MM Bagali, HR, MBA, HRM, HRD, Research .....HR module 2

Welcome
Module 2

Psychological Contract
Nature of Work

mm.bagali@jainuniversity.ac.in / sanbag@rediffmail.com

Business Problem

Scenario
The organization:
– Needs a qualified, talented person for a position
– Advertises and recruits for the position
– Hires someone for the position
The employee:
– Is trained and socialized
– Experiences a learning curve
– Becomes productive
– Leaves the organization

mm.bagali@jainuniversity.ac.in / sanbag@rediffmail.com2

Business Problem

Discussion Questions

1. What are the business concerns related to this scenario?

2. What are the implications of these costs to employers in terms of
recruiting and retaining employees?


Turnover
Not all turnover is bad…

• Dysfunctional turnover:
When talented, experienced, knowledgeable, productive, well-
networked, high-potential employees leave the organization

• Functional turnover:
When disruptive or poor-performing employees leave the organization


Nature of Work


how work has changed since the 1980s

up to 1980s after 1980s

work teams virtual teams
factory/office working
home/mobile-working
line management
matrix management
customer service call centers

in-house services outsourcing and off-shoring

job for life
job for 2 years
a life's work
a career for 10 ( or 5 )years
onsite services
online services
few employee rights
many employee rights
low employee awareness
high employee awareness
employees isolated
employees connected
reliable pensions unreliable pensions

HRM practices and Psychological Contract


What's Psychological contract

Psychological Contract first emerged in the 1960s, notably in the work of
organizational and behavioral theorists Chris Argyris and Edgar Schein


Psychological Contract refers to the relationship between an employer
and its employees, and specifically concerns mutual expectations of
inputs and outcomes

– feelings of employees
– Reaction of Employee
– Behavior of Employee

– how the employee is treated by the employer
– what the employee puts into the job


Psychological Contract represents….

the obligations, rights, rewards, etc., that an employee believes
he/she is 'owed' by his/her employer, in return for the employee's
work and loyalty

The notion
notion of 'relationship' or 'trust' or 'understanding'


Michael Armstrong's
Human Resource Management Practice (10th Ed., 2006)

"...the employment relationship consists of a unique combination of
beliefs held by an individual and his employer about what they
expect of one another..."


Edgar Schein's 1965, definition

Psychological Contract, as being (somewhat more vaguely) an
implication that: "...there is an unwritten set of expectations
operating at all times between every member of an organization
and the various managers and others in that organization..."


Wikipedia (April 2010) on Psychological Contract

"A psychological contract represents the mutual beliefs,
perceptions, and informal obligations between an employer and an
employee”.


Terms associated

• Organizational citizenship behavior (OCB)
• Engagement
• Involvement
• Association
• Affiliation


Factors for Psychological Contract

– Culture
– Management
– People around
– Disciplined workplace
– Governance


Psychological Contract offers

• a way to interpret and improve the relationship between employer and
employees, with consideration of:
– formal written terms or contract of employment - pay, hours, holidays, conditions, duties and
responsibilities, etc
– (potentially any or all) other aspects of the work - job interest, management, development,
satisfaction, advancement, etc
– what the employee 'brings to the job' or 'puts into the job' - effort, time, loyalty, innovation, results,
etc
– the employing organization's performance and situation - market success, financial strength, or lack
of (seen as a sort of 'ability to reward', or 'constraint to reward')
– the state of the job market and economy (for example, alternative job or career options, availability
of replacement staff)


Open to different interpretations
• There are a series of mutual obligations on both sides (which include,
crucially, intangible factors that can be impossible to measure
conventionally)

• It is a relationship between an employer on one side, and on the other
side an employee and/or employees (which by implication distorts the
notion of a formal contract between two fixed specified parties)

• subject to the perceptions of the two sides (which adds further
complexities, because perceptions are very changeable

• Psychological Contract is almost never written or formalized, which makes
it inherently difficult to manage, and especially difficult for employees and
managers and executives and shareholders to relate


employee's feelings and attitudes act on two levels

treatment at work

how they see themselves and their relationship with the employer,
and their behavior towards the employer


The composition of organizations is determined by

Attraction:
– People are attracted to organizations whose attributes are congruent
with their own personal characteristics (e.g., values, personality)

Selection:
– Organizations select applicants with attributes it desires (influenced by
organizational founders)

Attrition:
– People will leave organization if they don’t fit.

mm.bagali@jainuniversity.ac.in19
©SHRM 2008 / sanbag@rediffmail.com

Employer Attractiveness Dimensions
• Interest Value: The extent to which an individual is attracted to an
employer because of the excitement and creativity of the work
environment

• Social Value: Attraction based on a collegial work environment with good
team atmosphere

• Economic Value: Attraction based on salary and benefits

• Development Value: Based on recognition of work and career-enhancing
opportunities

• Application Value: The employee’s ability to apply what they have learned
to teach others and interact with customers in a way that is positive and
humanitarian.
mm.bagali@jainuniversity.ac.in / sanbag@rediffmail.com 20

What makes employees STAY?
or what makes increased Psychological contract


What makes employees STAY?

• Advancement opportunities
• Constituent attachment (co-workers, boss, employees)
• Extrinsic rewards (pay, bonus)
• Flexible work arrangements
• Investment in the organization
• Job satisfaction
• Lack of alternatives
• Location
• Non-work influences
• Organizational commitment
• Organizational justice
• Organizational prestige


HRM Systems and Psychological contract


HRM Systems

• individual employee motivation and management
• motivation and management of workgroups and departments
• entire workforce motivation and management
• review of grading, management hierarchy,
• recruitment and selection and induction
• training and development
• assessment of leadership - vision, style, capability
• assessment of traditional workplace terms and conditions, contracts, etc
• organizational communications
• organizational philosophy and culture


Where can we find lack of Psychological contracts

• Absenteeism
• Tardiness
• Poor attitude/insubordination
• Poor task performance
• Poor contextual performance
• Lack of willingness
• Postponement

mm.bagali@jainuniversity.ac.in25 / sanbag@rediffmail.com

Employer Branding


Employer Branding: What is It? Why Do We Need to Do It?

“internally and externally promoting a clear view of what makes a firm
different and desirable as an employer.” (Lievens, 2007)

mm.bagali@jainuniversity.ac.in27 / sanbag@rediffmail.com

Employer Branding Research

A strong employer brand is related to:

– Pride of individuals expected from being organizational members
(Cable & Turban, 2003)

– Applicant pool quantity and quality (Collins & Han, 2004)

– Stable and positive workforce attitudes and organizational
performance compared to broader market (Fulmer, Gerhart, & Scott,
2003)


Goals for/of Employer Branding

• Establish an image of the employment experience

• Create synergy with consumer brand:
– Align promise to customer with promise to employees

• Clearly state “what’s in it for me” to potential applicants

• Entice the right candidates to apply for the job.


Five Steps to Building an Employer Brand

1. Understand your organization

2. Create a compelling brand promise that mirrors your customer brand
promise. Articulate your value proposition for employees

3. Develop standards to measure the fulfillment of the brand promise

4. Align all people practices to support and reinforce the brand promise

5. Execute and measure


Ideal HR Practices

– Performance Management
– Performance Appraisal
– Training and development
– Compensation and benefits
– Employee Relations
– Learning Environment


• Leadership
• Reward system
• Participation


Retention: What Makes Employees Stay?

mm.bagali@jainuniversity.ac.in / sanbag@rediffmail.com 33

Google

• #1 on Fortune’s 100 Best Places to Work in 2007 and 2008
• Known for little bureaucracy
• Hire smarts; less emphasis on experience
• Good ideas are implemented, regardless of who they came
from
• What is it like to work at Google?


Embeddedness Theory of Retention
Premise: The more embedded an employee is in the organization, the less
likely they will actually leave.

Embeddedness factors include:
– Fit:
• With organization--working conditions, culture.
• With community--affordable housing, commute, pace, etc.
– Links (connections):
• To people and projects in organization.
• With the community.
– Sacrifice: What would I have to give up?
• From organization (benefits, flexibility, tuition, perks).
• Community (schools, neighborhoods, friends).


MM Bagali, HR, MBA, HRM, HRD, Research .....HR module 2

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MM Bagali, HR, MBA, HRM, HRD, Research .....HR module 2