Psychological Contracts in Organizations

1
Chapter 9

• Psychological Contracts in Organizations
• The Importance of Satisfaction and Morale
• Motivation in the Workplace
• Strategies for Enhancing Job Satisfaction and
  Morale
• Managerial Styles and Leadership

2
Objectives

• Describe the nature and importance of
  psychological contracts in the workplace.
• Discuss the importance of job satisfaction and
  employee morale and summarize their roles in
  human relations in the workplace.
• Identify and summarize the most important
  theories of employee motivation.
• Describe some of the strategies used by
  organizations to improve job satisfaction and
  employee motivation.
• Discuss different managerial styles of leadership
  and their impact on human relations in the
  workplace.

3
Psychological Contracts in Organizations

• Human Relations
• Interactions between employers and employees and
  their attitudes toward one another
• Psychological Contract 
• Set of expectations held by an employee
  concerning what he or she will contribute to an
  organization (referred to as contributions) and
  what the organization will in return provide the
  employee (referred to as inducements)

4
The Importance of Satisfaction Morale

• Job Satisfaction 
• Degree of enjoyment that people derive from
  performing their jobs
• Morale 
• Overall attitude that employees have toward their
  workplace

5
Satisfaction and Return to Shareholders
According to a recent study, the 100 best
companies to work for those with the highest
levels of highest levels of satisfaction and
moral outperformed the 300 largest U.S.
companies over both 5- and 10-year periods.
100 Best
100 Best
Russell 300
Russell 300
5-Year 1992-1997
10-Year 1987-1997
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Recent Trends in Managing Satisfaction Morale

• The booming economy of the late 1990s forced
  companies to work harder not only to retain
  current employees but also to offer creative
  incentives to secure new employees.
• In the bust economy of the 2000s firms are
  changing their policies.
• Should firms change depending on the economy?

7
Motivation in the Workplace

• Motivation v Manipulation
• The set of forces that cause people to behave in
  certain ways

8
Classical Theory

•  
• Theory holding that workers are motivated solely
  by money

Scientific Management Frederick Taylor (1911)
reasoned that paying employees more should prompt
them to produce more Time-and-Motion
Studies Industrial-engineering techniques were
applied to each facet of a job in order to
determine how to perform it most efficiently
9
Behavior Theory

• Hawthorne Effect
• Tendency for productivity to increase when
  workers believe they are receiving special
  attention from management

10
Contemporary Motivational Theories

• The major motivation theories include
• Human Resources Model
• Hierarchy of Needs Model
• Two-Factor Theory
• Expectancy Theory
• Equity Theory

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Human Resources Model
Behavioral scientist Douglas McGregor concluded
that managers had radically different beliefs
about how best to use the human resources
employed by a firm.

• Theory X
• Theory of motivation holding that people are
  naturally irresponsible and uncooperative
• Theory Y
• Theory of motivation holding that people are
  naturally responsible, growth oriented,
  self-motivated, and interested in being
  productive

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Hierarchy of Needs Model
Psychologist Abraham Maslow proposed that people
have several different needs that they attempt to
satisfy in their work.

• Hierarchy of Human Needs Model
• Theory of motivation describing five levels of
  human needs and arguing that basic needs must be
  fulfilled before people work to satisfy
  higher-level needs

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Maslows Hierarchy of Needs
Self- Actualization Needs
Esteem Needs
Social Needs
Security Needs
Physiological Needs
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Two-Factor Theory

• Psychologist Frederick Herzberg concluded that
  job satisfaction and dissatisfaction depend on
  two factors
• Hygiene Factors working conditions
• Motivation Factors recognition for a job well
  done
• According to the two-factor theory, hygiene
  factors affect motivation and satisfaction only
  if they are absent or fail to meet expectations.

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Two-Factor Theory of Motivation

• Motivation Factors
• Achievement
• Recognition
• The Work Itself
• Responsibility
• Advancement Growth

• Hygiene Factors
• Supervisors
• Working Conditions
• Interpersonal Relations
• Pay Security
• Company Policies Administration

9 - 15
16
Expectancy Theory

• Theory of motivation holding that people are
  motivated to work toward rewards that they want
  and that they believe they have a reasonable
  chance of obtaining

17
Equity Theory

• Theory of motivation holding that people evaluate
  their treatment by employers relative to the
  treatment of others

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Strategies for Enhancing Job Satisfaction Morale

• Reinforcement/Behavior Modification Theory
• Theory that behavior can be encouraged or
  discouraged by means of rewards or punishments
• Management by Objectives (MBO)
• Set of procedures involving both managers and
  subordinates in setting goals and evaluating
  progress

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Management by Objectives
Starting the MBO Program
Establishing Organizational Goals Plans
Collaborative Goal Setting Planning
Communicating Organizational Goals Plans
Meeting
Setting Verifiable Goals Clear Plans
Counseling
Identifying Resources
Establishing Organizational Goals Plans
Collaborative Goal Setting Planning
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Strategies for Enhancing Job Satisfaction Morale

• Participative Management and Empowerment
• Method of increasing job satisfaction by giving
  employees a voice in the management of their jobs
  and the company

21
Team Management

• Managers should remember that teams are not for
  everyone
• Some employees thrive in participative programs
• Many people will be frustrated by
  responsibilities they are not equipped to handle
• Participative programs may result in dissatisfied
  employees if workers see the invitation to
  participate as more symbolic than substantive

22
Job Enrichment Job Redesign

• Job Enrichment
• Method of increasing job satisfaction by adding
  one or more motivating factors to job activities
• Job Redesign
• Method of increasing job satisfaction by
  designing a more satisfactory fit between workers
  and their jobs

23
Job redesign is usually implemented in one of
three ways

• Combining Tasks
• The job of combining tasks involves enlarging
  jobs and increasing their variety to make
  employees feel that their work is more
  meaningful.
• Forming Natural Work Groups
• People who do different jobs on the same projects
  are candidates for natural work groups.
• Establishing Client Relationships
• Establishing client relationships means letting
  employees interact with customers.

24
ManagerialStyles Leadership

• Leadership (Followership?)
• Process of motivating others to work to meet
  specific objectives
• Managerial Style
• Pattern of behavior that a manager exhibits in
  dealing with subordinates

25
Managerial Styles

• Autocratic Style
• Managerial style in which managers generally
  issue orders and expect them to be obeyed without
  question
• Democratic Style
• Managerial style in which managers generally ask
  for input from subordinates but retain final
  decision-making power
• Free-Rein Style
• Managerial style in which managers typically
  serve as advisers to subordinates who are allowed
  to make decisions
• Contingency Approach
• Approach to managerial style holding that the
  appropriate behavior in any situation is
  dependent (contingent) on the unique elements of
  that situation

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Motivation and Leadership in the Twenty-First
Century

• Changing Patterns of Motivation
• Todays employees want rewards that are often
  quite different from those valued by earlier
  generations.
• Example Money is no longer the prime motivator
  for most people.
• Changing Patterns of Leadership
• As organizations become flatter and workers more
  empowered, managers naturally find it less
  acceptable to use the autocratic approach to
  leadership.
• Example Many are becoming more
  democraticfunctioning more as coaches than as
  bosses.