MANAGING THE PSYCHOLOGICAL CONTRACT

Transcription

1 MANAGING THE PSYCHOLOGICAL CONTRACT Michael Wellin 2008 Business Transformation Ltd 2004 T: +44 (0)

2 CONTENTS ACADEMIC STUFF NEW IDEAS PRACTICAL APPLICATIONS SO WHAT?

3 ACADEMIC STUFF Business Transformation Ltd 2004 T: +44 (0)

4 PSYCHOLOGICAL CONTRACT CONTEXT

5 EMERGENCE OF THE PSYCHOLOGICAL CONTRACT The Bible (3000 BC) -Deuteronomy Chapter 10 & 11 -refers to the mutual expectations between God and the Jewish People The Social Contract, (1762), Jean-Jacques Rousseau, -examines the relationship between the individual and the state Understanding Organisational Behaviour, (1960) Chris Argyris the psychological work contract refers to the implicit understanding between a group of employees and their foreman Organisational Psychology, (1965) Edgar Schein the unwritten expectations between every member of an organisation and the managers in the organisation

6 THE PSYCHOLOGICAL CONTRACT It is about the relationship between an employee and the organization that employs them It is concerned with expectations and obligations It is implied and unwritten It is mutual andtwo way People have feelingsabout the way their psychological contracts are fulfilled which drive their behaviour & actions

7 LEGAL CONTRACTS AND PSYCHOLOGICAL CONTRACT LEGAL CONTRACT Formal and impersonal Written & explicit Subject to laws of the land PSYCHOLOGICAL CONTRACT It is what I expect personally and what is expected of me It is not written anywhere, and often implied & not spoken about It is subject only to custom and practice E.G. My hours of work are to There is no contracted overtime pay E.G. There is a formal grievance procedure for compensation for delay E.G. In practice I am expected to stay as long at it takes to do the job, and sometimes stay till E.G. My boss listens to me if I have concerns and deals constructively with issues

8 EVOLVEMENT OF THE PSYCHOLOGICAL CONTRACT Psychological Contracts in Organisations (1995) Denise Rousseau; The psychological contract refers to individual beliefs shaped by the organisation regarding the terms of an exchange agreement between individuals and their organisation Managing the Psychological Contract (2007) Michael Wellin: The Personal Deal refers to the unwritten expectations which operate at all times between people who interact with one another. It underpins the way each of us relate and work with family, friends, colleagues, customers, & suppliers.

9 PSYCHOLOGICAL CONTRACT CONTENT Wellin Macro Factors Herriot et al Turnley & Feldman Coyle Shapiro Rousseau Westwood Challenge X X X X Development X X X X Environment X Equity X Involvement X X X X Org Reputation Pay & Benefits X X X X Pay Equity X X X X Responsibility X X Security X X X X X Support X X X X Teamwork

10 RELATIONSHIP & TRANSACTIONAL PSYCHOLOGICAL CONTRACTS Involves a short term relationship trade of extrinsic rewards & money for labour TRANSACTIONAL PSYCHOLOGICAL CONTRACT RELATIONSHIP PSYCHOLOGICAL CONTRACT Involves a long term relationship trade of personal security for loyalty From Rousseau D.M., (1989) Psychological and Implied Contracts in Organisations, The Employee Responsibilities and Rights Journal, Vol. 2,

11 MACRO CHANGES IN THE PSYCHOLOGICAL CONTRACT BUREAUCRATIC PSYCHOLOGICAL CONTRACT (1930/S TO 1995) Organisation is parent to employee Child NEW ADHOCRACY PSYCHOLOGICAL CONTRACT (1995/S - Organisation & employee are both Adult Organisation defines employees worth & identity Employee defines their own worth & identity Those who stay are good & loyal, others are disloyal Regular flow of people in and out of the organisation is healthy Employees who do as they are told will work until they retire Long term employment is unlikely expect & prepare for multiple employments Promotion is the primary route for growth Growth is through personal accomplishment From Kissler, G. the New Employment Contract Human Resource Management 33,

12 BREACH OF THE PSYCHOLOGICAL CONTRACT Breach of Psychological Contract is common; 69% people report breach in last 10 days (Conway & Briner 2002) Fulfilment of training components of the psychological contract were significantly related to employee commitment, (Coyle Shapiro & Kessler 2000) Different studies show a self reported link between psychological contract breach and deviant work behaviour (Coyle Shapiro 2002). Personality impacts reaction to Breach of the psychological contract e.g. Conscientiousness (Konovsky & Organ 1996)

13 SOME NEW IDEAS ABOUT THE PSYCHOLOGICAL CONTRACT Business Transformation Ltd 2004 T: +44 (0)

14 THE PERSONAL DEAL WHAT YOU GIVE ME? WHAT I EXPECT FROM YOU? WHAT YOU EXPECT FROM ME? WHAT I GIVE YOU?

15 THE PERSONAL DEAL WITH A RESTAURANT YOU EXPECT The table you booked is available when you arrive The waiter is courteous & makes pleasant small talk The waiter knows about the food on the menu The correct food arrives The food is of a high standard The waiter can talk knowledgably about the wine list You are not pressurised to leave as soon as you stop eating THE RESTAURANT EXPECTS You turn up at the time you booked You come from the targeted economic client group You are in a frame of mind to enjoy the food You order at least 2 courses from the menu Behave in a way that allows other diners to enjoy their meal Pay for your meal plus the 12.5% optional service charge

16 HOW AN EMPLOYEE MAY REACT TO A BROKEN PERSONAL DEAL WHAT MY LEADER GIVES ME WHAT I EXPECT FROM MY LEADER Not receive anticipated promotion Less personal support Less interesting work Increased hours Adapt to change More work WHAT MY LEADER EXPECTS FROM ME WHAT I GIVE MY LEADER DECISION TO QUIT!

17 TRADITIONAL Long term, impersonal, based on complex rules & procedures and principles of justice, e.g. local authority, Royal Mail etc PERSONAL DEAL TYPES RATIONAL MERCENARY Short & medium term, focus on extrinsic rewards e.g. temporary employees, e.g. Kelly, Manpower, agency nurse, contract programmer STABILITY CHANGE RELATIONSHIP Personal, based on close long term feelings and mutual agenda & trust, e.g. traditional partnership, family firm EMOTIONAL DEVELOPMENTAL Medium term focus on knowledge development & application, e.g. recent graduates, professionals and e.g. E & Y, Clifford Chance

18 MEASURING THE PERSONAL DEAL TRADITIONAL MERCENARY impersonal rules & natural justice (5) (4) (3) (2) (1) (1) (3) (2) (4) (5) performance & extrinsic rewards REQUIRED NOW personal trust & mutual relationship (5) (2) (3) (4) RELATIONSHIP (1) knowledge acquisition & application DEVELOPMENTAL Chapter 6 page 27 (1) (2) (3) (4) (5)

19 PRACTICAL APPLICATIONS

20 THE PERSONAL DEAL IN PRET A MANGER WHAT PRET A MANGER EXPECT FROM EMPLOYEES Reasonably hard working Good sense of humour Enjoy delicious food Start early and leave early WHAT EMPLOYEES CAN EXPECT FROM PRET A MANGER Get paid as much as we can afford (not as little as we can get away with) Cosmopolitan atmosphere as a result of diverse employee backgrounds Invest in people training & development (in-store trainer) Most managers are promoted from within

21 THE IMPLIED PSYCHOLOGICAL CONTRACT AT PRET A MANGER PRÊT GIVES IT S PEOPLE As much as we can afford to pay Cosmopolitan atmosphere as a result of diverse employees Investment in training and development (in-store trainer) Most managers promoted from within WHAT I EXPECT FROM PRET PRÊT EXPECTS FROM PEOPLE Reasonably hard working Good sense of humour Enjoy delicious food Start early and leave early WHAT I GIVE PRET

22 THE IMPLIED PSYCHOLOGICAL CONTRACT AT ERNST & YOUNG E&Y gives its people Recognition & reward for individual contribution An enjoyable place to work Care, listen & respond to people s ideas and concerns Continuous learning opportunities WHAT I EXPECT FROM E & Y E&Y expects from its people Do the right thing & succeed for clients Energy, enthusiasm stretch & excel yourself Build relationships, teamwork & the courage to lead Take charge & personal responsibility for your career WHAT I GIVE E & Y

23 RICHER SOUNDS PERSONAL DEAL EMPLOYEES GET THE COMPANY GETS Funat work Recognition Golden Aeroplane Award Reward senior sales earn 18K including weekly profit share Communication Loyalty promote from within, loyalty lunch at Ritz Hard work Adapt to customer activity Customer Service Highest no of UK suggestions Low shrinkage Loyalty

24 RICHER SOUNDS BUSINESS & PEOPLE PERFORMANCE Ranked as the top of 1.3 million companies in the UK British owned business to work for Supercare warranty has been commended by publications such as The Independent, Guardian and Which? magazine Equal opportunity employer Give 22% of profits to charity and employee profit sharing scheme Very low shrinkage 0.5% compared to retail average 2-3%

25 WHAT IS YOUR PERSONAL DEAL WITH YOUR EMPLOYER? YOU WANT & EXPECT FROM THEM???? THEY WANT AND EXPECT FROM YOU????????

26 SO WHAT?

27 CREATING A CULTURE TO SUSTAIN BUSINESS GROWTH Diagnosis identified silo working Trained leaders to conduct one to one Personal Deal discussions in 2 day leadership workshop Managers had Deal discussions with individual employees Business Teams discussed their Deals particularly service functions with operational units

28 THE PERSONAL DEAL WITH MY MANAGER WHAT MY MANAGER GIVES ME WHAT I EXPECT FROM MY MANAGER WHAT MY MANAGER EXPECTS FROM ME WHAT I GIVE MY MANAGER Michael Wellin 2008 Chapter 3 page 14

29 AUDIT OF CULTURE CHANGE TO SUSTAIN BUSINESS GROWTH M Power is one of the few change Programmes I have seen that seems to have really made a Difference..IIP Inspector Aug 2003

30 USING THE PERSONAL DEAL TO ACHIEVE MAJOR INTERNATIONAL PROJECT Working with team of 300+ engineers who delivering the construction drawing for B++ international project Employee research found that needed to fulfil different behaviours & competencies for success than those used in parent company Created Personal Deal Toolkit for use by managers in one to one discussions with team members Trained Project Managers to hold agree Personal Deal with each team member discussions Personal Deal discussion being implemented in 2008

31 BUSINESS VALUE OF THE PERSONAL DEAL / PSYCHOLOGICAL CONTRACT Strategic Contributes to future direction of the organisation & survival in the competitive environment Aligns and engages people to strategy and vision Enables managers to create better understanding with their people Creates clarity for people about what they need to do, and can expect Framework for HR processes recruitment, induction, performance and management.

32 HOW HUMAN RESOURCE MANAGEMENT CREATES BUSINESS VALUE BUSINESS STRATEGY HUMAN RESOURCE PRACTICES PEOPLE & HR OUTCOMES BUSINESS OUTCOMES Business Growth, Customer Focus, Product Innovation, etc Performance Review, Managing Change, Assessment, Managing the Psychological Contract Commitment, Adaptability, Retention, Recruitment Costs, Absenteeism Job Performance, Innovation, Revenue Growth, Profit The Personal Deal provides a practical vehicle for leaders to translate Business Strategy into HR practices and Business Outcomes, and live the Employer Brand Chapter 10 page 24

33 FIND OUT MORE 1. Managing the Psychological Contract by Michael Wellin, Gower, Contact Michael direct; (0)

34 REFERENCES Jean-Jacques Rousseau, The Social Contract, (1762),, Penguin Classics, UK Argyris, Chris, (1960), Understanding Organisational Behaviour,The Dorsey Press Inc., Homewood, Illinois Conway, N. and Briner, R. B, (2002), A Daily Diary Study Of Affective Responses To Psychological Contract Breach And Exceeded Promises, Journal of Organizational Behaviour, 23, Coyle-Shapiro, J. and Kessler, I, (2000), Consequences Of The Psychological Contract For The Employment Relationship: A Large Scale Survey, Journal of Management Studies, 37: Herriot, P., Manning, W. E. G. and Kidd, J. M,(1997), The Content Of The Psychological Contract, The British Journal of Management, Vol. 8, Kissler, G., The New Employment Contract, Human Resource Management, 33, Konovsky & Organ, (1996) Rousseau D.M., (1995), Psychological Contracts in Organisations,Sage Publications, California, USA Rousseau D.M., (1989), Psychological and Implied Contracts in Organisations, The Employee Responsibilities and Rights Journal,Vol.2, Schien, Edgar H., (1965), Organisational Psychology, Engelwood Cliffs, N.J. Wellin, Michael, (2007), Managing the Psychological Contract, Gower Press Westwood, R., Sparrow, P. and Leung, A, (2001), Challenges To The Psychological Contract In Hong Kong, Int. J. of Human Resource Management, 12,