Psychological Contract in Nigeria - British Journal of Science

British Journal of Economics, Finance and Management Sciences 43August 2012, Vol. 5 (1)Psychological Contract in Nigeria: A Conceptual Explication and Mutuality DebateJustin M. Odinioha GabrielDepartment of Management, Faculty of Management SciencesRivers State University of Science and Technology, Nkpolu, Port Harcourt, Rivers State, Nigeria.Phone: 08033154656E-mail: justinpozy@yahoo.comEdwyn JonathanDepartment of Jurisprudence and International LawRivers State University of Science and Technology, Nkpolu, Port Harcourt, Rivers State, Nigeria.AbstractIn this article, we examined psychological contract as a unilateral construct that is either transactional orrelational in orientation; and having to do with a set of expectations held by an employee concerning whatinputs he or she anticipates to bring into the organization and what inducement are expected to be gained inreturn. The paper particularly focused on conceptualizing psychological contract as well as debating onwhether mutuality exists between employees and employers on psychological contract. The paper concludedon the proposition that psychological contract management has a strong association with organizationaloutcomes; that when an employee perceives psychological contract as being faithfully honored by employer,she/he tends to reciprocate with positive outcomes, and when the opposite prevails, it is also followed bysuiting negative behaviors. Considering the current state of affairs in Nigeria, where transformation of everysphere of our individual and national life is emphasized, the paper recommends among other things that: (1)employers should be sensitive to the plight of employees by honoring the psychological contract (2)employees must also reciprocate this gesture by being affectively committed to their job (3) employers andemployees must communicate effectively to avoid misunderstanding and misinterpretations of actions.Key Words: Psychological Contract, Employment Contract, mutualityIntroductionThe notion of a psychological contract implies that the individual has a variety of expectations of theorganization and that the organization has a variety of expectations of him (Armstrong, 2009). Theseexpectations not only cover how much work is to be performed for how much pay, but alsoinvolve the whole pattern of rights, privileges, and obligations between worker and organizations.Accordingly, expectations such as these are not written into formal agreement between employer andorganizations, yet they operate powerfully as determinants of behavior (Denisi and Griffin, 2005).Although not acquiring construct status until the early 1990s (Millward & Brewerton, 1999), the‘psychological work contract’ can be traced back to as early as 1960 when Argyris (1960) inAnderson & Schalk, (1998) used the term to describe the relationship between the employees andforeman in a factory in which he was conducting research. He saw this employee /employer© 2012 British Journals ISSN 2048-125X

British Journal of Economics, Finance and Management Sciences 44August, Vol. 5 (1)relationship as being dominated by an environment within which the employees would maintain highproduction with minimal grievances if the foreman respected the norms of their informal culture.The purpose of this paper therefore is to among other things discuss (1) The conceptualize ofpsychological work contracts, (2) Its formation and content engage (3) The question of mutuality, and thenormally shared perceptions between two parties concerning contract obligations, and (4) conclude andmake some recommendations.Conceptualizing Psychological ContractThe psychological contract defines what the individual expects from the organization in order to achieve andmaintain psychological wellbeing. Individuals are attracted to an organization because they believe theorganization has the potential to contribute to their wellbeing. What that contribution will be, and how it willbe delivered, is embedded in both the formal employment contract and the psychological work contract. Ifeither contract is breached or violated, the individual will act to address the perceived injustice. The workeremployerpsychological contract is a huge force in the work relationship dynamics.From the employer’s view, employees do not have lifetime jobs, guaranteed advancement or raises, orassurance that their work roles will be fixed. However, the most admired employers believe that openness,integrity, providing opportunities, and supporting the growth and development of their employees are toppriorities. They perceive this as the unwritten contract they have with their people. On the other hand,employees believe that employers must be honest, open, and fair and also willing to give workers a large sayin their jobs. As Allen (1995) claimed, supported by Brown (1996), an assessment of how personallybeneficial or detrimental the work environment is to their wellbeing, and whether the organization caresabout their wellbeing, is continually being made by employees. This assessment will influence the extent towhich employees have themselves engaged in the workplace (Kahn, 1990).The Psychological Contract: Formation and ContentHow psychological work contracts form is answered simply by Andersson (1996), who suggested that acontract emerges when an employee perceives that the organization is obligated to reciprocate in somemanner in response to contributions he or she has made. The process of psychological contract formation,appraisal, and assessment is iterative and provides both the structure of the contract and its content. Withinthat structure, and based on the content, the contract establishes the mechanisms (constructive, interpretive,and corrective) through which individuals seek meaning from the work they pursue, and from theorganizational climate and environment within which that work is performed.As Sonnenberg (1997) proposed, expectations or hopes of personal development, reward, adjustment andregulation are generally present in the work one is engaged in. Individuals enter an organization with a set ofbeliefs, values, and needs, and with the expectation that these will be met, upheld, and respected, and theirwellbeing ensured, preserved, and protected. This is the socialization process referred to as ‘sense making’by de Vos, Buyens, and Schalk (2003).The core of the psychological contract concerns the exchange of promises and commitments (Guest &Conway, 2001a). Within this context, the content of the contract is about cognitions, perceptions,expectations, beliefs, promises, and obligations. That is, it is concerned with non-tangible psychologicalissues (Makin, Cooper, & Cox, 1996). These cognitions, perceptions, and expectations, and so forth, form© 2012 British Journals ISSN 2048-125X

British Journal of Economics, Finance and Management Sciences 45August, Vol. 5 (1)part of the psychological and implicit employment contract coexisting with the explicit, formally documentedand legally binding contract of employment.Coyle-Shapiro and Conway (2005) suggested that, within the context of social exchange, the psychologicalcontract is one way of operationalizing the employee-employer exchange. Understanding employeeexpectations relating to that social exchange may help identify the factors that shape employee perceptions ofthe psychological contract. One of those factors is reciprocity which provides a basis for a global evaluationof the employment relationship by the employee (Coyle-Shapiro & Conway, 2005). The evaluation of theemployment relationship by the individual is in itself likely to influence the content of the psychologicalcontract.Although no totally encompassing definition of psychological contract content prevails, some appreciation ofpotential content may be acquired through the research efforts of the many researchers who have developedmeasures a priori and ad hoc to meet their particular requirements. What hampers consensus on content arethe many factors at individual, organizational, and societal levels that influence contract formation, and hencethe resulting content. These influences must be taken into consideration when developing measures of thepsychological contract for it is these influences that hinder the development of a generic measure.The concept of a ‘contract’ naturally conjures up the expectation that two parties are involved and hencemutuality concerning understanding and appreciation of contract obligations results. However, aspsychological contracts exist in individuals’ minds alone, the question arises as to how mutuality, through theinvolvement of the other party to the contract occurs. Again the major problem associated with psychologicalcontract remains that it is an idiosyncratic construct; of which what employee one considers as psychologicalcontract fulfillment may not be so deemed by employee two. The concept of mutuality will now be explorednext.Mutuality DebateMutuality in contracting refers to the perceptions shared between the two parties to a contract, of theobligations and expectations each party holds, under the terms and conditions of that contract. Contracts aregenerally formed between two parties, thus providing mutuality with respect to the management, acceptanceand interpretation of the contract. In normal legal contracts each party has its perceptions concerning contractobligations and it is these shared perceptions that provide mutuality. However, psychological contracts areformed by only one party, the employee, who provides that mutuality by adopting a two-party (employee andorganization) perspective. This concept of mutuality permeates (Goddard, 1984) even though psychologicalcontracts are typically viewed solely from the employee perspective.Confirming this, Rousseau (1995) stated that the most general description relates to the belief in obligationsthat exist between two or more parties, with this belief largely being created through communicationsunderpinning organizational human resource practices Ostroff & Bowen (2000); Rousseau & Wade-Benzoni,(1994); Sels, Janssens, & Van den Brande, (2004), but also subject to other influences such as perceptions oforganizational culture Turnley & Feldman, (1999a). Anderson and Schalk (1998) also argued that mutualobligations are the central issue in the relationship between employer and employee.Although these mutual obligations may be to some extent recorded in the formal employment contract,Anderson and Schalk contended that they are mostly implicit, are covertly held, and only discussed© 2012 British Journals ISSN 2048-125X

British Journal of Economics, Finance and Management Sciences 46August, Vol. 5 (1)infrequently. Formal contracts are ‘normally’ entered into between two or more parties with each partyholding a written ‘copy’ of the contract that clearly spells out the terms and conditions. Before contracts aresigned, and from that point becoming legally binding, any ambiguities or misunderstandings are resolved bythe parties to that contract. However, the same process does not occur with psychological contracts.Psychological contracts, by definition, are held in the minds of the holders and are not formally negotiated.Therefore, the extent to which the terms and conditions are shared between the parties involved is difficult, ifnot impossible to assess. This situation raises the perplexing question as to how the mutuality inherent in aformal written contract can also be inherent in a psychological contract. Can, for example, an organization’sperspective on the content of an employee’s psychological contract be assessed? Can, for example, apsychological work contract, held in the mind of an employee, become ‘known’ to the organization?Two issues arise in considering the possibility that ‘organizations’ may develop specific views of the contentof the psychological contract. Firstly, identifying the ‘organization’ is a complex undertaking (exampleMarks, 2001; Morrison & Robinson, 1997; Rousseau & Tijoriwala, 1998). Secondly, it follows thatdetermining the organization’s perspective would inherit similar complexity, for as Arnold (1996) correctlypointed out, the question then arises as to exactly who constitutes the ‘organization’ as the other party to thepsychological work contract. Yan, Zhu, and Hall (2002) also faced this dilemma and cautioned that careneeds to be exercised in defining what ‘organization’ stands for.Our proposition is that more will be understood about the consequences of violation of the contract if thecontract itself is understood from an employee perspective. Central to this discussion is acceptance that forany contract to exist there must be at least two parties to it and, whilst mutuality does permeate, it is theemployee alone who provides this mutuality. The employee adopts two perspectives; what they expect of theorganization (inducements) and what they believe the organization expects of them (contributions) (Turnley,Bolino, Lester, & Bloodgood, 2003). These are the two views that influence an employee’s behavior to bothbe committed and exhibit organizational citizenship behavior (behaviors outside formal job requirements buthelpful to the organization) or remain uncommitted and engage in counter productive work behaviors. Bothhave its consequences on organization’s functioning.It is this perspective, that is, the employees’ perceptions of the mutual obligations that exist betweenthemselves and the organization that confirms that mutuality in the psychological contract is provided by theemployee alone. Additionally, as Morrison and Robinson (1997) stated, by definition, psychologicalcontracts are in the minds of employees. They are also unwritten (Van Buren, 2000), and as suggested byRousseau and Tijoriwala (1998) a psychological contract is by definition an individual perception.ConclusionPsychological Contract was in this paper perceived and defined as the set of expectations held by anemployee concerning what he or she will contribute to the organization (referred to as contributions) andwhat the organization will provide to the employee in return (referred to as inducements). The contributionfrom the individual comprises among many others thing; efforts, ability, loyalty, skills, time, competenciesetc. and on the inducement list are pay, job security, benefits, career opportunities, status, advancement etc. afulfillment of these conditions has the tendency of boosting employment relationship to the extent that bothparties will be happy with each other.© 2012 British Journals ISSN 2048-125X

British Journal of Economics, Finance and Management Sciences 47August, Vol. 5 (1)However, an unfulfilled psychological contract is a slow killer of organizational processes. On the part of theemployee, it has the tendencies of causing job dissatisfaction; acted out in absenteeism, lack of commitmentand lateness to work. On the other hand a perceived fulfilled psychological contract breeds a smoothworking relationship between employees and employers; holding other factors constant. Psychologicalcontract is either of a transactional nature (involving shorter time horizon and stressing financial inducement)or relational (stresses non financial issues); each of these is sine qua non in the pursuit of healthy employer/employee relationship.RecommendationsHaving discussed thus far, we hereby offer the following recommendations Employers should be sensitive to the plight of employees by honoring the psychologicalcontract in line with Nigeria’s transformation agenda where it is considered that everyoneshould strive to do what is right. Employees must also reciprocate this gesture by being affectively committed to their job; indoing so, mutual trust will increases within the organization. Employers and employees must minimize the work space gap by maintaining closenessthrough effective communication to avoid misunderstanding and misinterpretations of actions. Employers should realize that employees came to the organization to fulfill some personalgoals while fulfilling those of the organization and create the enabling conditions for suchgoals to be fulfilled, especially when they do not conflict with those of the organization. Employees to also bear in mind that the employers are not looking for those to throw moneyat, rather for those that can bring values to the organization. In so doing, efforts will bedirected towards collectively aiding the organization to achieve success.References[Allen, M. W. (1995). Communication concepts related to perceived organizationalsupport. Western Journal of Communication, 59(4), 326-347.Anderson, N., & Schalk, R. (1998). The psychological contract in retrospect andprospect. Journal of Organisational Behavior, 19, 637-647.Andersson, L. M. (1996). Employee cynicism: an examination using a contractviolation framework. Human Relations, 49(11), 1395-1418.Armstrong, M. (2009). Handbook of Human Resources Practices, 11 th edition, Kogan Page.Arnold, J. (2004). A test of the psychological contract amongst graduates inBritish and Dutch Small Businesses. Loughborough University, UK:Personal Communication.Arnold, J. (1996). The psychological contract: a concept in need of closerscrutiny? European Journal of Work and Organizational Psychology, 5(4),511-520.© 2012 British Journals ISSN 2048-125X

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