Psychological Contract in the Contemporary Organisation Essay

Every human being is an unique individual. This is an undeniable fact, thus organisations have to explore the various antecedences of the psychological contracts between employees and the organisation. Employees have different perceptions and thinking over the concept of psychological contracts. Generation Y is slowly filling up the positions in contemporary organisations. Therefore, what are the influencers revolve around this power craving group of people? Research has concluded that employees and employers have different perceptions on job support and resources (Attridge 2009, 392; Kahn 1990, 708) and even job satisfaction (McShane and Travaglione 2007, 180). Employee disengagement has been occurring more and more often nowadays (Bates 2004, 44). Employee engagement is closely linked with the result of the organisation (Medlin and Green 2009, 948; Harter, Schmidt and Killham 2003, 27), where employee disengagement may cause unsatisfactory employee achievement; leading to undesirable organisational advancement and financial development. Because of these, organisations should examine the psychological contracts between them and the employees, especially that of the Generation Y. Psychological Contracts Ppsychological contract is defined as ones beliefs about shared responsibilities and commitments in the framework of the relationship between employees and the organization (Robert, Kristie and Kathryn 2010, 220). Cyril (2004, 1) mentioned that psychological contracts are the employees’ mindset about what they look forward to from the organization and what they feel they should commit to the organization. The psychological contracts emphasize more on the relationship between an employee and employer as a whole rather than traditional compensation issues (Robert, Kristie and Kathryn 2010, 220). The concepts of the psychological contract are commitments particularly based on perceived obligations by the others (Robert, Kristie and Kathryn 2010, 220). Whether well expressed or not, the perceived obligations create commitment and responsibility that must be executed for the contract to be affirmed (Robert, Kristie and Kathryn 2010, 220). For instance, the organization making use of a relational psychological contract is responsible to account for the individual fairly, provide hazard free working conditions, allow employees justifiable personal time, and provide adequate materials to accomplish their job. On the contrary, the employee is responsible to accomplish given tasks, display a positive attitude, boost the reputation of the company, and abide corporate policy (Robert, Kristie and Kathryn 2010, 220). Given so, these obligations do not only encompass on the quantity of work is to be carried out for a certain amount of pay, but also draw in the whole pattern of rights, privileges, and obligations between employee and organisation (Mario Pepur, Sandra Pepur, and Dr. Ljiljana Viducic 2010, 231). For instance, after serving the company for a number of years, the employee may expect the company not to fire him and similarly, the company may expect that the worker not to tarnish company’s reputation or leak out confidential secrets to rival companies(Mario Pepur, Sandra Pepur, and Dr.  Ljiljana Viducic 2010, 231). Expectations as such are not transcribed into contractual agreement between employees and organisation, yet they work as power determinants of behaviour (Mario Pepur, Sandra Pepur, and Dr. Ljiljana Viducic 2010, 231). Literature Review No doubt, the theory on psychological was established in the 1960 by Argyris (Cyril 2004, 1), it is still highly applicable in today’s context. Rothbard’s (2001, 656) empirical study shows that there is a relationship between psychological contracts and employee engagement. Rothbard (2001, 656) mentioned that attention is the psychological presence and the time spent by the employee contemplating about his responsibilities at work, while absorption is concerned with the affection of employee to put emphasis on the responsibilities on duties. It is believed that the psychological contract is generally an appropriate and impactful construct that can aid explain, and inform effective management of, contemporary academic work performance and workplace relations (Grant, Branka and David 2010, 6). The psychological contract can help both employee and employer to gain awareness on contemporary employment relationships; indeed, it has been debated that perceived obligations within the psychological contract are usually more vital to work related attitudes and behaviour than are the official and explicit elements of contractual acknowledgement (Grant, Branka and David 2010, 6-7). Employees trust that the employer has the obligations to facilitate them the following: career advancement, incremental salary, alary based on the current working efficiency, upgrading, safe long-term employment, opportunities to build their career as well as support in case personal problems occur (Mario, Sandra and Dr. Ljiljana 2010, 233). On the other hand, the employees believe that they have the following obligations towards their employer: working overtime, staying loyal, taking initiative to take up new responsibilities at work, providing a beforehand notice when taking another position, be ready for transfer, rejecting support to rivalry, protecting confidential company information, spending a minimum of two years doing the routine (Mario, Sandra and Dr.  Ljiljana 2010, 233). Many studies indicated that personal and psychological factors have significant influence on employees, including biological factors and the work attitudes of employees (Hung-Wen 2010, 92). Hung-Wen (2010, 92) mentioned that Yu suggested work attitude is the level of organizational identification, the levels of involvements in current jobs and overall job satisfaction. Therefore, this research explains job satisfaction and work involvement as its two variables (Hung-Wen 2010, 92). Job Satisfaction Job satisfaction is an assessment of the work and job context by employees (McShane and Travaglione 2007, 116; Spector 1997, 2). Little and Little (2006, 115) deemed job satisfaction as an enjoyable experience or positive emotional condition . They agreed with the research done by Kreitner & Kinicki in 2004 that job satisfaction is associated with job involvement, organizational behaviours and commitment (Little and Little 2006, 115). In an adverse effect, it is also associated with turnover and stress. Similarly, experimental studies on 7,939 business units in 36 organizations find out that job satisfaction concludes employee engagement, and are forecasting organisation progression (Harter, Schmidt and Hayes 2002, 268). The extended studies by Harter, Schmidt and Hayes (2002, 268) states that it is crucial to constantly stress on the degree of employee engagement and contented and happy employees would be very much motivated in the organisation (McShane and Travaglione 2007, 180). Poornima (2009, 35) has given a hypothesis that statistically, there is a strong relationship between age and difference between expectation and fulfillment levels of employees with regard to monetary and non-monetary compensation practices followed by the organizations (Poornima 2009, 35). The result shown that those aged between 25to28 are not responding positively to monetary motivation. Research shown 85% of the young people want progressive management to inspire them and 52% of them think that the managers are not helping in their development (Robin 2007, 34). Kim (2007, 154) agrees with (Henry 2006, 11) that Generation Y is motivated by the chances to grow and develop, thus they welcome comments and feedback. Therefore, Generation Y would expect organisation to enrol them with training and development program, as well as providing them with feedback for improvement. Failing to do so, goal is not achieved, thus motivation of Generation Y decrease. With that, these create job dissatisfaction in Generation Y. Taking consideration of Poomima and Kim’s studies, Generation Y is a group of people who are more intrinsically driven rather than monetarily motivated. Work Involvement In today’s context, organisation should anticipate expectations of their employees through their psychological contracts if they want to gain their loyalty (Mario, Sandra and Dr. Ljiljana 2010, 236). Mario, Sandra and Dr. Ljiljana (2010, 236) agrees to Rousseau that the main difference between new and old psychological contracts lies in the lack of job security. She proves this by quoting an employee of a telecommunication company who says that: â€Å"It used to be that working for the company meant being part of a family (Mario, Sandra and Dr. Ljiljana 2010, 236). As organisation moves towards the modern era, the younger generations are beginning to fill up most of the positions. Tulgan (2009, 3) shared that Generation Y is so far the hardest generation to manage. While organisation expects employee to stay loyal to the company, Generation Y, a group with high expectation and believe in their capability tends to switch jobs to satisfy their hunger for fast career advancement (Tulgan 2009, 3). Another contributing factor to the frequent job switch is the Generation Y’s expectation; they are constantly looking out for jobs that provide training (Sue and David 2008, 368). Sara and Ans (2010, 256) have come up with two hypothesizes. â€Å"The level of careerism will be emphatically related with psychological contract expectations in account of job description, employment development, training, and monetary rewards. The level of careerism will be cynically related with psychological contract expectations in account of social environment, work-life balance, and employment assurance† (Sara and Ans 2010, 256). The first hypothesis does make sense as the three factors mentioned act as a motivator to increase the level of careerism. However, the second hypothesis is countered by the research of Sue and David (2008, 368) which points out that â€Å"although Generation Y has a desire for defined goals and managerial reinforcement in what is to be done, they also crave for autonomy and flexibility in decision making process. Furthermore, despite being autonomous, they are viewed as being emotionally needy and consequently, continuously looking for acknowledgement and commendation. In terms of work, they are power thirst. However, they do look upon work life balance and if given a choice will choose family and friends rather than work†. Evaluation Given the unique characteristics of Generation Y, it is difficult for the organization to determine their psychological contract with the organization, thus making it a challenge for the organization to come up with strategies to motivate and retain these â€Å"potential job switchers†. Demanding for power in workplace, yet craving for work life balances; organizations have to come up with plan to satisfy these employees before they can be aligned and work towards the same goal. Event such as Bring Your Child to Work promotes work life balance yet not disrupting the normal working procedure. Organizations can consider such event to strike a balance for the employees. Employee disengagement is one of the crucial explanations for organization turnover. With this getting more and more common in the organization (Pech and Slade 2006, 22), management should seek to understand the reasons behind the dissatisfaction and explore the psychological contract between them and the employees to reduce the possible unhappiness, thus creating a conducive work environment. Conclusion The concept of psychological contracts is characterised by dynamic features. They are continuously adjusted to new trends in the working environment. A triumphant resolution to the productive handling of employee engagement kicks off with recognition of the uniqueness of each employee. Accessing the factors influencing their needs and perception after presuming that employees are engaged is an fallacious way and is not very much encouraged. Psychological contracts can encompass various areas such as work involvement and job satisfaction. However, psychological contracts involve many other factors. For instance, human resource practices such as employees’ relation and welfare, training and development, and compensation and benefits (Saks 2006, 613). Therefore, effective understanding of psychological contracts would require organisations to contemplate the perception of individual employees towards the influencing variables. Franking speaking, how many organisations are prepared to go for the extra mile for the employees? Even though the organizations may acknowledge the significance of psychological contracts, it is intricate to get to a mutual understanding for both the organisation and employee. Organisations may only see the link between the understandings of psychological contracts in both aspects with beneficiary outcomes as a theoretical model, thus are not convinced that their employees can make it happen. Every employee is unique. They have different needs and perceptions in terms of psychological contracts with the organisation, which may also change over time. This would also mean that the organizations have to take into consideration of the incalculable factors catering to the different employees. Is this cost and time efficient? Management would rather spend the time on the operations and focus on the visible and instant results. Nevertheless, there are organizations that are still prepared to spend their effort working on psychological aspect in employees. Personally, I feel that understanding of psychological contract is essential to organization success. However, it is very much reliant on the distribution of time, effort and loyalty of the organizations to form a successful understanding and alignment of the psychological contracts between themselves and their employees.