Magoosh GRE


| April 6, 2015

1.1 Background
The psychological contract is a widely researched issue that has affected many business organizations. And this is a challenge that many employees and their organizations face in trying to keep up the pace with a constantly changing business environment. Most of the pressures that business organizations face constantly has come from changes in their economic environment such as increase in global or international competition, reduced growth, and even in some instances, declining markets, thereby making the organization to cut costs, reduce prices of commodities in order to achieve significant productivity improvements. However, about the same time, there has been a couple of significant changes in the demographic distribution of the labor force, technological infrastructure, and other important aspects of the surrounding environment that influence the perceived external context of these organizations and the way in which they are run (Sparrow &Hiltrop 1994). This report focuses on these changes that have occurred and considers the implications for effective management of human resources, with much focus on the constantly changing psychological contract in an increasingly insecure environment.
The present day understanding of the concept of what the psychological contract is has evolved from a couple of different definitions. The term has been defined in different forms, but taking a closer look at the concept, it seems to be something of a contradiction. A contract can simply be defined as the legal arrangement between two or more parties that involves the exchange of a legal tender for a commodity or service. On the other hand, the term ‘psychological’ refers to the mind and therefore something intangible.
Taking a look at the perceived history of the psychological contract, reference has been made to what is written in the Bible as far back as the 3000 BC.Deuteronomy Chapter 10 & 11 makes mentionof what is assumed to be related to the psychological contract (Wellin 2008). It talks about the mutual expectations between the Jewish people and their God. Similarly, Jean-Jacques Rousseau in 1762 examined the relationship between the state and the individual in what he termed the ‘Social Contract’ (Rousseau 1994). Chris Argyristook this a little bit further when he described the understanding of organizationalbehavior, explaining that the psychological work contract “refers to the implicitunderstanding between a group of employees and their foreman” (Wellin2008). But in 1994, Rousseau proposed a more widely accepted definition of the psychological contract in which he defined it as “the understandings people have, whether written or unwritten, regarding the commitments made between themselves and their organization” (Rousseau1994). In most of these definitions or descriptions of the psychological contract, the recurring theme is the promises, unexpressed beliefs, responsibilities, and/or expectations with respect to what is assumed to be a fair exchange within what are the perceived confines of the relationship between the employer and the employee.

Simply put, the psychological contract refers to the mutual expectations and obligations that two parties have of each other in a relationship (whatever it is) and how these mutual expectations affect and modify their behavior over time. Apart from the expectations, it is also concerned with the obligations that each person or party has of the other. However, it is term used most commonly for business organizations in which it describes the expectations and obligations that an employee has of the organization he or she is working in and the expectations that the organizations itself has of the employee. Nonetheless, this same concept can still apply for other forms of relationship – between a husband and wife, or any other form of relationship.
The psychological contract is a complex concept and it differs in many respects from other types of contracts partly because of the several elements which are involved. But more importantly, it is different because the participants of the contract – the employee and the employer – may assume different expectations as regards the employment relationship. In most employment situations, very few features of the supposed relationship between the employer and the employee would have been discussed, with majority of the other components being inferred only. And these elements are subject to changes as the expectations of the individual and the organization changes.
1.2 Context
The concept of the psychological contract has been examined in varying sectors of the economy, and even among different human populations. However, extensive literature search has revealed little or no information about the influence of the psychological contract on the public sector. There is mounting pressure on public organizations to be able to deliver very high quality services which are customer centered. And this has resulted in a need to improve the performance of this sector of the economy. And in order to be able to achieve this, much emphasis needs to be placed on practices that can boost the sector. One of this is the employment relationship between employers of labor in the public sector and their employees. So far, it seems that the expectations employers (usually the government or associated bodies) have towards their employees and vice versa have been altered and augmented. And it seems this relationship is gradually shifting its focus (Willems, Janvier & Henderickx 2004). Researchers have identified that there has been a shift from a relational contract which focuses on long-term job security, trust and organizational loyalty to a transactional contract which emphasizes the physical monetizable aspects of the relationship such as pay rewards (Hiltrop1996). This then means that a less certain set of agreements have superseded the traditional employment relationship. Therefore, the significance of these needs to be explored.
There has been conflicting evidences as to the existence of the psychological contract of the public sector worker. Some researchers have concluded that the psychological contract does not exist for the employee in the public sector (Guest & Conway, 2000). At the same time, some other researchers have said that there is indeed an existing psychological contract which is well managed in the public workplace (Janssens et al 2002). However, there is a wide variance between the psychological contract found in the private sector and what obtains in the public sector.
This study tries to explore and examine the management of the psychological contract in the public sector. There seems to be an existing pattern of contract found in the whole of the public sector, especially as related to the central coordinating body – usually the government – which differs in a long way from what is found in the private sector. Public civil servants demand relatively larger expectations from their employers than workers in other sectors. This then indicate that there is a very strong psychological contract, which if well managed, can be exploited to yield increased productivity. Also, most of these public workers remain loyal to the psychological contract earlier established which mostly places more emphasis on long-term employment. However, there seems to be a difficulty in employers meeting the expectations of most public sector workers in the area of promotion and salaries (Guest & Conway 2001). Most workers in the public sector complain about their employers not meeting their promises with regard to pay. In the short term, this causes a breach in the psychological contract because there is a disparity between what the employees expect and what is actually being done. The question now arises: why is the psychological contract important in the public sector, and why is managing it important?
The study of the psychological contract in the public sector is important because of two major reasons. First and foremost, its study recognizes and emphasizes the personalization and individualization of the employment relationship (Willems, Janvier & Henderickx 2004). This is because in the relationship between the employer and the employee, both parties have their own individual views on the mutual expectations from each party. And it is important to know that the psychological contract itself is about the subjective perceptions of the individuals involved. The second importance is drawn from the fact that although the psychological contract in the public sector, as it is in most other sectors, contains the obligations, concerns and expectations of each individual party, it still gives room for background factors to modulate the attitudes and behavior of the individuals involved. These background factors may include the policy guidelines of the organization, union role, and organizational climate (Willems, Janvier&Henderickx 2004). It is also necessary to note that the framework of the psychological contract allows for active participation, that is, the individuals involved can change the deal as regards his/her behavior and attitudes especially when his/her expectations are not being met. This then points to the changing nature of the psychological contract and the need to manage it appropriately.
Furthermore, the study of the psychological contract in the public sector is very essential because of the likely negative effects of a breach in the agreed contract between the employer and his/her employee. And in the public sector, when the employees believe that their expectations are not being met or when the central government, usually the coordinating body, is not delivering what has been earlier promised, the employees may derive reduced satisfaction and negative attitudes in the long run, making them to neglect their work, or even leave the organization (Turnley & Feldman 1999). On a long term basis, the intended increase in productivity would not be achieved. In addition to the above, another important reason for the study of the psychological contract in the public sector is the commonly held belief that the usual traditional employment relationship which has always been based on job security is now being replaced by other arrangements that are less certain (Guest & Conway 2000). All these point to the need to explore carefully how managing of the psychological contract occurs in the public sector of the economy.
1.3 Aims and Objectives
The aims and objectives of this research are as follows:
1. To ascertain the nature of the psychological contract in the public sector
2. To identify how the psychological contract is being managed in the public sector.
3. To explore the expectations of workers in the public sector.
4. To evaluate the fulfillment of the expectations workers in the public sector and the effects on employee attitude.
1.4 Research Questions
1. What is the nature of the psychological contract in the public sector?
2. How is the psychological contract being managed in the public sector?
3. What are the expectations of workers in the public sector?
4. Are the expectations of workers in the public sector being fulfilled?
5. What are the effects of the psychological contract on employee attitudes?
1.5 Research Summary
Having given a concise introduction to the research, the report would be divided into the following sections in order to present a comprehensive report of the study conducted on managing the psychological contract.
• The first chapter gives the introduction into the research. It gives the background into the research as regards what has been known and what is present knowledge about the nature of the psychological contract. It will also give the context on which the study is based – the public sector of the workforce.
• The second chapter will give a deep and comprehensive literature review into the history, development, nature, and changes associated with the psychological contract. It will also describe how the psychological contract is being managed in the public sector. In addition to this, the chapter will also address the definitions, content and the impacts of the contract on business relationships and transactions.
• The third chapter would describe extensively the methodology which has been adopted for this study. Based on what is found in existing literature, it is going to give a succinct account of the methods and approaches selected for use in the collection of data and its analysis. It will also give the limitations and the ethical issues encountered during the course of the study.
• The fourth chapter will give the results derived during the research. Particularly, it gives snippets of the data acquired from the use of the methodologies described in the earlier chapter.
• The fifth chapter gives the analysis of the data derived and presented in the fourth chapter. The methods of analysis would be described and presented.
• The sixth chapter, which is the final chapter, gives conclusions and recommendations after careful deductive analysis of the whole research. It draws out from the results presented and analyzed in the fourth and fifth chapters respectively in light of the existing facts. It also gives some recommendations as regards the effective management of the psychological contract in the public sector.
This research is a very important one as it describes the nature of the psychological contract as comprehensively as possible. It also explains the uniqueness of this form of contract in business organizations, especially the public sector. And then later explores how this contract can be well managed in the public sector so as to be able to achieve the intended purposes.

2.1 Introduction
This chapter draws upon previous works and literatures to examine the diverse definitions of the subject of the psychological contract that has evolved over time and it then focuses on the different theories that have been used to explain the concept. The distinguishing factors between the ‘old’ and the ‘new’ psychological contract are considered. It concludes by reviewing works that have examined the peculiarities of the psychological contract in that exists in the public sector.
2.2 Psychological Contract: Definition
The concept of the psychological contract has received immense inquiry and studies from many scholars that have examined the effect of changes in employment on individuals, as well as managers and employees, who perceive it as a major component that is important in recruitment, retention and motivation of employees (Guest and Conway, 2002; Coyle-Shapiro et al., 2004). The importance of the study of this concept cannot therefore be overemphasized.
The subject of the psychological contract has evolved through many decades and different views have been documented in literature. Different authors have over time defined the subject of psychological contract in different ways. It is therefore imperative that these definitions are reviewed. One of the first writers that defined and described the psychological contract was Argyris (1960). He described it as the mutual relationship that exists between the foremen and the employee and he called this relationship the ‘psychological work contract’. He noted that the productivity of the employees depended on the pay and job security that the foremen provided. Levinson et al (1962) however did more work on the concept and defined the psychological contract as ‘the unwritten contract, the sum of the mutual expectations between the organization and employee’.
Another writer that first broadened the scope of the psychological contract is Schein (1965). In his definition, Schein (1965) defined the psychological contract as ‘the unwritten expectations operating at all times between every member of an organization and the various managers and others in that organization’. Schein’s definition differs from that of Argyris in that it focuses on the group relationship that is present between the employee and the management of the organization.
In order to further define the borders of the psychological contract, recent authors have however seen a need to redefine the concept of the psychological contract. A more recent definition by Rousseau (1990) narrowed the concept of the psychological contract. Rousseau (1990) defined it as ‘the employee’s perception of the mutual obligations existing with their employer’.
Other recent definitions also agree with the narrowed concept given by Rousseau (1990). Newell & Dopson (1996) for example defined it as ‘what employees are prepared to give by way of effort and contributions in exchange for something they value from their employer, such as job security, pay and benefits or continuing training’. Also, DeMeuse & Tornow (1990) express the psychological contract as an emotional bond between an employee and the employer and Sims (1994) defined it as ‘the set of expectations held by the individual employee that specify what the individual and the organization expect to give to and receive from each other in the course of their working relationship’.
The benefits of the narrower concept are that they make measurements of the indicators of psychological contract more objective and they also remove the ambiguity of ‘management’ because people have diverse meanings of the term. ‘Each individual’s psychological contract can be measured, analyzed and interpreted – the individual’s expectations about the organization, as well as the individual’s beliefs about what management expect from them as employees’ (Wellin 2008).
Irrespective of the concept used in the definition by different authors, the underlying theory that underlies the psychological contract is that it is an unwritten relationship that describes the expectations and responsibilities of the employee to the employer and vice versa.
The characteristics of a psychological contract however differ from other forms of contracts owing majorly to the fact that a psychological contract is an inferred relationship. According to Spindler (1994), a psychological contract is differs from a legal contract in that on any occasion of a breach of a psychological contract, there is no recourse to any of the two parties, and the aggrieved party only has the option of withholding contributions or withdrawing from the relationship. Also much earlier, Levinson (1966) identified the difference between psychological contracts and legal contracts as majorly being that psychological contracts are nonverbal expectations and that these expectations exist even before the contract is formed. This infers that an employee already understands what is expected of his employer and vice versa even before an agreement of employment is reached.
2.3 The Role of Psychological Contracts
In recent times, a major challenge of human resource experts has been to maintain a positive psychological contract in order to attract and retain qualified employees (Butler &Waldroop1999). The psychological contract is therefore not merely an abstract relationship but can be a major tool that can determine the quality of the employees in a particular organization.
The primary roles of the psychological contract have been explained by different authors. Many authors agree that psychological contracts continue to play important roles in organizations and that its continuous study is hence necessary. Coyle-Shapiro & Kessler (2000) believe that a positive psychological contract will maintain commitment and retention of the employees. Psychological contract is an integral part of organizational systems, important in the binding of individuals and organizations and in the regulation of their behavior (Robinson & Rousseau 1994). It is a force that will ensure that the shared relationship involving the employee and the employer leads to increased productivity provided the two parties maintain the provisions of the contract.Psychological contract will therefore maintain and sustain this employee-employer relationship overtime (Rousseau & Wade-Benzoni 1994). According to Morrison (1994), psychological contract ensures that the human side of organizations is brought into play and is also useful in times of risks.
Sparrow & Hiltrop (1997) identified two main tasks that the psychological contract can help to accomplish-the prediction of the level of output that the employers will get from the employees and the prediction of the manner of reward that the employee will obtain for his time and effort. The primary function of the psychological contract can also be seen as the reduction of uncertainty thereby giving employees a greater sense of predictability
Many firms, especially Western firms, that have faced a stiff competition for quality employees have looked for ways to represent themselves as an ‘Employer of Choice’ in their diverse businesses (Lenaghan & Eisner 2006). This race by different firms to become the ‘Employer of Choice’ has further necessitated interest in psychological contract because it has been seen to play vital roles in this regard. The psychological contract is therefore a part of EOC strategies. EOC strategies are the efforts of organizations to develop ‘employer brand strategies’ that make use of some particular marketing concepts and principles in order to market firms to their intended labor markets (Backhaus &Tikoo 2004). In order to be able to implement these EOC strategies, there must therefore be the understanding of what the firm is ready and able to offer that will attract the high-quality employees that it desires and will impact on its productivity. The concept of psychological contracts has thus been an area in human resource management that has received much attention in recent times (Cullinanane & Dunlon 2006).
It is however important to note that some authors have recently identified a need for the expansion of the scope of psychological contracts. Coyle-Shapiro et al (2004) argue that there are theoretical limitations and issues of practical implementation that necessitates the need for a broader approach to the theoretical perspectives that form the basis of the construction and management of the psychological contract. O’Donohue (n.d.) therefore suggests that everyday marketing language and conceptsuch as ‘value’ and ‘price’ should be employedin conceptualizing and managing the psychological contract more effectively. They argue that using such concept and language will help in broadening the understanding of the psychological contract and its role in the creation of a viable EOC position in scenarios of tight labor markets.
2.4 Causes and Consequences of the psychological contract
The psychological contract is influenced by various important factors that may originate from the employee or the organization itself. The contract also in turn has an influence on some attitudes and behaviors. Guest & Conway (2000) put into consideration these factors and designed a model that portrays the causes and the consequences of the psychological contract. This model identifies the individual and organizational factors and influences of policy as the causes while it recognizes the attitudinal and behavioral consequences.


Guest & Conway (2000) discovered that some factors had more influence than others. Examples are the human resource practices and direct participation (the extent to which employees have the power to make decisions and independence), which have important influence on the status of the psychological contract. Also according to a survey done by Turnley & Feldman (1998), organizational changes have a harmful effect on the nature of the psychological contract.
2.5 Development of the Psychological contract
According to Maguire (n.d.), ‘psychological contracts first emerge during pre-employment negotiation and are refined during the initial period of employment’. Thomas & Anderson (1998) note that it is within the first three to six months after an employee joins a business organization that the fundamentals of the psychological contract will be brought into reality. This means that the initial employee-employer relationship is created on a set of expectations about the probable relationship. Rousseau (1995) and Louis (1980) agree that employees initially have high expectations towards the employer and have an optimistic view of the work relationship. However, as fresh employees use more time in the organization and seek out and analyze information from different sources within the organization, their expectations will adjust more to actuality. Rousseau(1995) therefore notes that the perception of new employees of the promises of the organization will weaken, while their personal promises towards the organization will increase.
The figure below helps to illustrate the relationship between psychological contracts and the goals of the organization. According to Shore &Tetrick (1994), the development of a psychological contract is a ‘deliberate, goal-oriented process’. Therefore, due to the interdependence between the goals and the contract, there could be a disparity in the perceptions of obligations between the employer and the employee in cases where there is an adjustment in the goals of the organization.

2.6 Content of the psychological contract
As earlier stated, psychological contracts are based upon expectations, obligations and promise that exist in the employee-employer relationship. De Vos, Buyens and Schalk (2001), using the existing benchmarks and some studies, describe the psychological contract through a multidimensional approach having five key dimensions that make a distinction between organizational promises and employee promises. These dimensions are illustrated in the tables below.


BuyensJob2.6 Types of psychological contracts
MacNeil (1985) categorizes psychological contracts into either transactional or relationalcontracts and other authors seem to agree with this delineation. Transactional contracts are the contracts that can be represented monetarily, are specific and has a limited duration (Maguire n.d.). According to Ven (n.d.), ‘two dimensions reflect the transactional psychological contract: narrow involvement in the organization, limited to a few well-specified performance terms; and short term duration, two to three years at most’.
In contrast to the transactional contract, relational contracts are rather open-ended and have little or not well defined specifications. Relational contracts are aimed at establishing and maintaining a bond that involves both monetary and nonmonetary exchanges (De’Vos&Buyens 2001). According to Rousseau (1990), transactional contracts have a narrow focus and have more tangible and concrete terms, while the interpretation and understanding of relational contracts by both parties are subjective. The components of relational contracts include job security, employee training and career development, while that of transactional contracts involves components such as high pay, performance based pay and short term employee investments (De’Vos&Buyens 2001). Rousseau & Wade-Benzoni (1994) expressed the aim of transactional contracts as ‘a fair day’s work for a fair day’s pay’. Guzzo & Noonan (1994) also explain that relational contracts are broader than the transactional contract, in that they involve the relationship between each employer and the organization.
These two contracts can also be distinguished based on the type of exchange-economic or social. Since, transactional contracts are monetizable, they can be related to economic exchange, whereas relational contract can be linked with social exchange.According to Emerson (1981), economic exchange bases its assumption on the belief that transactions are short term and are not ongoing processes. He further notes that the framework of economic exchange excludes components such as obligation, trust and interpersonal commitment to exchange partners. On the other hand, social exchange is the relationship that exists when the receiver of a service is obligated by the supplier of the service, and the receiver must therefore provide benefits to the supplier (Blau 1964).The elements of both the transactional and relational psychological contracts can be found in an organization. According to Rousseau and McLean (1993), the fraction of relational components to transactional components within the psychological contract in any organization is dependent on factors such as the status of the employment, the human resource benefits, time span of the relationship and practices of the organization.


Owing to the peculiarities of the psychological contract, companies do not however realize they are committing a violation of an important though unwritten social contract between them and their workers and they are not aware of the result of this violation (Yankelovich 1993). The employers and investors are now benefiting from these changes in terms of increase in productivity and high profit returns to share holders (Capelli 1997).
Just like Kissler (1994), Sparrow (1997) also outlines some key features that differentiate the ‘new’ psychological contract from the old one.

Table 2.5. Sparrow’s differentiation between old and new psychological contracts. Source, Sparrow (1996)





2.8 Psychological contracts in public organizations
Some authors have studied the peculiarities of the psychological contract in the public sector. Observing the public sector in England for example, Coyle-Shapiro & Kessler discovered that there was a reciprocal association that existed between the views of employer’s fulfillment of their obligations and the actions of individual employees. When there is a perception of the fulfillment of the employer’s obligations, it will in turn result in a positive influence on the obligation and fulfillment of the employees. Different authors have also looked at psychological contracts in the public sector and have compared it with other sectors. O’Donnell and Shields (2002) observed reactions to performance management practices in the Army and Finance-Administration agencies in the Australia, exemplifying what is obtained in the public sector. Expectations were found to be weak in the Army agency because the employees have come to term with the limitations explaining the unchanging nature of the contract. They however realized that there was the evolution of a new psychological contract due to dissatisfactions and dishonesty that existed in the finance agency. According to Cassar (2001), it was observed that the breach of psychological contracts with Maltese public service employees negatively impacted on trust, dedication and work contentment.

Janssens et al (2003) examined the various types of psychological contracts that existed amongst Belgian employees. They found that civil servants were faithful to the psychological contract which shows that the Belgian employees had strong expectations and a high level of loyalty. They however lacked a good level of personal investment.
Coyle-Shapiro & Kessler (2003) also later found a positive association between commitment and achievement of job security and also between career advancement obligations and extra-role behavior in the public sector.

Their expectations were based on equivalent treatment and lasting involvement.
Lemire & Roouillard (2005) found important relationships between the contravention of the psychological contract and organizational dedication, neglect and exit in Quebec.

2.9 Types of commitment in the public sector
Different literatures have identified diverse types of commitment such as work involvement, occupational commitment and job involvement. It is therefore important to consider the different dimensions of employee commitment in order to understand behavioral outcomes (Meyer et al 1993).
2.9.1 Organizational commitment
Allen & Meyer (1990) define organizational commitment as ‘a psychological state that binds the individual to the organization’. They also describe organizational commitment using a three dimensional concept. The first is the affective commitment which according to them ‘refers to the employee’s emotional attachment to, identification with, and involvement in the organization’ while ‘the continuance commitment refers to an awareness of the costs associated with leaving the organization’ (Meyer & Allen 1991). The third is the normative commitment which ‘reflects a feeling of obligation to continue employment’ (Meyer & Allen 1991). The existence of the three dimensional concept has been tested by some authors.
According to Perry & Wise (1990), the affective and continuance dedication are important elements of the commitment of public employees. Liou and Nyhan (1994) further confirm the presence of the affective and continuance commitment amongst public employees. Goulet & Frank (2002) did a comparison between organizational commitment in private company, public agency and NGOs. They found out that the level of commitment was lowest in the public agency while it was highest in the private sector.
2.10 Public service motivation
Perry & Wise (1990) defined the concept of public service motivation as ‘an individual’s predisposition to respond to motives grounded primarily or uniquely in public institutions’. Individuals who are therefore well motivated towards public service are more likely to work for public administrations, give optimal performance on the job and be more sensitive to non-extrinsic rewards (Perry & Wise 1990). Perry (1996) later defined public service motivation using four dimensions which inclde:
1. ‘attraction to public policy making,
2. commitment to the public interest,
3. compassion, and
4. Self sacrifice’.
Brewer et al (2000) also consolidated on the findings of Perry by identifying four separate notions of public service motivation amongst servants. According to Brewer et al (2000), ‘Samaritans are strongly motivated to help people’ while ‘Communitarians are ‘motivated and stirred by civic duty and public service’ (Brewer et al 2000). ‘Patriots act for causes much bigger than themselves, protecting, advocating and working for the good of the public’ and ‘Humanitarians are motivated by a strong sense of social justice and public service’ (Brewer etal 2000). However, Alonso & Lewis (2001) found that there is no concrete connection between the public service motivation described by Perry and public job performance.
Wright (2001, 2004) used goal and social cognitive theories to investigate job motivation in the public sector. About half of the variation in work motivation can be explained using goal specificity, job goal difficulty and self efficacy (Wright 2004). Self efficacy according to Bandura (1986) is the confidence in ‘ones capabilities to organize and execute courses of action, required to attain designated types of performance’. Wright (2004) further notes that organizational goal specificity, goal conflict and procedural constraints which are the work context variables, may be important in the understanding of employee work motivation.

3.1 Introduction
According to Patton (2002), methodology is a compilation of a study’s methods, strategies, philosophies and procedures. This chapter is therefore based on the methodology that is employed in achieving the goals of this study. Data and methodology are dependent on each other (Leedy and Ormrod 2005). Therefore the nature of the data that is required will determine the type of methodology that will be used in any research. Therefore, considering the nature of the data that is needed in examining the nature of the psychological contract and ascertaining how it is being managed, this chapter discusses the approach that will be taken to arrive at the results.
3.2 Research Design
This research uses the research sequence designed by Gill and Johnson (2002). The 7 step sequence of Gill and Johnson (20020) begins with identifying a broad topic which in this case will be the psychological contract as a whole. The steps are then followed sequentially until the findings are presented. The proposal already gives a platform on the approach that will be used in the research. The plan will depend on the type of data that will be gathered. The information that has been collected is then scrutinized for patterns and explanations on how the psychological contract is being managed in the public sector are presented.
There are two widely accepted types of research methods namely the qualitative and quantitative methods. For the purpose of studying how psychological contracts are being managed in the public sector, both the qualitative and the quantitative methods will be employed (triangulation).


3.2.1 Qualitative research
According to Atkinson (1995), ‘qualitative research is a form of social enquiry that focuses on the way people interpret and make sense of their experiences and the world in which they live in’. The qualitative research is a form of scientific research that seeks answers to questions, uses a systematical set of predefined procedures in answering the questions, collect evidence and manufacture findings that can be applied beyond the immediate scope of the study (Mack et al 2005). Unlike the quantitative research, the qualitative research method seeks to gain understanding of the subject area as opposed to producing a rational explanation for it (Dawson 2005:25). Also, while quantitative research has its basis on the identification of a range of variables, qualitative research tries to understand a situation through a holistic approach. According to Shank (2002), qualitative research ‘is a form of systematic inquiry into meaning’. It is systematic because it follows predefined and accepted guidelines that have been designed by the research population. It is empirical because it is based on the experience of the respondents and it is an inquiry into meaning because it explains how the respondents make sense of their own experiences. This study therefore seeks to understand the experiences of employees and employers in the management of the psychological contract. Reasons to use qualitative research
According to Ospina (2004), some particular cases favor the use of qualitative research over quantitative research and these include;
• To investigate a trend that is yet to be researched
• To augment an existing knowledge about a subject that has been previously explained through quantitative research
• To gain better insight into a subject by using both the quantitative and the qualitative research methods, called triangulation. This particular study uses this type of synergy between the qualitative and the quantitative design to explain the management of psychological contracts in the public sector
• To understand any intricate trend that cannot be explained through quantitative research
• To attempt to understand any social trend from the experience of the players involved instead of using outsiders to explain it subjectively Merits of the Qualitative Research Method

• It is flexible and can be adjusted in cases of unexpected ideas,
• It is more relevant for practitioners
• It can study social meaning and dimensions that are symbolic,
• It allows for the development of fresh ideas and theories,
• It is sensitive to contextual factors
(Conger 1998; Bryman et al 1988; Alvesson 1996 as cited in Ospina 2004) Demerits of the Qualitative Research Method
• The reliability of the qualitative data can be questioned
• It could consume time in some cases

3.2.2 Quantitative Research
According to Kumar (2010), in ascertaining the extent of diversification, it is imperative to use both the qualitative and the quantitative research in explaining a phenomenon. Therefore, in order to further explore this research subject, a quantitative research method is also employed (i.e. triangulation). According to Grix and Watkins (2010), quantitative research method involves ‘quantifying and quantity’. It focuses on variables that the researcher is willing to study and expresses them in parameters such as frequency, amount, and differences. Advantages of Quantitative Research
• It is a more objective way to obtain information as opposed to the qualitative research
• It is easy to stick to the aims and objectives of the research Disadvantages of Quantitative Research
• It does not reveal why the respondents choose a particular option over another
• The researcher has little control over the situation in respect to individual respondent
• It discourages the continued investigation of a particular research

Table 3.1 Differences between qualitative and quantitative research Source Introduction to



3.2.3 Triangulation
A handful of researchers believe that both the qualitative and quantitative research methods can be combined. Triangulation, according to Atkinson (1995), ‘is the process by which several methods (data sources, theories or researchers) are used in the study of one phenomenon’. There are four distinct types of triangulation: triangulation of methodologies, theories, investigator and data. In exploring the psychological contract in the public sector, the triangulation of methodologies is used. There are two main forms through which researchers use the triangulation of methodologies: the intra method triangulation and the inter method triangulation (Ospina 2004)

3.3 Research Strategy: Case Study
It is important for the researcher to use a case study as it helps to better understand the trends and events that defines the research and according to Bryman (2000), the case study approach aids in the profound study of the phenomenon on which the research is based. Case studies are used in describing the entities that form a single element. The case study is good because it provides information that are lacking in other methods and it employs different data collection method in obtaining the information. This study uses the case study approach in describing the psychological contract in the public sector. It must be noted however that the case study approach has its own limitations. According to Hancock (2002), the case study approach may not provide information that is the true representative of what is obtained in general. In this case, the information obtained in the public organizations may not be truly representative of the nature of the psychological contract in the public sector in general. However, this study can provide sufficient information that will give insight that can be to a large extent exemplary of what is obtained in most pubic organizations.

3.3.1 Advantages of the Case Study Approach
According to Garger (2010), the advantages of the case study approach over other approaches include:
• It can be used in the study of rare phenomena
• It is very helpful in the extraction of ideas about behaviors
• It can be used as primary or secondary source of data
• It can be used in both qualitative and quantitative research methods

3.4 Data Collection
The data collection process can be divided into two: the primary and the secondary. According to Sapsford and Jupp (2006:142), the primary data are the fundamental information that the researcher can rely upon to provide raw materials for the researcher. The secondary data include all public available information that can be accessed relating to the subject matter and this may include books, journals and the internet as a while. In ascertaining the nature of the psychological contract and to investigate its management, the primary data sources will be from questionnaires and interviews that will be obtained from the employees and administrators of three government establishments; National Health Service, DVLA and the Inland Revenue. The secondary data source for this study will include all the external sources such as the internet and journals.
3.4.1 Interviews
Interviews were used in this study as a major primary data source. There are three identified forms of interviews: structured, semi structured and unstructured interviews
Structured interviews are designed in a way that every respondent gets to be asked the same set of questions in the same way and the questions are structured in a way that the answers can be limited to a set of possibilities. Due to this, a similarity has been said to exist between a structured interview and a questionnaire.
Semi structured interview on the other hand depends on the use of open ended questions. This means that the interviewer and the respondents, depending on the course of the interview, can explore the details of some particular areas if it becomes necessary. Here, the interviewer can help the respondents understand the question better by using clues or illustrations that can help the respondents grasp the details of the question better.
In unstructured interviews, there are usually little predetermined questions. The interviewer uses his/her discretion to ask questions which will follow the course of the previous answer that was provided by the respondent. In this case, there are no preconceived plan and structure in approaching the respondents
There are some guidelines that an interviewer should follow in order to maximize the interaction and according to Patton (1987), some of these guidelines include:
• The interviewer should focus on the research and should not deviate into questions that are not relevant to the research
• The respondents should be allowed to express themselves in their own word to better capture their views
• The best type of interview that can appropriately do justice to the aims of the research should be used
• There should be an understanding of the diverse kinds of information that can be obtained through interviews such as feelings, behavioral data, knowledge and background information
• There should be an appropriate planning on how the interview can be best sequenced to address every area of the subject matter
• The questions should be clear and easily understood. Ambiguity should be avoided
• The interviewer should give necessary attention to the responses so that the respondent will feel he/she is been followed
• Tape recorders can be used in order to capture the exact response of the respondents. This will be useful in analysis.
• Active effort should be taken to ensure the reliability of the information that is obtained from the respondent
The major aim of interview in this research is to investigate the perceptions of the employees and the employers towards the psychological contract. Questions were directed at the employees in order to ascertain their expectations from the employees and also to explore how satisfied they have been with the employee-employer relationship. Their experiences were sought as to how changes in the psychological contract have influenced their efficiency at work. Advantages of Interviews
According to Kumar (2010), some of the advantages of the interview include:
• Due to its simplicity, information can be easily obtained
• The interviewer can take control of the interview and determine its direction and pace
• Interviews are helpful in some cases where other methods have failed
• The information obtained in interviews are usually detailed and comprehensive Disadvantages of Interviews
• Interviews place too much control on the interviewer
• There may be perplexity either due to a misunderstanding by the respondents or the interviewer
• It is not as cost effective as other methods
• Much work is still required to be done after the interview has been concluded

3.4.2 Questionnaire design
Questionnaires are a cost and time effective way of gathering data. The aim of the use of the questionnaire in this study is to gather quantifiable data of the nature of the psychological contract in the public sector. The questionnaires were designed using the likert scale. The responses were dichotomous in that they offered a choice of two answers, they were normal in that there were no reference or positional meaning for the values. The likert scale was also used in that the respondents were offered a position and they were to signify their extent of agreement and the rating is also used in which the relevance of a particular attribute is rate. According to Edwards and Kenny (2011), the likert scale is useful in the accumulation of data for efficient and effective analysis. The four-point or the five point likert scale can be used. An example of the four and the five point likert scale is shown below



The format of the questionnaire was designed to gather quantifiable specific data from employees in the public sector in the three government establishments. The questions are designed to ascertain the nature of the psychological contract in the public sector and how it is being managed. The respondents are to be followed up after the questionnaires have been sent in order to ensure that they are duly completed and that the information given is reliable. Advantages of Questionnaires
• It is a time saving and cost effective method that can be easily used in obtaining data about a research (Beiske 2002)
• The information that is gathered can be easily analyzed and interpreted
• It ensures that the same set of questions are answered by the respondents with limited options (Bernard 2006) Disadvantages of Questionnaire
• The respondents may be in a hurry and may not take time to internalize the questions before giving answers
• There is a high level of inaccuracy that is associated with questionnaires (Milne 1999)
• In cases when the question is not understood by the respondents, there is no opportunity for the provision of further explanation (Milne 1999)

3.5 Characteristics of the sample
The study engages non-probability convenient sampling method in the selection of respondents for the collection of the primary data. This was based on convenience, proximity and availability. Three government establishments were selected; NHS, DVLA and Inland Revenue. The respondents were picked based on their employment or their administrative role at the establishments.
3.6 Data Analysis
The information that is gathered through the qualitative and the quantitative research methods will be analyzed and will be observed for consistent patterns. The thematic framework analysis is used to in the analysis of the qualitative research data. The thematic framework analysis identifies, explores, defines and explains the elements of a research data (Bryman and Burgess 2004). The thematic analysis identifies consistent patterns that are present in data that are otherwise unrelated. The SPSS Prediction Analysis Software was used in the analysis of the primary data.
3.7 Data Interpretation
There are diverse ways by which data can be represented and they include graphs, charts (pie chart, bar chart) and data tables. Data can also be represented using more than one form of representation.
According to Newton and Bristoll (2009), data interpretation involves two steps:
• Information must be obtained from the charts or graphs that have been used in representing the data
• The information will be appropriately manipulated in order to obtain the necessary information
3.8 Research Limitation
The major limitation to this study is the limited amount of respondents that were used. If more public organizations were used, it would have brought a better pattern to compare and contrast the management of the psychological contract in the public sector.
3.9 Summary
The data is important to the author in order to be able to carefully examine the nature of the psychological contract in the public sector and to ascertain the management of the psychological contract in the public sector.
The results and the analysis of the data that have been gathered will be discussed in the next chapter.

4.1 Introduction
This chapter presents the data derived from the use of quantitative and qualitative research tools – questionnaires and face-to-face interviews – as described in the preceding chapter. The adoption of the triangulation method based on a rationale explained in the chapter on methodology has yielded both quantitative and qualitative data, which would be presented in various forms as appropriate. Also included in this chapter is the analysis of the data derived from the interviews and questionnaires.

4.2 Data derived from the questionnaires
A wide range of workers in different cadres in the public sector took part in the questionnaire survey. These respondents were selected at random and asked to answer a set of predetermined questions with the aim of fulfilling the following objectives:
– Understanding the background of the participants: This information was necessary for the researcher to gain an understanding of the background of the respondents and how this may have influenced their responses to the questionnaire, and later to the interviews.
– Ascertain the expectations employees and employers in the public sector have of each other.
– Measure the understanding of the psychological contract among the respondents
– Evaluate the management of the psychological contract in the public sector as reflected by the participants’ assessment.
– Evaluate the fulfillment of the psychological contract
– Identification of changes that would be necessary in order to have a better psychological contract that better helps in the achievement of organizational objectives.

As stated earlier, twenty respondents were randomly selected from three randomly selected public establishments in the United Kingdom, particularly the National Health Service (NHS), Inland Revenue, and the Driver and Vehicle Licensing Agency (DVLA).

4.2.1 Type of respondent
Based on the questionnaire survey conducted, the percentage of respondents that were employed as workers in the three establishments were 60% as opposed to the other 40% who served in different administrative capacities, and can be regarded as employers. This is shown in the chart below (Fig 4.1).


Figure 4.1 Type of respondent. Source: Research data

This information was necessary in order to be able to categorize the respondents and be able to understand their views further. It is well understood that the expectations of the employee are quite different from those of the employers as regards the psychological contract. Therefore, it is important to know the status of the participant in order to make valid deductions from the other responses.

4.2.2 Do you think there is fairness and trust in the relationship between the employees and employers in your organization?

In response to this question, 75% of the participants believe that fairness and trust exist in the relationship between employers and employees. On the other hand, one quarter of the respondents (25%) claim that this is not present in their organization.


Figure 4.2 Presence of fairness and trust in the relationship between employers and employees in the organizations. Source: Research data
This question was necessary in order to understand the state of the psychological contract which exists in the organizations. According to (Willems, Janvier&Henderickx 2004), it is important to state the context and form in which the psychological contract operates before full comprehension can be attained. And the state in which it exists is important in understanding its effects on a range of human behaviors and attitudes. The state of the psychological contract in the three organizations been studied in relation to fairness and trust shows that it is more or less present in all three organizations as a larger proportion of the respondents claim that there is fairness and trust in their establishments (75%). However, this needs to be taken further, hence the need to rate the level of the fairness and trust.

4.2.3 How would you rate the fairness and trust in your organization?


Figure 4.3 Rating of fairness and trust in the organizations. Source: Research data

Of the 75% that claimed that there was fairness and trust in their organization, only 20% rated this as excellent. Most of them claim that the state of the psychological contract was good (40%). 20% said that it was good. From this, it can be said that the state of the psychological contract is generally above average in all the establishments, more so that only 20% (10% – fair; and 10% – poor) said that it was below average in their establishments.

4.2.4 In terms of entitlements, which of the following clusters do you expect in your own organization?

This question was aimed at determining the type of psychological contract that can be found in the organization. Since one of the objectives of the questionnaire was to determine the expectations of employees concerning the psychological contract, it would be necessary to find out the expected entitlements of the employees towards their employer in the public sector, in this case, the three establishments using a cluster analysis. The breakdown of the clusters is as follows:
 Cluster A – carefulness regarding arrangements, tangibility, long-term involvement, personal treatment, and equal treatment;
 Cluster B – tangibility, long-term involvement, personal treatment, and equal treatment;
 Cluster C – long-term involvement, personal treatment, and equal treatment;
 Cluster D – personal treatment, and equal treatment
 Cluster E – equal treatment.
And the cluster analysis of the responses is presented below:


Figure 4.4 Expected entitlements. Source: Research data

Cluster A represents 30% of the respondents, and Cluster B was chosen by 40% of the respondents. In other words, this can be said that a large proportion of the respondents have very high expectations of their employers in their organizations. Combining the two clusters, it means almost all of the five entitlements were expected from the organizations in which the respondents work. According to Janssens et al (2002), it should be expected that employees with a strong psychological contract would very high expectations, which these participants have, and would also be prepared to offer a lot more in return for the fulfillment of these expectations.

4.2.5 What is the most important thing you prepared to offer if all your expected entitlements are met?

A range of five options were given to this question for respondents to choose from. The options are derived from Janssens et al (2002) study in which these options were used to determine employee obligations especially as regards the willingness to offer the employer something in return if all or most of the expected entitlements are met.



Figure 4.5 Employee obligations. Source: Research data

As shown in the pie chart above, the bulk of the respondents preferred to give loyalty if all their expected entitlements are met. According to Willems et al (2003b), employees in most cases are willing to offer their employers a lot in return if and when their expectations are met. In this case, it seems the prevailing obligation that the respondents were willing to give in return was loyalty. This is similar to the results of the study by Janssens et al (2002) where most of the employees were willing to offer loyalty in return for their high expectations. Also, personal investment was chosen by only 20% of the respondents, similar to what Janssens et al (2002) found out that most employees, especially in the public sector, are not willing to offer personal investment, but prefer to yield their loyalty. Flexibility and respect for authority were each chosen by 5% of the respondents. None of the participants even chose open attitude at all.
4.2.6 Do you believe your organization has made promises – implicit or explicit – or commitments on a broad or limited range of issues?


Figure 4.6 Organizational promises. Source: Research data

85% of the respondents believe that their organizations have made promises – whether implicit or explicit – on a range of issues, while 15% do not believe. Apart from looking at the psychological contract from the aspect of employee expectations and obligations, another viewpoint is from the aspect of promises. According to Guest and Conway (2000), the psychological contract can be seen as “the extent to which workers believe that promises and commitments made to them by the organization have been delivered, the level of fairness of treatment associated with promises and the degree of trusting management to continue to deliver promises in the future”. This is why it is necessary to know whether promises have been made by the management or employers. But to buttress this further, more information is needed to determine whether these promises have been kept.
4.2.7 Do you believe that the promises made by your organization have been fully kept, kept to a large extent, to some extent or not kept?

Figure 4.7 Have the organizational promises been kept? Source: Research data

As shown in the pie chart above, only 10% of the respondents believe that the promises made by their organization have been kept far more than they expect. A sizable proportion, 30% claim that the promises have been kept more than they expect. 25% said that it was just as they expected; 30% less than they expected, and 5% far less than they expected. This is similar to what was found in the Willems et al study (2003a) in which participants answered the question that was trying to find out to what extent the organization meets up to their expectations concerning different things by choosing ‘far less than I expect’, ‘less than I expect’, ‘just as I expect’, ‘more than I expect’ or ‘far more than I expect’. The largest proportion of the participants in the Willems et al (2003a) study chose ‘just as I expect’ as the way in which their expectations have been met, compared to what was found in this study in which 25% said it was just as they expected. But overall, it can be said that in most of the cases, employee expectations are met albeit in at different levels. And this is a very vital point in any psychological contract as the expectations of the employees concerned needs to be met before any corresponding obligations on the part of the employee can be delivered, although in many cases, some of these expectations are not explicitly stated and are usually based on what the employees expect or believe that the employer has promised him or her. This is why in the case of this study, no mention was made explicitly of any promise, but made open for the participant to choose from – whether implicit or explicit promises.

4.2.8 Are you satisfied with the pay and promotion in your organization?


Figure 4.8 Satisfaction with pay and promotion. Source: Research data

Only 40% of the respondents are satisfied with the pay and promotion in their workplace, as opposed to 60% who are dissatisfied with the treatment of workers in their workplace in the area of pay and promotion. The area of pay and promotion is a useful tool to evaluate the fulfillment of the psychological contract in the workplace. And as shown in the pie chart above, it can be said that employees in the public sector (particularly the three organizations collectively studied) have a poor psychological contract. The relativity of this psychological contract can be made in comparison with other sectors such as the private sector, local government, and health sector with regard to employee wellbeing, pay and promotion, and fair treatment as shown by Guest and Conway (2000). To buttress this further, a survey in 2000 by the CIPD showed that employees in the central government, also a part of the public sector, have a poorer psychological contract than most other employees in other sectors of the economy (Willems, Janvier & Henderickx 2004). Other researches such as the one done by Coyle-Shapiro and Kessler (2003) have also shown that there is a wide discrepancy between what is paid and the expectations of workers in county councils, another part of the public sector. Several reasons have been attributed to this, and which have been discussed in the second chapter.

4.2.9 Do you trust the senior management of your organization to look after your best interests?



Figure 4.9 Best interests. Source: Research data

To this question, 35% of the respondents answered in the affirmative, while 65% of the respondents indicated that they do not trust the management of their organization to look after their best interests. And the implications of this are much. This might have been because of the problematic attitudes towards the management as a whole. According to Guest and Conway (2000), employees in the public sector, compared to other sectors especially the private sector, feel less fairly treated, and they also believe that the expectations or promises made to them by the management (which are usually perceived promises) are not being met. Therefore, this leads to dissatisfaction, and indirectly to other things such as lack of trust, less performance, and in the long run, to decreased employee retention.

4.2.10 Would you move to another sector of the economy if given the chance?



Figure 4.10Would you move to another sector of the economy? Source: Research data

The response shows that 55% of the respondents agree to move to another sector of the economy if given the chance. This shows the extent of employee dissatisfaction which would lead to increased employee turnover, and the attendant effects such as loss of productivity, increased competition as the employees move over to competitors, and loss of knowledge and know-how gained over the period of association with the organization. But all these boil down to the poor management of the psychological contract within the organization. On the other hand however, 40% of the respondents strongly disagree with moving, as they prefer to stay on in the organization. 5% of the respondents are indifferent, as they neither agree nor disagree with moving to other organizations in other sectors of the economy.
4.3 Data derived from the interviews
After obtaining data from the questionnaires, the researcher embarked on a semi-structured interview with seven of the respondents in order to get more detailed information as to why they chose some of the responses they did choose in the questionnaire survey. The interviews focused on deriving first-hand information about the point of view of the respondents as regards the nature of the psychological contract in their organizations. The table presented below gives a brief summary about the seven interviewees:




For the purpose of this report, only snippets of the interviews would be presented here.

Question 1: In your years of experience in your organization, what are the things you expect of your employer? And what are the things your employer can expect from you?

R1: “I expect the administration of the organization to be able to provide an atmosphere of trust, fairness, and equity. I also believe that the administration should be able to keep its promises when made . . . and sincerity too.” My employer can expect my loyalty and dedication to my work.”
R2: “I would want my employers to respect my rights as a worker. I also expect that each party keeps its own end of the agreement – mine as an employee to do the job I am supposed to do at the right time, and the management too, to pay me as at when due, promote me at the right seasons . . .”
R3: “. . . recognition of my work . . . The employer should keep up with its own end of the bargain . . . in areas such as pay and promotion, fairness, security, training and development. . . and at the same time, my employer can expect me to do my job right.”
R4: “I expect my employer to recognize my qualifications and give me the appropriate job to do which I would do right. I also expect him to reward my good service in terms of pay which should be regular and based on merit. And when this is done, he can expect to my commitment and loyalty to the job. If my job is well rewarded . . . putting more time and hours to the job. . .”
R5: I expect to be promoted to the next level . . . when due. I also expect the employer to pay me at the right time. My employer can also expect my loyalty and maximal input.”
R6: “. . . job security . . . I also want to be paid and promoted . . . which would enable me contribute my own quota to the achievement of the organization’s goals.”
R7: “I expect equal and fair treatment of all workers. All employees also need to be paid as promised, not having to wait for long or not being paid at all. And the terms of agreement needs to be kept by both the employer and the employee . . .”

From the responses, it is obvious that employees have a lot of expectations they want from their employers. And this corroborates the findings of Jannsen et al (2002) who found out that employees expect up to ten dimensions of entitlements and obligations from their employers. Some of the expectations of the respondents include such things as trust, fairness and equity; respect; pay and promotion; recognition; and job security. And they also expect to deliver loyalty, commitment and dedication to their jobs. According to Willems et al (2003b), workers with high expectations are willing to deliver a lot in return especially if their expectations are met. And in most cases, these expectations are usually not completely clarified as shown by the responses to the following question.

Question 2: Were the expectations you explained earlier clarified before you began to work in the company?

R1: “No, but we discussed wages and salaries in the terms of work . . .”
R2: “Not exactly. The salary for the kind of job I wanted was stated . . . and I knew I would get promoted after every three years of good service.”
R3:“Yes. We clarified almost all of the issues during the meeting . . . my salary at the right time, and opportunities for training and development.”
R4:“Yes and No. Yes because we talked about the number of hours it would take to do the job, and how much I would be paid. No because we never talked about commitment and loyalty, but I believe that that would be deserved when the company does its own part . . .”
R5:“No. But the organization should know when to promote its employees. They don’t have to be told that.”
R6:“No one discusses job security at the beginning of a job . . . but how much I would be paid was already stated, and it seems we kind of agreed on that before starting.”
R7:“They weren’t exactly clarified at the beginning, but as time went on, they became clearer what my employer wanted from me, and at the same time what would be my reward for a good job . . .”

Most of the respondents confirmed that their expectations were not exactly clarified at the beginning of their work at their present organization. At least, Respondents R1, R2, R4, R5, R6, and R7 confirm this. This is in line with what Maguire (n.d.) states that few of the expectations in an employee-employer relationship would have been specifically discussed at the onset. Usually, most are only inferred and as the organizations and individuals involved change are also subject to change.

Question 3: What do you think should be the relationship between employees and employers in an organization?

R1:“I believe in transparency . . . there should be trust in the relationship . . .”
R2:“I think the employer and employee in an organization must be able to come to an agreement or compromise as regards some things . . . there should be trust and sincerity on both ends . . .”
R3:“. . . trust and fairness . . .”
R4:“There should be a high level of trust and sincerity in any relationship . . . especially a business relationship. Each party should also be open to each other as regards expectations and obligations.”
R5:“I think there employees should be treated with fairness . . . trust . . .”
R6:“I believe . . . in a healthy working relationship which cannot survive without trust”
R7:“. . . there should be transparency, trust, sincerity, fairness, and equity in any relationship between an employer and employee. Also, each party must have integrity . . . being able to keep to the terms of the agreement.”

Some of the recurring themes in the responses of these participants include “trust”, “sincerity”, “transparency”, “fairness”, and “integrity”. This means that the respondents believe that these elements are vital to the working relationship between the employee and the employer, just as they are vital to any other relationship. Although it was not asked whether these respondents were offered these in their own employee-employer relationships, Guest and Conway (2000) found out in their own study that “93% of central government workers,88% of local government employees and 85% of health sector workers indicated their employerpromised them fair treatment, as opposed to 76% in the private sector.” From this, it can be said that a large proportion of the workers in the public sector have access to fairness in treatment, although the same cannot be exactly concluded for other elements such as trust and sincerity.

Question 4: Do you feel your inputs are commensurate with the rewards you receive? Could you give reasons why?

R1:“In a way, I’d say yes, but not completely. I am being paid at the appropriate intervals, but other rewards such as promotion, recognition for a job well done, and development do not come as regularly as they should have been . . .”
R2:“No. I put in more than I’m paid for . . . not because I want more money, but for me to keep my job.”
R3:“Yes. I am being paid for what I do.”
R4:“Not exactly, because at times, I perform more tasks more than what is required of me. And at the same time, I may not do up to what I am expected to do. Really, there is no way of measuring . . . being paid for what I do.”
R5:“No. I am not being appropriately rewarded . . . I am being underpaid.”
R6:“No. I don’t think that it is all about money . . . I’m not being given opportunities for training and development, health benefits, pensions, control, etc . . . like colleagues in other places.”
R7:“I’d think so.My input as an employee deserves to be rewarded, which I get at the end of the month, as agreed”

In terms of balance between employee input and rewards, there seems to be a dissension between the responses of these respondents, although a larger proportion of them answered “No” for different reasons (Respondents R2, R4, R5, and R6). The most common recurring factor here is pay which is the most common physical form of reward. However, some themes such as “opportunities for training and development”, “health benefits”, ”pensions”, “control”, “promotion”, and “recognition” also appeared. As it has been described in the second chapter, a balance between employee input and rewards for this input is necessary for any successful psychological contract. When employees see and believe that whatever input they put in would be adequately rewarded, they would be motivated to do more, and in the long run, increase productivity which is one of the major achievements of a good psychological contract.

Question 5: What would you say your attitude is concerning how your organization is run?

R1:“I understand the nature of things up to an extent, and I am comfortable with what is going on.”
R2:“I would say I am okay with the state of things with the management. But I would have been happier if things were done the right way . . .”
R3:“In a way, I am satisfied . . .”
R4:“I am not completely satisfied because there is no fairness in the way the management deals with its employees. What would make me happy is if the agreement made at the beginning of the job is being kept . . .”
R5:“I am not happy at all because the organization is not fulfilling its own end of the bargain . . .”
R6:“Not sure”
R7:“If left to me, I would say . . . an attitude of trust and commitment . . .”

Employee attitudes are a fall out of the psychological contract. When employees derive their expectations and entitlements, they would have an attitude tending towards the positive. On the other hand however, when these expectations are not being met, the attitude would most likely not be satisfactory. These respondents have shown different attitudes ranging from “satisfaction” and “commitment” to dissatisfaction and “unhappiness”. Although there is no conclusive explanation for why employees manifest particular types of attitudes, but when particular expectations and wants are not met, the attitude towards the organization as a whole, and not just the management alone, becomes problematic (Guest & Conway 2000).

Apart from the needs and expectations of the workers not being met, it has been suggested that dissatisfaction may arise from “the tighter frameworks ofperformance and the recent difficulty of identifying a distinct public service ethos” (Willems, Janvier&Henderickx 2004). This suggests that what motivates the workers to choose a job in the public sector may not be appreciated and valued. However, there are no obvious explanations for this. Also, it may be because the promises made towards the workers may have been generalized for a wide range of worker cadres. But the bottom line is that these respondents have shown that their attitudes are being influenced largely by what goes on in their organizations.

Question 6: What changes would you want to be incorporated in your organization?

R1:“An environment of complete trust and sincerity. The management should have an agreement with the employee and should make sure that this agreement is kept to.”
R2:“. . . promises made should be kept. And if it would not be possible to keep them, then they should not be made at all.”
R3:“The employer should make sure he keeps up with his own end of the bargain in every area especially concerning salaries, employee relations, fairness, and training and development . . .”
R4:“I think that the management should decide on what it is going to offer to workers and stick to it. When employees know what they would be rewarded with at the end of the day, they would be motivated to do their jobs right.”
R5:“. . . to reward workers appropriately and adequately . . . to provide an atmosphere of trust and sincerity.”
R6:“If there is anything to be changed . . . employer-employee relationship. It should be enhanced . . . in terms of communication and transparency . . .”
R7:“Employees should be treated more fairly and all agreements should be adhered to as strictly as possible.”

These respondents have identified different areas they want change in their organization, especially as regards the psychological contract. One vital point they have made is that employers should carry out all the promises they make to the employees. And as it has been said earlier, this is essential to employee attitudes and productivity in the long run. Also, there should be transparency, trust and sincerity in the employee-employer relationship.

5.1 Conclusions
This study was conducted with the main objectives of understanding the nature of the psychological contract in the public sector, identifying how the psychological contract is being managed in the sector, and be able to come up with recommendations on what changes need to be made in order for core organizational objectives to be achieved.

Studies about the psychological contract abound in different sectors of an economy, not excluding the public sector. But this research has been able to shed more light on some issues concerning the public sector, and especially how employers and employees relate as regards the existing psychological contract between them. One of the rationales behind carrying out this study was because of the understanding that many employees and their organizations face challenges in trying to keep up with the constantly changing business environment, resulting from changes in the surrounding economic situations. And in order to be able to keep up with the increasing pressures, an understanding of how the psychological contract enables organizations to effectively manage human resources so as to be able to achieve key objectives that would make them stay afloat becomes necessary.

With a basic understanding that the psychological contract refers to the understanding, expectations and obligations that employers and employees have toward each other, whether written or unwritten, the researcher set out to derive data from public sector workers as regards what their understanding, outlook, and expectations are concerning the employee-employer relationship. And from what was derived, it was discovered that the employees indeed have a lot of expectations and wants. The cluster analysis done revealed that these employees have high expectations. And when inquired further, it was found out that most of these expectations are unwritten. Most of them were actually inferred.

It was also discovered that the rating of fairness and trust was above average in the organizations studied, meaning that the psychological contract in these organizations were well maintained. And as shown in the data obtained, the employees were ready to give in their loyalty as much as their expected entitlements are met. Trust was an element that seemed to be lacking in the organizations as most of the employees did not agree to completely trust their senior management with issues concerning their own best interests. And when asked whether they would be willing to move to another sector if given the chance, a large percentage of the respondents agreed to move on. All this boils down to the importance of managing the existing psychological contract wisely.

It is important that the relationship between employers and employees be saturated with trust, sincerity, fairness and transparency. Earlier studies have shown that these are vital to employee attitudes and productivity. And this research has also confirmed this as one of the changes necessary to achieve core organizational objectives.

Looking at everything as a whole, especially the empirical evidence gathered, there seem to be an element of the psychological contract in the public sector, although the exact measure could not be determined. However, one of the things that was noticed was that there was a high level of expectations, which have been shown by previous researches to be different from what is found in other sectors of the economy (Guest & Conway 2000). It was also observed that the employees value a loyal psychological contract which places an emphasis on long term employment and job security. A lot of promises are also being made in the public sector – especially concerning issues such as pay, promotion, training and development, job security – but rarely completely fulfilled usually because these promises are generalized across different cadres of workers. And therefore, the employees experience constant breaches in their psychological contract as the management seems not to deliver what has been promised earlier.

The first chapter gave a brief background and context of the study. It also presented the aims and objectives of the research. This was followed by the second chapter that presented the results of an extensive literature review, giving a comprehensive and detailed expose on the nature of the psychological contract, its history, definitions, and present understanding of the concept. The third chapter describes the methodology adopted for the purpose of this study based on what has been found in existing literature. The triangulation method was applied based on reasons earlier discussed in chapter three resulting in the collection and analysis of both qualitative and quantitative data. The fourth chapter gave a presentation of the results and analysis of the data generated using the methodology explained in the third chapter. And finally, the fifth chapter presented the researcher’s conclusions based on empirical evidence gathered in the course of this study. It also gave recommendations based on these conclusions, and reasons for future research.

5.2 Recommendations
The researcher suggests that for public organizations to be able to achieve core organizational objectives and to be able to keep up with the constantly changing business environment, this research highlights different ways in which improvements can be made in the management of the existing psychological contract in these organizations. The following recommendations are therefore necessary based on the outcome of this research:
 The management of any organization should plan and decide what the obligations of the employees are and communicate these effectively to those concerned
 Employers should make promises with restraints, and when they are made, must be ready to fulfill them completely.
 The management should avoid anything that would raise the hopes of employees as regards expectations and benefits that have not been earlier agreed upon.
 Employee entitlements should not be generalized, but specified for which category of workers it is relevant to.
 The management should create a forum where employees can voice their concerns and feelings about issues going on within the organization instead of bottling such feelings up for long periods.
 The employers should strive to improve employee orientation.
 The employers should also strive to maintain sincerity, transparency, and trust in their relationship with the employees.
 All workers deserve to be treated fairly, and should be treated as such.
5.3 Further Research
As it has been stated earlier, this study is more of an explorative study. The researcher has been able to look into the current nature of the psychological contract in a few organizations to see if it exists, and if it exists, to see how it is being managed. However, further research is still necessary based on the limitations which were experienced during the course of the study.

This study is a small scale research which focuses on a few workers in three different organizations and this limits the scope of this study. Further research would be needed to confirm the preliminary results generated in this study. Also, a large scale research comprising a large number of employees cutting across several public organizations would give more accurate information concerning the nature and management of the psychological contract in the public sector. It is also necessary to compare how the psychological contract is being managed in the public sector with other sectors such as the health sector and private sector, or differences in how the psychological contract is being managed within different components of the public sector such as the central government, local government, etc.

In addition, it would be necessary to link the results derived in this research with other studies on public sector motivation. As it has been suggested by researchers such as Coyle-Shapiro and Kessler (2003), the motivation in the public service may influence the kind of contract that employees look for in an organization and how these employees respond to the fulfillment of the contract. And it has also been found out that fulfillment of certain components of the psychological contract such as promotion, job security, etc.; as shown in this present study, have a positive influence on the behavior of the employees in the organization, that is, their readiness to deliver more than expected.

Using the existing psychological contract framework for the current research is a suitable method for this research on the public sector employee-employer relationship. However, a lot of practical and theoretical work needs to be done in order to be able to come to a more comprehensive understanding of the unique aspects of the psychological contracts as it exists in the public sector.

Allen, NJ & Meyer, JP (1990), The measurement and antecedents of affective, continuance and normative commitment to the organization, Journal of occupational psychology 63.

Alonso, P & Lewis, GB (2001), Public service motivation and job performance: Evidence from the federal sector, The American review of public administration

Argyris, C, P (1960). Understanding Organizational Behavior, Homewood, IL: Dorsey Press.

Atkinson,P 1995, Some perils of paradigms, Qualitative Health Research, 5 (1) 117-124
Backhaus, K &Tikoo, S (2004), “Conceptualizing and researching employer branding”, Curcer Deuelopment International, Vol. 9, pp. 501-517.

Bandura, A (1986), The explanatory and predictive scope of self-efficacy theory, Journal of Clinical and Social Psychology, 4, 359-373

Beiske,B 2002, Research methods: Uses and limitations of questionnaires, interviews and case study, Munich, GRIN Publishing GmbH

Bernard, HR 2006, Research methods in aanthropology: Qualitative and quantitative approaches, Altamira Press

Blau, PM (1964), Exchange and Power in Social Life, New York: John Wiley.

Brewer, GS, Selden, S & Facer, R (2000), Individual conceptions of public service motivation, Public Administration Review, 60: 254-264

Bryman, A 2000, Social Research Methods, Oxford University Press
Bryman, A & Burgess, RG 2004, Qualitative research, SAGE Publications, Thousand Oaks, California

Butler, T & Waldroop, J (1999), Job sculpting, The art of retaining your best people, Harvard Business Review, September-October

Cappelli, P (1997), Rethinking the nature of work: A look at the research evidence. Compensation & Benefits Review, (July/August), 50-58

Cassar, V. (2001), “V’iolating psychological contract termsamongst Maltese public service employees: Ccurrenceand relationships”, Journal of Managerial Psychology, Vol. 16, No. 3, pp. 194-208.

Coyle-Shapiro, J, & Kessler, I (2000). Consequences of the psychological contract for the employment relationship: a large scale survey, Journal of Management Studies, 37, 903-930.

Coyle-Shapiro, J, A, Shore, L, M., Taylor, M, S, & Tetrick, L, E, The employment relationship:
examining psychological and contextual perspectives, New York; Oxford.

Cullinane, N & Dundon, T. (2006), “The psychological contract: a critical review”, International Journal of Management Reviews, vol. 8, pp. 113-129.

DeMeuse, K, & Tornow, W (1990), The tie that binds – has become very, very frayed, Human Resource Planning, 13, 203-213.

De’Vos & Buyens (2001), Managing the psychological contract of graduate recruits: A challenge of human resource management, Available from . [17 January 2012]

De Vos, A, Buyens, D & Schalk, R (2001), “Psychological contract development during organizational socialisation: adaptation to reality and the role of reciprocity”,
Journal of Organizational Behavior, Vol. 24, pp. 537-559.

Edwards, AL & Kenny, KC 2011, A comparison of the Thurstone and Likert techniques of attitude scale construction, Journal of Applied Psychology vol 30 (1)
Emerson, R (1981), Social Exchange Theory, in M. Rosenberg, & R. Turner (Eds), Social Psychology: Sociological Perspectives (pp. 30-65). New York: Basic Books.

Garger, J 2010, Using the case study in PhD research, available on [4th February 2012]
Gill, J & Johnson,P 2002, Research methods for managers, SAGE Publications, California
Grix, J & Watkins, G 2010, Information skills: Finding and using the right resources, Macmillian
Guest, D & Conway, N (2000), The psychological contract in the public sector. The results of the2000 CIPD Survey of the employment relationship, Research report, Chartered Institute of Personnel and Development, London

Guest, D& Conway, N (2001), Public and private sector perspectives on the psychological contract, Results of the 2001 CIPD Survey, Research Report, Chartered Institute of Personnel andDevelopment, London

Guzzo, RA, Noonan, KA & Elron, E (1994), Expatriate managers and the psychological contract, Journal of Applied Psychology, 79.
Hancock, B 2002, An introduction to qualitative research, Trent focus group
Hiltrop, JM (1995), “The changing psychological contract: the human resource challenge of the
1990s”, European Management Journal, Vol. 13 No. 3, p. 286.

Hiltrop, JM (1996), Managing the Changing Psychological Contract, EmployeeRelations, vol. 18, no. 1, pp. 36-50.

Introduction to Qualitative Research 2004, available on [3rd February 2012]
Janssens, M, Sels, L, Van den Brande, I & Overlaet, B (2003), Multiple types of psychologicalcontracts – A six cluster solution, Research Report, Department of Applied Economics, K.U.Leuven.

Kanter, DL & Mirvis, PH (1989). The Cynical Americans, San Francisco: Jossey-Bass.

Kissler, GD (1994), The new employment contract. Human Resource Management, 33(3), 335-351.

Kumar, R 2010, Reaseach methodology, A step-by-step guide fro beginners, SAGE Publications, California
Lemire, L & Rouillard, C (2005), An empirical exploration of the psychological contract violation and individual behavior, Journal of Managerial Psychology, 20, 150-163.

Lenaghan, JA & Eisner, AB (2006), Employers of Choice and competitive advantage: The proof is in the pudding, Organizational Culture, Communication and Conflict; 2006; 10(1): 99-109.

Levinson, H, Price, CR, Munden, KJ, Mandl, HJ, & Solley, CM (1962) Men, management and mental health, Cambridge, MA: Harvard University Press,

Louis, M (1980), “Surprise and sense making: what newcomers experience in entering unfamiliar organizational settings”, Administrative Science Quarterly, Vol. 25, pp. 226-51.

Mack, N., Woodsong, C., MacQueen, K.M., Guest, G., & Namey, E. (2005). Qualitative research methods: A data collector’s field guide. Research Triangle Park, NC: Family Health International

MacNeil, IR (1985), Relational contract: What we do and do not know, Wisconsin Law Review, 483-525.

Maguire, H (n.d.), The changing psychological contract: challenges and implications for HRM, organisations and employees, Available from [17 January 2012].

Meyer, JP & Allen, NJ (1991), A three-component conceptualization of organizational commitment, Human resource review, 1, 61-89
Morrison, DE (1994), Psychological contracts and change, Human Resource Management, 33(3), 353-371.
Newell, H, & Dopson, S (1996), Muddle in the middle: organisational restructuring and middle management careers, Personnel Review, 25(4).
Newton, P & Bristoll, H 2009, Data Checking Pratice test 1, available on [6th February 2012]

O’Donnell, M. & Shields, J (2002), Performance management and the psychological contract in the Australian federal public sector, The Journal of Industrial Relations, 44, (3), 435-457.

O’Donohue, W & Wickham, W (n.d.), Managing the Psychological Contract for Employers of Choice: Would You Like Fries with That?, Available from [18 January 2012]

Ospina, S 2004, Qualitative research, Encyclopedia of Leadership, SAGE Publication, California

Patton, M. Q. (1987) How to Use Qualitative Methods in Evaluation. California: Sage Publications, Inc.

Perry, JL (1996), Measuring public service motivation: An assessment of construct reliability and validity, Journal of Public Administration Research and Theory 7(2): 181-97

Perry, JL & Wise, LR (1990), The motivational bases of public service, Public Administration Review 50(3): 367-73

Robinson, S & Rousseau, D (1994), Violating the psychological contract: not the exception but the norm, Journal of Organizational Behavior, 15, 245-259.

Rousseau, DM (1990), New hire perceptions of their own and their employer’s obligations: a study of psychological contracts, Journal of Organisational Behaviour, 11, 389-400.

Rousseau, D (1994), Two ways to change and keep the psychological contract: Theory meets practice”, Executive Summary for the International Consortium for Executive DevelopmentResearch, Lausanne, Switzerland.

Rousseau, DM. and McLean PJ, (1993), “The contracts of individuals and organizations”, Research in Organizational Behavior, Vol. 15, pp. 1-43.

Rousseau, DM & Wade-Benzoni, K (1994), Linking strategy and human resource practices: how employee and customer contracts are created, Human Resource Management, 33(3), 463-489.

Sapsford, R & Jupp, V 2006, Data collection and analysis, SAGE Publications, pp. 28

Schein, EH (1965), Organizational Psychology, Englewood Cliffs, NJ: Prentice-Hall

Shank, G. (2002), Qualitative Research: A Personal Skills Approach. New Jersey: Merril Prentice Hall

Shore, LM & Tetrick, LE (1994), The Psychological Contract as an Explanatory Framework in the Employment Relationship, in C. Cooper, & D. M. Rousseau (Eds), Trends in Organisational Behaviour. New York: Wiley.

Sims, RR (1994), Human resource management’s role in clarifying the new psychological contract, Human Resource Management, 33(3), 373-382.

Sparrow, PR, (1996), ‘Transitions In The Psychological Contract: Some Evidence From The Banking Sector’, Human Resource Management Journal. Vol. 6, no. 4, 75-92

Sparrow, P & Hiltrop, J (1994), European Human Resource Management in Transition, Prentice-Hall, London.

Spindler, GS (1994). Psychological contracts in the workplace – a lawyer’s view, Human Resource Management, 33(3), 326-334.

Thomas, HDC, & Anderson, N. (1998), Changes in Newcomers’ Psychological Contracts during Organizational Socialization: A Study of recruits Entering the British Army, Journal of Organizational Behavior, Vol 19, pp 745-767.

Turnley, W& Feldman, D (1999), The Impact of Psychological Contract Violations on Exit, Voice, Loyalty and Neglect, Human Relations, vol. 52, no. 7, pp. 895-922.

Wellin, M (2008), Managing the Psychological Contract, Gower Press

Willems, I, Janvier, R &Henderickx, E (2004), The Unique Nature of Psychological Contracts in the Public Sector:An Exploration, Paper to be presented at the EGPA Annual Conference, Ljubljana (Slovenia ), 1-4 September 2004.

Willems, I, Henderickx, E, Janvier, R & De Prins, P (2003b), “Psychological contracts” in the Belgian federal civil service, Paper presented at the EGPA annual conference, Oeiras (Portugal), September 2003

Wright, BE (2004), The role of work context in work motivation: A public sector application gof goal and social cognition theories, Journal of Public Administration Research and Theories, 14 (1), 59-78

Wright, BE (2001). Public sector work motivation: Review of current literature and a revised conceptual model, Journal of Public Administration Research and Theory, 11(4), 559-586

Yankelovich, D (1993), How changes in the economy are reshaping values, In: H.J. Aaron, T. E. Mann and T. Taylor (eds.), Values and Public Policy. Washington D.C.: The Brookings Institution.

Category: Business Essay Examples, Essay & Dissertation Samples