An Investigation o f the Psychological Contract among temporary employee’sin a chosen organisation

Edel Lane

A dissertation submitted in partial fulfilment for a BA (Hons) in HumanResource Management

National College o f Ireland

2012

I hereby certify that this material, which I now submit for assessment of the programme of study leading to the award of B A (Hons) in Human Resource Management is entirely my own work and has not been taken from the work of others save and to the extent that such work has been cited and acknowledged within the text of my work

Declaration

SignedEdel Lane

Date 31st August 2012

Student Number 10210679

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This study is an investigation of the Psychological Contract among temporary employee’s

in a chosen organisation Temporary employee’s were invited to complete a questionnaire,

which sought to identify the psychological contract they have with their employer The

study highlighted the dimensions of the psychological contract by measuring perceptions

of employee and employer obligations Findings suggest that employees are willing to

sacrifice security and commitment in favour of employability Organisational implications

and recommendations are identified

Abstract

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Table of ContentsAbstractDeclaration

Page NumberChapter 1 - Introduction1.1 Research Question 61.2 1.2 The Organisation 71.3 Research Aims and Objectives. 8Chapter 2 - Literature Review2.1 Introduction 112.2 What is the Psychological Contract? 112.3.Origins of the Psychological Contract. 132.4 Formation of the Psychological Contract 152.5 Changing nature of the Psychological Contract. 202.6 Temporary employee’s and their Psychological Contracts 212.7 The new temporary employee 222.8 Psychological Contract Types. 232.9 Psychological contract violation in temporary employee’s. 262.10 Criticisms. 28Chapter 3 - Research Methodology3.1 Research Philosophy. 313.2 Research Paradigm 353.3 Research Methodology 353.4 Structure of the Questionnaire 383.5 Reliability and validity. 403.6 Axiology - Ethical considerations 41Chapter 4 - Results and Findings4.1 Response Rate 444.2 Sample Demographics. 444.3 Psychological Contracts. 464.4 Transitional Psychological Contract. 514.5 Summary 53Chapter 5 - Conclusion and Recommendations5.1 Conclusion. 555.2 Recommendations 56Chapter 6 - Bibliography 61Appendix 1 - Phases in Psychological Formation 64Appendix 2 - The Psycones Analytical Framework 65Appendix 3 - Assessment of the Psychological Contract 66Appendix 4 - Questionnaire 67Appendix 5 - Questionnaire Response Summary 72

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Chapter 1

Introduction

The flexible workforce has become a key competitive tool for many organisation’s as they

adapt to a competitive landscape that is in constant flux due to the impact of economic changes and

technological innovations Organisations are seeking out ways to improve their competitive

advantage through their key asset, a flexible workforce By acting as a buffer, temporary

employment allows employers to adjust their operations more effectively to changes in competitive

conditions, including business-cycle fluctuations in demand In addition, employers may also be

using temporary posts as a cost-saving way of screening potential candidates for permanent jobs in

their organisations

The increase in temporary employment reflects not only employer’s demands but

individual’s demands for flexibility in working patterns Others have less choice The

introduction of the public sector moratorium on recruitment and promotions means all public

sector recruitment is mainly on a temporary basis Workers in the current knowledge-based

economy are seeking out ways of differentiating themselves through their skills and knowledge

As flexible practices become more acceptable, as more women are joining the workforce who seek

flexibility, as legislation improves, and as this knowledge economy strengthens, values based on

skills and knowledge, rather than loyalty are becoming the imperative Employee’s may choose to

be employed in temporary rather than permanent jobs for a number of reasons, e g temporary jobs

may involve less commitment to the employer and, hence, better opportunities to combine work

with other activities Other individuals may value temporary jobs as a means of getting a foothold,

securing an immediate source of income while gaining work experience

The OECD defines temporary employment as ‘dependent employment of limited duration,

in contrast to permanent work where the contract which regulates the employment relationship has

Chapter 1 - Introduction

1 1 Research Question

An investigation o f the psychological contract o f the temporary workers in a chosen organisation

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no end-date5 (OECD 2011) It’s use in organisations is pervasive due to an increased need for

flexibility and cost reduction, according to De Cuyper and De Witte (2011, p 104) Temporary

employment is often associated with the service industry, seasonal work such as tourism or

agriculture In Ireland, the temporary employment accounts for 7 5% of men, and 9% in women

The average across OECD countries is 15% (OECD 2011, p 8)

1 2 The Organisation

The organisation is a multi-national telecommunications company with headquarters in

Dublin and site office throughout Ireland It currently has 850 employee’s It’s mission o f ‘Simply

for everyone’ has driven it’s objective o f bringing simplicity o f TV and broadband service to it’s

785,500 customers Similar to many organisations in today’s climate, the organisation finds itself

adjusting to an uncertain environmental landscape Where once it had a strong internal

employment market where employee’s made a career with the firm, recent changes have resulted

in new employee’s being increasingly recruited on fixed term or temporaiy contracts in an effort

for the company to achieve competitive advantage through flexibility The chosen organisation has

8% temporary employment, primarily involved in project work associated with future

technological roll-outs, such as warehousing products, IT and network engineering professionals

and call centre representatives

The use o f temporary workers as a flexible tool has seen a steady increase Employment

has grown from 2% in 2000 to 8% in 2012 The biggest departments are Stores and IT Although

the call centre traditionally consisted o f the largest portion, the greatest increase recently has been

in the stores and warehouse These contracts are used for a variety o f purposes, ranging from

absence cover or to adjust to changes in dem and resulting from a new product roll-out

However what is not picked up by retention or legal metrics is the effect that temporary

employment has on the psychological contract among temporary employee’s in the organisation

As it is a recent phenomenon, uncertainty exists about the impact o f flexible work practices on

employees, as evidenced by increasing legislation such as the introduction o f T he Protection of

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Employee’s (Fixed Term Work Act) 2003’, which provides that fixed-term employees may not be

treated less favourably than comparable permanent employees unless the employer can objectively

justify the different treatment Many organisations struggle to create a template for it’s flexible

practices and policies Employment under a temporary contract often entails a different set o f legal

obligations on behalf o f employers and certain aspects o f employment protection legislation may

not apply to temporary contracts

The organisation needs concrete evidence in order to build policy and legislation The

theory o f psychological contract between the employer and employee is particularly appropriate in

this context, and is therefore important to investigate the phenomenon further from an employee

context

1 3 Research Aims and Objectives

1 have a personal interest in this subject, having been employed on both temporary and

permanent contracts within the organisation In addition, as a recruiter for the organisation, I am

involved in a crucial phase o f the psychological contract and have experienced the various

challenges related to this practice both from the organisation’s and employee’s perspective

I will define the psychological contract and examine the ‘reciprocal contract’ of a fixed

term employee and the organisation

My research question is

An investigation o f the psychological contract o f the temporary workers in a chosen organisation

My objective from this research is

1 To explore the type o f psychological contract currently in place between temporary workers and

the organisation

The purpose o f this is to focus on how temporary employment as a HR strategy affects workers

performance, well-being and job satisfaction

2 To explore the impact o f temporary contract employment on the psychological contract o f those

employee’s

The objectives above will provide evidence needed to establish the extent how temporary

working effects the psychological contract Through this, I will make recommendations which I

hope can be used as a practical tool to enhance the strategic conversation between the organisation

and it’s employee’s These will provide guidance for the company in setting practices and policies

in place to inform future HR strategic choices in this area and help improve the psychological

contract in the organisation

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Chapter 2 Literature Review

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Chapter 2 - Literature Review

2 1 Introduction

To explore the psychological contract of the temporary employee, an overview of

the fundamental concept, origin and emerging theory is required Through theoretical and

empirical research, this chapter will answer the question what is the psychological

contract, how does it inform the employment relationship between the employer and

temporary employee, and finally to provide an evaluation is provided of the psychological

contract of the temporary employee

2.2 What is the Psychological Contract?

Although there are many definitions of the psychological contract (Shalk, 2004),

the most accepted is Schein’s definition as ‘a set of reciprocal but unwritten expectations

between individuals and their employer’s’ (Shein, 1980, p 22) This implies that there is

an unwritten set of expectations operating at all times between every member of an

organisation and the various managers and others in that organisation, and therefore it is a

powerful determiner of behaviour

This definition must be distinguished from the legal contract of employment which,

although offering a more explicit interpretation of the employment relationship, rarely

represents the full reality The employee may contribute little to the terms beyond

accepting them According to Schein, the psychological contract will explain why an

employee will operate over and above their written contract

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MacNeil (1980, p483) also makes the distinction that all contracts are essentially

incomplete There are inherent perceptual and implicit details and obligations beyond

those that can be explicitly described in formal, legal terms He argues that the

psychological component is therefore inevitable in almost all contracts Contracts bind the

transacting parties and regulate their activities both legally and psychologically

Rousseau (1989, 1990, 1995) develops the definition further, as an employee’s

perception of the exchange of mutual, promise-based obligations between the employee

and the organisation Her definition emphasises the mutuality and similar to Schem, the

reciprocity of the exchange She maintains that the holder implicitly understands that the

other party has commitments or obligations to live up to, and m exchange, the holder has

their own commitments and obligations that they must fulfil for that party

Robinson (1996) elaborates on the distinction between expectation and the

psychological contract, stating that not all expectations emanate from perceived promises,

and expectations can exist in the absence of perceived promises or contracts

Conway & Briner (2005) agree with this distinction by stating that ‘the nature of

the exchange is based on the perceptions of each party rather than what has been written

down or explicitly agreed So while some parts of the exchange between employee and

employer are explicit and agreed, much of it is based on an implicit understanding of the

sorts of promises each has made to the other’ They note that the subjectivity of the

contract between both parties is an essential feature The subjectivity and reciprocity of

the concept was a departure in the development of psychological contract theory

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To fully understand the psychological contract, an evaluation of its origins and

development is required The focus of this study can then be narrowed down to its

conceptual framework

The term "psychological contract" has it’s provenance with Argyns who described

it as an ‘implicit agreement about leadership and job performance between a foreman and

his team’ (Argyns, 1960) Even at it’s early stages, the concept refers to mutual

obligation, expectation, values and aspirations which operate over and above the formal

contract of employment in the employment relationship

It is no coincidence that the concept framework has it’s foundation during post-

industrial era of the 20th century Roehling (1997) argues that psychological contract

theory can be traced back to social exchange theory of Bernard’s (1938) equilibrium

theory Schem (1980) in particular argued that the philosophy of social contract theory

supposes that individuals voluntarily consent to belonging to an organised society,

including its inherent entitlements and constraints

While Argyris referred to the specific relationship between the foreman and his

team, Schein focussed on the collective relationship as a way of understanding and

managing behaviour in an organisation He maintained that while expectations were not

written into a formal agreement, they were key determinants of behaviour

Since Argyris, many attempts have been made to develop and refine the concept

Levinson, Munden, Price and Solley (1962) described the set of expectations and

2 3 Origins of the Psychological Contract

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obligations that employees raised when talking about their work Ther study identified

expectations such as fairness and equity, security, trust in management and the employees’

scope in demonstrating their own competencies These expectations also included

unconscious expectations such as employer welfare

The latter part of the 20th century was characterised by significant change in the

traditional employment relationship During this time, the psychological contract became

a particularly relevant concept for researchers in describing and analysing the reactions of

employee’s to these changes Recent developments in the theory are largely dominated

by Rousseau (eg 1989, 1995, 2001, 2004) Just as earlier beliefs focussed on

expectations, later definitions, such as Rousseau’s, emphasised promise-based obligations

Rousseau’s theory focusses in particular on the subjectivity of an employee’s beliefs about

their employment relationship Crucially, both parties may not agree with what is actually

involved in the contract This leads to a dualistic approach

Rousseau (1989) stated that ‘when an individual perceives that contnbution he or

she makes obligate the organisation to reciprocity a psychological contract emerges It is

the individual’s belief in an obligation of reciprocity that constitutes the contract This

belief is unilaterally held by a particular individual and does not constrain those of any

other parties to the relationship ’ She maintains that the psychological contract is promise -

based and, over time, takes the form of a mental model or schema which is relatively

stable and durable She explicitly distinguished between conceptualisations at the level of

the individual and at the level of the relationship, focusing in her theory on individual

employees' subjective beliefs about their employment relationship (Rousseau, 1989)

Crucially, the employer and employee may not agree about what the contract actually

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involves, which can lead to feelings that promises have been broken, or, as it is generally

termed, the psychological contract has been violated Therefore it is formulated only in

the mind of the employee, and concerned with individual beliefs She recognises the

organisations role in shaping these beliefs in terms of the exchange agreement between the

individual and organisation

Conway and Bnner (2005, p 23) consider expectations and obligations part of the

psychological contract only if they were based on a perceived promise They note that

where earlier psychological contract theory emphasised beliefs about expectations, later

definitions have emphasised beliefs about promises and obligations

The theory that underpins research mto the psychological contract raises three questions

• How does it form7

• How is it influenced?

• What determines the content of the psychological contract9

2 4 Formation of the Psychological Contract

In attempting to clarify the formation of psychological contract, Rousseau (2001, p

523) describes the psychological contract as a ‘manifestation of a cognitive schema’, the

mental model evoked to help individuals cope with and understand what they experience

Schema is revised over time and as new information and feedback is gathered

Rousseau states that the terms of a psychological contract are conveyed by

• Objective treatment of other individuals in an equivalent position and status

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• Organisation position and status

• Organisation policies and HR practices

• Organisation’s (or contract bearer’s) behaviours in the past

• Information acquired form the surrounding social environment, e g norms and

statements of colleagues

• Other important information about the organisation and how it is considered or

valued

Rousseau and Greller (1994) highlight how investigating the construct of the psychological

contract can sharpen our understanding o f the HR practices behind it It’s particularly relevant for

the contract makers, the messages sent by diverse contract makers from recruiting to performance

appraisal and compensation The framework below (figure 2) shows how aligning HR practices

with the business strategy can be seen as a key feature in making contracts which the organisation

can keep

Personality traits are also an important influence on an individual’s interpretation of

their psychological contract How they cope with changes, their ideology, and how

consciously an employee will work on or modify their own contract, not only reacting to

their employer’s behaviour

The model below shows the cognitive schema changing with time and information While

relatively incomplete in it’s initial phases, individuals are motivated to seek out and

integrate new information This demonstrates the influence of management practices

which influence the state of the psychological contract

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OrganisationalStrategy

Figure 2 - Framework linking Strategy and HR practices to psychological contract (from

Rousseau, Wade-Benzom, 1994, p 464)

Rousseau (2001) maintains that the organisation cannot simply choose a business

strategy based on it’s environment, it’s strengths and weaknesses must be factored in too

She looks at the causal sequence of how the contract is formed (outlined in Appendix 1)

While unanticipated factors such as economic downturns, organisation change arise

subsequent to the formation of the psychological contract, some adverse consequences in

the employment relationship may be related to the conditions of its formation She

suggests that schema’s of experts and novices suggest that new hires with substantial pnor

experience may hold different schemas about employment than their less experienced

counterparts and are likely to react to new information or change differently Thus, an

individual’s first impression of an organisation is critical in the formation of the

psychological contract

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• Pre-employment

According to Rousseau (2001), the pre-employment phase starts with the

individual’s discrete beliefs, to elaborately organised schemas of many interrelated beliefs.

These include professional norms - what the individual defines as appropriate treatment in

employment (ie their occupational ideology) and societal beliefs about their work,

occupations.

An individual’s first impression of an organisation is critical to the formation of the

psychological contract. Experiences incurring during the information-seeking phase are

likely to have lasting effects on the psychological contract. For example, an employer

with a reputation as a developmental employer attracts future employee’s seeking

development and improving their career, while promoting employee development within.

Even at this stage, although incomplete information may exist regarding each party’s

intentions or expectations, the contract is being formed. If we are to take the psychological

contract as subjective belief regarding an exchange agreement between the two parties

(Rousseau 1995), then this stage is the beginning of the contract. It is promise-based, and

over time, will take the form of a common understanding between both parties.

• Recruitment Phase

During the recruitment process, the employer and future employee will discuss what

they each can offer in the prospective relationship. Rousseau (2001) argues that this stage

is key to the formation, as it specifies the conditions under which the psychological

contract can be maintained and revised. The interview stage provides information and

feedback which both parties can use to make accurate predictions about the actions of the

other party. Resulting negotiation and information-gathering promotes deeper cognitive

processing necessary to revise and evolving contract. Once an agreement is reached,

employers introduce the standard legal contract. Exact duties of the employee are only

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clarified at the later socialisation phase However initial statements at this stage, although

informal and imprecise, may later be remembered as promises and give rise to

expectations Whether they are incorporated into the psychological contract will depend

on whether both parties believe that they should be treated as part of the relationship

Once formed, the model each party holds regarding the employment relationship, tends to

be maintained Increasingly, employer’s are careful to document offers to reduce the risk

of raising false expectations followed by disappointment

The source of hire also raises questions regarding promises and expectations

Robinson, Rousseau (1994) found that the motivation of recruiters to provide accurate

information is low so these employee’s are unlikely to receive realistic job previews during

recruitment Overselling a job’s features can be compounded with subjective

interpretation of what the promised job actually entails

• Early Socialisation / Later experiences / Evaluation

As the psychological contract becomes clearer, both parties can better identify

appropriate behaviour to maintain and fulfil commitments each has made An important

aspect of the psychological contract is that it can be continually re-negotiated, changing

with an individual's and an organisation's expectations and with shifting organisational and

social contexts

Notwithstanding the influence of organisational strategies on the formation, Cuyper

and DeWitte (2011) argue that the exact constituencies of the psychological contract vary

depending on the individual Factors such as age, life experience and ideologies will differ

from one employee to another Similarly employee’s consciously work on or modify their

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own contracts, not only reacting to the employer’s behaviour Most researchers agree that

it is revised over time

It follows that a newer employee will absorb most information during the first few

months, so the duration of an employee’s employment is a key factor to the influence on

their psychological contract Rousseau demonstrated that individuals are more motivated

to seek out and adapt to new information (Rousseau, 2001) Seeck and Parzefall (2008),

cited in Cuyper and De Witte (2011), highlight the importance of co-workers at this stage,

stating that simultaneous self-management is coupled with management by colleagues and

management

2 5 Changing nature of the Psychological Contract

Roehhng (1997) credits Levinson et al (1962) with explicitly recognising the

dynamic relationship of the psychological contract They noted that by it’s nature, the

psychological contract would change in time as a result of changing needs and

relationships on both the employee's and the employer's side This variable nature is a

characteristic also recognised by Schein (1980) who recognised that as organisations are

not stable, nor long lived, then flexibility, adaptability and speed of response is imperative

With leaner organisations come greater demands on employee’s and in particular, on the

traditional employment relationship

Sparrow and Hiltrop (1997) maintain that the psychological contract helps

employee’s predict the reward they receive for investing time and effort into their

organisation They argue that while good contracts may not always result in better

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performance, poor contracts act as a demotivator and reflect lower commitment, and in

turn, heightened absenteeism and turnover

They conclude that employers should focus on career management, organisation or

corporate responsibility and ‘ìnspiralling’ careers, through personal development There

is now a focus on lateral development rather than promotion, and on finite job duties to

multiple roles Employee’s are not only expected to meet job requirements but to add

value The emphasis on job security is increasingly changing to employability and

marketability The orgamsation provides the training, while learning and personal

development is owned by the individual

2 6 Temporary employee’s and their Psychological Contracts

Hiltrop’s proposal that a new emergent psychological contract is in place in the

employment relationship is particularly relevant to the temporary worker As outlined

above, there are different sources of impact on the psychological contract content For

example, greater employability means an employee must place greater value on training

and development than job security

Where the old psychological contract is characterised by stability, permanence,

predictability and mutual respect, the new contract is primarily based on short-term

relationships, emphasising flexibility, self-reliance and achieving immediate results

Hiltrop (1996) recognised that psychological contracts were changing, from imposed to

mutual relationships, from permanent to variable employment relationships

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There is a widely held view that temporary employee’s are a disadvantaged

minority who need protection (Guest et al (2010) For example, recent employment

legislation for temporary workers was introduced to protect and establish equality among

this working group However much depends on the whether their temporary status is

involuntary or voluntary In a recent study, De Cuyper (2008 a) showed that volition is a

factor in perceived employability They found that high perceived employability is

positively related to work engagement and life satisfaction Different job-related

expectations among temporary employee’s also received support Kinnunen (2011) found

that job security may be more valued among involuntary temps than perceived

employability, whereas voluntary temporary employee’s compensate the loss of job

secunty with higher perceived employability and therefore benefit more from perceived

employability

2 7 The new temporary employee

The traditional temporary employee anticipates job security and is motivated to

achieve a permanent position, which can lead to better performance compared to a

permanent employee However new career models no longer rely on traditional job

secunty as a way of building a career (Forrer et al, 2009 and Hall 2003) Where traditional

employment relationships were based on security and commitment, new career models are

‘boundaryless’ and ‘protean’ (Cuyper and De Witte, 2011, p 106) Those on this path are

capable of moving self-sufficiently through the labour market These workers tend to be

highly skilled, voluntarily seeking and accepting their temporary position The core to

these careers is employability, not security

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Research shows that these new career models are a factor for individuals in taking

a temporary post (Robinson and Rousseau 1994) Employee’s taking the view that career

advancement will occur outside the current organisation have different goals from those

focussing upon careers within a firm, and consequently, pursue different career strategies

2 8 Psychological Contract Types

Factors affecting whether the psychological contract goes in a relational or transactional

direction, are

• Timeframes of the employment relation (short term or open-ended)

• Static or Dynamic employment terms

• How detailed the performance criteria for employment are (Specific or weak)

Rousseau (2000) later extended the transactional / relational model with two additional

dimensions, balanced and transitional The psychological contract can be subdivided into

4 types Through this, the relational and transactional dimension is made less obvious,

emphasising the multi-dimensional phenomenon

Short-termTime

Open-ended

Figure 1 Types of Psychological Contracts (from Rousseau and Wade-Benzoni (1994, p

468)

Specific Weak

Transactional Transitional

Balanced Relational

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• Transactional

Rousseau (2001) describes this type as when an employee is only obliged to perform a

fixed set of duties, limited to doing only what they are paid to do In return, the employer

has committed to offering only a limited involvement with the organisation, with little

training or career development Robinson, Kraatz and Rousseau (1994 ) maintain that

transactional contracts involve specific, monetizable exchanges between parties over a

period of time Characteristics include competitive wage rates and absence of long-term

commitments

• Relational

Relational contracts involve open-ended, less specific agreements, establishing and

maintaining a relationship They involve both monetizable and non-monetizable

exchanges They include inducements such as training and development opportunities

and long term career path In return for this stability from the organisation, the employee

is obliged to be loyal and commit themselves to the organisation’s needs

• Balanced

Both parties are contributing to the other’s needs and development (Rousseau 2000)

There are two types

• External employability The employee is obliged to develop marketable skills

through career development In return, the employer is committed to enhancing the

employee’s long term employability outside the organisation as well as within

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• Internal employability The employee is obliged to develop skills which are valued

by the organisation itself, and the employer provides career development

opportunities within the organisation

• Transitional

By contrast, the transitional contract is characterised by a breakdown in the contract

caused when the absence of commitments regarding future employment and limited

performance is expected The violation signals that the employer’s original motives to

build and maintain a mutually beneficial relationship has changed, or were false to begin

with The violated party loses faith in the benefits of staying in the relationship and is

more likely to leave

Rousseau and Wade-Benzom (1994) identified 3 characteristics

• Mistrust occurs when the employer is inconsistent regarding its intentions toward

the employee, information is withheld and the employer mistrusts its employees

• Uncertainty The employee is uncertain regarding his or her obligations

• Erosion of trust Trust may be lost in the employer’s motives is the employee

expects to receive fewer future returns in exchange for their contributions The

employer may have instigated a change which reduces the employee’s salary or

erodes their quality of life

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2 9 Psychological contract violation in temporary employee’s

Rousseau (1990) suggests that violation or breach of the psychological contract may have

a different impact on employee’s whose career motives differ It follows that employees

who place greater emphasis on the employment relationship itself, le an involuntary

temporary employee, could be more negatively influenced by the violation than those who

do not Her study found that individuals high on careerism perceive their current

employer as an instrumental stepping-stone up the internal organisation career ladder and

are likely to adopt intended to be long term and what is exchanged has a short term focus

What the employee values are the more immediate rewards of the relationship such as pay,

training, and credentials to obtain a better job in another organisation

Those high on the careerism scale, who place less value on the relationship than

their careers and perceived employability, experience less loss from psychological contract

violation, than those low on careensm

In contrast, those low on careerism scale have a more ‘relational orientation’,

believing their career path to be through a long-term relationship with their employer and

value not only what they gam from their employer m the short term, but also, the

relationship itself The relational contract tends to be less tangible, based on long-term

exchange or partnership between the parties

The fixed, short timeframe of the temporary worker could mean mostly

transactional psychological contract is expected (De Cuyper and De Witte 2006)

However this is contrasted by O’Donohue & Wickham (2008) who demonstrate no

significant differences between the psychological contract’s of temporary and permanent

staff Mill ward and Brewerton (1999) found that both transactional and relational content

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could occur They conclude that ‘careerists' who place less value on the relationship itself,

should experience less loss from psychological contract violation than do those low on

careerism Their study examined the costs and benefit of temporary employment on

employee’s and organisations They note that it achieves competitive advantage through

flexibility The theory of a psychological contract between the employer and employee is

particularly appropriate in this context Robinson and Rousseau (1994) found that recruits

who expect a more transactional employment relationship (le short term, monetizable),

have a less adverse reaction to violations

Temporary employment has beneficial effects De Cuyper and De Witte

demonstrated that temporary workers, motivated to achieve a more permanent position,

may excel at work to show their potential Anticipating job security leads to more

effective daily functioning, and therefore better performance De Cuyper et al (2011)

suggest that future research is needed around frustration of job security expectations over

time For example, the temporary workers who do not see the chance to transition to

permanent employment

Hirsch (1987) describes the perspective of an organisation following radical

change, recommending managers to ‘loosen the psychological ties’ that bind them to an

organisation They should become ‘free agents’ and organisation oriented and task

directed will give way to self-orientation and career-directed decisions

A useful model of the psychological contract (Guest) the contract is based on

employees' sense of fairness and trust and their belief that the employer is honouring the

'deal' between them where the psychological contract is positive, increased employee

commitment and satisfaction will have a positive impact on business performance What

stands out is the impact of HR practices Employer’s have a role in this changing

employment relationship

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Causes

Organisational

culture/climate

HRM policy and

practice

Experience

Expectations

Alternatives

Content

Fairness

Trust

Delivery of the deal

Job Satisfaction

Organisational

commitment

Sense of security

Employment relations

Motivation

Organisationalcitizenship

Absence

Intention to quit

Consequences

Figure 3 - Guest’s Pychological Contract Model (1998)

2 10 Criticisms

While Rousseau’s definition and approach has dominated recent research, several

critics have questioned its construct validity The criticism was based on two area’s in

particular

Smithson and Lewis (2010) argued that Rousseau’s definition focusses on individual

employee’s subjective beliefs about employment relationships They maintain that

Rousseau’s definition was more one-sided, not including the employer’s perspective

compared to the broader definitions of Schein and Levinson For example, it is an

individuals belief in an obligation of reciprocity that constitutes the contract, without

constraint from the other party Krivokapic and O’Neill (2008) also argued that this

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showed the psychological contract as being formed about individual beliefs rather than

being shared by an employer

Indeed most research since Rousseau has lacked the employer’s perspective It could

explain why much research has focussed on psychological contract violation (e g

Rousseau, 1995, Morrison & Robinson, 1997) The consequence of this emphasis on the

employee’s perception has mainly been studied in terms of violation of the psychological

contract, which results in strong attitudinal and behavioural reactions among employees

However more recent research has focussed on the employer’s perspective (Guest and

Conway 2000, Coyle-Shapiro and Kessler 2000) In 1995, Rousseau acknowledges the

organisation’s role in shaping these beliefs and focussed on the ‘exchange agreement’

between both parties Guest later reconciled this through a pan-european study carried out

by Guest et al (2011) called the Psycones project (Psychological Contracts across

Employment Situations) evaluated the impact of a temporary employment contract on

worker well-being and work-related attitudes and behaviour They examined in depth both

employer and employee’s perspective In this study he uses Rousseau’s definition of the

psychological contract

The second area for criticism is Rousseau’s ‘promise-based obligations’ as the basis of

the psychological contract ‘The psychological contract, unlike expectations, entails a

belief in what the employer is obliged to provide, based on perceived promises of

reciprocal exchange’ (Robinson and Rousseau 1994,p 246)’ Expectation can exist in the

absence of perceived promises or contracts Guest (1998) argued against what he

perceived as ‘unclear definition’ asking whether the psychological contract consisted of

expectations or perceived promises

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Chapter 3

Research Methodology

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Chapter 3 - Research Methodology

3 1 Research Philosophy

Before deciding on the most appropriate research method to explore the topic, I

will discuss the research philosophy According to Saunders et al, 2007, the research

philosophy relates to the ‘development of knowledge and the nature of that knowledge’

There are three different approaches which influence the research philosophy

3 11 Epistemology

‘Concerned with what constitutes acceptable knowledge in the field of study’ (Saunders et

al, 2007), the epistemology As acceptable knowledge is a subjective term, an examination

of the relationship between the researcher the field of study is required

• Positivism

Defined as ‘the philosophical stance of the natural scientist’ (Saunders et al, 2007), the

positivist believes that only knowledge that is observable and measurable is valid An

important component of the approach is that it should be ‘value-free’ The positivist does

this by emphasising a highly structured methodology to enable replication, which lends

itself to statistical analysis The end-product tends to be a law-like generalisation, for

example, in the field of physics or science However, law-like generalisations are not as

valid in capturing the rich complexity of the business or social situations due to their

rapidly-changing nature

• Realism

Similar to positivism, the realist undertakes a scientific approach to handling knowledge

Defined as ‘what the senses show us as reality, is the truth Objects have an existence

independent of the human mind’ (Saunders et al, 2007) There are two types of realists

31

Direct realist argues that what you see is what you get For example, an image on a

TV screen The direct realist views the world and how it operates as relatively stable By

comparison, a critical realist argues that what we see is just a sensation, not the image

directly For example the image on a TV screen is just a representation or a ‘sensation’

The critical realist acknowledges a multi-layered approach to their study From a business

research perspective, this entails researching the individual, group and overall

organisation This would provide the researcher with the knowledge of the social

structures, and then inform their understanding of the phenomena studied

• Interpretivism

This approach maintains that ‘the researcher must understand the differences between

humans in our role as social actors’ (Saunders et al, 2007), or how humans react in the

world The emphasis is on conducting research among humans rather than objects It is

concerned with research through empathy, understanding the other party’s world from

their perspective, similar to an actor Saunders et al (2007) recommend that taking an

mterpretivist perspective is highly appropriate in business research

Due to the subjective and multiple nature of the psychological contract, an

mterpretivist approach is more relevant I will explore, rather than measure, the complexity

of a social phenomenon with a view to gaining an interpretive understanding

32

The second approach to research philosophy is by using an ontologist assumption Of

specific relevance to business research, ontology is concerned more with reality (Collis et

al, 2009), or by studying the nature of social phenomena as entities It has three aspects

• Objectivism

Bryman and Bell (2011) recommend asking the question - can these social entities be

independent from social actors, and be considered objective7 For example, the

organisation structure and culture which exists in an organisation can be seen as external to

the individuals within it These aspects of the organisation set limits, within which

individuals are expected to maintain, so it has an objective reality

• Social Constructionism

Social constructionism or subjectivism asks the question, could these social phenomena be

built up or constructed from the perceptions and actions of the social actors7 Bryman and

Bell (2011) point to a study conducted by Strauss et al (1973) where it is argued that the

social order in an organisation is m a constant state of change They acknowledge that

formal properties exist which constrain individuals, and that culture has a reality which

must be appreciated, however this ignores the daily order of an organisation which is

produced through social interaction It is the subjective approach where the individuals

will perceive different situations in a variety of ways, depending on their view of the

world In this research study, the temporary employee’s I encounter are not only

interacting with their environment but with their own interpretation, so there may be

multiple realities Taking an mterpretivist subjective approach, I need to explore what

motivates the actions of temporary employee’s in order to understand the actions

3 12 Ontology

33

themselves A subjectivist study carried out by Thomas and Linstead (2003) highlights the

benefits of taking a social constructionist perspective m exploring how managers dealt

with feelings of insecurity, ambiguity m their changing roles They recommend

approaching the question as open-ended Instead of asking what has become of the

particular employee group, the question should be ‘how are they becoming9’ (Cited in

Bryman and Bell 2011)

• Pragmatism

Alternatively, rather than simply choosing between the positivist or interpretivist

philosophy, the pragmatist adopts the most suitable philosophy for the research question

Saunders et al (2007) refer to this as 4mixed-method\ where both qualitative and

quantitative methods are possible For example, using an in-depth interview in addition to

a survey could both provide valuable insights into the research question

3 1 3 Axiology

The axiological branch of philosophy looks at the values of the researcher and how it

informs the research Saunders et al (2007) recommend including a statement of values as

a way of heightening awareness for the researcher in how their value judgements will

inform the conclusions, and from an ethical perspective, how these values informed the

decisions taken as part of the research I will address this when discussing ethical

considerations later in this chapter

34

3 1 4 Research Philosophy Conclusion

From this review and in consideration of the theme of my research, I will make the

ontologist assumption that each subject will have a different opinion My approach will be

to compare the results across all levels of temporary employee to distinguish a pattern or

common associations and causal effects between each variable

3 2 Research Paradigm

Collis & Hussey (2009) define the research paradigm as the philosophical

framework guiding how the research should be conducted My research paradigm is

predominantly mterpretivist as I am interested in generating theories rather than testing a

hypothesis I will investigate the broad issue of psychological contract by focussing on a

particular group of stakeholders, the temporary employee’s My research paradigm

follows the analogy of the theoretical framework developed in the literature review This

has identified both dependent and independent variables which will inform my questions

and themes

3 3 Research Methodology

Several research methods are appropriate depending on whether the research is

exploratory, descriptive or explanatory Common research methods include experiments,

surveys, case studies, theory building, ethnography, archival research, focus groups and

interviews Although some approaches clearly apply to each of the above groups,

according to Bryam and Bell (2011), more than one of these methods can often be used to

inform the research

35

The relationship between the theoretical framework and the research can either take a

deductive or inductive approach (Figure 3) Saunders et al (2007) defined this as the

process of developing a theory and hypothesis and designing a research strategy to test the

hypothesis In practical terms, it involves firstly conceptualising a theory, then expanding

it and testing it through research By contrast, inductive is the reverse approach Data is

collected and analysed before developing a theory The approach of this research will be

deductive, as the theory identified through the literature review will be tested and applied

Figure 3 - D eductive versus Inductive

• Deductive vs Inductive

Deduction Induction

Theoiy > Observation/Findings Observation/Findings > Theory

• Qualitative and Quantitative Data

Consideration of all data collection methods is required in order to justify the most

appropriate method

Qualitative analysis explores behaviours and attitudes through focus groups and

interviews The mam advantage of this method is that an in-depth honest insight can be

gained However the information gathered through qualitative research can be more

subjective In order to examine the attitudes behaviours and experiences of subjects,

influences of the researcher on the participant can cause bias

36

Quantitative research gathers data and facts which can be translated into numerical

data, and interpreted through statistics It has the advantage of providing a measurable

unit, which is supported by validity and reliability theory In addition, it also facilitates

generalisation so that findings may be applicable across several types of organisations

Although this is a primarily interpretivist study, I have decided to include methods

often used in a positivist study Collis & Hussey (2009) maintain that a survey

methodology can be a valid methodology used m an interpretivist study My objective is

to obtain findings consisting of objective quantitative data which can be generalised from

my sample to the population, rather than across similar settings However I also had to

consider practical issues such as time, cost and the various locations involved as many of

the stakeholders are based in units across the country

To resolve this, I decided to employ a quantitative method such as a questionnaire to

reach a wider and consequently larger sample so that more precise statistics can be

generated It is also a practical method of gathering more relevant information which

refers directly to the survey

In this case, selecting a sufficiently large sample is not as crucial as m a positivist

study, as the aim is to gam insights from the individual temporary employee’s in the

sample In line with this interpretivist paradigm, I will send the survey to all temporary

employee’s, requesting volunteers to participate

An online, self-completion questionnaire was chosen as the most practical and

objective method Witmer et al (1999) argued that online questionnaires offered greater

37

control as users respond to emails sent directly to their inbox The primary data obtained

from this method will provide a means to conduct a statistical analysis It allows me to

acquire systematic information across several departments and locations

3 4 Structure of the Questionnaire

The structure of the questionnaire will be based on the three mam research objectives

• Demographics

The model that informs my demographic study is based on Guest’s 2011 Psycones model

(see Appendix 2) Guest recommends controlling for a range of background factors, such

as the individual, and nature of the employment contract This provides a test of the

importance of the psychological contract not only on the employment contract, but the

alongside other established variables

As previously noted, the psychological contract is a multi-dimensional phenomenon I

chose to investigate the four dimensions, transactional, relational, balanced and

transitional I applied the Rousseau (1997) assessment of psychological contract

(Appendix 3) in order to measure the relational or transactional onentation dimensions as

discussed in the previous chapter

Each question was divided into categories as outlined in the assessment of psychological

contract, as shown below

38

Table 1

Perception about Employer’s Obligations (Question 7)

Dimension Questions

Short term 27, 28, 29

Loyalty 30,31,33

Narrow 22, 24, 25

Dynamic performance requirements 26, 37, 38

Career development - Internal market 34, 35, 36

Career development - External market 39, 40, 41

Security 23, 32, 42

Table 2

Perception about Employee’s Obligations (Question 8)

Dimension Questions

Short term 1,13, 14

Loyalty 2 ,5 ,19

Narrow 6, 18, 20

Dynamic performance requirements 7, 16, 17

Career development - Internal market 3,8,21

Career development - External market 4, 9,15

Security 10, 11, 12

39

Table 3

Employer Transitional Psychological Contract

Dimension Questions

No Trust 43,44,45

Uncertainty 46,47,48

Erosion 49, 50,51

3 5 Reliability and validity

The data collected is based on self-reports which may inflate the relationships found,

owing to common method variance Evan (1995) shows that common method variance

can attenuate rather than inflate these effects which were the mam focus of this study I

feel confident that the nsk of inflated relationships does not account for the interaction

results in the study Biases often lead to individual’s over-estimating their own

contribution and underestimating the costs incurred by ‘exchange partners’ (Robinson and

Rousseau (1994)

Another consideration is that some departments may employ very few temporary

employee’s, compared to others where the prevailance of temporary employee’s is much

higher In a similar study, Kinnunen (2011) found that there may be negative implications

for the well-being and job performance in those departments with a low level of temporary

employee’s This one-sample design naturally restricts the generahsabihty of the findings

40

The findings derive from a statistical analysis of quantitative data To minimise the

threat of reliability and validity mistakes, questionnaires were distributed at the same time

The benefit of using a questionnaire is that it allows for just the relevant questions

to be answered However the questionnaire used open, probing questions rather than

prompting or leading questions

3 6 Axiology - Ethical considerations

Ethical considerations are concerned with the well-being of participants involved in the

research To assess the ethical implications of the study, I reviewed the three main

categories outlined by Saunders et al (2007)

• Informed consent

In order to inform all respondents of the research, I outlined clearly how to answer

the questionnaire and how long it would take I explained fully the use of the data

and participation rights so that respondents were fully aware and could choose

whether they wanted to complete the questionnaire

• Confidentiality and protection of privacy

Confidentiality needs to be assured not only to protect an individual’s privacy, but

to avoid biases and to encourage honest responses Data collected was used solely

for the purposes of this study and the identities of the participants were kept

anonymous and were not identified

41

It was imperative to ensure that conducting the research did not cause a

disadvantage or harm to the participants The nature of the research could be

considered to be contentious or sensitive so anonymity and discretion were

paramount

• Minimisation of potential harm

42

Chapter 4

Results and Findings

43

Chapter 4 - Results and Findings

This chapter outlines the findings from the study conducted withm the organisation in

terms of the proposition in the methodology and the literature review

4 1 Response Rate

I was able to obtain a large sample of temporary employee’s across the organisation

There are 68 employee’s (8%) in the organisation that have definite contracts, such as

temporary fixed term contracts, as opposed to 782 with indefinite contracts This is in line

with OECD average for Ireland (7 5%) 52 questionnaires were returned and fully

completed, therefore this response rate of 76% is an acceptable representative and the

results and interpretation can be generalised to the overall population of the temporary

employee group

4 2 Sample Demographics

• Education

The demographic study reveals relevant characteristics among the population The gender

balance is even, with 57% were male, and 42% were female Overall there is a wide range

of skill levels The highest group (23%) are secondary school leavers with a further 13%

having obtained an apprenticeship or other qualification Overall 28% have completed

third level degree’s, with 5% having achieved a masters degree or higher This reflects a

44

high rate of knowledge workers Research shows this group in particular may value the

freedom of temporary employment

• Skills and occupation

Their education level is reflected in the range of occupations represented Almost 70% of

the temporary employee’s are semi- or higher-skilled workers This is characteristic of the

strategic imperative of the organisation, to have skilled flexible workforce such as network

engineers and IT consultants who are a key component of the technical project and product

work undertaken periodically by the organisation The remaining group, also a high

proportion (23%), consist of unskilled or skilled workers This reflects the stores and

warehousing department where demand peaks then falls following product roll-outs

• Employment Status

Almost half of the temporary employee’s are on a fixed term contract of over a year The

next highest group (23%) are working m the organisation via a third party, mainly through

employment agencies The smallest group (10%) are employed on fixed term contracts of

less than a year Recruitment data shows the shorter contracts are used to cover absence,

where the longer contracts tend to be specialists m their field

• Length of service

The employment status demographic is closely linked to length of service, 42% have been

employed with the organisation for over 3 years Comparing this to the types of contracts

45

most employee’s have, demonstrates that employee’s have been on more than one fixed

term contract. This is relevant to HR as it adjusts to European legislation which will

change how the organisation recruits and more significantly, retains employee’s on rolling

fixed term contracts.

4.3 Psychological Contracts.

I have chosen to outline the key findings of the psychological contract of both employer

and employee perception together, as this will highlight the key differences and

similarities.

• Short Term Obligations.

Figures 5.1 and 5.2 show employee perception of their own obligation, compared to their

perception of the employer obligation, in terms of their short term status. The temporary

nature of their employment is reflected in the similar perceptions and is as expected. 40%

of employee’s perceive their employment to be short term in nature and the similar pattern

of 42% show that they perceive their employment will also end in the near future. This

shows the clear and explicit agreement that temporary employee’s have with their

organisation.

Figure 5.1 Short Term (Employee Obligation

■ Not at all

0% 10%■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

Figure 5.2 Short Term (Employer Obligation)

■ Not at all

■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

0% 12%

46

An unexpected result is reflected in employee’s perceived loyalty to the organisation.

Although temporary, the employee’s perceptions show that only 4% are not willing to

make personal sacrifices for the organisation. In fact, 37% would ‘somewhat agree’, and a

further 17% ‘moderately agree’ that they show loyalty to their employer, and protect the

organisation’s image. This shows that they are emotionally involved with the

organisation. On the other hand, only 21% would ‘somewhat agree’ with expectations of

loyalty from their employer. The highest majority, 29% would only ‘slightly agree’ and

25% don’t agree at all, that the organisation has concern for their personal welfare.

• Obligation of loyalty.

Figure 5.3 Loyalty (Employee Figure 5.4 Loyalty (EmployerObligation) Obligation)

■ Not at all ■ Not at all

4%17 /o m C l i n K t k i n n r a a

8 %■ C l io K t l i / a o r o o™ j i i g i i u y a g i c c

Hr1; , ■ Somewhat agree37%

■ Moderately agree Moderately agree

■ Agree to a great ■ Agree to a greatextent extent

• Narrow.

Figure 5.5 below shows a trend among temporary employee’s which indicates that they do

not consider their jobs limited to what is stipulated in their contracts. In fact, 27% are not

at all in agreement with this, and a further 29% only slightly agree. This shows that most

are prepared to have a broader job description and by consequence, their willingness to add

value to the organisation. A gap becomes apparent when comparing this to their

expectations of their employer. The vast majority (31% and 21%) feel that their employer

47

has lower expectations in return, in area’s such as training and tasks which are limited to

their current job.

Figure 5.5 Narrow (Employee Obligation)

■ Not at all

■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

Figure 5.6 Narrow (Employer Obligation)

■ Not at all

■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

• Dynamic Performance requirements.

In the contrasting dimension to narrow (above), employee’s obligations and expectations

of their performance requirements follow a similar pattern. The majority of employee’s

agree that they are obligated to accept new and different performance demands, which

helps the organisation to remain more competitive. By contrast, fewer employee’s (33%

and 25% only slightly or somewhat agree) feel that their employer supports them in

meeting these demands. This reveals a challenge for the organisation in assisting these

employee’s to respond to more challenging performance standards.

48

Figure 5.7 Dynamic performance requirements (Employee Obligation)

■ Not at all

■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

Figure 5.8 Dynamic Performance Requirement (Employer Obligation)

■ Not at all

■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

10% 12% 13%

• Internal career development.

Linked to the dynamism and willingness to add value of the results above, Figures 5.9 and

5.10 below shows an obligation to seek out development opportunities and in turn, make

themselves more valuable to their employer. Over half of respondents agreed to a great

extent or moderately agreed with this. Although fewer employee’s felt that the employer

granted them with the opportunity for internal development, nonetheless, the figure of 31%

and 23% respectively were somewhat or moderately in agreement that the employer

encouraged them to develop themselves within the organisation.

Figure 5.9 Career Development - Internal (Employee Obligation)

■ Not at all

■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

Figure 5.10 Career Development - Internal (Employer Obligation)

■ Not at all

■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

49

From the external dimension, the results are not unexpected for temporary employee’s, and

reflects the demographic of knowledge workers who are also temporary. Most

employee’s are building skills that will enhance their external employment opportunities.

This reflects their preparation for employment outside the organisation. In terms of their

expectations of their employer however, Figure 5.12 shows a varied response, which

shows that employee’s differ on the issue of whether the organisation is doing enough to

help them get employment elsewhere. However a telling contrast is that 20% feel that the

organisation is not at all helping them in this dimension, which could be interpreted as

short-sighted from the employer’s perspective.

• External Career Development.

Figure 5.11 Career Development- External (Employee Obligation)

N otatali

I Slightly agree

Somewhat agree

I Moderately agree

■ Agree to a great extent

Figure 5.12 Career Development External (Employer obligation)

Not at all

16%

Slightly agree

Somewhat agree

Moderately agree

Agree to a great extent

• Security.

The majority of employee’s did not show any obligation to stay with the organisation for a

long time. Unlike dimensions of career and performance requirements, security was an

area where obligations and expectations were both evenly balanced, with most employee’s

did not expect the organisation to provide them with security such as stable benefits for

families and competitive salary. This could reflect a common attitude among some highly

50

skilled temporary employee’s that they ‘pack their own parachute’ (Hirsh 1989) in order to

maintain control over their own long term security.

Figure 5.13 Security (Employee Obligation)

Figure 5.14 Security (Employer Obligation)

■ Not at all ■ Not at all

8% 0%

■ Somewhat agree

■ Moderately agree

■ Slightly agree15%

■ Somewhat agree

■ Moderately agree

■ Slightly agree

■ Agree to a great extent

■ Agree to a great extent

4.4 Transitional Psychological Contract.

• No Trust.

The short length of service evident with all temporary employee’s becomes relevant when

analysing psychological contract violation or transition. Rousseau (2001) maintained that

new hires or less experienced employee’s may hold different schemas about employment

than their more experienced counterparts and are likely to react to new information or

change differently. This will have implications for their psychological contract, because,

for the more recent employee’s, or those hired after a particular change, the new

psychological contract is the only ‘deal’ they have had with the organisation.

Figure 5.15 shows that most temporary employee’s are only in slight or somewhat

agreement in the dimension of trusting their employer. This is in line with Rousseau’s

theory that more transactional, temporary employee’s have fewer commitments to their

employer and expect fewer commitments in return.

51

Figure 5.15 No Trust

■ Not at all

10% 13%13r ■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

• Uncertainty

Figure 5.16 reflects a sharper dichotomy, with 29% in moderate agreement and 31%

somewhat agreeing the uncertainty of the relationship. This uncertainty may also reflect

the economic changes and uncertain climate following recent organisation changes, in

particular with the increase in temporary hiring and fewer commitments on behalf of the

employer in recruiting the employee’s to more permanent or long term jobs.

Figure 5.16 Uncertainty

■ Not at all

11% 8%■ Slightly agree

■ Somewhat agree

■ Moderately agree

■ Agree to a great extent

52

Figure 5.17 is related to mistrust, as it shows a slight but not significant erosion of the

contract, with 29% of employee’s agreeing slightly and 23% somewhat in agreement that

the employer will decrease it’s benefits and demand more in return in the future.

• Erosion

4.5 Summary

The findings above were contrary to expectations. This study revealed some imbalances in

the psychological contracts of temporary employees. In particular related to loyalty, career

development and performance requirements, the temporary employee’s feel that they

promise more to the employer than the employer offers in return. They demonstrate a

willingness to increase their performance standards and skills, and are positive towards

career development. This reflects the benefit they may perceive in gaining better

employability and marketability, in return for less job security.

53

Chapter 5

Conclusions & Recommendations

54

Chapter 5 - Conclusions & Recommendations

5 1 Conclusion

Guest (1994) highlighted that while HR practices such as selection, job

specification, performance management have been validated through decades of research,

changing employment conditions and organisation restructurings have created

uncertainties and unearthed a neglected role for human resources - the creation and

maintenance of the psychological contract between organisations and their members

The mam objective for this research was to explore the current psychological

contract as perceived by the organisation’s smallest demographic, the temporary

employee’s 1 explored how this mutual obligation is formed, and discovered that a unique

reciprocity is in place between these employee’s and their employer The review of

psychological contract literature and the research findings themselves, demonstrate how

the construct of a psychological contract can sharpen the organisation’s understanding of

it’s employee’s and in particular, the HR practices in organisations

I found that a strong, overall positive psychological contract was in place among

this small group The majority have accepted the lack of security and stability that is

common with a transactional psychological contract However despite the uncertain

environment they experience both internally and externally, the findings show that they are

making a significant contribution in helping the organisation achieve it’s goals In return,

they have high expectations of the organisation and many policy implications have

emerged for this organisation

55

• Employer Brand

The study into the formation of the psychological contract highlighted the first

improvement HR practices which convey future intent are vital The organisation has an

opportunity to sending out a message that it will hire, promote and train future employee’s

To do this, the organisation needs to develop it’s strong employer brand as a strategy to

attract key workers This will reinforce their message both to future and current

employee’s that the organisation is a dynamic and flexible work environment A strong

message at this point will guide the future employee to define what their employment

relationship will entail

• Recruitment strategy

As demonstrated in the findings, a specific explicit agreement which outlines the promises

that the employment conveys and the extent of the agreement between the parties, is a

benefit to both parties The negotiation and information gathering from both parties gives

a deeper foundation for the psychological contract at this crucial formation stage This

research has shown that as schemas become more complete, both parties can better

identify appropriate behaviour to maintain and fulfil commitments each has made

This highlights the possible negative effects of depending on recruitment agencies as the

key tool in sourcing employee’s The information and brand is conveyed more accurately

without external intermediaries

5 2 Recommendations

56

• Employee Handbook

The promises and expectations are also communicated through an employee handbook

ment contract Employee handbooks are not in place currently in the organisation as they

can be read as legal contracts However it is of benefit to the new employee, as a useful

communication tool in explaining the training, career and performance development

expectations of the organisation and adds to the new employee’s information gathering

stage In return, it outlines the employer’s expectations, in legal obligations, for example

compliance and employee Code of Conduct If published online through the

organisation’s human resources webpage, it can also shape pre-employment interpretations

for future employee’s

• Performance Management

By re-negotiating contracts at regular intervals, a positive psychological contract can

develop and be nurtured The findings show that the organisation would benefit by

reviewing it’s performance management practices, which mainly only involve permanent

employee’s The temporary employee’s have shown their acceptance of increasing job

standards, and in return they expect career development Ongoing performance

management, including managing probationary periods, would benefit employee and

employer in meeting their expectations

• Career development

There is now a focus on lateral development rather than promotion, on finite job duties to

multiple roles and from meeting job requirements to adding value For temporary

employee’s, the research has shown that they are generally accepting of these changes In

return for personal development being owned by the employee, the organisation provides

the training

57

In this company, educational sponsorship provided is discretionary, depending on a

department’s budget and the relevance of the course to the employee’s role. This

subjectivity is further reinforced through the education policy, which rules that if an

employee leaves within a year of finishing their course or sponsorship period, they must

repay the fee to the company. This is a disadvantage to shorter term employee’s, as

commitment is no longer the key factor for either party. Temporary employee’s should be

actively encouraged to take up training opportunities. A more equal education sponsorhip

programme would have the advantage of both attracting new employee’s and motivating

current employee’s.

Another opportunity for the organisation is the emphasis which the temporary

employee’s place on their employability. An effective way to motivate change is have

current employee’s interview for new and different positions, while making clear the

potential benefits and gains of this. Both parties can negotiate new conditions which

promotes a revision of the psychological contract, creating an exchange relationship.

• Communication

While the findings show that overall, the temporary employee’s have good psychological

contract, the challenge for HR, facing organisational and economic changes, is to keep

employment changes from becoming violations. A key message from this research is the

importance of the organisation to engage and communicate more openly with it’s

temporary employee’s. Social isolation can effect temporary employee’s, who often don’t

have the same IT access, or even email accounts and are left out of key organisational

information. They depend on other parties, such as colleagues, to keep them informed.

58

Finally, Rousseau and Greller (1994) addressed the role of administrative contract

makers within HR, stating that there are diverse contract makers from recruiting to

performance appraisal and compensation which send out the message to employees and

future employee’s alike The recommendations above highlight the opportunity for the

organisation in sending out the message to employee’s and future employee’s alike, that

HR practices applied by multiple agents, in different settings, and across time, are vital to

the shaping of the psychological contract

59

Chapter 6

Bibliography .

60

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63

Appendix 1 - Phases in psychological contract formation (from Rousseau (2001) Schema, promise

and mutuality, The building blocks of the psychological contract

Pre-employment Recruitment EarlySocialisation

Professionalnorms

Societal Beliefs

Active promise exchange

Evaluation of signals by both firm and worker

Continuingpromiseexchange

Active information seeking by workers/agents

Multiple sources of information from firm

Later Experiences

Intermittentpromiseexchange

Less active information seeking by workers/agents

Firm reduces itssocialisationefforts

Changes often incorporated into existing psychological contract

The focus of most psychological contract research

EvaluationRevision/Violation

Discrepant information leads to evaluation

Incentives / costs of change impact revision

64

Appendix 2 -T he Psycones analytic framework (Guest, Isaksson, DeWitte 2011, Employment

contracts and psychological contracts in Europe)

CONTROL1 Individual(a) age(b) gender(c) education level(d) family status(e) income contribution(f) income dependants(g) domestic responsibility(h) work involvement2 Work-related(i) occupational level (j) working hours(k) night shifts(I) organizational tenure(m) supervision(n) union membership(o) main job vs other paid job3 Organization(p) core HR practices (q) number of characteristics of company from employer survey4 Sector5 Country

INDEPENDENT 1 Formal contract(a) type of contract

INTERVENING 1 Psychological contract Employer obligations(a) content(b) fulfilment(c) violation(d) fairness and trust Employee obligations(e) content(f) fulfilment

2 Employment prospects(a) job insecurity(b) employability3 Choice(a) contract of choice(b) job of choice(c) profession of choice4 Job characteristics5 Support(a) organizational support(b) supervisory support

6 Non-permanent only variables(a) duration of non-permanent contract(b) time left on non-permanent contract(c) history of temporary working(d) expectations o f further work(e) motives for temporary working

DEPENDENT1 Work-related health reports(a) occupational self-efficacy(b) positive work-life influence(c) affective well-being(d) irritation2 Employee-reported behaviours(a) sick leave(b) sick presence(c) accidents(d) harassment3 General health reports(a) general health(b) life satisfaction4 Organisational-related attitudes(a) job satisfaction(b) organisational commitments(c) intention to quit(d) self-reported performance

65

Figure 1 - APPENDIX 3 Assessment of the Psychological Contract (Rousseau 2000)

B A L A N C E D

/ CareerCareer Dynam icDevelopm ent -Developm ent Perform anceInternalM arket

External M arke t' R equirem ents

Short-TermLoyaltyO ther-O riented

-RELATIONAL

Security

TR A N S A C TIO N A L

Narrow

No Trust / Uncerta in ty \ Erosion

T R A N S IT IO N A L© D e n i s e R o u s s e a u

1 9 9 7

66

Appendix 4 - Employee Questionnaire

Employee Survey

1. What is your gender?

( j Female

0 Male

2. Which category below includes your age?

„ . 17 or younger

0 18-20

0 21-29

0 30-39

0 40-49

0 50-59

0 60 or older

3. What is the highest level of education you have completed?

{j Second level (up to Leaving Certificate)

( J Third level Certificate

O Third level Diploma

' J Third level degree

[j Post-graduate qualification

( J Masters / Doctorate

Other (please specify)

4 How long have you been employed in the organisation?

0 Less than a month

0 Less than a year

O 1 2 Years

0 3 5 Veare

Q More than 5 years

5 Which of the following categories best descnbes your employment status?

Q Fixed Term Contract oí less than 1 year duration

Q Fixed Term Contract of more than 1 year duration

Q Temporary contract through a third party agency or contracto

0 Casual worker

Other [please specify)

6 Which of the following best descnbes your current occupation?

0 Unskilled worker (eg assembly line worker storesperson)

0 Sidled worker or foreperson (eg e le c ta n technician fitter)

0 Lower level sk^led worker (e g typist secretary telephone operator computer operator assistant)

0 Intermediate worker or supeivisoi of lower level skilled worker (e g computer programmer trainer sales or customer service representative)

0 Upper level sidled worker (eg sales or customer seivice manager engineer advisor consultant)

0 Management or d rector (e g head of department senior or area manager director)

Other (please specify)

68

7 To wtiat extent has your employer made the following commitments or obligations to you?

Not at all Sbghtly agree Somewhat agree Moderately agree Agree to a gre;

Ajob only as long as this employer needs me 0 0 0 0 0Concern for my persona! welfare 0 0 0 0 0Advancement within this organisation 0 0 0 0 0Job assignments that enhance my external marketability 0 0 0 0 0Responsive to my persona! concerns and well-being 0 0 0 0 0Limited involvement in the organisation 0 0 0 0 0Support me to attain the highest possible levels of performance 0 0 0 0 0Opportunity for career development within the organisation 0 0 0 0 0Help me develop externally marketable skills 0 0 0 0 0Secure employment 0 0 0 0 0Competitive salary 0 0 0 0 0Health care benefits 0 0 0 0 0A job for a shcxt time only 0 0 0 0 0Makes no commitments to retain me in the future 0 0 0 0 0Potential job opportunities outside the organisation 0 0 0 0 0Help me to respond to ever greater mdustiy standards 0 0 0 0 0Support me m meeting increasingly higher goals 0 0 0 0 0Training only fa my current job 0 0 0 0 0

69

Make decisions with my interest in mind

Requires me ta perform only a limited s<=! of duties

Enables me to adjust to new challenging performance requirements

8 To what extend have you made the following commitments or obligations to your employer?Not at all Slightly agree

Perform only required tasks 0 0Remain with the organisation indefinitely 0 0Do wily what lam paid to do 0 0Fulfil a limited numfier of responsibilities 0 0Accept new and different performance demands 0 0Quit whenever 1 want 0 01 have no future obligations 0 01 have much fewer commitments 0 0Make personal sacrifices for this organisation 0 0Take the organisations concerns personally 0 0Plan to stay here a long time 0 0Protect this organisations image 0 0Build skills to increase my value in this organisation 0 0Make myself increasingly valuable to this employer 0 0Actively seek internal opportunities 0 0

0 0 0

Somewhat agree Moderately agree Agree to a great extent

0 0 00 0 00 0 00 0 0

0 0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 0

0 0 0

0 0 00 0 0

0 0 0

0 0 0

70

Accept increasingly challenging performance standards

Continually exceed my formal performance requirements

Build contacts outside this organisation

increase my visibility

Build skills to increase future employment

Continue to work here

Withholds information from me

Doesnt tiust me

Introduces changes without involving me

An uncertain future regarding its relations with me

Uncertainty regarding its commitment to employees

Uncertainty regarding its commitment to me

Demands more from me while p n g me less in return

Decreasing benefits over the next few years

Stagnant or reduced Salary the longer I work here

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0

'our employer's relationship to you?

0 0

Not at all Slightly agree Somewhat agree Moderately agree

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0

0000

Agree to a great extent

0 0 0

0

0

0

0

0

0

0

| DoneJ

71

Appendix 5 - Questionnaire Responses

Response Summary Total Started Survey: 52Total Finished Survey: 49

1. What is your gender? Response Response

Percent Count

Female 42% 22

Male 57% 30

12. Which category below includes your age? Response Response

Percent Count

17 or younger 0% 0

18-20 0% 0

21-29 19% 10

30-39 63% 33

40-49 14% 7

50-59 4% 2

60 or older 0 0

3. What is the highest level of education you have completed?Response Response

Percent Count

Second level (up to Leaving Certificate) 23% 12

Third level Certificate 21% 11

Third level Diploma 13% 7

Third level Degree 19% 10

Post-graduate qualification 4% 2

Masters/Doctorate 5% 3

Other (please specify) - Apprenticeship 13% 7

4. How long have you been employed in the organisation? Response Response

Percent Count

Less than a month 10% 5

Less than a year 25% 13

1-2 Years 42% 22

3-5 Years 23% 12

More than 5 Years 0 0

L5. Which of the following categories best describes your employment Response Response

status?Percent Count

Fixed Term Contract of less than 1 year duration 10% 5

Fixed Term Contract of more than 1 year duration 48% 25

Temporary Contract through a third party agency or contractor 23% 12

Casual worker 19% 10

Other (please specify) 0 0

_ - ■ ■ 1

6. Which of the following best describes your current occupation? Response Response

72

Percent Count

Unskilled worker (e.g. assembly line worker, storesperson) 19% 10

Skilled worker or foreperson (e.g. electrician, technician, fitter) 11% 6

Lower level skilled worker (e.g. typist, secretary, telephone operator, computer operator, assistant)

25% 13

Intermediate skilled worker or supervisor of lower level skilled worker (e.g.computer programmer, trainer, sales or customer service representative)

25% 13

Upper level skilled worker (e.g. sales or customer service manager, engineer, advisor, consultant)

19% 10

Management or director (e.g. head of department, senior or area manager, director)

0 0

7. To what extent has your employer made the following commitments or obligations to you?

QuestionNo.

Not at Slightly all agree

Somewhatagree

Moderatelyagree

Agree to a great extent

Response Count

A job only as long as this employer needs me

1 0 6 9 23 14 52

Concern for my personal welfare

2 12 16 10 9 4 52

Advancement within this organisation

3 7 7 15 12 11 52

Job assignments that enhance my external marketability

4 10 9 11 9 11 52

Responsive to my personal concerns and well-being

5 13 15 11 9 4 52

Limitedinvolvement in the organisation

6 2 12 14 17 12 52

Support me to attain the highest possible levels of performance

7 6 18 13 9 6 52

Opportunity for careerdevelopment within the organisation

8 7 6 16 11 9 52

Help me develop externally marketable skills

9 10 8 12 10 11 52

Secure 10 18 19 7 8 0 52

73

employment

Competitivesalary

l l 19 18 8 7 1 52

Health care benefits

12 19 18 8 7 1 52

A job for a short time only

13 1 5 9 22 14 52

Makes no commitment to retain me in the future

14 0 6 10 21 13 52

Potential job opportunities outside the organisation

15 9 9 12 11 11 52

Help me to respond to ever greater industry standards

16 7 17 13 9 6 52

Support me in meeting increasingly higher goals

17 6 18 12 9 5 52

Training only for my current job

18 3 11 14 18 11 52

Make decisions with my interest in mind

19 12 15 11 8 3 52

Requires me to perform only a limited set of duties

20 3 11 13 18 12 52

Enables me to adjust to new challenging performance requirements

21 7 7 15 13 10 52

8. To what extent have you made the following commitments or obligations to your employer?

QuestionNo.

Not at all

Slightlyagree

Somewhatagree

Moderatelyagree

Agree to a great

extent

Response Count

Perform only required tasks

22 14 15 11 7 4 52

Remain with theorganisationindefinitely

23 12 23 10 4 0 52

Do only what 1 am paid to do

24 13 14 12 6 4 52

Fulfill a limited number of responsibilities

25 14 15 12 7 3 52

Accept new and different performance demands

26 5 8 9 15 13 52

Quit whenever 1 want

27 0 4 10 20 15 52

74

1 have no fu tu re

obligations

28 0 5 10 21 14 52

1 have m uch

fe w e r

co m m itm en ts

29 0 4 11 20 15 52

M a k e personal sacrifices fo r this

organisation

30 12 10 19 9 2 52

Take th e

organisation's

concerns

personally

31 11 10 20 8 2 52

Plan to stay here

a long tim e

32 13 24 11 4 1 52

Protect this

organisation'sim age

33 12 10 19 9 1 52

Build skills to

increase my

value to this

organisation

34 0 9 13 14 14 52

M a ke m yself increasingly

valuable to this

organisation

35 1 8 12 15 15 52

A ctively seek

in ternalop portunities

36 1 9 13 15 14 52

Acceptincreasinglychallenging

perform ance

standards

37 5 9 10 16 12 52

Continually

exceed my

fo rm al perform ance

requ irem ents

38 4 10 9 15 13 52

Build contacts

outside th e

organisation

39 0 8 11 14 17 52

Increase m y

visibility

40 1 9 12 14 16 52

Build skills to

increase fu tu re em p lo ym en t

41 0 9 12 13 17 52

Continue to w o rk

here

42 13 24 10 3 0 52

9. To what extent do the items below describe your employer's relationship to you?

QuestionNo.

Not at all

Slightlyagree

Somewhatagree

Moderatelyagree

Agree to a great

extent

Response Count

W ithholds

in fo rm atio n from

m e

43 7 17 14 8 5 52

D oesn't tru s t m e 44 7 18 15 8 6 52

75

In troduces

changes w ith o u t

involving m e

45 8 19 14 7 5 52

An uncerta in

fu tu re regarding

its relations w ith

m e

46 4 12 15 14 6 52

U ncerta in ty regarding its

co m m itm en t to

em ployees

47 5 11 16 15 5 52

U ncerta in ty

regarding its

co m m itm en t to

m e

48 4 11 16 15 6 52

D em ands m ore

fro m m e w h ile

giving m e less in

re tu rn

49 10 15 12 8 5 52

Decreasing

benefits over th e

next fe w years

50 11 15 11 9 6 52

Stagnant or

reduced salary

th e longer 1 w o rk

here

51 10 14 12 9 6 52

76