Psychological Contract Breach & Violation

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Psychological Contract Breach Violation

• Dr. David McGuire
• Napier University Business School

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Agenda

• Rousseau Model of Psychological Breach/Violation
• Distinguishing Breach and Violation
• Pate et al. Psychological Contract Violation
  Model
• Response to Psychological Contract Violation
• Role of Trust
• Outcomes of Psychological Contract
  Breach/Violation
• Layoffs Psychological Contract
• Expatriate Psychological Contract
• Psychological Contract Drift

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Rousseaus (1995) model of contract
breach/violation
Relationship Strength
Monitoring
Contract Outcome Dependency
Perceived Size of Loss
Violation
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Sources of Contract Violation

• Inadvertent
• Able and willing
• Divergent interpretations made in good faith
• Disruption
• Willing but unable
• Inability to fulfil contract
• Breach of Contract
• Able but unwilling
• Reneging

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Failure to keep commitments

• Opportunism
• Active, self-serving behaviour by one party at
  the expense of another (e.g. quitting an employer
  with whom there is an agreement to stay)
• Negligence
• Passive Failure to perform specified
  responsibilities (e.g.mentors who fail to follow
  through on support to those they counsel)
• Failure to cooperate
• Behaviour that undermines ability of parties to
  maintain their relationship (e.g. refusing to
  participate in attempts to resolve disputes)

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Types of Violation

• Absence of training, training not as promised 65
• Discrepancy between promised and actual pay 61
• Promotion schedule not as promised 59
• Misrepresentation of the nature of the job 40
• Promises regarding job security not met 37
• Feedback inadequate compared to promised 35
• Ees not asked for change input or told about it
  29
• Ees given less responsibility than promised 27

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Psychological Contract Breach

• Psychological Contract Breach is relatively
  common
• Morrison Robinson (1997) Breach is the
  cognition that ones organisation has failed to
  meet one or more obligations within ones
  psychological contract
• May be a relatively short-term phenomenon
• May result in an individual returning to
  returning to a relatively stable psychological
  contract state

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Psychological Contract Violation

• Morrison Robinson (1997) Violation is an
  emotional and affective state that may follow
  from the belief that ones organisation has
  failed to adequately maintain the psychological
  contract
• Violation response more intense than breach as
  respect and codes of conduct are called into
  question as a promise has been broken and it is
  more personalised

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Guest Conway Psychological Contract
Background Factors
Policy Influences
The Outcomes
Attitudinal Consequences Org. commit Work
Life sat. Job Security Motivation
Individual Age Gender Union Member Level in
Org. Type of work Hours worked Marital
Status Children Organisational Sector Org.
size Location
HR Policy Practice Direct Participation Job
Alternatives Organisational Support Work
Centrality Surveillance Org. Change Suitably
qualified Promises made
State of Psychological Contract
Fairness Trust Delivery of the Deal
Behavioural Consequences Intention to stay or
quit Knowledge Sharing
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Pate et al. Psychological Contract Violation
Model
Organisational Justice Triggers Distributive
Justice Issues Procedural Justice
Issues Interactional Justice Issues
Attitudinal Outcomes Lower Job Satisfaction Lower
Org. Commit Increased Cynicism Behavioural
Outcomes Lower Org. Citizenship Lower effort
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Understanding Psychological Contract Violation

• Violation is most likely when
• There is a history of conflict and low trust
• Social distance exists between the parties
• Incentives to breach contracts are high
• One party places little value in the relationship
• Factors that cause resistance to violation
  include
• Strong relationships
• Frequent interactions
• Sacrifice and previous investments

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Responses to PsychologicalContract Violation
Nature of Ee Response
Constructive Destructive
Voice Neglect
Destruction Loyalty Exit
Silence
Active
Type of Ee Response
Passive
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Exit Neglect/Destruction

• Exit is most likely following violation when
• Contract is transactional
• Many other potential jobs or potential employees
  exist
• Relationship is brief
• Other people are leaving
• Attempts to address issues have failed
• Neglect/Destruction is most likely when
• History of conflict, mistrust and violation
• No voice channels exist
• Other people demonstrate neglect and destruction

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Voice Loyalty/Silence

• Voice is most likely when
• A positive relationship and trust exists
• Voice channels exist
• Other people are using voice
• People believe they can exercise influence
• Loyalty/Silence is most likely when
• There are no voice channels or ways of
  complaining
• No alternative opportunities exist elsewhere

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Role of Trust in Environmental Turbulence

• Trust influences the likelihood that an action
  would be perceived as a psychological breach
• Trust acts as a mediator of the relationship
  between the psychological contract and employees
  subsequent contribution
• Employees with low initial trust will experience
  a greater decline in their trust following a
  perceived breach

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Types of Trust

• Calculus Based Trust Individual rationally
  weighs up the value of sustaining the
  relationship. Usually economically based
• Knowledge Based Trust This concerns the
  predictability of the other partys behaviour and
  their likely future course of action
• Identification Based Trust Involves
  identification with other partys values, desires
  and intentions. Violation of this form of trust
  engenders strongest reaction

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Outcomes of Psychological Contract Breach

• After a breach Employees are motivated to reduce
  their commitment to the organisation or to
  contribute less to the organisation in terms of
  in-role of extra-role performance (Turnley et al.
  2003)
• Negatively influences employee attitudes towards
  organisations and their jobs (Lester et al. 2002)
• Leads employees to believe that organisation does
  not care about their well-being cannot be
  trusted (Robinson 1996)
• Negatively related to affective commitment
  positively related to intention to quit (Raja et
  al. 2004)

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Outcomes of Psychological Contract Breach

• Less motivated to restore balance to the
  employment relationship in some way (Lester et
  al. 2002)
• Organisational Citizenship Behaviour (OCB)
  discretionary, extra-role behaviour intended to
  benefit the organisation not formally recognised
  or rewarded during performance review
• In cases of breach, employees will reduce OCB,
  because it is discretionary and likely to go
  unpunished (Robinson Morrison 1995)

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Outcomes of Psychological Contract Violation

• Psychological Contract Violation will be a key
  intervening variable that will explain (mediate)
  when psychological contract breach will influence
  intention to quit (Suazo et al. 2005 Turnley
  Feldman 2000)
• Psychological Contract Violation will mediate the
  relationship between psychological contract
  breach and professional commitment (Suazo et al.
  2005)

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Layoffs Psychological Contract

• Edwards et al. (2003) Organisations with Ee
  ideology of self-reliance perceived less of a
  breach of contract following a layoff
• High levels of work ethic and self-esteem
  influence reactions of survivors to layoffs
  (Brockner et al. 1985 1988)
• Astrachen (1995) Layoff announcement induces
  separation anxiety and degree of this depends on
  size of layoffs
• Mone (1997) Trust decreases following a layoff

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Layoffs Psychological Contract

• Leana et al. (1992 1987) Victims experience
  overwhelming pessimism, anger, stress and
  feelings of learned helplessness
• Interpersonal Treatment/Interactional Justice
  accords layoff victims increased perceived
  justice (Naumann et al. 1998 Bennett et al.
  1995)
• Marks Mirvis (1998) The way in which a merger
  is handled by top mgt. affects Ees feelings about
  their jobs and sense of personal stability.

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Psychological Contract Change

• Internal Change
• Contract Drift Changes to the contract without
  any formal effort to change the terms
• External Change
• Accommodation Mutually acceptable adjustments
  within the existing contract
• We must adjust to changing times and still hold
  to underlying principles
• Transformation Redefinition and renegotiation of
  the contract

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Psychological Contract Drift
Gradual External Change
Zone of Acceptance
Working Contract Model
Maturation
Cognitive Tendencies
Contract Schema
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Managing Psychological Contract Drift

• Periodic Conferences Discussions and reminders
  of contract terms can prevent erosion or
  expansion of contract terms due to drift
• Training Development Exercises Identifies
  manager and subordinate expectations and allows
  highlighting of differences/similarities
• Updates Resigning of contract on a regular basis
  allows renewal and re-examination of terms and
  conditions as well as reciprocal expectations