Human resource management practices and psychological contracts in Swiss firms: an employer perspective

This article investigates the relationship between HRM practices and organisational performance, considering the fulfilment of the psychological contract as an intermediate variable. Apart from testing the influences of a high-investment HRM system index on the psychological contract, the influence of individual HRM practices and their interaction was examined. The sample consisted of HR managers of 92 firms in Switzerland and the data were collected for the Cranfield Network project. The results showed that the high-investment HRM system index predicted the fulfilment of the psychological contract, and some of the individual HRM practices were correlated with the fulfilment of the psychological contract. The interaction effect of performance appraisal and performance-based pay on the fulfilment of the psychological contract showed that performance appraisal is only effective in combination with a tangible consequence in the form of performance-based pay. We neither found a mediation effect for the psychological contract nor an association with organisational performance. This might be due to the fact that the questionnaire was filled in during the financial crisis in 2008 and that the organisational performance was assessed in an economic crisis. Our study sheds light on the relationship between HRM practices and the psychological contract and contributes to the body of research on psychological contracts from a macro level perspective.     

Creating psychological and legal contracts through human resource practices: A signaling theory perspective

Despite the surge in research on the psychological contract over the past two decades, there has been little integrative research that has examined psychological contracts in conjunction with legal contracts. We address this shortcoming by presenting a framework for understanding the differences between psychological contracts and legal contracts in the United States. This is done by presenting definitions and examples of psychological contracts (i.e., relational and transactional) and the two forms of legal contracts: (a) express (written and oral), and (b) implied (quasi-contract and promissory estoppel). In addition, by utilizing signaling theory [Rynes, S.L. (1991). Recruitment, job choice, and post-hire consequences: A call for new research directions. In M. D. Dunnette & L. M. Hough (Eds.), Handbook of industrial and organizational psychology, (pp. 399–444). Palo Alto, CA: Consulting Psychologists Press.], we describe the means by which human resource practices such as recruitment, training, performance appraisal, compensation, and employee handbooks can create psychological and legal contracts. We conclude by proposing directions for future research and implications for practicing managers.     

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.     

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 impact of employment equity regulations on psychological contracts in South Africa

This article will show the impact of employment equity legislation on the psychological employment contracts of the three main employee groupings in South African society. This study is important in that it fills the gap in the literature that identifies labour market regulations as an important shaping influence on the psychological contract. More than 500 managers from across South African industry and from all ethnic groups were surveyed to identify differences in psychological contracts and attitudes towards the social transformation regulations. We found that the legislation has impacted differentially on the three groupings mainly in terms of their loyalty to stay with their organizations, the focus on their career development in terms of the external labour market and the degree to which they felt they had been affected by the legislation. Additionally we find that the perceived linkage between job satisfaction and labour turnover is significantly weakened by labour market legislation in the case of the beneficiaries of the legislation, but that this may not be the case for those negatively affected by the legislation. The findings have significant implications for the HRM practices of multinationals operating in societies with significant labour market regulatory interventions.     

Inclusive human resource management in freelancers' employment relationships: The role of organizational needs and freelancers' psychological contracts

This study aimed to advance our understanding of inclusive human resource management (HRM) in freelance employment. We examined organizational needs and freelancers' psychological contracts with a qualitative interview study among eight dyads of HR managers and freelancers. Although the findings showed that organisations and freelancers have different interests, both parties agreed on what inclusive HRM entails in freelancers' employment relationships. However, within the dyads, the content of the psychological contract was not always viewed the same by HR managers and freelancers. Hence, negotiating mutual expectations when implementing inclusive HRM to avoid psychological contract breach appeared important. Furthermore, organizational needs did not seem to be considered when designing inclusive HRM. Due to this lack of strategic fit, organisations may waste opportunities of tapping into the full potential of hiring freelancers. The findings provide organisations insight in considering freelancers as potential sources of competitive advantage.     

From HRM to psychological contracting - the case of Finnish mobile content producing companies

The paper explores how human resource management (HRM) is currently intended, used and experienced in 10 Finnish companies operating in the field of telecommunications. Our specific focus is on direct and indirect forms of managerial control and the psychological contract. We examine how psychological contracts are created and maintained, and study their relationship with HRM as a means of either direct or indirect control. Our findings indicate that employees are voluntarily assuming the obligation to exercise organizational control as a part of their psychological contract in exchange for the freedom and autonomy that they enjoy. Recruitment emerges as a top employer priority. However, not many other human resource (HR) techniques are used. Rather, carefully selected workers are allowed the autonomy and freedom to define what constitutes their psychological contract, with a duty to control its attractiveness from the employers' point of view.     

Human resource practices as communications and the psychological contract

This article examines the psychological contract and human resource practices as communications relevant to that contract. We argue that employees, at certain times only, systematically analyze their employers' HR practices for meaning vis-ri-vis their psychological contract. Judgments about the adequacy with which their psychological contracts are fulfilled result from such systematic analyses, and these judgments have important effects on employee commitment. Practical implications of our analysis are also discussed.     

How Do Developmental and Accommodative HRM Enhance Employee Engagement and Commitment? The Role of Psychological Contract and SOC Strategies

In the context of the changing workforce, this study introduced two perspectives on HRM and distinguished universalistic developmental HRM from contingent accommodative HRM. We predicted two separate pathways for the effects on two employee outcomes: work engagement and affective commitment. We expected that developmental HRM would universally relate to employee outcomes by rebalancing the psychological contract between the employee and organization into a less transactional to a more relational contract. We also predicted that accommodative HRM would relate to outcomes only when fulfilling specific needs of employees, associated with their selecting, optimizing, and compensating strategies. Results of a multilevel study among 1058 employees in 17 healthcare units fully supported our expectations regarding the role of the psychological contract. Additionally, we found support for the expected roles of selection and compensation, but not for optimization strategy. This study contributes to the literature by demonstrating that HRM relates to employee outcomes through multiple pathways, which can be either universal or contingent.     

A cross‐cultural examination of the relationships among human resource management practices and organisational commitment: an institutional collectivism perspective

Previous research has shown that human resource management (HRM) practices vary across cultures. However, little research has empirically compared the effects of various HRM practices on firm‐level or individual‐level outcome variables across cultures. Drawing upon psychological contract theory and the literature on cultural values, the present study examined the effects of three organisational‐level HRM practices on individual organisational commitment in a survey of 2424 individuals in 120 organisations located in four countries and three industries. Based upon the GLOBE study, we classified the four countries into two groups – high versus low institutional collectivism. The results of our hierarchical linear modelling (HLM) analyses found significant differences in the effects of organisational‐level HRM on individual organisational commitment across cultures for two of the three HRM practices included in our model: training and teamwork. We also found partial support for differences across cultures for the effects of the third HRM practice: employee involvement in decision making. Overall, our results support the utility of theoretical and empirical models that address multiple levels of analyses to better understand the mechanisms through which the HRM‐performance link takes place across national cultures.     

Dynamic and customer-oriented workplaces: implications for HRM practice and research

Changes in competitive environments are resulting in changes to the nature of work. We present job structure changes and a heightened customer orientation as two primary examples of changes that necessitate adaptation of human resource management (HRM) practices. The level of success in light of these organizational changes will largely be determined by how effectively people are managed in the new organizational environments. HRM practices that adapt to the new organizational conditions can add tremendously to the business and be a key to long-term competitiveness. We examine the implications of these changes for HRM practice and research, with particular attention to psychological contracts, job analysis, selection, and performance appraisal. The thrust of the article is to identify and describe research directions that have the potential for contributing to the future relevance and success of HRM.     

HRM in the SME sector: valuable employees and coercive networks

Although the productivity and survival of small and medium-sized enterprises (SMEs) may be enhanced if they adopt human resource management (HRM) practices, there is a far greater degree of informality in employment practices in SMEs than in larger workplaces. The aim of this paper is to assess the extent to which a range of factors both internal and external to the workplace predict the extent to which HRM practices have been adopted in SMEs. Using data from the 1998 Workplace Employee Relations Survey, the analysis reveals that differences in workforce skill-mix, unionization and the customer base are important influences, with the first of these influences being particularly strong. As such, we suggest SMEs may lack the capability to develop HRM practices, but they are more likely to adopt such practices if they employ highly skilled employees and are networked to other organizations     

Human resource practices: Administrative contract makers

Practices used in recruiting, training, performance review, and compensation all contribute to employee beliefs in a psychological contract with their employer. This article presents the basic features of contract-making which human resource practices must manage. Organizations with multiple contract makers must align the messages they send to create a contract that works and can be kept. Recommendations are made for managing the psychological contract more effectively.     

Transitions In the Psychological Contract: Some Evidence From the Banking Sector

This study examines the psychological contract in a sample of 107 employees in a retail bank. Deregulation, market-entry by non-traditional suppliers, and the introduction of advanced technology have changed the security of and rules implicit in the employment contract in the UK banking sector, which is one of the leading contenders for downsizing and delayering. Many banks are experiencing increased employee cynicism. New structures and technology, demanding levels of customer service, and new competitors have produced heightened attention towards performance and are associated with the need for employees to develop new competencies, such as relationship-handling and sales skills. Regardless of whether banks pursue high performance management systems or control-based HR strategies, the requirement for committed and engaged employees able to develop new competencies is an assumed constant. Demographic factors such as age, service and sex are found to be partial predictors of some attitudinal items. However, these proxy measures of attachment to the old employment deal are not related to items that consider commitment or satisfaction. the psychological contracts in the bank are highly fragmented. Seven underlying constructs are revealed: ‘frustratedly disengaged’, ‘still ambitious’, ‘passively flexible’, ‘guidance seekers’, ‘buy me outers’, ‘don't push me too fast’ and ‘just pay me more’. Implications of the research for HRM, the management of new internal labour markets in the banks and future directions of research on the psychological contract are discussed. It is concluded that a new set of internal labour markets are being created within the banks, the dynamics of which clearly revolve around a wide range of individual factors. Accepted wisdom about participative management practices will be challenged in the HR strategies of the late 1990s.     

The role of wasta in repatriates’ perceptions of a breach to the psychological contract: a Saudi Arabian case study

This study examines the influence of a national cultural dimension, specifically a strong orientation towards collectivism/reliance on network relationships, referred to as ‘wasta’, on the way in which psychological contracts form and change in a Saudi organisation. Specifically, it focuses upon how the psychological contract is perceived to have been breached by repatriates because of the role that wasta plays in shaping formal and informal HR practices pre- and post-assignment. The analysis demonstrates that prior to international assignment, wasta was taken for granted and only implicitly acknowledged as influencing selection criteria for assignments and individuals’ expectations and obligations associated with their psychological contract. Once repatriated, wasta was foregrounded and perceived as highly problematic in terms of career advancement. This shaped repatriates’ perceptions that their psychological contract had been breached, influencing their intentions to leave. These findings suggest that the psychological contract can be viewed as highly context-specific, as well as a person-centred phenomenon. We consider the implications of our research in terms of the influence of national cultural characteristics on individual’s perceptions of breaches to the psychological contract and highlight the possible implications generally for Saudi Arabia, which is aiming to be less reliant on foreign labour.     

Contract employment policy and research productivity of knowledge workers: an analysis of Spanish universities

Abstract

This article investigates how contract employment practices adopted by universities—fixed-term contracts and permanent contracts—impact research productivity measured in terms of publications in scholarly journals. The empirical application considers the Spanish public higher education system for the period 2002–2008. We report an inverse U-shaped relationship between the rate fixed-term contracts and the research productivity of Spanish universities. That is, contract policies based on fixed-term contracts are conducive to research productivity; however, beyond a critical threshold value increases in the proportion of fixed-term contracts are associated with declining research productivity. These findings reveal that contract employment policies shape research productivity, and that flexible and balanced contract practices are critical for enhancing universities’ research productivity. The results suggest that the excessive use of fixed-term contracts might create an unstable working environment that limits the universities’ capacity to capitalize on their knowledge workers. Policy implications and future research avenues are discussed.     

Sustainability and ideology-infused psychological contracts: An organizational- and employee-level perspective

In this paper we explore sustainability-based ideology-infused psychological contracts (IPCs) from both organizational and individual-level perspectives. Better knowledge about how and when IPCs operate and the role of the organization's human resource management in that process is beneficial to firms that wish to capitalize on the positive outcomes resulting from IPCs while avoiding the creation of ideological obligations that they are unable or unwilling to meet (Rousseau & McLean Parks, 1993; Thompson & Bunderson, 2003). Organizations may show they care, through sustainable HRM strategies, and encourage ideological currency exchange in order to recruit and retain quality employees, increase organizational commitment, increase citizenship behaviors, strengthen identity, increase job satisfaction, and maintain a positive public perception and reputation. On the other hand, if an organization fails to fulfill an IPC it may lead to negative behaviors and consequences. We extended our arguments beyond the individual-level focus common to psychological contract theory, to include firm-level context. In doing so, we explain how an organization's efforts towards being more sustainable can connect employees to the organization through their IPCs, and moreover, through their IPCs, employees can connect to corporate goals. Finally, we advance current theory by exploring the underlying motivations that drive organizations and individuals to develop IPCs.     

Sustainable HRM strategies and employment relationships as drivers of the triple bottom line

This paper aims to develop a conceptual framework capable of analysing the contributions made by strategic human resources management (SHRM) to firm sustainability and competitiveness. Specifically, we identify different sustainable corporate strategies and the way in which they are supported by coherent sustainable HRM strategies. We propose different sustainable employment relationships considering two dimensions: inducements offered by an organisation and expected employee behaviours in order to comply with sustainable HRM strategies. All the above also necessitates a system of HRM practices (content of the employment relationship) that should be well defined and oriented towards sustainability. Accordingly, we suggest associations of specific systems of HRM practices, depending on the type of employment relationship and sustainable HRM strategy, in order to promote the expected ‘Triple Bottom Line’, and which also improve firm competitiveness.     

Beating the advertising drum for the employer: How legal context translates into good HRM practice

The legal context is constitutive for the legitimacy of HRM practices. In this paper, we use an institutional work approach to investigate how a legal mandate requiring employers to state the minimum pay in job advertisements in Austria was translated into a legitimate HRM practice over time. In this process, HR practitioners translated the law into an HRM practice going well beyond the legal requirements. In contrast to merely constraining HRM practice, we find HR practitioners actively engaging with the legal context. In the discursive struggle over a legitimate translation of the law into practice, actors speaking ‘for HRM’ were mostly HRM consultants and service providers building on an individualist and unitarist frame of reference for employment relations. Our findings contribute to a contextualized understanding of HRM practices by considering the interaction of HR practitioners and legal context.