Psychological Contrast in Service Operations, Research Paper Example

Concept of Psychological Contract

Psychological contract was defined by Rousseau (1995, p. 9) as “individual beliefs, shaped by the organization, regarding the terms of an exchange agreement between individuals and their organization”. Parks, Kidder, and Gallagher (1998) characterized psychological contracts as “idiosyncratic sets of reciprocal expectations held by employees”. Psychological contract aspects encompass performance requirements, job security, training provision, compensation, and career development prospects (Thomas, 2010). Puchala (2010) reported that research on psychological contract theory emerged in the 1960s, and changed abruptly with groundbreaking findings of Rousseau (1989) who explored the individual construction of psychological contracts, explicit and implicit promises as foundations of this type of contract, occurrence of contract violation where promises are contravened, and demarcation of parties to the contract as employee and employer.

Psychological Contract Theory in Service Operations

Riley, Ladkin, and Szivas (2002) suggested that the difference between service and manufacturing sectors of industry is in the degree of precision of the psychological contract. While manufacturing job-related psychological contracts take into account the expected end-product and output measures enabling quantification, service jobs are more continuous and non-quantifiable, thus enjoying more informal control. Such differences in the job specificity have their individual implications for the job satisfaction and perception by employees, which in its turn has a series of managerial, organizational structure, and HR management implications.

Boella and Goss-Turner (2013) explored the role of psychological contract in the tourism and hospitality industries with regard to the changing market conditions of the 21^st century. The authors noted that in the UK, HRM advancements made managers realize that the most effective psychological contracts can be established based on commitment, thus offering employees the hope of a moral involvement and engagement, making them a committed workforce valuing its role and contribution to the attainment of organizational objectives. This way, a much higher level of employee commitment to an organization can be created in the conditions of increasing national and international competition, and a much higher level of customer loyalty can be achieved under the condition of building strong customer-service entity relationship (Boella & Goss-Turner, 2013).

As noted by Riley, Ladkin, and Szivas (2002), the major distinguishing feature of service industry is imprecision of labour contracts resulting in normative control and much informality. Though service industries are currently undergoing a series of advancements, process engineering, and standardization practices (in particular, the focus of the authors’ research was on tourism and hospitality), there is a danger of diluting intrinsic satisfaction of workers. While the job design gets more information-based, employees may be managed through information, which introduces a fundamental change of the psychological contract, making it more explicit, more precise, and following more formal labour relations.

The financial services market is also not an exception, as the psychological contract theory can be successfully applied there as well. For instance, Pepur, Mihanovic, and Pepur (2013) researched the influence of psychological contracts on the quality of business-to-business relationship in the financial services marker, and found out that they do have a positive influence on the relationship quality. Blancero and Johnson (1997), in their turn, focused on the impact of psychological contracts on the employee discretionary service behaviour affecting the quality of service provided to customers. The authors inferred that the employees’ psychological contracts serve as a basis for the formation of their distributive justice perceptions, and the discretionary service behaviour forms through the procedural justice considerations under the impact of the employee/customer contractual obligations. Therefore, the discretionary service behaviour is a concept of central influence on the quality as perceived by customers stemming from the obligations of the psychological contract between the service providers and service recipients.

Effect of Multiple Actors’ Involvement on Psychological Contract

Psychological contract is traditionally viewed as a reciprocal agreement between an employee and an organization, thus implying that only two parties are involved in it. However, there is a growing need to understand how the psychological contract changes in case multiple actors are involved; this issue was researched by Sverdrup, Brochs-Haukedal, and Gronhaug (2010) who suggested that management of knowledge worker teams implied the changing role of psychological contracts. The researchers substantiated their claim by noting that workers in such teams usually possess specialized and complementary competencies and skills, superior knowledge with higher degrees of autonomy, thus making traditional management and leadership counterproductive and obsolete. Therefore, the coordination of knowledge worker teams should be conducted on the basis of a psychological contract for teams, which is different from conventional managerial tools.

Berber also noted that social relations have become an integral part of the workplace expectations, so the psychological contract theory may be interwoven with the social network theory in the 21^st-century workplace, with multiple employee interactions shaping their beliefs and job-related perceptions (Berber, 2014). By analyzing forces shaping psychological contracts of modern employees, the author inferred that career planning at present is undergoing a radical change, with the emergence of boundary-less careers challenging the traditional perceptions of careers and career-associated duties. This new type of jobs emphasizes transferrable skills, individual responsibility for career management, on-the-job training, learning-related career path, etc. Thus, employees gain virtually unlimited freedom and control over their own careers, and multiple actors of social networks continuously affect their psychological contracts by shifting obligations and evolving perceptions of obligations. The author also pointed out that no actor possesses the comprehension and control of the whole social networking system, so knowledge of its participants is mostly fragmented, which is essential in understanding their psychological contracts based on fragmented knowledge.

Berber worked on the issue of multiple contract makers as well, and concluded that employees interpret their psychological contracts on the basis of information coming from multiple knowledge sources, such as their boss, co-workers, and through training and performance appraisal processes. In cases when multiple sources convey conflicting messages, erosion of perceived mutuality of the psychological contract may take place (Rousseau, 2004). False expectations or conflicting information may even cause the perceived breach of the psychological contract, which results in decrease of employee morale, loyalty, and commitment, which should be mitigated in organizations with multiple actors participating in the formation of psychological contracts by means of open communication and homogeneous information channels.

Aas (2010) pointed out the recently noted inconsistency in envisioning psychological contract as concluded between two parties – the organization and the employee – because the organization is usually a set of actors, and it frequently cannot speak with one voice. Hence, the organization tends to be envisioned as a collective entity, a multitude of actors, which implies that communication within the psychological contract agreements may not be in unison. Nevertheless, Mabira (2011) found out a significant positive relationship between psychological contract and teamwork management, which has a direct effect on each employee’s engagement. The researcher pointed out that specifically in the times of organizational change, teams of workers may not have a clear understanding of their responsibilities and goals, which increases the perceived psychological contract breach and decreases job commitment. Therefore, effective teamwork management contributes positively to perceived fulfilment of psychological contract obligations, thus improving the overall organizational performance.

At present, there is scarce research on the issue of psychological contracts’ influence on different actors’ performance, so there is a clear research need to explore the concept of psychological contract in relation to services coordinated in teams. Sambick and Wainwright (2010), for instance, referred to the work of Argyris (1960) who understood a psychological contract as an understanding between a group of workers and a single foreman, and to the work of Schein who envisioned the psychological contract as a result of agreement between a group of employees with various managers. Hence, it is clear that psychological contract was approached from the perspective of multiple agents many decades ago; however, the researcher acknowledged the persisting ambiguity regarding the contracting parties, which requires further research in the modern field of academic interest.

Theory Building in Psychological Contract Theory

Though there is nearly half a century of psychological contract research, many theoretical issues are not yet well understood. Cullinane and Dundon (2006) emphasized that the core of the psychological contract theory is the idea that social relationships result from a complex interrelationship of unspecified obligations and distribution of unequal power resources. Schein (1978) was one of the first researchers who recognized the violation of psychological contracts as the prime reason for labour instability, employee dissatisfaction, and the feeling of alienation workers may experience in the workplace. Therefore, with the modern trend of growing flexibility and outsourcing in the workplace, decline of collective bargaining, and nurturing of individualist values, interest in psychological contract research is increasing.

Many researchers believe that psychological contracts change over time, but the mechanism of change is not yet explored in detail; Bankins (2012) researched the subject and unveiled certain mechanisms of change, while McInnis (2012) inferred that the desirability of a psychological contract decreases with job experience, and it is the task of employers to sustain continuous and open communication for maintaining motivation and interest in the psychological contract. The findings of Puchala (2010), in contrast, showed that employees had few expectations and desires regarding their workplace before obtaining job experience, and formulated their psychological contract requirements more clearly after gaining work expertise. Atkinson (2007) found empirical proofs for the role of trust in the sustenance of the psychological contract, and presence of trust in all psychological contracts of more or less strong and binding nature.

Rousseau (2001) is one of the most dedicated researchers of psychological contracts; in the 2001 publication, the author indicated that there is little attention to antecedents and building blocks of psychological contracts, as the majority of studies is dedicated to their consequences. Freese and Schalk (2008) worked extensively on identifying methodological issues and concerns in psychological contract-related research; they underlined that the concept of psychological contract was initially used to describe, analyze, and explain the mutual promise-based obligations between employees and their employing organizations. The authors stressed that the major challenge in the present-day theory building is to identify whether obligations between parties should be considered as unilateral or bilateral, and whether psychological contracts should be measured in a feature-oriented, content-oriented, or evaluation-oriented way (Freese & Schalk, 2008). Modern research recognizes such types of psychological contracts as transactional, balanced, transitional, relational, team player, loyal, instrumental, weak, unattended, investing, and strong ones. Thus, a number of approaches can be taken to researching psychological contracts, opening many avenues of their research and measurement.

Notwithstanding the fact that psychological contracts are intensely researched nowadays, there are still some research complexities recognized by scholars. Cullinane and Dundon (2006) named such research challenges as the possibility of considering a psychological contract a contract (in terms of juxtaposing it to a legal contract), the negative effect of mixed messages and divergent expectations on the perceived obligations of employees, limited explanations to violations of psychological contract (mostly regarded as a managerial failure though in fact having a much more complex nature), and sources for building a psychological contract (of both external and internal nature). However, Adams (2011) pointed out that continuing research on psychological contracts is highly essential, since it plays an outstanding role in shaping employee behaviours, motivations, and attitudes, and that it serves a significant predictor in the formation of organizational citizenship behaviour, a prime intrinsic motivator of employees in the workplace.

References

Aas, ER 2010, ‘Communication and psychological contracts in teams: A multilevel investigation’, University of Oslo, viewed February 8, 2014, at <https://www.duo.uio.no/bitstream/handle/10852/17941/PSY4090xCommunicationxandxPsychologicalxContractsxinxTeamsx-xAxMultilevelxInvestigation.pdf?sequence=2>

Adams, JW 2011, Examination of inter-relationships between psychological contract, careerist orientation, and organizational citizenship behavior, Unpublished doctoral thesis, City University, London.

Atkinson, C 2007, ‘Trust and the psychological contract’, Employee Relations, vol. 29, no. 3, pp. 227-246.

Bankins, S 2012, Investigating the dynamics of the psychological contract: How and why individuals’ contract beliefs change, Queensland University of Technology, Brisbane.

Berber, A 2014, ‘Psychological contracts in the age of social networks’, In C Machado and JP Davim (eds), Human resource management and technological challenges, Springer International Publishing, Switzerland.

Blancero, D & Johnson, SA 1997, ‘Customer Service Employees and Discretionary Service Behavior: A Psychological Contract Model’, (CAHRS Working Paper #97-07). Ithaca, NY: Cornell University, School of Industrial and Labor Relations, Center for Advanced Human Resource Studies, viewed January 28, 2014, at <http://digitalcommons.ilr.cornell.edu/cahrswp/149>.

Boella, M & Goss-Turner, S 2013, Human resource management in the hospitality industry: A guide to best practice, Routledge, New York.

Cullinane, N & Dundon, T 2006, ‘The psychological contract: A critical review’, International Journal of Management Reviews, vol. 8, iss. 2, pp. 113-129.

Freese, C & Shalk, R 2008, ‘How to measure the psychological contract? A critical criteria-based review of measures’, South African Journal of Psychology, vol. 38, no. 2, pp. 269-286.

Mabira, LN 2011, The relationship between individual intervention, team work management, psychological contract and employee engagement, Makerere University, viewed February 8, 2014, at <http://www.mubs.ac.ug/docs/masters/mba/The%20relationship%20between%20Individual%20Intervention%20,%20team%20work%20management,%20psychological%20contract%20and%20employee%20engagement.pdf>

McInnis, KJ 2012, Psychological contracts in the workplace: A mixed methods design project, The University of Western Ontario, Ontario.

Parks, JM, Kidder, DL & Gallagher, DG 1998, ‘Fitting square pigs into round holes: Mapping the domain of contingent work arrangements onto the psychological contract’, Journal of Organizational Behavior, vol. 19, pp. 697-730.

Pepur, M, Mihanovic, Z & Pepur, S 2013, ‘The impact of psychological contract on relationship quality in financial services market’, Croatian Operational Research Review, no. 4, pp. 89-98.

Puchala, N 2010, The formation of, and change in, the psychological contracts of graduates, Queensland University of Technology, Brisbane.

Riley, M, Ladkin, A & Szivas, E 2002, Tourism employment: Analysis and Planning, Channel View Publications.

Rousseau, D 1995, Psychological contracts in organizations: Understanding written and unwritten agreements, Sage Publications, Thousand Oaks.

Rousseau, D 2004, ‘Research Briefs’, Academy of Management Executive, vol. 18, no. 1, pp. 120-127.

Rousseau, DM 2001, ‘Schema, promise, and mutuality: The building blocks of the psychological contract’, Journal of Occupational and Organizational Psychology, no.74, pp. 511-541.

Sambrook, S & Wainwright, D 2010, ‘The psychological contract: Who’s contracting with whom? Towards a conceptual model’, Bangor Business School Working Paper, viewed February 8, 2014, at <http://www.bangor.ac.uk/business/docs/BBSWP10013.pdf>

Schein, EH 1978, Career Dynamics: Matching Individual and Organizational Needs, Addison-Wesley, Reading.

Sverdrup, TE, Brochs-Haukedal, W & Gronhaug, K 2010, ‘Psychological Contracts and Knowledge Worker Teams’’, viewed January 28, 2014, at <http://www.idunn.no/ts/beta/2010/02/art02 >.

Thomas, DC et al. 2010, ‘Psychological contracts across cultures’, Organization Studies, no. 31, pp. 1437–1458.