Employees' perceptions of HR investment and their efforts to remain internally employable: testing the exchange-based mechanisms of the ‘new psychological contract’

This study investigates the relationship between perceived investment in employee development (PIED) and the internal employability efforts that such perceptions are assumed to influence under the terms of the ‘new psychological contract’. A cross-sectional survey among 238 employees in a Norwegian IT and management consulting firm provides support that PIED relates positively to employees' openness to develop themselves and adapt to changing work requirements (‘internal employability orientation’) and their active pursuit of new competencies and career trajectories within the organization (‘internal employability activities’). However, our findings challenge widely held claims that investment in employee development elicits these responses by way of the reciprocal mechanisms of a social exchange relationship. While PIED is found to relate positively to employees' perceptions of a social exchange relationship with their organization, these positive exchange experiences are not supported to influence internal employability outcomes. Our findings do support, however, that PIED relates negatively to perceived economic exchange relationships that in turn undermine internal employability orientations. Suggestions for future research and implications for practice are discussed.     

Linking strategy and human resource practices: How employee and customer contracts are created

Organizations implement their business strategies through the human resource (HR) practices they use. These practices are major determinants of employees' psychological contracts. How employees interpret the terms of their employment impacts motivation, innovation, and customer service. This article describes four common types of psychological contracts in US firms and the HR practices that create them. It develops a framework for understanding how each contract shapes employee performance, retention, cooperation with fellow employees and customer responsiveness. It presents recommendations for more effectively managing the link between business strategy and the psychological contract of employees. © 1994 by John Wiley & Sons, Inc.     

The Marketization of Local Services and the Fragmentation of Labour Markets

This paper is a product of the ESRC's Local Governance research programme which considers the employment implications of the introduction of market forces into the provision of local government services in the United Kingdom. It discusses the fragmentation of labour markets as both a process and outcome of the commercialization of local service provision. In contrast to privatization scenarios, marketization suggests the blurring of the distinction between public and private employment deriving from the commercialization of municipal services and the transmission of local authority work organization and culture into the private sector. An assessment of employment change, workforce recomposition and bargaining capacity is offered which leads to the development of new models for institutional restructuring. ‘Sectoral de-differentiation’ is a concept developed to address the evolution of new labour market patterns and a ‘public capsule’ model is offered to explain the locality and service variations in marketization outcomes.     

East German labour market in transition: segmentation and increasing disparity

The employment system of the former GDR–like that of other socialist countries–could be seen as an aggregation of ‘internal labour markets’ with long term employment, internal promotion and little external mobility. Consequently the rapid integration of the East German economy into the western market economy has led to structural problems of the labour market which combined with and intensified the general effects of the sharp decrease in the demand for labour.     

Is coworker feedback more important than supervisor feedback for increasing innovative behavior?

A growing body of research explores human resource management practices that encourage employees to innovate. In this study, we examine the links between different sources of feedback (supervisor and coworker) and employees’ innovative behavior. Drawing on social exchange theory and the job demands‐resources theory, we first propose that work engagement and psychological contract breach mediate the relationship between supervisor feedback and employees’ innovative behavior. Second, we propose a moderated mediation model in which coworker feedback attenuates the relationships between supervisor feedback and employees’ innovative behavior through the mediating mechanisms of both work engagement and psychological contract breach. Using three waves of multisource data from 300 Chinese employees and their 64 supervisors, we found a dual‐mediation pathway by which employees’ work engagement and perceptions of psychological contract breach mediate the influence of supervisor feedback on innovative behavior. Our results also show that coworker feedback can be used to supplement the lack of supervisor feedback when required. Organizations are advised to ensure that employees obtain regular feedback from multiple sources because such feedback can promote employees’ work engagement and perceptions that the organization is upholding its side of the psychological contract, which fosters employees’ innovative behavior.     

Collectivism versus individualism in Dutch employment relations

From a very centralistic and collectivistic tradition after World War Two, Dutch employment relations now show a trend towards radical decentralisation and individualisation. What might be the consequences of this trend for labour relations? Do developments still fit within a movement towards ‘organised decentralisation’ or will the existing system of labour relations be hollowed out and destroyed? And what will be the consequences for ER management at company level? We present empirical data on how companies deal with their decentralised and individualised employment relations. It appears that, in the main areas such as labour contracts, working time arrangements, reward systems and development plans, decentralisation and individualisation are taking place. It has also become clear that management as well as workers support this and that a new form of negotiation between them is developing at workplace level, resulting in what we call ‘third contracts’ that are additional to the initial labour contract and the collective agreement. Our results also highlight the pragmatic way in which companies deal with these decentralised and individualised employment relations, which, nevertheless, remain linked to the national and collective levels of bargaining. Within the multilevel system of Dutch employment relations a new balance between collectivism and individualism is emerging.     

HR practices and commitment to change: an employee‐level analysis

This article explores the relationship between HR practices and commitment to change in three health service organisations in Ireland. The research focuses on employee views of HR practices and resulting employee‐level consequences including commitment to change, perceptions of the industrial relations climate and the psychological contract, and work–life balance. The findings indicate that the HR practices valued by employees, and which are related to a range of employee‐related consequences, are very different from the lists of sophisticated HR practices that appear in the high performance literature. The research suggests that organisations need to ensure that attention is still paid to the basics of the employment relationship and that these are not lost in the rush to introduce more sophisticated approaches to managing employees.     

Resource link: Re-establishing the employment relationship in an era of downsizing

This article examines AT&T's efforts to deal with force management issues by developing Resource Link^sm, an internal service unit that uses payroll management employees to help meet the variable work force needs of AT&T. Resource Link is discussed in terms of its contributions to increasing employment stability, improved learning, better governance, and helping to renew the psychological contract between employees and employers. The paper calls for future research in four major areas: skills development, teamwork, reward systems, and career management. It also addresses the potential applicability of this type of program to other firms. © 1995 by John Wiley & Sons, Inc.     

Employment security and employee organizational citizenship behavior: does an ‘iron rice bowl’ make a difference?

Empirical evidence linking employment security to organizational citizenship behavior (OCB) is equivocal. Limited research has considered the effect of employment status. Using data from 217 subordinate–supervisor dyads in a large state-owned enterprise in China as basis, our research found significant association between overall perceived employment security and employee OCB. However, this relationship may vary depending on employment status. Further analysis suggested a curvilinear relationship for permanent employees with an ‘iron rice bowl’ (lifetime employment) and a linear relationship for contractual employees without an ‘iron rice bowl’. Our study contributes to a thorough understanding of the relationship between employment security and positive behaviors in terms of OCB by integrating the literature on social exchange, psychological contract, and proactive behavior.     

Epidemics,labour markets and unemployment: the impact of SARS on human resource management in the Hong Kong service sector

This article examines the links between epidemics and their economic consequences, specifically in terms of their impacts on labour markets and jobs. To exemplify the above, we examine the effects of SARS (Severe Acute Respiratory Syndrome) on the Hong Kong economy, its labour market and its level of employment and unemployment. The article hypothesizes that the greatest impact would be on human resource management (HRM) in the service industries and on particular sub-sectors, such as the hotel sector. It concludes that the dramatic demand and supply ‘shocks’ significantly affected both the demand for and the supply of labour in the sector, with discernible HRM consequences.     

Profiling the desirable psychological contract for different groups of employees: evidence from Greece

This study aimed to examine potential variations in employees' perceptions of the desirable psychological contract, based on gender, age, and educational level. A total of 1145 employees – 642 of whom were female – aged between 18 and 64, who had attended all educational levels, participated in the study. T-tests and analyses of variance suggest that there is no uniform view of the psychological contract content among different groups of employees. With the exception of involvement with decision-making affecting the organization, women tend to expect more from their employment relationship. As for age groups, the ‘new generation’ emphasizes balance in personal life, the ‘old generation’ is rather indifferent, while the ‘desert generation’ is the most demanding and attached to the ‘old psychological contract’. Finally, individuals with at least college education have relatively increased expectations, with the exception of co-worker support for personal problems and continuous training.     

A STRATEGIC PERSPECTIVE OF BANK FINANCIAL CONGLOMERATES IN LONDON AFTER THE CRASH

The deregulation of financial markets has led to severe challenges for bank management and banking strategy. Investment banking is a sector that has experienced important and well-publicized changes. London's celebrated ‘Big Bang’ helped to stimulate new banking strategies that were characterized by the formation of so-called ‘bank financial conglomerates’. The October 1987 stock market crash, however, has precipitated strategic and organizational crises for many of these banks active in securities business and capital market products. This article re-examines investment banking strategies in London and some of the lessons associated with the crash experiences.     

Changing Organizational Forms and the Employment Relationship

This paper draws upon new research in the UK into the relationship between changing organizational forms and the reshaping of work in order to consider the changing nature of the employment relationship. The development of more complex organizational forms – such as cross organization networking, partnerships, alliances, use of external agencies for core as well as peripheral activities, multi‐employer sites and the blurring of public/private sector divide – has implications for both the legal and the socially constituted nature of the employment relationship. The notion of a clearly defined employer–employee relationship becomes difficult to uphold under conditions where employees are working in project teams or on‐site beside employees from other organizations, where responsibilities for performance and for health and safety are not clearly defined, or involve more than one organization. This blurring of the relationship affects not only legal responsibilities, grievance and disciplinary issues and the extent of transparency and equity in employment conditions, but also the definition, constitution and implementation of the employment contract defined in psychological and social terms. Do employees perceive their responsibilities at work to lie with the direct employer or with the wider enterprise or network organization? And do these perceptions affect, for example, how work is managed and carried out and how far learning and incremental knowledge at work is integrated in the development of the production or service process? So far the investigation of both conflicts and complementarities in the workplace have focused primarily on the dynamic interactions between the single employer and that organization’s employees. The development of simultaneously more fragmented and more networked organizational forms raises new issues of how to understand potential conflicts and contradictions around the ‘employer’ dimension to the employment relationship in addition to more widely recognized conflicts located on the employer–employee axis.     

Challenges to the psychological contract in Hong Kong

This study investigates empirically the psychological contract of a sample of 205 Hong Kong junior and senior managers. It determines the perceptions of factors that employers and employees see as relevant to the employment relationship, and then analyses perceptions of and attitudes towards recent changes in the Hong Kong business environment. In addition to exploring the nature and content of manager's psychological contracts in Hong Kong, the study explores how contracts are related to and affected by both the external environment and internal management practices. A survey questionnaire is used to measure the promises and commitments perceived to have been made by organizations, and the obligations that employees perceive they owe to their employer. In addition, the actual policies and practices of the employing organizations are determined. The impact of the HRM climate of the employing organizations (actual policies and practices) and the attitudes, expectations and feelings of organizational members about ongoing changes in the business and management environment on this exchange relationship are isolated. The study makes two contributions to the psychological contract literature: it examines the relevance of a psychological contract approach in a nonWestern geographical region; and it moves the concept of HRM preferences more centrally into the psychological contracting literature. This enables a better understanding of the construct in relation to the comparative management literature. The content of the psychological contract is shown to be multi-dimensional. Perceptions of organizational commitments and promises focus around four judgements: an intrinsically satisfying and challenging environment; a secure and rewarding job; equity; and supportive leadership. By Western standards the employee side of the employment relationship 'deal' is more one-sided. The proportion of managers who believe employees are strongly obligated to do certain things for their employers is very high. The study examines the factors that predict employees' psychological contracts. Actual HRM practices are shown to predict perceived commitments and obligations, and the strength of obligation is related to perceived promises and commitments. In contrast to the emphasis on the internal cognitive and individualized conception of the psychological contract in much of the literature, this study indicates that this decontextualizes psychological contracts. The true nature of a psychological contract is shown to be an exchange relationship firmly linked to a culture's reciprocity norms.     

Changes in psychological contracts during the global financial crisis: the manager's perspective

The employee–organisation relationship is dynamic and arguably affected by contextual factors, such as a change in the economic environment. This study uses data collected from managers in Australia before and after the beginning of the global financial crisis (GFC) to examine the changes in psychological contract (PC) terms from the manager's perspective. In particular, as industries can be affected differently by economic crisis and gender discrimination can increase in tough economic conditions, we examined if any changes in PC terms were contingent on industry and employee gender. The study's results show that the terms of the employment relationship deteriorated in Australia only for employees working in industries affected by the GFC. Further, we found that some gender differences in the terms of the PC exist independent of the state of the economy. In addition, a three-way interaction indicates that managers working in industries not affected by the GFC are allocating a greater proportion of their resources to their female employees than to their male employees. Ongoing labour shortages and gender inequities in Australia might have prompted managers in non-affected industries to use their relative ‘resource-rich’ advantage to positively influence the employee–organisation relationship for female employees, a traditionally disadvantaged group.     

Alternative diversity management: Organizational practices fostering ethnic equality at work

Taking a critical, performative stance, this study aims to advance our understanding of diversity management enhancing ethnic equality at work. Relying on a multiple-case study, we inductively identify organizational practices that foster the valuing of multiple competencies and the ability to express multiple identities, two key organizational markers of ethnic equality advanced in the gender and diversity literature. Our analysis indicates that ethnic equality is fostered by practices that broaden dominant norms on competencies and cultural identities, and avoid reducing ethnic minority employees to mere representatives of a stigmatized social group. In contrast to ‘classical’ diversity management practices which focus on individuals’ cognitive biases toward out-group members, these practices redefine what is ‘standard’ in the employment relationship, hereby structurally countering ethnic inequality within organizational boundaries.     

HR outsourcing: the impact on HR role,competency development and relationships

The business benefits of an outsourcing strategy are well documented, and HR is encouraged to outsource in order to add value. Yet little is known about how HR outsourcing affects the HR role, competencies and relationships with senior management. These issues are examined through 27 semi‐structured interviews with senior HR professionals, comparing HR departments engaged in HR outsourcing with those maintaining full in‐house HR provision. The findings indicate that HR outsourcing stymies HR role transformation. HR outsourcers experienced limited skill development and an increased focus on cost reduction at the expense of their strategic position. In contrast, non‐HR outsourcers actively engaged in other parts of the business, developing competencies that garnered trust and support of senior managers. The benefits of an external HR community appear limited. The study suggests that an ‘internal’ HR community is better placed to enhance HR departmental roles.     

Redefining psychological contracts with the U.S. work force: A critical task for strategic human resource management planners in the 1990s

The well-publicized waves of layoffs in recent years have destroyed the long-standing psychological contract between employees and their employers which promised pay, promotion, and job security in exchange for worker skills, effort, and loyalty. This article provides empirical support for the transformational effect layoffs have had on psychological contracts and discusses the critical role human resource management must play in establishing and developing new contracts to guide future employment relationships between employers and employees. Implications for both academics and practitioners are provided. © 1998 John Wiley & Sons, Inc.     

'Fun and surveillance': the paradox of high commitment management in call centres

Much of the research into telephone call centres has focused on the coercive employment systems which are adopted in these organizations. This appears to contrast with the high levels of customer service and satisfaction which are often required for them to be successful. Our research, which is based on two case studies of call centres studied in depth, challenges this 'satanic mills' image. We explore the ways in which both companies sought to balance the pressures in the product and labour markets and employee needs to develop strategies which combined elements of commitment and control. They developed sophisticated human resource practices, which resembled the high commitment management approach, while, at the same time, maintaining a highly controlled and measured work environment. Consequently, there was a greater alignment between their HR practices and control systems, the needs of employees and the high quality of interactions with customers expected. This suggests that high commitment practices are not automatically associated with extensive employee discretion, as has been argued in the manufacturing sector. HR practices of this kind can be used to offset some of the worst features of call centre working. These findings illustrate the variety of HR practices in call centres and suggest some possible reasons for this diversity.