In the present world situation, in an organization psychological contract is a common but complex affair. At the time of joining in an organization it is common for the employee to sign in various contractual documents. Those contracts help to raise understanding as well as expectations between employer and employee. Besides those written contracts there is another contract related to trust among the organization which is called psychological contract. This type of contracts is made from the knowledge of the employee. Psychological contract has a great impact on customers to create their perception towards their organization.
Performance of the employee also depends on this contract. But when there is a bench this psychological contract employee has to face longer lasting influence on their job satisfaction that results their decision of saying in the organization. Organizational support also reduced for this bench of contract. More on this, the type and the bench of psychological contract has an interaction between them. When an employee found organization does not fulfill their obligations that expected from them they react negatively due to dissatisfaction toward the organization. Organizational citizenship behavior of an employee as depends on the psychological type, bench of this contract affects largely on this organization citizenship behavior.
Definition Psychological Contract The concept of psychological contract is developed by Denise Rousseau, an organizational scholar. It is related to employee and employer relationship. Psychological contract is an unwritten contract which concern about the expectation, trust and obligation between employee and employer. This is an informal obligation that creates mutual expectation. Employer promises over promotion, hope for a bonus, increase of salary and many other expectations are example of psychological contract. By this understanding employee and employer come to know their role in the organization.
Performance of the employee is largely depending on this psychological contract. In an organization this type of contracts influences employees’ job commitment and satisfaction. It is important to attain the common goal of the organization. If the psychological contract work according to the expectation then productivity, efficiency, product quality or outcome of the organization will increase. But if there is a bench of this contract then the organization must face various difficulties. So, organization should more careful about the psychological contract. Bench of Psychological Contract Bench of Psychological contract refers the failure of psychological contract. When an organization cannot fulfill the informal promises, obligation, hope, and expectation of its employee or vice versa is said the bench of psychological contract. It has many negative consequences over the organization.
Bench of psychological contract results reduced loyalty, commitment, and other behavioral symptoms. It is impossible to say when the consequences of this bench of psychological contract will arise. It may occur very after the joining in the organization or after one or several years. It the psychological contract is not so important then the result of bench may disturb in a small area of the organization but if the contract vital then it may reduce the overall performance of the organization. If this situation turns into unjust or immoral aggressive downsizing or like something occurs as well as it destroys the company. The cold war between the manager and subordinate may also create a bench of psychological contract.
General Effects of Psychological Contract Breach There are some psychological effects between the employees and the organization. The effect has some far-reaching diverse effect over the performance of the employee and as a result on the profitability of the organization. While an employee experiences breach of psychological contract, his/her job performance reduces; mutual understanding between the employee and employer damages, employee loses the motivation power to work efficiently with the organization, and over all a chaotic situation between the employee and the organization. Bench of a psychological contract can harm manager-subordinate relationship; it creates a critical situation in the organization. The turnover rate of the employee also proportionally related to the breach of psychological contract.
Employees willingly leave the organization if there is breach of this contract. As a result, the organization loses its efficient and experienced workers. Some rival groups being created in case of such breach. Therefore, generally psychological contract breach does not bring anything good for the overall activities of the organization. Effects on Job Outcome ; Employee Attitude Bench of a psychological contract can cause a range of reaction of the employee toward the organization. Their attitude and behavior, both can have affected for this bench of contract. There are some attitudinal effects on the employees in case of a psychological breach of contract. In an organization there is a connection among the organization and the employee based on the trust.
When the organization cannot fulfill the expectation of the employee this trust breaks down that affects the attitude of the employee. If the employee feels that they do their best and maintain the contract perfectly but the organization has not, they feel they are betrayed by the organization and being upset. Among various attitudinal job outcomes, job satisfaction is the most important. Findings of research are constantly showing that there is a unenthusiastic affiliation among job satisfaction level and the breach of a psychological contract. The more the organization fail to fulfill the employees’ expectation the more the employee are dissatisfied. The breach of a psychological contract of an employee is completely correlated to intention of employee to leave the company, which is an additional commonly studied attitudinal outcome of job.
The situation is just opposite when the employee breeches the psychological contract. There is an affirmative association among job satisfaction and bench of an psychological contract of employee. When an employee does not want to provide extra afford to the organization he/she will not want to stay in the organization after benching the psychological contract. Intentional turnover of employees is significantly and positively related which has been found in the research. It is common in an organization that an employee who has a transitional contract is more likely to quit his/her job than the employee who has a relational psychological contract. Retention of an employee is depending on the type of contract and its maintenance.
According to this discussion it can be said that employee make decision to stay or leave the company on the basis of this psychological contract and it’s breaching. Job outcome can also be in a form of perceived organizational support, though it has not been researched widely. Perceived organization support means an employee has believe in his/her organization that assesses their performance and think about their well-being (Eisenberger, et. al. 1986).
When an employee understands the organization is not treat them equally and there is no value of his/her contribution he/she will be dissatisfied and flustered that affect the outcome of the organization. Researchers have found that perceived organization support plays an important role in making the employees’ perception about the organization’s care and value to the employees. While employees think that, their organization is providing proper care and valuing them the put extra effort in the workplace and a loyal relationship is created between the employees and the organization. Ultimately, these things help the organization to meet its goal. If an organization conscious about the employee’s bonus, justified payments, provide an opportunity in making decision, training and so on then the employee think the organization valued him/her.
Employees show a positive attitude towards the organization. Additionally, when an employee has a higher perception about organizational support he/she will be more satisfied with their job. But when the matter breach of psychological contract comes it is negatively related to the perceived organizational support. So, Organization should not breach this psychological contract. Among other behavioral job outcomes, organizational citizenship behavior is the most popular and it has a wide range of research. Dennis Organ is the father of organizational citizenship behavior. It defines as the behavior of the employee in an organization which is performed by his/her own choice and which is not directly related to the reward system but overall organizational effectiveness. It is largely related with the psychological contract. When an organization can fulfill the expectation of an employee the employee will satisfied with his/her job and try best to more give contribution in the organization like a good citizen
As a result, the performance and effectiveness of the organization will increase. But when there is a breach of psychological contract then the employee being frustrated with the organization. Job satisfactions will Lawrence . They can react in various ways. They might leave the organization, increase absenteeism, make harm or does not perform well because organizational citizenship behavior is not specified in the job description. These reduce the organizational effectiveness. So, it is very important to ensure the psychological contract’s maintenance. Conclusion Psychological contract is very important to a company for its effectiveness.
Sometimes it is more important than written contract because organization can worth more from this type of contract. If an organization respects its employees and their contribution then it should perform according to this psychological contract. This contract can establish a good employee and employer relationship that results a healthy work environment. Both the employee and the organization should not breach the psychological contract. This is very harmful for the organization. It reduces the productivity of the organization. Job outcome as job satisfaction, organizational citizenship behavior is largely depended on this. So, organization should be more careful about the psychological contract.
