An Investigation Of The Relational Component Of The Psychological Contract Across Time, Generation, And Employment Status.(Brief

Historically, a mutual understanding existed between employees and employers. It was expected that employees would work hard, cause few problems, and generally do whatever the boss wanted. In return, it was expected that employers would provide "good jobs" with "good pay," offer plenty of advancement opportunities, and virtually guarantee lifetime employment. It was a stable, predictable world; the employee would be loyal to the employer and, in return, the employer would provide job security for the employee. The Organization Man, written by William H. Whyte in 1956, portrayed this reciprocal understanding as an institution in American business. This belief in an unwritten agreement between the employee and the organization later came to be referred to as the psychological contract and was described by Levinson et al. (1962) and Schein (1965).

The corporate restructuring and downsizing strategies of the 1980s and 1990s likely have changed this traditional employee/employer relationship. Some researchers have asserted that the American workplace of today is one of increased workload and stress and decreased job security and commitment (Cascio, 1998; De Meuse et al., 1997; Jaffe and Scott, 1998). The popular press, as well as the academic literature, proclaim that the current work environment sends confusing signals that may lead to employee uncertainty, cynicism, fear, and anger (De Meuse and Tornow, 1990). Initiatives such as Total Quality Management (TQM), employee empowerment programs, and self-managed work teams convey to employees that employers value them and they are an integral corporate asset. However, at the same time, employees are being exposed to strategies such as downsizing and reengineering that often are contrary to the implications of such intervendons and ignore the critical role that people play in organizational success (Pfeffe r, 1998). Ironically, few empirical investigations have examined whether employee perceptions of the psychological contract actually have changed.

The existing literature distinguishes between two components of the psychological contract--transactional and relational (Macneil, 1985; Morrison and Robinson, 1997). These two components emphasize different types of exchange relationships between the employee and employer. In a transactional exchange, organizations explicitly and/or implicitly promise to provide specific, monetary remuneration for certain services performed by the employee. Consequently, a short-term, almost contract-like agreement between the two parties results. In contrast, the relational component emphasizes a socio-emotive interaction between the employee and employer. Relational elements revolve around trust, respect, and loyalty developing over time. The relational component of the psychological contract is becoming a more complex issue for companies as some are forced to downsize, while others face a tight labor market, making it difficult to find and retain qualified employees. In this competitive environment, an understanding of h ow to attract and retain critical talent will be increasingly important.

Cavanaugh and Noe state that "the academic and practitioner literature has suggested that the psychological contract in the United States has changed. In particular, the literature emphasized that the relational aspect of the psychological contract has changed" (1999: 324). How employees perceive the relational component of the psychological contract likely influences their future attitudes toward the organization and their corresponding behaviors. While the person on the street may bemoan the changes taking place in the employee/employer relationship, few studies have gathered empirical evidence that employees believe the traditional psychological contract as described by Whyte (1956) has been altered. The primary purpose of this investigation is to test the extent to which perceptions of the relational component of the psychological contract have changed during the past 50 years. Further, the study analyzes whether generational differences or differences in employment status (full-time versus part-time) ar e related to perceptions of the psychological contract.

Past Findings and Current Hypotheses

A relatively small group of researchers has published several studies on the psychological contract within the past few years. Most of those studies have focused on perceptions of contract violations and their effects on employee attitudes and behaviors (Morrison and Robinson, 1997; Robinson, 1996; Robinson et al., 1994; Robinson and Morrison, 1995; Robinson and Rousseau, 1994; Rousseau, 1990, 1995). For example, Robinson and Rousseau (1994) examined perceived contract violations among recent MBA graduates. They found an inverse relationship between psychological contract violations and employee satisfaction, trust, and employees' intentions to remain with their current employer. In a similar study, Robinson (1996) found that initial trust (in an organization) was not only negatively related to perceived breaches of the psychological contract, but also served as a moderator of the relationship between psychological contract violation and subsequent trust levels. That is, those individuals low in initial trus t experienced greater declines in trust levels following a breach of contract.

The way employees perceive the employment relationship can be explained in part by Equity Theory (Adams, 1965). Employees enter into a relationship with an employer based on the concept of a reciprocal agreement. In this exchange, the employee believes he or she is delivering a set of contributions to the organization (e.g., effort, loyalty) and correspondingly expects to receive a set of equally valuable inducements (e.g., job security, support, respect). Each employee during this exchange engages in a psychological comparison, and based on that comparison determines if the critical inducements are being delivered by the organization. For the purpose of the psychological contract, the employee can compare his or her contribution/inducement ratio over time to what the organization has presumably promised. When the employee perceives a change in what is received versus what is expected, this triggers additional cognitive analysis of the employment exchange.

In a recent article, Shore and Barksdale (1998) discuss this cognitive analysis in the context of the relational component of the psychological contract. They adopt a social exchange approach to explain how the relationship between an employee and employer evolves over time. In a work setting, both parties incur reciprocal obligations. Although those obligations may be illdefined, both parties expect the other to fulfill them. When the fulfillment of those obligations between the employee and employer is in balance, a positive relationship results. However, when the exchange is out of balance, negative consequences may arise such as turnover and dissatisfaction (Blau, 1964).

Writers have argued that organizations may not be living up to their end of this reciprocal obligation (De Meuse and Tornow, 1990; Hiltrop, 1995). Rousseau (1995) believes that organizations are going through a fundamental change in the way they internally and externally conduct business. She proposes that organizations are moving away from a bureaucratic employee/employer relationship to a more "adhocratic" model (i.e., a model where this partnership is viewed as a temporary one). The lifespan of this partnership is heavily dependent on external contingencies. This change in the relationship has occurred relatively quickly and is forcing both employees and employers to reevaluate the unwritten rules of the workplace.

In terms of the psychological contract of today, both parties appear to acknowledge that the employee/employer relationship is changing. Companies often focus on corporate goals, quarterly profit margins, and daily stock market prices. Employees typically focus on immediate job needs and career networking opportunities. This type of relationship tends to foster a short-term attachment and self-gratification (De Meuse et al., 1997; Noer, 1997). As the pressure on organizations to become more flexible, adaptable, and efficient increases, they may engage in a set of strategies that alter employee perceptions of the employment exchange. In other words, as companies modify their strategies, employees are likely to believe that their contribution/inducement ratios are not in alignment with what the company (presumably) promised them. If the imbalance is perceived to exist over time, employees may begin to question the nature of the employee/employer relationship. It is expected that individuals' perceptions of the relational component of the psychological contract have changed over the past 50 years. Thus, we propose the following hypothesis:

Hypothesis #1: There will be a main effect of time on individual perceptions of the psychological contract, such that trust, support, and respect (i.e., elements of the relational component) will have decreased during the past five decades.

Research suggests that attitudes toward the psychological contract are influenced by the employees' age and experience, as well as their initial level of trust in an employer. In a study of MBA alumni, Robinson et al. (1994) found that the employees' views of their psychological contract with their respective organizations significantly changed over time. Specifically, two years after MBA students began their employment they believed they owed their employers less than when they started; whereas, they perceived that their employers owed them more.

Rousseau (1990) found business school alumni had varied expectations of their first employer. Some individuals labeled "careerists" expected to stay with their first job for less than three years, while others sought more commitment from employers and hoped to stay with the organization for five or more years. It is possible that continued downsizing in the 1990s has caused a greater percentage of individuals entering the work force today to adopt a "careerist" orientation. The newest generation of workers appears to be in a good position to take advantage of the many opportunities that exist under the current psychological contract (e.g., high compensation and highly flexible work arrangements). In contrast, older workers who have spent the majority of their careers under the more traditional psychological contract may have fewer opportunities and be less optimistic. Many individuals who have been accustomed to a psychological contract based on loyalty and job security appear to have been slow to accept or have openly resisted the more contemporary contract (Mirvis and Hall, 1994).