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Surviving the plummet of organisational commitment after a breach of the psychological contract can be one of the most complex challenges leaders, managers and employees have to navigate in the course of their careers. This week’s blog dives into what the psychological contract is, how a breach can take place and why a rapid response with some carefully selected approaches could help to get working relationships back on track.

The psychological contract is the individual perception of what an organisation and employee can deliver in return to one another, and the level of commitment required to secure that expectation (Rousseau, 1995). There is no “one contract fits all” and, no agreement ahead of time of the parameters of that contract as they are estimated by each individual, based on past experiences and future expectations. So, if the psychological contract is such a potential minefield of expectations, emotions and feelings, how can employers possibly be expected to manage something so fragile and discreet?

Sign here…

Well, branding, company image and reputation have a lot to do with how we make decisions about whether we want to form a psychological contract with one organisation over another. In fact, the formation of the psychological contract begins during the job application process. If successful, and once onboarded, the evaluations continue between employee and employer, as relationships are cemented and expectations are discussed, agreed and fulfilled. Over time, this builds trust that if I deliver on my part, you will deliver on yours because we are clearly working together towards a common goal. As long as this remains constant, the psychological contract is being fulfilled. But, a contract can be breached if one party fails to fulfill any of these expectations by default or through the change management process (Festing & Schäfer, 2014). If the breach remains unaddressed, it will escalate and in the worst of scenarios, the contract may be violated. This failure carries perhaps the greatest impact for organisations when employees disengage from their roles and commitment plummets, manifesting in behaviours such as:

  • Increased lateness
  • Unauthorised absence
  • Increased turnover

The Recovery Position…

After a breach or violation of the psychological contract, our natural reaction is to stabilise the situation by rebalancing the perceived inequity. How we cope with the distress will depend on whether we choose to move towards or away from the stressor. We can either address the breach directly with managers and leadership or begin to disengage and mentally withdraw from the organisation. According to recent research by Solinger, Bal, Hofmans & Jansen (2016), employees who experience a shock causing a breach of the psychological contract, can recover from the emotional impact when there is a breach resolution process in place. However, the degree of recovery depends on the emotional intensity of the shock and the organisation’s willingness to offer compensation after a breach. This can even include symbolic organisational actions such as the CEO communicating on a weekly basis with employees during a merger (Schwieger & DeNisi, 1991). However, employee perceptions of organisational support, how much an organisation cares for individual wellbeing and values their contributions all influence individual decision making following a breach or violation.

Research evidence indicates that employees can recover and thrive in the workplace following a failure to fulfill the expectations which form their psychological contract when leaders and managers step up support for, and commitment to, their employees’ wellbeing. Commitment to an organisation can be restored with careful communication and expectation management over time or destroyed in a matter of weeks when those expectations are neglected or overlooked.

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References:

Festing, M., Schäfer, L., & Scullion, H. (2013). Talent management in medium-sized German companies – An explorative study and agenda for future research. International Journal of Human Resource Management, 24(9): 1872–1893.

Rousseau, D. M. (1995). Psychological contracts in organizations: Understanding written and unwritten agreements. Thousand Oaks, CA: Sage.

Schweiger, D. M., & Denisi, A. S. (1991). Communication with employees following a merger: A longitudinal field experiment. Academy of management Journal, 34(1), 110-135.

Solinger, O. N., Hofmans, J., Bal, P. M., & Jansen, P. G. W. (2016). Bouncing back from psychological contract breach: How commitment recovers over time. Journal of Organizational Behavior37(4), 494–514. https://doi.org/10.1002/job.2047

 

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