psychological contract development theoretical paper

A model of psychological contractcreation upon organizational

entryMaria Tomprou

Heinz College and Tepper School of Business, Carnegie Mellon University,Pittsburgh, Pennsylvania, USA, and

Ioannis NikolaouDepartment of Management Science and Technology,

Athens University of Economics and Business, Athens, Greece

Abstract

Purpose – The purpose of this paper is to highlight the importance of a number of factors innewcomers’ psychological contract development.

Design/methodology/approach – The approach taken is a literature review with the developmentof a conceptual model.

Findings – The paper contributes to the psychological contract literature by adopting a sensemakingperspective and focusing on the role of newcomers’ pre-entry expectations and emotions on thepsychological contract creation process. The authors also discuss the differential role of contractmakers and facilitators and the modes they employ to influence newcomers’ psychological contractcreation.

Originality/value – Psychological contract research has emphasized the consequences ofpsychological contract breach and violation. The paper’s aim is to direct attention at understandingthe psychological contract in its very initial stages. The authors discuss implications for research andpractice on managing psychological contract creation.

Keywords Psychological contract, Socialization, Sense making, Employee behaviour, Employment

Paper type Conceptual paper

A concept that “neatly captures the spirit of our times” (Guest, 1998, p. 649) regarding thecontemporary employment relationships is the psychological contract. The plethora ofliterature on this topic has to date predominantly focused on the processes of contractviolation and its attitudinal and behavioral aftermath (Coyle-Shapiro and Kessler, 2000;Edwards et al., 2003; Lo and Aryee, 2003; Robinson, 1996; Robinson and Morrison, 2000;Turnley and Feldman, 1998, 1999a, b). This wealthy theoretical and empirical work hascontributed substantially to our understanding of the properties of the psychologicalcontract and its relevant outcomes.

However, we believe that this approach is rather pessimistic. The conventionalapproach conceptualises the process through which psychological contracts are formed,managed and breached (Rousseau, 1995, 2001). It is generally accepted amongresearchers that contract violation refers to “the rule and not to the exception”

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1362-0436.htm

Part of this research was funded by the State Scholarships Foundation (IKY) to the first author.The authors are also grateful to Denise Rousseau for her support and helpful comments duringthe development of this article.

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Received 14 October 2010Revised 3 December 2010,28 March 2011Accepted 29 March 2011

Career Development InternationalVol. 16 No. 4, 2011pp. 342-363q Emerald Group Publishing Limited1362-0436DOI 10.1108/13620431111158779

as predicted by Robinson and Rousseau (Coyle-Shapiro and Kessler, 2000; Robinson andMorrison, 2000; Turnley and Feldman, 2000). Here, we examine psychological contractby looking in particular at the dynamics of psychological contract creation.Psychological contract creation refers to the sensemaking process including anamalgam of promises exchanged by the newcomer and the organizational insiders, asexperienced by the focal individual during her first days at work.

Psychological contract creation is very important from a careers perspective, as well.Changes occurring in the employment relationships, as a result of the current economicclimate might have led employees to embed the new psychological contract in theirmentality (Baruch and Bozionelos, 2010). The traditional protean career shifts its focus ofcareer management to the individual, while the organisation’s role is to provide employeeswith opportunities for growth and development (Briscoe and Finkelstein, 2009; Hess andJepsen, 2009). As a result, the newly recruited employees have also probably adopted adifferent way of creating their psychological contract compared to previous generations.Here, we consider a number of characteristics, such as pre-entry expectations, stemmingfrom previous work experiences and pre-entry information about the organization, certainindividual differences, and post-entry social influence that may affect psychologicalcontract creation. We also incorporate in our model the role of emotions, since upon entryemotions can be considered a good indicator of comprehending how psychological contractcreation is perceived and experienced by the newcomer. We distinguish psychologicalcontract creation from psychological contract development since we mainly focus onpsychological contract processes occurring during the encounter stage of socialization.Psychological contract creation is a process taking place during newcomers’ first days atwork and lasts for a few weeks. During this stage, the outsider becomes a newcomer andfaces the new working reality; promises and information are intensively exchanged andexpectations are being revised (Louis, 1980). On the other hand, psychological contractdevelopment accounts for a longer time period (almost up to a year) and may includeperceptions of fulfilled and/or violated promise-based obligations (De Vos et al., 2003).

We have decided to concentrate on psychological contract creation during the firstdays of employment for a number of reasons:

(1) A few studies have explored the early processes of psychological contractdevelopment (De Vos et al., 2003, 2005; Rousseau, 1990; Thomas and Anderson,1998). In these studies, participants have provided retrospective reports of theirperceptions of contracts at entry, with some reports involving lengthy periods(e.g. four waves: first month, third month, sixth month and 12th month(De Vos et al., 2003), two waves: first year, second year (Robinson et al., 1994); twowaves: first day and after eight weeks (Thomas and Anderson, 1998)). Althoughretrospection over such lengthy periods does not necessarily lead to biasedreports, there is ample evidence suggesting that retrospective reports are prone tovarious problems (Reis and Gable, 2000).

(2) The findings of these studies have shown that newcomer’s expectations andperceived promises tend to change over time contingent on the employer’sactual inducements and insiders’ perceptions of the psychological contract. Yetthese studies do not fully tap the dynamics occurring during psychologicalcontract creation. For instance, none of these studies explains the sourcesand modes of psychological contract-related information, although they appearto recognize their influential role.

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(3) Theory and research on organizational entry have primarily emphasizednewcomer’s cognitions and behaviors (i.e. how they think and act related totheir new job and organization) rather than newcomer’s emotions (i.e. how theyfeel related to the new job and organization). Although emotions are consideredinherent in the sensemaking processes (Weick, 1995), they are systematicallyneglected under the scope of contract creation with a few exceptions mainlywithin the framework of psychological contract violation (Conway and Briner,2002; Robinson and Morrison, 2000).

(4) Our conceptual model attempts to respond to recent calls (Bauer and Erdogan,2011) for integration of the psychological contract and socialization literatures,since there is limited interplay between the two approaches, although they are bothvery significant for understanding newcomers’ adjustment in the organization.

Our aim is to provide a testable model of psychological contract creation upon entry,from a socio-cognitive perspective. Our proposed model is graphically shown inFigure 1.

Overview of the psychological contract creationSince Rousseau’s (1989, 1995) landmark work, psychological contracts have beenconstrued as the perceived agreement of promise – based on obligations between thefocal person and the employing organization. According to Rousseau (2011, p. 193)“psychological contract theory represents the employment relationship in terms of thesubjective beliefs of employees and their employers”. By definition, a psychologicalcontract implies a subjective nature (Rousseau and Tijoriwala, 1998) indicating that inevery mind there is a different world (Sparrow, 1996). A key issue in psychologicalcontracts is the belief that some kind of promise is made and a consideration is offeredin exchange for it, binding the parties to some set of reciprocal obligations (Rousseau,1989, 2011). However, empirical work has shown that when newcomers enter anorganization, they already have expectations about the job itself, the organization andtheir working relationship, which may function as the basis on which psychologicalcontracts are being formulated (Thomas and Anderson, 1998). Although not allexpectations are contractual (Rousseau, 1990, 1995), some actually are and thereforecannot be neglected during psychological contract creation. Such expectations form thebasis of early evaluations of the organization’s (in)ability to fulfill contractualobligations and might create a “reality shock”, which in turn can sow the seeds offuture (dis)engagement. Indeed, findings have consistently reported that employeeschange their perceived obligations to the organization as a function of their evaluationsof the inducements and obligations offered by the organization adjusting thus theirpsychological contract with the employing organization (Coyle-Shapiro and Kessler,2002; De Vos et al., 2003; Robinson et al., 1994; Tsai and Yang, 2010). Expectationsseem to be revised contingent on the messages conveyed by the contract makers;pre-entry expectations can be either met, unmet or indeed, even overmet. Met andovermet expectations are incorporated into a newcomer’s psychological contract.In particular, expectations that are actualized through implicit or explicit promisingwithin the new employing relationship become part of the new psychological contract.

On the other hand, the promises exchanged between the newcomer and the employerabout the employment relationship establish the main fundamentals of the focal person’s

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psychological contract, as these comprise the main components of the unwrittenagreement between the two parties. Promises are the inherent property of psychologicalcontracting, as these messages encoded by individuals as promissory signifypsychological contract creation (Rousseau, 2001, 2011). Rousseau (2001) argues thatpromises express intentions to provide the recipient with some benefit. This entailsthat promises increase the psychological attractiveness of the transmitter and increasethe odds that agreements will be reached. Through promising not only obligations arecreated but also trust by providing information that people would otherwise possessabout each others’ intention. As such, upon entry, promises are considered the mainingredient of psychological contract creation as these imply two primary functions:first, they initiate the negotiation between the two parties and, second, they engage bothparties in achieving a perceived mutual agreement about their obligations.

Salience is another property that appears to influence the way employees interpretthe messages sent by the organization (Herriot et al., 1997; Thomas and Anderson, 1998).

Figure 1.A model of psychological

contract creation

Pre-entry expectationsCognitive biasesPrevious work experiencesPre-entry information

Post entry experiencesIndividual differences

work ideologiesSensegivers

Anticipatoryexpectations

Monitoring

Emotional reactionsIntensity/type

Psychological contract creationUpdate ExpectationsExchanged Promises

Fluctuation of Emotions

FacilitatorsNo power and AuthorityInformingInformal modes ofsensegiving - facilitating

Contract makersPower and authorityPromisingFormal modes ofsensegiving - contracting


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Salience has been defined as the degree to which a stimulus becomes noticeable from itsimmediate context (Fiske and Taylor, 1984). Depending on how important someorganizational inducements are to the employee, promissory messages about salientinducements will have a greater likelihood of being detected and becoming part of herpsychological contract. Conway and Briner (2002) have found that the personalsignificance of particular inducements is a key predictor of emotional reactionsregarding the occurrence of a broken or exceeded promise. Accordingly, newcomersentering the organization actively seek information about the organizationalinducements they consider salient (De Vos et al., 2005; Thomas and Anderson, 1998).

Psychological contract creation as a sensemaking processRousseau has presented an approach on how an individual’s contract is created withthe other “party”, focusing mainly on constituent, intra-psychic processes, such as howthe focal person encodes and decodes external messages based on personaldispositions and motives (Rousseau, 1995). Her theory of psychological contractinghas been developed based on schema theory focusing specifically on how the employeemakes sense of her psychological contract (Rousseau, 2001). Fiske and Taylor (1984)have defined schema as a cognitive structure that demonstrates organized knowledgeabout a given stimulus as well as the rules that direct information processing. Schemaserves as a mental map to make sense of the environment and guide the individual toact accordingly (Harris, 1994; Louis, 1980). Schema-based sensemaking processes aregenerally understood to be naturally occurring for organizational newcomers fromentry onwards (Harris, 1994). This paper will adopt a sensemaking approachconsistent with Rousseau’s (2001) position on psychological contracts as cognitiveschemata (De Vos et al., 2005; Morrison and Robinson, 1997; Rousseau, 1989).

Sensemaking theory furnishes insight into how the psychological contract, as acognitive schema, is being created and evolves in an employee’s mind (Rousseau, 1995,2001, 2011; Shore and Tetrick, 1994). Sensemaking refers to the actors’ attempts to buildmeaning in relation to self and their context. The assumption is that people arecontinuously engaged in a retrospective sensemaking process, particularly in new, novelor unanticipated situations (Weick and Quinn, 1999). Within the socialization context,sensemaking refers to the attempts of a newcomer to cope with their entry experiences(Louis, 1980), and in particular by attributing meaning to their employment relationship(De Vos et al., 2005). Previous literature on psychological contracts has employedsensemaking theory mainly to explain dynamics of breach and violation (Conway andBriner, 2005; Morrison and Robinson, 1997) or psychological contract development(De Vos et al., 2003), but none of these has focused on psychological contract creation.Here, we propose that pre-entry expectations based on previous work experience andpre-entry information about the future employer might both affect what the newcomerperceives as promissory messages sent by the organization whilst ignoring others.

Pre-entry expectationsPre-entry expectations are created during the anticipatory stage of socialization(Louis, 1980). During this stage, recruits – while outsiders – anticipate their experiencesin the organization they are about to enter. According to Weick (1995), the mostdistinguishable property of sensemaking is the focus on retrospect. The newcomerentering the organization, and especially the young graduate (Hurst and Good, 2009;

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Hess and Jepsen, 2009), relies on a number of inputs to interpret and understand the newemployment relationship (Louis, 1980; Weick, 1995), and to formulate expectationsabout the prospective psychological contract. Individual predispositions influence hownewcomers interpret these expectations. Rousseau (1995) claims that an importantfactor influencing the development of these expectations is cognitive biases, whichappear to be a generalizable information processing style. We believe that this style willbe heavily influenced by newcomers’ previous work experiences. Newcomers’ previousexperiences, either positive or negative, will affect how they encode and develop theirexpectations from their new employer. Moreover, this is not the only influence onrecruits’ pre-entry expectations. These will also be affected by the pre-entry information,the employee has gathered about the future employer through organizational andrecruitment image during the job seeking and recruitment process.

Cognitive biases. These pertain to the schemata that gradually develop fromprevious experiences and subsequently guide the way new information is organized(Louis, 1980; Weick, 1995). They provide a lens through which prospective employeescreate their expectations about the content of their psychological contract acquiredprior to socialization (Rousseau, 2001). Within the anticipatory stage, previous workexperiences act as pre-entry schemata accounting for the formation of newcomerexpectations (Rousseau and Tijoriwala, 1998) and depict how the newcomer will actwithin the new employing organization (Louis, 1980; Weick, 1995). Upon entry,newcomers with previous work experience are considered as veterans vis-a-vis theinexperienced neophytes (Carr et al., 2006). Veterans have created extant schemata thatserve as a guide for attributing meaning to the new employment relationship (Louis,1980). Neophytes on the other hand are more reliant on schemata evolved in relation tosimilar but different contexts (e.g. university or school context). During this stage,recruits develop prospective expectations about their life in the organization and on thejob. According to Wanous (1977), it is during this phase that unrealistic expectations orexpectations inconsistent with organizational reality can develop. As apre-employment schema, previous work experience accounts for the extent to whichsome employees develop stable psychological contracts (Rousseau, 2001). Veterans canhave well-developed psychological contracts that are more difficult to change and areoften less responsive to contradictory information than their neophyte counterparts.

Most people work for several organizations throughout their careers and it is notuncommon for employees and organizations to change occupations, industries ororganizations. Newcomers’ previous experience of terminating psychological contractscan influence the content of pre-entry expectations. Experiencing involuntary jobchange or any other unpleasant job event also contributes to employees’ expectations forfuture employment relationships (Morrison and Robinson, 1997). Research has shownthat employees with a history of perceived breach of a relational (i.e. high trust) contractare more likely to defensively pursue a transactional contract (i.e. quid pro quo) as apre-emptive strategy against other incidents of violation (Robinson et al., 1994). On theother hand, individuals who have experienced job loss and organizational change aremore likely to expect job insecurity (Cavanaugh and Noe, 1999). Conversely, newcomerswith positive previous experiences, such as keeping promises and expectations onbehalf of the employer, would influence, respectively, the process of psychologicalcontract creation. It is also more likely that they would expect that their new employerwould keep their promises.


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Pre-entry information. Pre-entry information about the employing organization caninfluence a newcomer’s expectations about the new employment relationship. Dineenand Soltis (2011) in the most recent review of recruitment research emphasized theimportance of firm characteristics in the context of recruitment. Here, we focus on thesignalling messages sent by the employing organization through its brand andorganizational image. Signalling is a very significant part of the recruitment process.Candidates often generalize from job and organizational attribute information they haveto job and organizational attributes about which they lack information (Breaugh et al.,2008). The credibility of the source might also be an important factor in this process. Tsaiand Yang (2010) suggested that one of the main antecedents of organizationalattractiveness is corporate credibility image. Credibility is generally considered a validway of taking others “on board” and earn their trust. When an organization is positivelyperceived by outsiders, people may normally associate such a positive impression with anumber of positive characteristics in the firm. Because of the functioning of socialidentification, a positive image will attract larger number of applicants to thecorresponding organization.

Psychological contract researchers argue that the employer can send messages(whether unwitting or contrived) about future contractual obligations during therecruitment and selection process (Millward-Purvis and Cropley, 2003; Rousseau, 1995,2001; Rousseau and Greller, 1994; Shore and Tetrick, 1994). Firm characteristics, such asthe corporate image, create general organizational impressions through advertisements,campaigns and activities of corporate social responsibility (Rynes, 1991). In the absenceof inside information, applicants may rely on corporate image to decide whether topursue an employment relationship with the focal organization. Images actively used inrecruitment processes may likewise be used by prospective employees (Gatewood et al.,1993). Rousseau and Greller (1994) argue that promises abound in descriptions of thework, pay system, career progression and working conditions. Although these promisesmay be considered by those who send the messages as personal opinions, the result ismore often than not to create lasting expectations. Selection procedures, such as theemployment interviews, realistic job previews and assessment centers can all furnishexpectations (Rousseau and Greller, 1994; Wanous, 1977).

The above provide the rationale for the following propositions:

P1. Pre-entry expectations will influence newcomer’s perceptions oforganizational promises.

P1a. Veteran newcomers will have more realistic expectations, and will perceivefewer promises than neophyte newcomers.

P1b. Corporate and recruitment image will influence pre-entry expectations, whichwill in turn affect newcomers’ perceptions of organizational promises.

Post-entry experiencesWhen new hires enter the organization, they have already formulated a gamut ofexpectations about their future employment relationship (Robinson, 1996; Rousseauand Greller, 1994). However, it is also clear that these expectations are subject torevision through the course of interactive exchanges with insiders(Thomas and Anderson, 1998). As earlier stated, one common newcomer experiencethat can challenge pre-existing schemata is “reality shock”. Newcomers, in their early

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days at their new position, are busy with many unfamiliar cues that need to behandled. Louis (1980) argues that individuals experience events that may be starklydivergent from their expectations and predictions. A perceived inconsistency ofpromises (i.e. perceived obligations) and anticipatory expectations may be experienced(Robinson, 1996), because pre-entry expectations are ill-founded in the reality of theorganization (Wanous, 1977; Wanous et al., 1992). It is also possible that new recruitswill perceive congruence and consistency between pre-entry expectations andperceived obligations (Robinson, 1996). Met expectations are likely to become part ofnewcomers’ psychological contracts. However, it should be noted that expectations canexist in the absence of perceived promises (Robinson, 1996) contributing to someuncertainty about where expectations end and promises begin in the employees’ minds(Coyle-Shapiro and Kessler, 2000; Guest, 1998).

Whether the newcomer recognizes what was promised and whether theseexpectations are actually met or unmet will also depend on the salience of perceivedobligations and expectations. Salience is likely to affect how vigilant an employee will bein detecting whether perceived promises are upheld (Morrison and Robinson, 1997), andalso the perceived relevance of particular employer contributions to judgments aboutwhether obligations have been met. In addition, the influence of social environmentguides the individual’s attention to focus on certain information close to her salientschemata and provide expectations concerning individual behavior (Harris, 1994). In thefollowing section, we explain the influence of certain individual differences and the roleof the social environment within the context of psychological contract creation.

Individual differences. Psychological contract and breach are individual-specificconstructs that are influenced by individual characteristics and differences, generallyrepresented by personality traits, work values and beliefs. A few studies haveinvestigated the role of individual differences on psychological contract violation(Raja et al., 2004; De Vos et al., 2005; Rousseau, 2004; Nikolaou et al., 2007). Further,previous research has investigated the effect of work values on psychological contractdevelopment and type of information seeking (De Vos et al., 2005). We expand thiswork by suggesting the potential role of work ideologies that could affectpsychological contract creation, since we believe that reciprocation ideology andself-reliance play have important roles in psychological contract creation.

Proactive personality. Personality is less subject to changes during career andorganizational experiences relative to work values and ideologies (De Vos et al., 2005;Gundry and Rousseau, 1994). As stated earlier, socialization researchers tend to conceivenewcomers as proactive in information seeking in relation to their new environment(Bauer and Erdogan, 2011; Major et al., 1995; Morrison, 1993a, b, Nikolaou et al., 2007).Proactive newcomers appear to adjust more readily to new organizational settings(Morrison, 1993a, b). Proactive employees take action to influence their environment(Bateman and Crant, 1993) and experience career success (Seibert et al., 1999) along withincreased levels of work engagement over time (Dikkers et al., 2010). Crant (2000) arguesthat, in general, proactive people recognize opportunities and act on them, demonstrateinitiative, take action and persist until significant change occurs. In short, proactivitymay influence the sensemaking process during psychological contract creation, and mayin particular contribute to the development of realistic expectations as well as to theirability to understand and interpret promissory messages sent by the organization.Proactive newcomers would be more vigilant about organizational messages in order to


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understand the new working environment than less proactive individuals. Proactivity isalso associated with the willingness to take the initiative and to make promises as a wayto seek and initiate feedback (Crant, 2000). Proactive individuals also have an increasedtendency to control their work environment, thus demonstrating proactive behavior thatenhances socialization (Bauer and Erdogan, 2011). Therefore, we expect that moreproactive newcomers would report more employer promises than less proactivenewcomers.

Work ideologies. Ideologies have been defined as “a relatively coherent set of beliefsthat bind some people together and that explain their worlds in terms of cause-and-effectrelations” (Beyer, 1981). Work ideologies often exist prior to an encounter with aparticular employer (Rousseau, 2001). Ideologies within the organizational setting serveto reduce uncertainty and ambiguity acting as an interpretation of employment reality,minimizing the need to constantly explain an overload of complicated information (Beyer,1981; Edwards et al., 2003). When the individual is about to enter the organization, herpre-entry expectations direct sensemaking processes regarding psychological contractcreation. Based on the idea of the psychological contract as an exchange relationship(Coyle-Shapiro and Conway, 2005; Coyle-Shapiro and Neuman, 2004; Teklab and Taylor,2003), the role of reciprocation ideology has been found to influence the formation processby means of biasing the way newcomers perceive information sent by the organization(Coyle-Shapiro and Neuman, 2004; Eisenberger et al., 1987). Eisenberger et al. (1987)have identified two independent dimensions of reciprocation ideology: one involvingbeliefs that returning help greater than previously received will result in generousrepayments (i.e. creditor ideology), and one involving caution in returning help requiredto avoid being taken advantage of (i.e. reciprocation wariness). Creditor ideologists aremore likely to pursue an over-reciprocation contract with the employer when they enteran organization, due to a preference to have the other party in their debt rather thanexperiencing the felt discomfort of indebtedness (Coyle-Shapiro and Neuman, 2004). Assuch, a creditor newcomer will tend to be vigilant about their own promises but not to theemployer promises. Accordingly, newcomers with high reciprocation wariness mayappear to ignore promissory messages sent by the organization and being rather stingyon their own promises maintaining a balance between their own and the organization’sobligations. Another potentially important work ideology is that of self-reliance.Employee’s self-reliance is a belief that employees should depend on their employers aslittle as possible and should be responsible for their own employability (McKinley et al.,1998). Edwards et al. (2003) argue that employees who are not self-reliant can have highexpectations of employers regarding training, benefits and job security (i.e. pursuing amore relation-oriented psychological contract), whereas their counterparts subscribingto a self-reliance ideology are likely to have lower expectations of employers regardingthese attributes, predisposed to more transaction-oriented contracts. Therefore,self-reliant newcomers will tend to perceive fewer promises about employer promises.This leads to the following propositions:

P2. Certain personality traits and work ideologies are likely to affect newcomer’spsychological contract creation.

Specifically:

P2a. Proactive personality will be positively related to perceived employer promises.

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P2b. Ideologies of reciprocation and self-reliance will be negatively related toperceived employer promises.

Sensegivers. Psychological contract creation does not take place irrespectively of thenewcomers’ work environment. “Sensemaking is a social process that acts as a constantsubstrate shaping interpretations and interpreting” (Weick, 1995, p. 39). Learning theropes involves exchanges with insiders (i.e. existing employees), who act as sensegivers;they supply viable and workable interpretation of the new reality and influencenewcomers to adopt it as their own. Rousseau (2004) describes the psychologicalcontract as a product of a complex web of exchanges between the organization and theemployee. These exchanges occur within the organization on an interpersonal levelbetween the focal person and various organizational representatives (Rousseau, 1995). Itis too easy to personify the organization as a unified party to the exchange relationshipinsofar as the feelings an employee may have for an agent of the organization maysometimes be generalized to the whole organization (Coyle-Shapiro and Kessler, 2002;Dabos and Rousseau, 2004a). However, we have to note that individuals holdpsychological contracts, not organizations: the organization, as the other party in therelationship, offers a framework for the creation of the psychological contract.Organizations cannot “perceive”, but their representatives can perceive a psychologicalcontract and react accordingly (Rousseau, 1989). In psychological contract terminology,organizational representatives with whom the employee interacts and perceives his/hercontract have been labeled as contract makers (Rousseau, 1995).

Contract makers. The contract maker is defined as any person who conveys someform of future commitment to another person, implying that this contract maker has – atleast to some degree – the power and the authority to fulfill his/her obligation. Differentpotential contract makers have been identified, such as managers, recruiters, topmanagement and mentors, along with structural signals, such as human resourcespractices (Rousseau, 1995, 2004a; Rousseau and Greller, 1994). Empirical work hasfocused mainly on the role of managers and supervisors as contract makers, with whom,along with coworkers, the employee has the most frequent contact (Coyle-Shapiro andKessler, 2000, 2002; Tekleab and Taylor, 2003). Here, we differentiate the role of contractmakers from the informal social influence or alternatively the “third party” of thepsychological contract, such as co-workers. This is in order to comprehend more fullytheir function in the sensemaking process on psychological contract creation.

Previous research on the effect of networks has shown that friends and ties within theorganization have important consequences for perceived psychological contractfulfillment (Ho and Levesque, 2005; Ho et al., 2004). These researchers argue that theperceived discrepancy between employees’ and employers’ evaluation of fulfillment ispartially accounted for by the fact that an individual’s network play a pivotal role inshaping an employee’s fulfillment evaluation. However, there is still no clarity onwhether an employee’s network encompasses contract makers or other informationsources. Within early socialization, newcomers have not yet established their networkwithin the organization, therefore organizational insiders are considered as informationsources rather than as an established network. Rousseau (1995) identifies two externalsources based on the nature of the messages provided to the employee; contract makers,who send organizational messages and co-workers who provide social cues. Applyingthis distinction to a socialization context, we distinguish the two potential sources ofsensegivers into contract makers and facilitators. Here, we expand co-workers to all


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potential sources labeled as “facilitators” because although they do not have the powerand authority to make any promises, they do nonetheless influence the sensemakingprocess of psychological contract creation, providing information that influences itscontent.

To comprehend better this demarcation, we will focus on the differential functionssensegivers serve during the process of newcomers’ psychological contract creation.First, the contract maker conveys promises about future intent or warranties (Rousseau,1995). These promises might correspond to employer’s obligations in exchange foremployee’s contributions; therefore they are made by those who can act on behalf of theorganization to fulfill these promises. To convey promises, the organizationalrepresentative should satisfy at least two requirements:

(1) to have the power to fulfill them at least to some degree; and

(2) to have been given the authority to make promises on behalf of the organization.

Otherwise, the promises conveyed to the newcomer may lead to a disoriented andunrealistic psychological contract vulnerable to violations. Contract makers, on theother hand, are not always an accessible source of information; they mainly conveymessages as organizational representatives through formal procedures, such asrecruitment and selection or socialization and induction processes (Miller and Jablin,1991; Rousseau, 1995). Within these organizational practices, formal conversations arethe framework of sensegiving and sensemaking processes that create the content of thepsychological contract (Rousseau, 2001). This might occur, for example, throughrealistic job previews (Premack and Wanous, 1985) or active communication.

Facilitators. By contrast, facilitators convey messages about the employmentrelationship as information providers to help (facilitate) the newcomer to make sense ofhis/her psychological contract. Ho and Levesque (2005) and Ho et al. (2004) conceivedthe third party as friendships and networks, whereas Thomas and Anderson (1998)defined the third party as insiders but not clearly distinguished from contract makers.During organizational socialization, especially in the early beginning of theemployment relationship, the third party has a facilitative role to the extent thatthey clarify promissory messages sent by organizational representatives. Therefore,they are labeled as facilitators and act as a secondary informal information source.When promissory messages are conveyed by organizational representatives, thenewcomer is likely to seek validation or clarification from facilitators. Facilitators canprovide helpful information for the newcomer to make sense of the promissorymessages sent by the organization. For instance, if an organizational representativepromises fringe benefits, the newcomer can make use of facilitator source to obtaininformation of the process of obtaining these benefits. Facilitators can be co-workers,administrative staff, and colleagues from other departments (Miller and Jablin, 1991)but do not necessary have some type of relationship, such as friendship or network, asin Ho and colleagues’ definition. During psychological contract creation, relationshipsare not yet established and newcomers focus on the facilitative role of the third party toobtain information. They may turn to experienced peers, or informal mentors (Eby,2011), who act as helpful sources and guides to salient background information forassigning meaning to events and surprises (Louis, 1980). In their study into armyrecruits’ changes in psychological contracts, Thomas and Anderson (1998) argue thatnewcomers’ changes in their pre-entry expectations are generally toward the existing

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norms of experienced soldiers. All these arguments indicate the influential role offacilitators in the psychological contract creation process.

Unlike contract makers, facilitators cannot make any official promises aboutemployer’s obligations as they are not assigned with the authority or the power to doso. Therefore, they may not be considered as reliable source of information as contractmakers. Nonetheless, they do provide information about employer’s obligations. Thiswill definitely be the case if we are talking about an informal mentoring relationship(Eby, 2011). This information may attribute both positive and negative meaningcompared to promises that have a primarily positive nature, as they refer to intentionto fulfill a perceived obligation. Researchers have consistently found that supervisorsevaluate contract fulfillment towards their subordinates higher compared toemployees’ evaluation of organizational contract fulfillment (Coyle-Shapiro andKessler, 2000; Porter et al., 1998; Tekleab and Taylor, 2003). Porter et al. (1998) havealso found that employees report greater amounts of employer’s inducements than dotheir organizational representatives. These discrepancies can be explained by theinformation provided by the facilitators who help the newcomer to learn the ropes byproviding both positive and negative information.

The second function that differentiates the role of contract makers from that offacilitators is the differential sensegiving modes they adopt. Contract makers, as weexplained earlier, are more likely to employ formal tactics to convey messages about anemployer’s obligations, whereas facilitators use more informal tactics to provide theirinformation. The potential inefficiency of formal procedures to offer the newcomer aholistic picture of the new employment relationship may lead to the development ofalternative modes of information seeking (Miller and Jablin, 1991). The use of facilitatorsas informal socialization agents may provide a means by which the newcomer canconfirm or clarify contract makers’ promises. Facilitators are available to newcomersthrough more informal modes, such as chatting, storytelling and advising. Previousresearch has shown that advice and friendship relationships shape the content ofpsychological contract (Dabos and Rousseau, 2004b; Ho et al., 2005). Therefore,we develop the following propositions:

P3. During the encounter stage, different sources of sensegivers will influencedifferently the process of psychological contract creation.

P3a. Newcomers will perceive more employer promises by contract makers thanby facilitators.

P3b. Newcomers will perceive more facilitative information about employerinducements from facilitators than by contract makers.

Monitoring. As a sensemaking process, monitoring is also another potential tactic thenewcomer employs in order to scrutinize uncertain or ambiguous information andevents (Miller and Jablin, 1991; Rousseau, 1995). Monitoring refers to observation of theinteractions taking place within their new working environment and the respectivebehaviors of others. Scanning the environment may be considered as a less explicit wayof interacting with insiders as the newcomer opts not for direct contact, either primarilybecause the insiders are not always accessible or as an alternative mode to gainknowledge and learn. According to social learning theory, the advantage of monitoringas a sensemaking process lies in its inconspicuous nature and on the individual’s ability


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to imitate other’s behaviors (Bandura, 1977). Researchers suggest that newcomers aremore likely to monitor others, than ask questions (Miller and Jablin, 1991; Morrison,1993b). During the first days at work there is overwhelming information that anewcomer’s mind capacity cannot fully interpret. She will monitor and extract only thisinformation that entails discrepancy from the existing schema of her psychologicalcontract (Rousseau, 1995). It is also likely to employ monitoring when the information issalient regarding her employer’s obligations and when the information source is notreadily accessible. However, the information obtained through monitoring may not be asreliable as that derived from other modes, as it is highly implicit in nature and therefore,promises inferred by monitoring may need further confirmation (Morrison, 1993b).Morrison (1993b) argues that when the information is particularly salient and valuableor very difficult to obtain through monitoring, employees will be more willing to askdirectly. Overall, monitoring is considered as a rather implicit tactic with relativelyunreliable inputs to making sense of the environment but frequently used, when thefocal information is considered highly important and is otherwise not easily accessible.This leads to the following proposition:

P3c. When there is lack of communication, newcomers will view promises andfacilitative information via monitoring organizational representatives andfacilitators.

Emotional reactions. Another inherent property of sensemaking processes is the typeand the intensity of the newcomers’ emotions. We will first have a look at the intensityof emotions. Weick (1995) argues that emotions are experienced when an organizedsequence is interrupted unexpectedly. Emotions are at stake when the newcomerexperiences contrast and change between the pre-entry expectations and the emergingpsychological contract. The frequency of emotions is likely to be intense as thenewcomer tries to attribute meaning to his/her new psychological contract based onpre-entry expectations as well as on the congruence between promissory messages bycontract makers and information provided by facilitators. The revision of pre-entryexpectations is likely to provoke intense emotions as the newcomer is bombarded withnew and unknown interruptions of his/her pre-entry script. Further, the (in)consistencyof promises and facilitative information may also challenge the newcomer emotionally:

P4. The greater the extent to which exchanged promises refer to salient pre-entryexpectations, the more intense the emotion the newcomer is likely toexperience, either positive or negative.

P4a. The intensity of emotional reactions is contingent upon the consistency ofpre-entry expectations and perceived promises. The more inconsistent theterms of the psychological contract are with pre-entry expectations, the moreintense the emotional reactions will be.

P4b. The intensity of emotional reaction is contingent upon the consistency offacilitative information and perceived promises. The more inconsistentthe terms of psychological contract are with facilitative information, the moreintense the emotional reactions will be.

The type of emotions experienced may also vary. In psychological contract research,emotions have been conceptualized by the term violation (Morrison and Robinson, 1997;

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Rousseau, 1989, 1995). Violation conveys strong emotional experiences that involvefeelings of betrayal and deeper psychological distress, as well as anger and resentment(Morrison and Robinson, 1997; Rousseau, 1989). These strong emotions are provokedunder the assumption that the organization has failed to meet one or more obligationscorresponding to a focal person’s contributions namely perceived breach (Morrison andRobinson, 1997). The above implies that the psychological contract is underpinned bythe concept of trust (Robinson, 1996). When the organization fails to fulfill itsobligations, trust is eroded (Lo and Aryee, 2003; Robinson, 1996) resulting into negativeemotions.

Promises may also increase the possibility of positive emotions (Conway and Briner,2005). Promise implies an intention for future action, i.e. obligation (Rousseau, 1995).The nature of a promise indicates a positive reaction insofar as the party involved isobligated to fulfill her promise (Sull and Spinosa, 2007), and the fundamentals of analleged agreement are perceived to be set. Contract makers, therefore, are more likely toprovoke positive emotions. Accordingly, facilitators provide information that maycreate positive but also negative experiences of the employment relationship. Sias andJablin (1995) argue that after an emotional event, coworkers are more likely to discussnegatively valenced incidents amongst themselves than positively valenced events.These findings indicate that the information provided by facilitators may provoke amixture of positive and negative emotions especially related to perceived employer’spromises. Therefore, we believe that the consistency between perceived employer’spromises and facilitative information will influence newcomer’s emotional reactions.Thus, depending on the source and nature of the information provided, emotions arelikely to fluctuate. This leads to the following propositions:

P5a. During psychological contract creation, promises by contract makers willprovoke more positive emotions, due to its formal contracting process andnewcomer’s perception for negotiating, than information provided byfacilitators.

P5b. The more consistent the information provided by facilitators is with perceivedemployer promises, the more positive emotions it will provoke.

Concluding remarksWe believe that the aforementioned dynamics provide a means of understanding howthe content of a newcomer’s psychological contract is formulated. Pre-entryinformation and cognitive biases function as a cognitive lens through which thenewcomer interprets the new employment relationship. Yet this cognitive lens is likelyto be dysfunctional within the new context, as pre-entry expectations will need to berevised and updated contingent upon entry experiences and social interchanges withinsiders (Robinson, 1996; Rousseau, 1989, 1995). Facilitators, as helpful sensegivers,also influence the content of newcomer’s psychological contract as they conveymessages that attribute both positive and negative meaning to the new psychologicalcontract (Ho and Levesque, 2005). The type of a new hire’s psychological contractis also being formed; promises emphasizing relational terms (e.g. long-term securityand concern for individual’s wellbeing) or transactional terms (e.g. encouragementof external marketability and pay contingent on performance), shape the scope throughwhich the newcomer interprets the nature of her employment relationship


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(Rousseau, 1990; Robinson et al., 1994). The final point regarding the psychologicalcontract fundamentals involves the fluctuation of emotions the newcomer willexperience. Acknowledging explicitly the role of emotions in the workplace has beenon the rise recently (Elfenbein, 2007; Barsade and Gibson, 2007). In a similar vein toMorrison and Robinson (1997) and Robinson and Morrison’s (2000) argumentabout the need to distinguish between cognitive and affective components of theconcept of violation, the influence of the emotions may need to be considered asinherent to psychological contracting. The degree of consistency between perceivedemployer promises with pre-entry expectations as well as with facilitative informationcan have a differential effect on how the psychological contract is being experiencedupon entry.

Despite the important work on psychological contract, little is known about how thepsychological contract is actually created and experienced during employees’ first daysat work. We have attempted to clarify the sensemaking processes occurring duringpsychological contract formation taking into consideration emotional and social factors,as well as conventional cognitive elements. In doing so, we have illustrated certainpre-entry antecedents, the role of individual differences, as well as the differentialinfluence of sensegiving from contract makers and facilitators. Likewise, we haveemphasized the pivotal role of emotions as an inherent part of the psychologicalcontracting process. Next, we address the future research potential of our propositions,and implications to promote both research and practice on psychological contracts.

Research and practice implicationsThe model outlined in this paper not only presents a framework on psychologicalcontract creation during the early days at work, but also provides an agenda for futureempirical research and guidelines for how such research could be conducted. For eachpart of our model, we have neatly identified variables that we deem likely to affect theprocesses of psychological contract creation. Researchers should also focus on theneglected issue of emotions as an inherent part of psychological contract creation.Sentiments and emotional reactions may fill the gap regarding differential perceptionsof the psychological contract, as well as its subsequent behavioral and attitudinalreactions. Likewise, the role of facilitators (with no formal authority to make promises)not just contract makers (with the authority to make promises) also needs to be furtherinvestigated within the process of psychological contracting. Further, the individualshould not be considered as “tabula rasa” when entering the organization, sinceprevious experiences and knowledge has articulated certain expectations that wouldguide individual’s perceptions about the new working environment.

The most important challenge, however, will be in developing an appropriatemethodology for capturing the dynamics of psychological contract creation. One-shotcross-sectional surveys cannot fully tap the dynamics of contract creation.Longitudinal surveys and diary methods are potentially much more conducive tocapturing postulated processes. Diary methods are especially likely to capture subtleemotional reactions and moods, more so than traditional surveys (Bolger et al., 2003),as well as narrative methods of interviewing which capture the chronological andtemporal nature of experience and sensemaking.

The exploration of these questions will shed light not only in the area ofemployment relationship, but also in other areas, such as recruitment, selection

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and career management. We consider that career management will especially benefitfrom understanding newcomers’ psychological contract creation. Despite theheightened effect of employability on employees’ work life (Scholarios et al., 2008) andthe shift towards individual or group responsibility for career management, as Baruchand Bozionelos (2010) suggest, employees value and will still value more in the futureemployers offering better career deals than the market, leading to increased levels oforganizational commitment (Ng and Feldman, 2008).

Our model has also practical implications for both employees and organizationsregarding how to manage psychological contracts from the beginning of theemployment relationship. The psychological contract has been often criticized as aconstruct developed by researchers rather than practitioners (Arnold, 1996; Cullinaneand Dundon, 2006). However, when violated it becomes more dominant in theorganization than ever. This is primarily because organizations mainly focus on thepathology of a phenomenon than on the aetiology. Organizations thus invest money toincrease desired outcomes, such as enhancing organizational commitment and morale,instead of investing on how to create the fundamentals that will lead to these outcomes.Therefore, understanding how the psychological contract is created may assistpractitioners to comprehend employment relationships better and manage themaccordingly. First, organizations should invest on dealing effectively with newcomers’pre-entry expectations. Although nowadays most large corporations spend a great dealof money on improving their corporate and recruitment image, job applicants cangather information from many different sources, which are not easily managed bythe company. In a “connected” world, candidates can easily form expectations abouta company and if these are provided by credible sources, it might be difficult for acompany to change them, if it is required to do so. Moreover, pre-entry expectations arealso formed during the recruitment and selection process (Millward-Purvis andCropley, 2003). Organizations should understand the important role of recruitment andselection in forming and developing newcomers’ psychological contract.

Newcomers play an active role in making sense of their new psychological contract.Socialization researchers have repetitively reported the proactive role of the neophytesin the information-seeking process (Major et al., 1995; Morrison, 1993a, b; Ostroff andKozlowski, 1993). They can creatively use the multiple sources of psychologicalcontracting to filter their new expected role and working relationship. Althoughsome of the sources may be considered more accessible, such as co-workers andadministrative personnel, these may not always be as reliable and powerful as theymay appear.

Understanding the differential role of contract makers and facilitators will enhancenewcomer’s ability to recognize the reliability of the exchanged information. For theorganization, it may be more productive to use facilitators more actively in thesocialization practices instead of neglecting their influential role. In that way, implicit,incongruent and distorted messages sent by the facilitators can be reduced. Teamleaders or newcomers’ supervisors should be aware of this exchange of information andintervene, when and if it is possible. This can be achieved, for example, through closecontact with the neophytes or with the development of “unofficial” mentoring programs.In practice, drawing a distinct line between the contract makers and facilitators may notbe easy, but organizations should make an attempt to recognize the influential role offacilitators during psychological contract creation.


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In general, we suggest that sensegivers play a pivotal role in the establishment of apsychological contract. When the psychological contract is still open to negotiation andmalleable, sensegivers can exercise their communication skills effectively to influencepsychological contract creation. Accordingly, it is important for the organization tobecome aware of its implicit messages to attract recruits and promote its corporateand recruitment image to the society. These messages may be considered as validindicators of their prospective working relationship, especially for inexperiencednewcomers. Organizational agents, especially recruiters, HR specialists and first-linesupervisors may need to work together to deliver messages in a more realistic way.

Within the context of positive organizational behavior, certain HRM interventionsare applied within organizations to increase positive emotions at work and thusincreasing employees’ commitment and work performance. In short, these interventionsmainly refer to “positive programs”, such as empowerment, fun at work and emotionalintelligence (Fineman, 2006). Without by any means condemning these structured typesof emotion management programs, we want to prioritize emotions through activepsychological contract management on an everyday basis especially from the verybeginning of a newcomer’s organizational life.

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Corresponding authorIoannis Nikolaou can be contacted at: [email protected]

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