitropaki (2013: 73) that a breach of contract can alter employee behavior, commitment, and handling of the employer’s services. According to Tükeltürk, Perçin and Güzel (2012: 194) studies have established that employees who do seem to be displeased with their occupations will have a greater level of intent to go elsewhere, while satisfied individuals tend to be more loyal and productive. Regardless of the factors behind loyalty or lack of it, the skewed perceptions of both the employer and the employee may be blamed for high turnover in an organization (Zagenczyk et al 2013: 290). Nonetheless, where employees are given challenging tasks with handsome rewards, the outcomes tend to be mixed. Balanced approach to Psychological Contract Despite of its balanced approach to unearthing the problem of psychological contract in organizations from both sides of the employer and the employee, the research of Shahnawaz and Goswami (2011: 209) has numerous parallels to studies that have examined the issue from the employee and employer perspectives as well as the potential impacts of the issue on the overall running of the organization. This is depicted in the studies on the breach of psychological contract in which the victims, and by extension the focus has been on the workers’ lives and perceptions of breaches by the organization. As Botsford and King (2012: 635) have stated, this all-encompassing approach of the study is contrary to past theories on the psychological agreements where the efforts were concentrated on only the employees within the wider organizational relationship and platform. As Jafri (2011: 24) has suggested, Shahnawaz and Goswami have highlighted the mutual benefits that an employer-employee relationship in an organization yields and the importance of fulfilling the other’s requirements. Whereas original research on psychological contracts executed out five decades ago had little scientific outcomes at the time, Shahnawaz and Goswami’s findings are an invaluable reminder of the progress made so far (Bao, Olson, Parayitam, & Zhao 2011: 3373). The recent research of Shahnawaz and Goswami (2011: 209) indicates that the business or its managers make up an imperative part of psychological contract, and a clear knowledge of their side of the story is imperative if the detailed power of the contract is to be utilized. This is evident in the current studies on breach of psychological contracts, which is governed by employee-focused research dwelling on employee understanding of breaches blamed on the employer (Searle & Skinner 2011: 87; Kiazad 2010: 91; Wellin 2012: 36). The research of Shahnawaz and Goswami (2011: 210) has pointed out the fallacy in a number of employee-based breaches of psychological contract which tend to classify the employers as the sole wrongdoers. It is this weakness in past research studies that the two researchers seek to correct. Meanwhile, regardless of who is normally responsible for a breach of psychological contract, what is evident about the issue is that the repercussions can be highly detrimental to both parties (Chiang et al 2012: 81). According to Liang and Liu (2014: 58), psychological contract violations have been associated with decreased levels of job contentment, organizational commitment and waning additional positive behavior on the occupation. Therefore, employees who allege a higher level of contract breach will be less committed to the attainment of organizational goals (Jafri 2011: 26). In addition they will tend to view their supervisors as poor performers and eventually opt out. Damaging repercussions for the workers experiencing breach may encompass reduced psychological health, and the prevalence of bad, counterproductive emotions such as feelings of anger, nervousness and pain (Beynon, Heffernan, & Mcdermott 2012: 261). More serious impacts on the employer may include employee-led interruption of services and an eventual leaving of the organization for another (Suazo, Martínez, & Sandoval 2011: 192). Owing to the fact that employers and employees normally have skewed perceptions of psychological contract violations, Shahnawaz and Goswami provide sanity in the whole issue. Mutual trust Gupta et al (2013: 743) and Wilkinson-Ryan (2012: 862) concur with the two researchers that in any social exchange arrangement such as psychological contracts within organizations, mutual trust is the ultimate weapon which dictates either party’s commitment to the fulfillment of goals. Gupta et al (2013: 740) add that this is mirrored in reactions to breaches where the affected parties narrow down their needs to a more business-like psychological contract whereby the contract terms are more explicitly spelt out and agreed upon. Despite the Shahnawaz and Goswami’s shallow insistence on mutual trust as the foundation of psychological contracts, Gupta et al (2013: 740) narrows the issue down by saying that all that mutual trust requires is acting fairly and reasonably towards the other party. Shahnawaz and Goswami (2011: 212) are basically showing the dynamic nature of mutual responses, which form an integral part of psychological contracts, in which case, the results of the social exchange at certain points are depicted as translating into triggers for the subsequent cycle of give-and-take. As Alcover, Martínez-Íñigo and Chambel (2012: 840) have said, researchers are in a consensus that in situations where employers do not fulfill the side of the bargain, employees would counter their “irresponsibility” in an effort to create “fairness” in the working arrangement. Employer-led breaches Psychological contacts have fairly equal reasons as to who was responsible for their scuttling whenever they are breached. The findings of Shahnawaz and Goswami (2011: 210) have enabled the researcher to cut a niche among few scholars who have attempted to investigate the employers’ perception regarding the issue. But as it is the case in a number of studies, the researchers have erred by dedicating the bulk of their study on unearthing the instances where the organization or the employer abdicates their commitment towards the fulfillment of what is required of them in a psychological contract arrangement, without pausing to think about the fact that the employer’s may be merely responding to toughening conditions in the market or employees misconduct (Epitropaki 2013: 72). Nonetheless, the relatively balanced approach taken Shahnawaz and Goswami explores the likelihood that employers also may be vulnerable to violations carried out by their employees and vice versa. Shahnawaz and Goswami’s (2011: 209) are spot-on when they argue that employers are the better placed in terms of negotiations of psychological contracts, because they have a greater level of assets at their disposal. But, even though, there are researches which focus on getting the employers understanding on psychological contract breaches, the likelihood that the employer or business will be vulnerable to such violations is not broadly captured by Shahnawaz and Goswami, despite the fact that the impacts can be costlier for the employer, for example, if the organization incurs heavy losses and or eventually collapses (Agarwal 2011: 291; Christeen 2009: 102). Botsford and King (2012: 631) have noted that employees may seek placements elsewhere in case of such breaches, but not employers. But Shahnawaz and Goswami (2011: 209) have indicated that the wide berth that researchers have given the employers’ perspective of such contract violations is a result of the sophistication of modern employer-employee relationships and the problems rife in arriving at a conclusion as to who is an organization’s representative. As suggested by a number of researchers, most businesses have put in place, an array of other officials who may be perceived as principals within the organization (Arain, Hameed, & Farooq 2012: 55). Shahnawaz and Goswami have picked on senior employees who hold supervisory posts as official representatives of the business in the execution of psychological contracts despite the fact that they are also employees who may suffer the same fate as lower-ranking workers. The most apparent reasoning to bring in line with such findings is that senior executives are themselves workers with relatively the same psychological contract with the organization which they claim to represent (Jepsen, & Rodwell 2012: 832). The likely conflict of interest that arises in their mandate that has evaded Shahnawaz and Goswami has been established by Beynon, Heffernan and Mcdermott (2012: 248), who then indicates that executives may be reluctant to play the role of surrogates in their contract with their employer, because such an arrangement would overlap with their formal mandate and might limit their psychological demands. Haggard (2012: 163) argues that just as junior employees may over their working arrangement perceive themselves as being on the receiving ends of contractual reaches by their employer managers too can have the same feeling. As Shahnawaz and Goswami (2011: 212) have pointed out, the end result is normally high turnover rates and lack of employee cohesiveness within an organization. Recommendations Owing to the importance of psychological contracts to the productivity of an organization, Scheepers and Shuping (2011: 143) have concurred with Shahnawaz and Geswami that business leaders and senior executives within an organization must therefore provide the necessary support that employees need in order to stimulate they loyalty and productivity. Organizations and members of human resource management ought to be cognizant of the psychological contract and how it may enhance employee effectiveness or lack of it in an organization (Arain, Hameed, & Farooq 2012: 51; Sia, Bhardwaj, & Sahoo 2013: 130; Agarwal 2011: 295; Jepsen and Rodwell 2012: 822). Identifying vital issues which are vital such as bonuses, employee motivation, and job promotion, swapping of tasks, holidays, and moderate supervision and implementing them would bring about positive outcomes within the organization. But whereas, the fulfillment of psychological contract terms and limiting of turnover rates is based on these packages, Shahnawaz and Geswami have not highlighted the fact the implementation of these issues attract costs and may cut into profits (Jepsen and Rodwell 2012: 822). In addition, when carrying out interviews for new employees and or those selected for orientation, human resource managers should be clear in their mind with regards to what they promise them and highlight the promises or duties that they are able to accomplish in order to avoid any misunderstandings that might spawn lack of trust and lead to a breach of psychological contacts in the end (Haggard 2012: 166; Agarwal 2011: 295). To fulfill psychological contracts, employers should be guided by reason and fairness in offering: meaningful tasks to employees and a chance for their career development; constant professional precepting; assigning challenging and rewarding tasks evenly; allowing flexible work programs; and creating safety at the workplace. Despite the challenges experienced in meeting communication needs of either party in a multi-ethnic and cross-cultural business environment, embracing proper employer-employee communication is important to ensuring that every misunderstanding is corrected before the problem gets out of hand (Wei & Si 2013: 553). Employees joining a new organization must also be cognizant of the business operations as this will help them to know what is required of them in a psychological contract. With these considerations put in place, employees will be more comfortable on the job and be unwilling to change employers. Conclusion Aside from the formal contract between an employer and the employees, Shahnawaz and Geswami point out that a psychological contract is an imperative part of smooth working relationship within an organization. Owing to its largely implicit nature, psychological contract depends on mutual trust for fulfillment. Knowing what the other party wants and or what is appropriate for the business sometimes relegates mutual trust and sets in managerial control. Regardless, the employer should hire employees who are knowledgeable and have the right state of mind to perform the tasks required of them within the organization in order to protect psychological contracts. Being mindful of the new recruit’s needs at the workplace such as competitive pay, flexible schedules, challenging and rewarding tasks, job promotion and safe workplace environment are all issues whose fulfillment remain at the core of a fruitful employer-employee relationship. However, these packages come at a cost and may cut into the profits. Regardless, psychological contract breaches affect both employees and the employer. Whereas it may lead to an employee’s penchant to leave, the resulting high turnover rates have a direct impact on the cohesiveness and productivity of the workforce and may trigger losses. Employers and employees should cultivate a good working relationship, practice mutual trust and professionalism in handling the other party’s interests as a way of fulfilling the mainly implicit terms of psychological contracts. . References Agarwal, P. (2011). ‘Relationship between Psychological Contract & Organizational Commitment in Indian IT Industry.’ Indian Journal of Industrial Relations, 47(2), 290-305. Alcover, C., Martínez-Íñigo, D., & Chambel, M.J. 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