Employee Motivation, Working Environment and Productivity - Research Paper Example

It is unsurprising that many studies of trust incorporate the concept of fairness. The term benevolence implies that the trustee will look after the interests of the trustor, and, as Brockner and Wiesenfeld (1996) have suggested, people tend to view decisions through an injustice lens when outcomes are unfavourable. Fairness is often seen as an outcome of integrity in that management decisions are unbiased and honest ” - Colquitt and Rodell, 2011 Introduction: Fairness, trust, justice along with recognition and awards have been recognized as the key contributing factors toward building a supportive workplace that is perceived as trustworthy by the employees. Studies conducted over the years have supported the argument that of the various factors that influence employee motivation and commitment at the workplace fairness and trust were ranked the highest. Although there is considerable debate and lack of consensus over the concept and appropriate definition employee engagement, there is hardly any disagreement or doubt over the issue of fairness and its relevance at the workplace. It has been clearly established by various researchers that along with adequate pay and opportunities the existence of fairness in the organisation and trust toward the management play a key role in gaining employee commitment and dedication. The psychological contract is a metaphorical representation of the various factors that help organisations in emphasising and exploring the key issues affecting their employees. It affords the management in addressing a range of issues faced by the employees and in devising effective plans to overcome the same. The fundamental objective of a psychological contract is to ensure that the management places more emphasis on the ‘people’ i.e., the employees as they are integral for organisational success and development. It also focuses on improving and enhancing the relationship between the employees and the management / organisation. The employees are integral to the success of any organisation and are instrumental in improving the profitability of the organisations. Hence various organisations include the element of ‘psychological contract’ as part of their strategic plans in order to help the organisations grow and prosper. It helps in the overall development of the organisations and help in tapping the energies, creativity and knowledge offered by the employees (Truss, Soane, and Edwards, 2006). There has been a drastic change in the manner in which organizations operate and function. The attitude toward the employees has also changed drastically over the years. Management today is no longer associated with control and authoritative style of management where the contribution, performance and productivity of the employees is achieved through negative reinforcements. Employee motivation today is achieved through a psychological contract where the organizations pledge to create an environment of trust and fairness rather than fear, shame, or guilt. Psychological Contract in the Workplace: The Beauty Industry The concept of psychological contract has been researched extensively over the years. The results suggest that it is vital in understanding and improving the relationship between the employees and the management / employers and helps in increasing the employee productivity through motivation. The term is defined as the "the implicit contract between an individual and his organisation which specifies what each expects to give and receive from each other in their relationship" (Kotter, 1973 cited in Petersitzke & Domsch, 2009: p. 15). The term is also often described as an unwritten contract between the employer and the employee with the condition that enables both the parties to benefit from each other. Hence, within an organisational setting the psychological contract between an employer and the employee could be described as the promise made by an employer to employee with regard to offering a healthy, trustworthy, fair and secure working environment. The employee on the other hand promises the employer to contribute to the organisational development through creativity, performance and dedication. Such contracts are described to be psychological in nature because unlike other legal contracts, such contracts are not legally binding on the parties to the contract. However it entails a promise made by each party to the other and helps in establishing a good working relationship between them. Strategic implications of managing the psychological contract: Building a high-trust workplace Psychological contract is of utmost significance to the organisations since it affords them the ability to repair and develop the relationship between employers and employees. It offers them the opportunity to develop a healthier working environment and in the process gain the trust, dedication and loyalty of its employees. There is mounting evidence in support of the influence and impact of psychological contracts within the organisations as well as on the likely repercussions in case of breach of such contract. Such contracts are widely used across all aspects including hiring and recruitment of workers. The UK beauty industry is estimated to be worth £15 billion employing over one million workers nationwide making it one of the most lucrative industries in the country (Beauty Resource, 2014). Hence the effective implementation of psychological contracts within such industry can prove to be mutually beneficial to both the parties concerned i.e., the employees and the employers. The hiring practices used by firms within the industry hence pave way for the establishment of trust and employee engagement in the workplace in the long run. Prominent brands such as LOreal use a range of alternative hiring practices such as to attract highly capable and efficient employees. Such recruitment tactics act as a foundation for the psychological contract between the employees and employers. The messages conveyed / exchanged during the process between the two parties contribute to building of expectations at both ends (Rousseau, 2001). Research suggests that the failure to execute such contract is likely to cause serious negative repercussions at individual, group as well as organisational level. It has also been suggested through research that the effective implementation and execution of psychological contracts within organisations leads to improved ethical leadership on the part of the management, which in turn translates into a highly motivated workforce; improved employee attitudes; as well as performance. Furthermore extensive research carried out to explore the concept of psychological contract and its implications on organisational development have indicated that there is a strong relationship between ethical leadership and improved individual as well as group outcomes / performance / productivity (Brown, Trevino, and Harrison, 2005). The manner in which the leader treats his/her subordinates significantly influences the attitudes and behaviour of the employees at the workplace. Hence if the supervisors /leaders /managers treat the employees with fairness and justice it is likely to translate into improved self-perception among the employees as well as their performance and productivity. Furthermore it was also observed that the employees whose organisations employed the psychological contract and offered a highly trustworthy, fair and just working environment were found to have greater job satisfaction. Also such employees were less likely to face depression, fatigue, or stress at their jobs (Sparr & Sonnentag, 2008). Improved job satisfaction: Research suggests that there is a strong relationship between psychological contract and improved job satisfaction. Hence breach of such a contract is likely to trigger equally strong negative outcomes (Zhao et al., 2007). There are various negative implications of breach of psychological contract including drastic change in the attitudes of employees toward their work, fall in their level of commitment and reduced job satisfaction levels. There is also strong evidence which supports the claim that a breach of psychological contract directly affects the level of performance of the employees and results in reduced trust in the management. The employees are likely to withdraw their interests and role in organisational activities since they are apprehensive about the organisation’s ability and willingness to fulfil their obligations. Such reduced trust in the management further leads to low interest in their jobs, reduced participation in organisational activities; increased absenteeism etc among others (Gemmiti, 2008). Hence in order to address the issue of increased absenteeism it is important for organisations to increase job satisfaction levels of employees through increased employee commitment. Job satisfaction entails the feelings of employees toward their jobs which in turn are based on their beliefs and perceptions toward the organisational values. Research has shown that there are two types of organisational commitment - affective and continuance. Affective commitment can be achieved when employees feel happy about their jobs and believe in the organisational values and hence voluntarily engage themselves in organisational well-being. Continuance commitment on the other hand entails employee commitment which is involuntary. The employees engage themselves in organisational activities not out of choice but out of obligation and for fear of being terminated. The affective commitment is profitable for companies in the long run. The Body Shop is one such organisation which achieves high level of job satisfaction and employee commitment through their values and contribution to society (Jennifer, 2009: p.95). The Body Shop actively endorses and participates in environmental conservation by selling organic products. Such values engender commitment within employees who believe in the cause and support environmental conservation and animal rights. The employees understand the organisational stance and care for the values invested in and endorsed by their employers and willingly contribute toward organisational success through high level of motivation and engagement at workplace. Studies have shown that employees are more likely to show high levels of commitment and job satisfaction toward organisations that support and endorse similar values as them. (Jennifer, 2009: p. 95). Improved organisational citizenship behaviour The term organisational citizenship behaviour refers to the voluntary participation of employees in workplace activities despite having no legal or contractual obligation to do so. The term which was first coined by Organ (1983) who defined the term as "behaviour that is non-rewarded and that is not part of the formal job requirements" (Gemmiti, 2008: p. 6). OCB is known to be highly instrumental in influencing positive performance and contribution by the employees and hence improved organisational development. Increased COB among the employees in turn ensures better cooperation between the employees and the management as well as amongst each other and help in increasing the overall organisational performance. However increase in COB is ensured only in organisations where the employees have increased trust in the management (Gemmiti, 2008). The level of commitment and involvement displayed by the employees toward such involuntary contributions to the organisations is a reflection of the gratitude of the employees toward their organisations for providing them equitable treatment and a fair and just working environment. Hence in case of breach of the psychological contract on the part of the management is highly likely to affect the OCB resulting in reduced interest of the employees toward the organisational well-being. Leaders who are unethical and unfair are the key reasons for employees reduced willingness to participate in organisational activities and their will to look for other jobs. Hence the presence of unethical leadership in an unfair and unjust organisation which do not apply the psychological contract is known to be the primary cause for increased employee absenteeism and turnover (Organ, 1997). There is considerable evidence in support of the relationship between increased employee turnover and reduced level of trust in the organisations. The organisations that breach a pscyhological contract are perceived by the employees as highly untrustworthy and hence highly likely to mistreat their employees in the future. Furthermore the employees are likely to be apprehensive toward the management since they have little or no faith in the management to honor their commitment toward them. Such reduced trust in the management and the consequent rise in employee turnover is a problem of critical concern for organisations. The management is required to hire and train new set of employees all over again resulting in increased cost of training for the organisation. This also affects the productivity and endangers the competitive positioning of the organisations within the industry. Expectations of employers and employees: Maguire (2002) developed a three tier model of the psychological contract which describes the various aspects of the relationship between employees and employers. These include transactional components, career aspects as well as relational aspects. The transactional components are concerned with "specific monetary economic exchanges which are typically short term" (Barrett & Mayson, 2008: p. 390). The career aspects however form a critical element of the relationship between the employee and the employer. The employees are concerned with the manner in which their employers will be able to guide / lead them toward a positive career path while the employers in turn look for ways in which the employees can help the organisations by staying committed rather than leaving abruptly. The psychological contract based on the career aspect hence enables both the emplyees and the employers to form a long-term trustworthy relationship. The relational aspect, unlike the other two components is not concerned with durability or career aspect but rather with forming of relational and emotional bonds that is instrumental in motivating the employees and the employers to work together in harmony. It represents a social exchange between the two which plays a key role in forming trust at the workplace (Barrett & Mayson, 2008: p. 391). Improved transparency in organisations: The adoption of a positive psychological contract is of utmost significance for the organisations mainly due to the fact that such positive contracts help in improving employee commitment and attitudes toward the organisation. Furthermore it helps in improved transparency at workplace where the terms and conditions likely to affect the employees are clearly defined and explained to them beforehand. Such improved transparency at workplace helps in restoring the employee trust and faith in the management and helps in improving their attitudes toward the leaders. Various multinational organisations have implemented such strategies (i.e. Increased transparency at workplace) in order to elicit positive and improved commitment from their employees. Organisations today are increasingly adopting an ethical approach in management. For instance, in case of the take-over of The Body Shop by the multinational cosmetics giant LOreal in 2008 the leaders made sure that the employees of The Body Shop were kept involved in the process through constant communication (Pettinger, 2012: p. 153). Hence although the founder, Anita Roddick was severely criticised by the media and by the consumers alike for selling the company to L’oreal, a company which was previously a subject of harsh criticism from the founder herself, the assurance given by Roddick and the level of transparency in the transactions helped maintain the psychological contract and the mutual trust between the management and the employees. In response to being labelled as an unethical leader, Roddick responded by stating that "I have done what any founder ought to do. I have done all I can to protect the future of thousands of employees and community trade suppliers.... I do not believe that LOreal will compromise the ethics of The Body Shop. That is after all what they are paying for and they are too intelligent to mess with our DNA" (Peng, 2009: p. 91) However the Royal Bank of Scotland in contrast overlooked the psychological contract by keeping its employees in the dark with regard to the developments during the restructuring of the company during 2008. There was significant uproar over the alleged plans of the management at RBS to cut jobs and resort to downsizing as a part of its restructuring strategy. However the company strongly denied the allegations and dismissed the rumours through the media confirming that "Rumours of job losses have been greatly exaggerated. There are no plans for substantial job losses for the present". However within two months of expressly giving such a commitment the Bank went ahead and announced its plan resulting in 10,000 job losses followed by another 10,000 jobs in the following year. The bank violated the psychological contract between the employees and the employers by hiding vital information from the employers and communicating critical information via informal channels such as the media (in this case) rather than communicating the same directly to the employees via an internal organisational channels (Pettinger, 2012: p. 153). Conclusion: The concept of psychological contract has increased in significance over the years with more and more organisations committing to ensuring improved transparency, trust and ethics in the workplaces. The relationship between the employees and the employers are no longer as simple as a contractual obligation, but in fact extends far beyond it. The psychological contract offers the organisation a robust and effective framework that includes effective and smooth communication channels for interacting with their employees, and understanding their attitudes, perceptions and issues faced by them during the course of their jobs. The concept of psychological contract is complex in nature and difficult to interpret and implement, since unlike the legal contracts such it is unwritten, implicit and subtle in nature. The effective application of a psychological contract is likely to benefit both the parties involved i.e., the employees and the employers alike. The employers can benefit from the improved employee loyalty, dedication, and a highly motivated and committed workforce. The employees on the other hand can be beneffitted in terms of a secure job, with a healthy, fair and transparent organisations. Hence although the benefits of such contracts are manifold, the repercussions in case of breach of such a contract are equally strong and powerful enough to shake the very foundation of the organisations in question. It is hence highly imperative for the management to ensure smooth and effective application of such contracts in the organisations. References: Barrett, R., Mayson, S., (2008). International handbook of entrepreneurship and HRM. London, England: Edward Elgar Publishing. Brown, M. E., Trevino, L. K., Harrison, D. A., (2005). Ethical leadership: a social learning perspective for construct development and testing. Organizational Behaviour and Human Decision Processes, Vol., 97: p. 117 - 134. Gemmiti, M., (2008). The relationship between organisational commitment, organisational identification and organisational behavior. GRIN Verlag Publication. Jennifer, G., (2009). Understanding and managing organisational behaviour. London, England: Blackwell Publication. Organ, D. W., (1997). Organizational citizenship behavior: Its construct clean-up time. Human Performance, Vol. 10: p. 85-97. Peng, M., (2009). Global business. Thousand Oaks, CA: Cengage Learning Publication. Petersitzke, M., Domsch, M. E., (2009). Supervisor psychological contract management: Developing an integrated perspective on managing employee. Frankfurt, Germany: Springer Publication. Pettinger, R., (2012). Organisational behaviour: Performance management in practice. London, UK: Routledge Publication. Rousseau D. (2001). Schema, promise and mutuality: The building blocks of the psychological contract. Journal of Occupational & Organizational Psychology, Vol. 74 (4): p. 511 - 541 Sparr, J. L., Sonnentag, S., (2008). Fairness perceptions of supervisor feedback, LMX and employee well-being at work. European Journal of Work and Organizational Psychology, Vol. 17: p. 198 - 225. Truss, C., Soane, E., Edwards, C., (2006). Working life: Employee attitudes and engagement 2006. Research Report. London: Chartered Institute of Personnel and Development Beauty Resource (2014). The history of beauty industry [Online] Available at: [Accessed: May 12, 2014] Read More