Introduction Aim of this essay is to understand

IntroductionIn the era of globalization, restructuring anddownsizing,  psychological contracts arebecoming ever more indispensable in contemporary employment relations. In thisever-changing situation, the traditional long-term job security contract in exchangefor hard work and loyalty may no longer be valid (Sims, 1994). Very importantissue is the violation of the psychological contract whose probability hasincreased in recent times due to sudden changes. The lack of a stable contractand instead the constant change of it can lead to the possibility ofmisunderstanding the agreement by employees and employers, thus perceiving anon-effective violation of the contract. Given this perception of violation ofthe contract of labor it is relevant to understand this phenomenon. Aim of thisessay is to understand the meaning of psychological contract and implicationsof its potential violations. The importance of ethical approaches to HRM andits way to maintain a positive psychological contract will also be addressedthrough the deepening of HRM related issues.1.

Psychological contractThe relationship between employers and employees isdefined by two different types of employment contract: the psychologicalcontract and the legal contract. The employment contract (technical-legalcontract) can not contain all the elements that characterize a workrelationship. It is incomplete and implicit, especially as regards themanagement of the company-employee relationship. For this reason it isimportant to manage in the best way what has been defined the psychologicalcontract. The psychological contract has been defined by Rosseau(1989) as ‘an individual’s beliefs regarding the terms and conditions of areciprocal exchange agreement between the focal person and another party’ (p.123). This type of contract differs from the formal employment contract becauseit is referred to “a set of unwritten reciprocal expectations between anindividual employee and the organization.

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” (Schein, 1980) (expectations ofsupport and stimulation of individual skills and professional potential). Thepsychological contract is about “the perceptions of employee and employer, ofwhat their mutual obligations are towards each other” (CIPD, 2012), includinginformal arrangements, mutual beliefs and perceptions between the two parties. The psychological contract, unlike the legal contract,has a much more fluid nature and evolves over time in relation to social andcultural changes. Furthermore the content of the psychological contract evolvesconstantly based on communication, or the lack thereof, between the two partiesof the contract, employee and employer.

Such contracts are deemed to bevoluntary, subjective, informal and dynamic (Hiltrop 1996), with elements beingadded and deleted over time as employee and employer expectations change(Robinson et al. 1994; Herriot 1995). Promises over promotion or salaryincreases, for example, may form part of the psychological contract. Takentogether, the psychological contract and the employment contract define theemployer-employee relationship. 1.1. Psychological Contract Breach and TrustIn addition to differing from the legal contract forall the points explained above, the psychological contract differs from thelegal one for a really important aspect: procedures followed in the event of a breach of contract.

Unlike theviolation of a legal contract, in which the aggrieved party may seekenforcement in court, such recourse is not offered in case of violation of apsychological contract; in this case the aggrieved party may choose only towithhold contributions or to withdraw from the relationship (Spindler 1994).Psychological contract breach is a subjective experience, referring to one’sperception that another has failed to fulfill adequately the promisedobligations of the psychological contract (Rousseau, 1989). Being a subjectiveexperience, relevant is the perception of a psychological contract breach whichis based on an individual’s perception of employer’s actions or inactionswithin a particular social context. Thus the experience of psychologicalcontract breach should depend on social and psychological factors specific tothe employment relationship in which it occurs (Morrison and Robinson, 1997). One such factor of a particular importance is thetrust in one’s employer.

Trust is the basis of relationships and contracts,influencing each party’s behavior towards the other and one’s owninterpretation of social behaviors within a relationship. Trust is thus likelyto play a significant role in this situation: Trust in one’s employer mayinfluence an employee’s recognition of a breach, his or her interpretation ofthat perceived breach if it is recognized, and his or her reaction to thatperceived breach (Roderick M. Kramer, 2006). https://global. breaches of the psychological contract canseverely damage the relationship between employer and employee, leading todisengagement, reduced productivity and in some cases workplace deviance. 1.2 Fairnessand justice of PCFairness is a significant part of the psychologicalcontract, bound up in equity theory – employees need to perceive that they arebeing treated fairly to sustain a healthy psychological contract.

In the nextparagraph will be addressed issues of inequity cases.The psychologist Adams was a pioneer in applying theprinciple of fairness in the workplace. Adams (1965) maintains that employeesprefer conditions of equity in relations with the working environment, and ifthere are injustices, tension is created which consequently is de-motivatingfor the worker.

With fairness Adams means: – there is fairness when, theperception of the individual on the relationship between what he brings in the exchangeand what happens in the exchange coincides with the analogous relationship inanother person taken as an object of comparison (1965). According to thetheory, in order to ensure a strong and productive relationship with theemployee and consequently to maintain a positive psychological contract it isnecessary to find a fair balance between the inputs of an employee (hard work,skill level, acceptance, enthusiasm and so on) and the outputs of an employee (salary, benefits, intangible assets such as recognition and so on). The respectof the equity will lead to a series of benefits such as happy and motivatedemployees. Organisational justice theory (Greenberg, 1987)focuses on perceptions of fairness in organisations, by categorising employees’views and feelings about their treatment and that of others within anorganisation. Literature identifies three different types of organizationaljustice theory (Greenberg, 1987; Folger and Cropanzano, 1998). The distributivejustice which has at its base the perceptions about the outcomes of decisionstaken (Homans, 1961, Leventhal, 1976).

Procedural and interational justice,often treated as one in the literature, are based on perceptions about theprocesses used to arrive at, and to implement, these decisions (eg Cropanzanoand Greenberg, 1997). Procedural justice focuses on employees’ perceptions ofthe fairness of procedures used to make decisions (Thibaut and Walker, 1975).On the other hand, interactional justice focuses on employees’ perceptions of thefairness of the interpersonal treatment received during implementation (Biesand Moag, 1986). These perceptions can influence attitudes and behaviour forgood or ill, in turn having a positive or negative impact on employeesperformance and the organization’s success and consequently on the respect ofpsychological contract (Baldwin, 2006). Having well-designed systems oforganizational justice lead to positive aspects for both parties, theindividual, who will be satisfied for having been treated fairly and theorganization which will keep control over potential challenges and threats fromits staff. file:///C:/Users/utente/Desktop/mp73.pdf


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