Magoosh GRE

The management of the psychological contract (Dissertation)

| April 6, 2015

ABSTRACT

In recent times, there seems to be a competition among many organizations in a bid to become the employer of choice. The psychological contract which is the mutual and unwritten relationship that exists between employees and employers, have been seen as a major tool in standing out in the competition. The importance of the psychological contract cannot therefore be overemphasized. In order to attract high quality employees, organizations must make and keep its promises. Also, in order to receive the best, the employee must also make and keep his promises. It is the extent to which both parties keep their promises that defines the management of the psychological contract. The psychological contract has been managed in different ways in diverse organizations. This study examines the management of the psychological contract in the British public sector using three public organizations and it found out that trust, fairness, sincerity and transparency are important components of the psychological contract that influences the obligations of the employees and employers in these public organizations.

ACKNOWLEDGEMENT
I would like to gratefully and sincerely thank *SUPERVISORS NAME* for his guidance, understanding, patience, and most importantly, his friendship during research. His mentorship was paramount in providing a well written project.
I am not sure many graduate students are given the opportunity to develop their own individuality and self-sufficiency by being allowed to work with such independence. For everything you’ve done for me, *supervisors name*, I say a big thank you.
I would also like to thank my family members for been there for me financial and also for their emotional support. I love you all.
I would also like to thank my friends. *Then you put their names*. Thank you all for been true friends.
And to all my class mates, it was nice sharing this educational experience with you all.
Contents
CHAPTER ONE: INTRODUCTION 7
1.1 Background 7
1.2 Context 9
1.3 Problem Statement 12
1.4 Research Justification 13
1.6 Research Questions 14
1.7Research Summary 14
CHAPTER TWO: LITERATURE REVIEW 17
2.1 Introduction 17
2.2 Psychological Contract: Definition 17
2.3 THE ROLE OF PSYCHOLOGICAL CONTRACTS 20
2.4 Causes and Consequences of the psychological contract 21
2.5 Development of the Psychological contract 23
2.6 Content of the psychological contract 24
2.6 Types of psychological contracts 27
2.7 Changes in the psychological contract 29
2.8 Psychological contracts in public organizations 32
2.9 Types of commitment in the public sector 33
2.9.1 Organizational commitment 34
2.10 Public service motivation 34
2.11 The Psychological Contract in the British Public Sector 36
CHAPTER 3: RESEARCH METHODOLOGY 38
3.1 Introduction 38
3.2 Research Philosophy 39
3.3 Research Design 40
3.4 Research Approach 41
3.4.1 Qualitative research 42
3.4.1.1 Reasons to use qualitative research 42
3.4.1.2 Merits of the Qualitative Research Method 43
3.4.1.3 Demerits of the Qualitative Research Method 43
3.4.2 Quantitative Research 43
3.4.2.1 Advantages of Quantitative Research 44
3.4.2.2 Disadvantages of Quantitative Research 44
3.4.3 Triangulation 47
3.5 Research Strategy: Case Study 47
3.5.1 Advantages of the Case Study Approach 48
3.6 Data Collection 48
3.6.1 Interviews 49
3.6.1.1 Advantages of Interviews 50
3.6.1.2 Disadvantages of Interviews 51
3.6.2 Questionnaire design 51
3.6.2.1 Advantages of Questionnaires 53
3.6.2.2 Disadvantages of Questionnaire 53
3.7 Characteristics of the sample 53
3.8 Data Analysis 54
3.9 Data Interpretation 55
3.10 Research Limitation 55
3.11 Summary 55
CHAPTER FOUR: RESULTS AND ANALYSIS 56
4.1 Introduction 56
4.2 Data derived from the questionnaires 56
4.2.1 Type of respondent 57
4.2.2 Do you think there is fairness and trust in the relationship between the employees and employers in your organization? 58
4.2.3 How would you rate the fairness and trust in your organization? 59
4.2.4 In terms of entitlements, which of the following clusters do you expect in your own organization? 60
4.2.5 As an employee, what is the most important thing you prepared to offer if all your expected entitlements are met? 61
4.2.6 Do you believe your organization has made promises – implicit or explicit – or commitments on a broad or limited range of issues? 62
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? 64
4.2.8 Are you satisfied with the pay and promotion in your organization? 65
4.2.9 Do you trust the senior management of your organization to look after your best interests? 65
4.2.10 Would you move to another sector of the economy if given the chance? 66
4.3 Data derived from the interviews 67
CHAPTER FIVE: DISCUSSION 75
5.1 Introduction 75
5.2 Discussion of the data derived from the questionnaire survey 75
5.3 Discussion of data derived from the interviews 79
CHAPTER SIX: CONCLUSION AND RECOMMENDATIONS 84
6.1 Conclusion 84
6.2 Recommendations 86
6.3 Further Research 87
Appendix one………………………………………………………………………………………………………………………………………. 96
Appendix two …………………………………………………………………………………………………………………………………100
Appendix three ………………………………………………………………………………………………………………………………104
CHAPTER ONE: INTRODUCTION
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, and not directly measurable.
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 mention of what is assumed to be related to the psychological contract (Wellin2008). 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 organizational behavior, 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” (Rousseau 1994). 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 (Hiltrop 1996). This then means that a less certain set of agreements have superseded the traditional employment relationship. Therefore, the significance of this has to be explored.
There has been conflicting evidences as to the existence of the psychological contract of the public sector worker especially in countries such as the United Kingdom. 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, with emphasis on the British 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 in the country 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 Problem Statement

A brief search through existing literature has shown that business organizations are facing increasing pressures of the economic environment every day, and the ability of the organization to keep up with these challenges are directly or indirectly based on the relationship between the employers (the administration) and the employees (Guest & Conway 2000). And with the resulting mounting pressure resulting from the need for public organizations especially to deliver high quality, customer oriented services, it becomes imperative to understand fully the employment relationship in the public sector, and how this can be exploited to yield increased productivity.

1.4 Research Justification

The significance of carrying out this study is based on the widely accepted role of the psychological contract, especially the way it is being managed, in ensuring that employees of any business organization deliver their best possible input and performances towards the achievement of core organizational objectives. Determining the most effective way in which the existing psychological contract can be managed is a very vital assignment for businesses or corporations that aim to keep up with the challenges of the constantly evolving economic environment. Also, most businesses rely on their employees to accomplish vital tasks that lead to the fulfillment of the organizations targets. All these then makes it important to understand how employees’ expectations and entitlements can be met, and at the same time increasing their propensity to fulfill their obligations which would lead to increased satisfaction, better attitude, increased productivity, and reduced employee turnover in the long run. It is therefore worthwhile to carry out this research to closely evaluate the existing psychological contract in the public sector, examine how it is being managed, and determining how best it can be managed to better suit the needs of both the employees and the employers.
1.5Aims and Objectives
The main aim of this research is to investigate the nature of the psychological contract in the public sector and how it is being managed with emphasis on the British public sector, and specifically three business organizations – National Health Service (NHS), Inland Revenue, and the Driver and Vehicle Licensing Agency (DVLA). The objectives to buttress these aims are as follows:
1. To ascertain the nature of the psychological contract in British public sector
2. To identify how the psychological contract is being managed in NHS, Inland Revenue, and DVLA.
3. To explore the expectations of workers in these public organizations.
4. To evaluate the fulfillment of the expectations workers in the public sector and the effects on employee attitude.
1.6 Research Questions

1. What is the nature of the psychological contract in Britain’s public sector?
2. How is the psychological contract being managed in public sector organizations such as the NHS, Inland Revenue, and DVLA?
3. What are the expectations of workers in these public organizations?
4. Are the expectations of workers in these public organizations being fulfilled?
5. What are the effects of the psychological contract on employee attitudes?
1.7 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.It also gives the analysis of the data derived. The methods of analysis would be described and presented.
• The fifth chapter presents the results of data collection and analysis as described in the third and fourth chapters in light of present knowledge about the concept of the psychological contract. It explains the findings and tries to bring out deductions and reasons for any obvious anomaly in the data collected.
• 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.

CHAPTER TWO: LITERATURE REVIEW

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.

Table 2.1: Organizational Promises ( De Vos, Buyens and Schalk, 2001)
Organizational Promises
1. Career development Offering possibilities for development and/or promotion within the organization (such as possibilities for development, chances of promotion)
2. Job content Offering challenging, interesting job content (such as work in which employees can use their capacities, challenging tasks)
3. Social environment Offering a pleasant and cooperative working environment (such as good communication among co-workers, good cooperation within the group)
4. Financial compensation Offering appropriate compensation (such as remuneration commensurate with the work, conditions of employment that have favorable tax
consequences)
5. Work-private life balance Offering respect and understanding for the personal situation of the employee (for example, flexibility in working hours, understanding of
personal circumstances)

Table 2.2: Employee Promises ( DeVos, Buyens and Schalk, 2001)
Employee Promises
1. Effort and performance Willingness to make efforts to perform well for the organization (for example, making efforts for the benefit of the organization, doing good
work both quantitatively and qualitatively, working well with co-workers)
2. Flexibility Willingness to be flexible in carrying out the work that needs to be done (for example, working overtime, taking work home)
3. Loyalty Willingness to continue working longer for the organization (for example, not accepting every job offer that comes along, working for the organization for at least several years)
4. Ethical conduct Willingness to conduct oneself ethically towards the organization (for example, not making confidential information public, dealing honestly
with resources and budgets)
5. Availability Willingness to keep one’s availability status at an acceptable level (for example, taking training courses that become available, keeping up with
trade literature)

2.6 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.
Table 2.3: Continuum of contract terms (Rousseau 1995)
Transactional Terms Relational Terms
Economic Focus Economic, Emotional
Partial Inclusion Whole person
Close-ended, specific Time frame Open-ended, indefinite
Written Formalization Written, unwritten
Static Stability Dynamic
Narrow Scope Pervasive
Public, observable Tangibility Subjective, understood

2.7 Changes in the psychological contract

Ever since the concept of the psychological contract was initially documented, there have been monumental changes in systems and beliefs. Different authors have observed a change in the concept over time and have agreed that there have been a negative shift in psychologicalcontracts. According to Kanter & Mirvis (1989), ‘loyalty to the company has given way to looking out for oneself’. The relationship and shared dependence that existed between the employer and employee can be said to have weakened (DeMeuse&Tornow 1990).
According to Sims (1994), the psychological contract can be explained as being characterized by stability, growth, and predictability and employees had the assurance of long-term employment and the commitment to their training. The employees gave their commitment and there was the expected advancement within the organization. Sims (1994) further notes that psychological contracts in modern times have restricted the opportunity for progress and employees are becoming aware that job security can no more be assured. There have therefore been downsizing programs that are now affecting management and other white collar positions that were usually exempted from the effects of economic changes (King, 2000). ‘The flexible, de-layered, slimmer organization, constantly changing to suit its volatile and shifting markets, can no longer offer the secure career progression of traditional structures’ (Hiltrop 1995).
Due to these changes, there seems to be a revision in the provisions of psychological contracts. Though the terms of the new psychological contract are not properly defined, it seems to describe a new responsibility for employers to create avenues for employees to see their personal welfare.
Kissler (1994) used the works of different authors to create an evolving employee-employer relationship.
Table 2.4: Kissler’s (1994) distinction between old and new characteristics of psychological contracts
Old contract New contract
Organization is ‘parent’to employee ‘child’ Organization and employee enter into ‘adult’ contracts focused on mutually beneficial work
Employee’s identity and worth are defined by the organization Employee’s identity and worth are defined by the employee
Those who stay are good and loyal; others are bad and disloyal The regular flow of people in and out is healthy and should be celebrated
Employees who do what they are told will work until retirement Long-term employment is unlikely; expect and prepare for multiple relationships
The primary route for growth is through promotion The primary route for growth is a sense of personal accomplishment

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)
Contract element Old contract New contract
Change environment Stable, short-term focus Continuous change
Culture Paternalism, time served, exchange security for commitment Those who perform get rewarded and have contract developed
Rewards Paid on level, position and status Paid on contribution
Motivational currency Promotion Job enrichment, competency development
Promotion basis Expected, time served, technical competence Less opportunity, new criteria for those who deserve it
Mobility expectations Infrequent and on employee’s terms Horizontal, used to rejuvenate organization, managed process
Redundancy/tenure guarantee Job for life if perform Lucky to have a job, no guarantees
Responsibility Instrumental , employees exchange promotion for more responsibility To be encouraged, balanced with more accountability, linked to innovation
Status Very important To be earned by competence and credibility
Personal development The organization’s responsibility Individual’s responsibility to improve employability
Trust High trust possible Desirable, but expect employees to be more committed to project or profession

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. Janssens et al (2003) 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.
2.11 The Psychological Contract in the British Public Sector

This research examines the psychological contract in the British public sector. It is therefore important to examine the nature of the psychological contract in the British public sector in general.
In the past in Britain, the choice of employees to work in the public sector has been favored by the presence of an incredibly institutionalized structure of regulations of employment that has helped them and the composition and operation of service provision (Coyle et al 2003). It can be said that after the end of the world war, a political consensus encouraged the presence of well resourced and freely available values in the British public sector. This approach helped improve the perceived job security that employees had in the public sector. However, as a result of the monumental changes in the nature of work and its setting, the employee-employer relationships in Europe have experienced a transition (Isakson 2003). The psychological contract in Britain and most European countries experienced a major change in the 1990s. There was an increased perception of job insecurity as a result of downsizing that was used by many organizations to cut the cost of production and in the public sector in particular, due to the depression of pay levels (Escott and Whitfield 1995). Some new terms of employment such as temporary and fixed term contract working were widely used and had negative impacts on job security (Hegewisch 1999). It is therefore expected that the expectations of the employees will be negatively affected due to the threat to their jobs. According to Hellgren and Naswall (2002), it has been shown that job insecurity leads to negative consequences on factors that are important to the psychological contract such as psychological well being and job satisfactionConsidering previous researches, this research will therefore help to achieve the aforementioned aims and objectives in order to test and to compare it with the previous results that have been presented by these studies.
The research will examine the contents of the psychological contract-both the transactional and relational contract. It is important to explore these two components in order to fully grasp the nature of the psychological contract in the British public sector and to understand the factors that may affect it. Therefore the data will be channeled towards obtaining information on both monetary and nonmonetary aspects of the employee-employer relationship.
CHAPTER 3: RESEARCH METHODOLOGY
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 aims and objectives of this study which are:
1. To ascertain the nature of the psychological contract in British public sector
2. To identify how the psychological contract is being managed in NHS, Inland Revenue, and DVLA.
3. To explore the expectations of workers in these public organizations.
4. To evaluate the fulfillment of the expectations workers in the public sector and the effects on employee attitude.
In order to effectively achieve these aims and objectives, the methodology has been carefully designed. Both the qualitative and the quantitative research methods will be used in order to effectively ascertain the nature of the psychological contract in the British public sector and to examine how it is being managed. Questionnaires and interviews will therefore be the primary methods of data collection.
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 Philosophy

The research philosophy is important in that it guides all the other elements of the methodology. It is therefore imperative that the researcher chooses the appropriate research philosophy that will best answer the research question. There are three main research philosophies that can be used namely the interpretivist, positivist and realist philosophies.
The positivist philosophy is usually used in the natural sciences and is highly evidence and objective based. It uses an extremely structured methodology for easy generalization. The researcher objectively evaluates the data collected and extracts the results to achieve the aims and objectives of his research (Saunders et al 2000). The research is devoid of any subjectivity and the results are interpreted as they are and the researcher’s interests and personality are excluded entirely.
In the Interpretivist philosophy, the researcher looks beyond the theories and laws and seeks to produce end results from the data collected. The interpretivist philosophy is born out of the need to provide explanations to facts and to see how the facts are influenced. Sekaran and Bougie (2010) referred to this philosophy as the social constructionism in social science research. According to Kasi (2009), it can also be appropriately applied in business settings in understanding the views of a large proportion of people by studying a small group. The realist philosophy is based on the relationship between values and beliefs. It helps examine the human behavior in the face of a particular situation.
Considering the aims and objectives of this study, the interpretivist philosophy is used. This is because the research seeks to understand the expectations and perceptions of employees and administrators .These are factors that vary from one individual to another and this is why the interpretivist research philosophy is the best in this case as it takes into consideration individual differences.
3.3 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 particular topic is then selected which is ‘managing the psychological contract in the British public sector’. The approach that is used includes both the quantitative and the qualitative research. In formulating the plan of this research, questionnaires were designed and interview questions were constructed in order to answer the research questions. The information that has been collected is then scrutinized for patterns and explanations on the nature of the psychological contract and how it is being managed in three public organizations. The data is then appropriately analyzed and the results and findings is presented and discussed in the subsequent chapters.
Figure 3.1: Research Sequence, Source Gill and Johnson (2002)
3.4 Research Approach

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).
3.4.1 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.

3.4.1.1 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
3.4.1.2 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)
3.4.1.3 Demerits of the Qualitative Research Method

• The reliability of the qualitative data can be questioned
• It could consume time in some cases
3.4.2 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.
3.4.2.1 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
3.4.2.2 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 Qualitative Research 2004

Qualitative Quantitative
Aim • Exploration of participants’ experiences and life world
• Understanding, generation of theory from data • Search for causal explanations
• Testing hypothesis, prediction, control
Approach • Broad focus
• Process oriented
• Context-bound, mostly natural setting
• Getting closer to data • Narrow focus
• Product oriented
• Context free, often in artificial or laboratory setting
Sample • Participants, informants
• Sampling units such as place, time and concepts
• Purposive and theoretical sampling
• Flexible sampling that develops during research • Respondents, participants (the term ‘subjects’ is now discouraged in the social sciences)
• Randomized sampling
• Sample frame fixed before research starts
Data collection • In-depth non-standardized interviews
• Participant observation/fieldwork
• Documents, photographs, videos • Questionnaire, standardized interviews
• Tightly structured observation
• Documents
• Randomized control trials
Analysis • Thematic, constant comparative analysis
• Grounded theory, ethnographic analysis etc. • Statistical analysis
Outcome • A story, an ethnography, a theory • Measurable results
Relationships • Direct involvement of researcher
• Research relationship close • Limited involvement of researcher
• Research relationship distant
Rigour • Trustworthiness, authenticity
• Typicality and transferability • Internal/external validity, reliability
• General is ability

The table above gives the various differences between the qualitative and quantitative research methods. In order to explore the advantages of both the quantitative and the qualitative research methods, the two methods are explored in this research. It is expected that combining these two will help the author better in finding answers to the research questions

3.4.3 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 the triangulation of theories, the researcher makes use of different theoretical approaches in studying a particular research problem while in investigator triangulation there is the involvement of more than one researcher studying a particular problem at a time. Data triangulation uses data from different groups in order to answer a research question. There are two types of triangulation of methodology; within method and between method triangulation (Ospina 2004). The within method triangulation makes use of different strategy but within the same approach e.g. the use of participant observation and open ended interviews. The between method triangulation makes use of a particular method to confirm the results of another method. This research uses the qualitative method to test and further explore the findings of the quantitative research method. This will help in augmenting the validity of this research
3.5 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.
3.5.1 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
3.6 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.
3.6.1 Interviews

Interviews were used in this study as a major primary data source. This research seeks to explore the expectations of employees and employers in the employee-employer relationship in the British public sector. Interviews will therefore help in ascertaining these expectations and to determine the possible effects of a breach of the psychological contract. 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 Patton (1987) listed some guidelines which were followed in this research. This include;
• The interviewer focused on the research and did not deviate into questions that are not relevant to the research
• The respondents were allowed to express themselves in their own word to better capture their views
• There was an understanding of the diverse kinds of information that can be obtained through interviews such as feelings, behavioral data, knowledge and background information.
• There was an appropriate planning on how the interview can be best sequenced to address every area of the subject matter
• The questions were clear and easily understood. Ambiguity was avoided
• The interviewer gave necessary attention to the responses so that the respondent will feel he/she is been followed
• Tape recorders were used in order to capture the exact response of the respondents. This was useful in the analysis.
• Active effort was taken to ensure the reliability of the information that is obtained from the respondent
3.6.1.1 Advantages of Interviews

According to Kumar (2010), some of the advantages of the interview used in this research include:
• Due to its simplicity, information was easily obtained
• The interviewer easily took control of the interview and determined its direction and pace
• Interviews were helpful as it was the best method that could explore the expectations of the employees and employers in the selected public organizations
• The information obtained are usually detailed and comprehensive
3.6.1.2 Disadvantages of Interviews

• The interviews placed too much control on the interviewer. However, the interviewer tried as much as possible to carry the respondents along
• There may be perplexity either due to a misunderstanding by the respondents or the interviewer. Therefore, the interviewer tried as much as possible to explain the questions to the respondents.
• It is not as cost effective as other methods
• Much work was still required to be done after the interview has been concluded
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.
3.6.2 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 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 rated. 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

Figure 3.2 : The 4 point likert scale
STRONGLY AGREE
1 AGREE
2 DISAGREE
3 STRONGLY AGREE
4

Figure 3.3: The 5 point likert scale
EXCELLENT
1 VERY GOOD
2 AVERAGE
3 POOR
4 UNACCEPTABLE
5
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. In order to ascertain the contents of the psychological contract in the organizations, the respondents were asked if they thought there is fairness and trust in the employee-employer relationship and they were also asked to rate the level of fairness and trust. They were also asked what they are prepared to offer if all their expectations are met. The employees were asked about the promises they think the management have made and if these promises have been kept. 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.
3.6.2.1 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)
3.6.2.2 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)
3.7 Characteristics of the sample

There are two main sampling methods which are the probability and the non probability sampling methods. In probability sampling, everyone in the sample frame has a known probability of being selected. The different types of probability sampling include simple random, stratified random, systematic random, random cluster, stratified cluster and the complex multi-stage random sampling methods. On the other hand, in the non probability sampling method, some persons in the sampling frame has a zero chance of being selected. The different types of non probability sampling include the purposive, quota and convenience sampling methods. In the purposive samples, selection of the respondents is based on a tangible reason in the research e.g. the research only needs a small number of respondents. In the quota sampling, there is a predetermined number of respondents. The convenience sampling method bases the selection of respondents on easy accessibility and is not based on the research. The study engages non-probability convenient sampling method in the selection of respondents for the collection of the primary data. This is because of 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. The employment roles include the cleaners, receptionists, accountants, engineers etc. The administrative roles include all the personnel managers in the organizations. Twenty respondents were chosen for the questionnaires while seven were interviewed.
3.8 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.
3.9 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
3.10 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.
3.11 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.

CHAPTER FOUR: RESULTS AND ANALYSIS
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).                                                                                                                                                                 Type_of_respondent

C:\Users\Neo\Pictures\Type_of_respondent.pngFigure 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.

Fainess_and_trust                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?
Fairness_and_Trust

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?

Expected_Entitlements      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.
4.2.5 As an employee, what is the most important thing you prepared to offer if all your expected entitlements are met?

Employee_Obligations

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 (70%). 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?

 

Organiztional_Promises

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.

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

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

Would_you_move_to_another_sector_of_the_economy

 

Figure 4.10 Would 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. 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. It is important to note that all the respondents are employees in the three organizations selected. The table presented below gives a brief summary about the seven interviewees:
Table 4.1 Description of the interviewees. Source: Research data
Interview respondent Status Organization
R1 Employee DVLA
R2 Employee DVLA
R3 Employee NHS
R4 Employee NHS
R5 Employee Inland Revenue
R6 Employee Inland Revenue
R7 Employee Inland Revenue

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 . . .”

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 . . .”

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.”

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”
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 . . .”
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.”
CHAPTER FIVE: DISCUSSION
5.1 Introduction

This chapter presents the results of the questionnaire survey and interview in light of existing literature. The aims and objectives of the study have been given earlier, in the first chapter, and information has been gathered as regards fulfilling these objectives. Here, analysis of the data which has been done already in the fourth chapter would then be compared with previous research and theories.
5.2 Discussion of the data derived from the questionnaire survey

One of the questions asked was in order to determine 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.
From what was illustrated in Fig 4.4, the most widely selected cluster was Cluster B, followed by Cluster A. This means 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 have 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.

And in terms of obligations that the employees were willing to offer especially if all expected entitlements are met, a range of five options were given to this question for respondents to choose from. The options were 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. As it was found in the data collected (Fig 4.5), most 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.

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. However, a very large percentage of the respondents agreed that their organizations have made promises – whether implicit or explicit – on a range of issues (Fig 4.6). On the other hand, it is a different thing to make promises; it is another thing to keep them, only a little proportion of the participants agreed that the promises made by their organization have been kept far more than they expect (Fig 4.7). Most of the others said either that it was just as they expected or a little bit more 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.
In terms of satisfaction with pay and promotion, 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 (Fig 4.8). 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.
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. But from the study sample, the bulk of the participants indicated that they do not trust the management of their organization to look after their best interests (Fig 4.9). And the implications of this are much. This might have been because of the problematic attitudes towards the management as a whole.
From all the foregoing, it is important to know whether these participants would be willing to move to another sector of the economy if given a chance. More than half agreed to be willing to move to another sector of the economy if given the chance (Fig 4.10). 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.
5.3 Discussion of data derived from the interviews

The first question tries to find out in details what the employees expect from their employers, and what their employers can expect from them. 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.
But in order to know whether the expectations and entitlements they discussed earlier were clarified before they began to work for their companies, they were asked to answer another question. Most of the respondents confirmed that their expectations were not exactly clarified at the beginning of their work at their present organization. At least, a large portion of the respondents, specifically 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 asks about ‘What do you think should be the relationship between employees and employers in an organization?’ And in response, the interviewees gave a wide variety of responses, presented in chapter four above. However, 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 employer promised 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.
The interviewees were also asked to state whether or not they felt that their inputs were commensurate with the rewards they receive, and to give reasons why. But looking at their responses closely, 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.
It is a widely accepted notion that 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. To question five, the 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.
The final interview question sought the interviewees’ opinions on what changes they would want to be incorporated in their organizations. They said that they wanted “An environment of complete trust and sincerity”, “The management should . . . make sure that this agreement is kept to”; “. . . promises made should be kept”;“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 . . .”; “I think that the management should decide on what it is going to offer to workers and stick to it”; “. . . to reward workers appropriately and adequately . . . to provide an atmosphere of trust and sincerity”; “. . . It should be enhanced . . . in terms of communication and transparency . . .” and “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

CHAPTER SIX: CONCLUSION AND RECOMMENDATIONS

6.1 Conclusion

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.
6.2 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.
6.3 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.
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APPENDIX ONE
SURVEY QUESTIONNAIRE
This questionnaire is an important part of a research that intends to evaluate the management of the psychological contract in business organizations. Your participation in this survey is crucial in order to be able to determine the existence of the psychological contracts in the public sector and how it is being managed. You have been randomly chosen. The data collected in this questionnaire is strictly confidential and the information would be used for statistical purposes only. All information gathered remains anonymous. Please, kindly provide accurate and honest information.
Please indicate the answers that closely fit your choice. Thanks in advance for your anticipated cooperation.

1. Age (as at last birthday): _______________
2. Sex: Male
Female
3. Occupation: Financial/Clerical
Producing/Manufacturing
Sales/Marketing
General Management
Other
4. Marital status: Married
Not married
5. Range of monthly income (in pounds): <5,000
5,000-10,000
10,000-15,000
15,000-20,000
>20,000
6. How long have you worked for your organization? ____________
7. How many hours do you put in every week? <30 hours
30-40 hours
40-50 hours
>50 hours
8. Do you think there is fairness and trust in the relationship between the employees and employers in your organization?
Yes No
9. How would you rate the fairness and trust in your organization?
Excellent Very good Good Fair Poor
10. In terms of entitlements, which of the following clusters do you expect in your own organization? Please choose the most appropriate.
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.

11. What is the most important thing you prepared to offer if all your expected entitlements are met?
Loyalty
Personal investment
Open Attitude
Flexibility
Respect for authority
12. Do you believe your organization has made promises – implicit or explicit – or commitments on a broad or limited range of issues?
Yes No
13. 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?
Far less than I expect
Less than I expect
Just as I expect
More than I expect
Far more than I expect
14. Are you satisfied with the pay and promotion in your organization?
Yes No
15. Do you trust the senior management of your organization to look after your best interests?
Yes No
16. Would you move to another sector of the economy if given the chance?
Yes No Indifferent

APPENDIX TWO
STRUCTURED INTERVIEW FORMAT

Good day,
My name is _____________ and I am pursuing a research in finding out the management of the psychological contract in the public sector of the economy. This interview is only meant to record your opinion about the management of the psychological contract in your organization. For the purpose of uniformity, here is a copy of the questions I would be asking you. Please feel free to follow me as I read it to you.
Please note that you have the right to decline to participate, to refuse to answer any question(s), or to withdraw from the study at any time.
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?
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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

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

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

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

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

APPENDIX THREE
INTERVIEW TRANSCRIPT

Respondent One
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?
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 to the employees, likewise trust and sincerity too.As regards what my employer can expect from me, my employer can expect my loyalty and dedication to my work.
Question 2: Were the expectations you explained earlier clarified before you began to work in the company?
No, but we discussed wages and salaries in the terms of work expected and done at the end of the month.
Question 3: What do you think should be the relationship between employees and employers in an organization?
I believe in transparency in any business, and there should be trust in the relationship between the administration and the employees under it.
Question 4: Do you feel your inputs are commensurate with the rewards you receive? Could you give reasons why?
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 compared to what I think is being done in many other companies.
Question 5: What would you say your attitude is concerning how your organization is run?
I understand the nature of things up to an extent, and I am comfortable with what is going on.
Question 6: What changes would you want to be incorporated in your organization?
I would want an environment of complete trust and sincerity to be incorporated in every part of the company. The management should have an agreement with the employee and should make sure that this agreement is kept to.

Respondent Two
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?
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, etc.
Question 2: Were the expectations you explained earlier clarified before you began to work in the company?
Not exactly. The salary for the kind of job I wanted was stated in the vacancy advert which I saw before I applied, and from what my colleagues and other people had been saying, I knew I would get promoted after every three years of good service.”
Question 3: What do you think should be the relationship between employees and employers in an organization?
I think the employer and employee in an organization must be able to come to an agreement or compromise as regards some things such as bonuses, salary increase, and other benefits, and there should be trust and sincerity on both ends of the spectrum.
Question 4: Do you feel your inputs are commensurate with the rewards you receive? Could you give reasons why?
No. I put in more than I’m paid for especially in the number of hours and what comes out of those hours, not because I want more money, but for me to keep my job.
Question 5: What would you say your attitude is concerning how your organization is run?
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 they should have been done.
Question 6: What changes would you want to be incorporated in your organization?
One of the most important changes I would want is that promises made should be kept. And if it would not be possible to keep them, then they should not be made at all.

Respondent Three
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?
The things I expect include recognition of my work, salaries when due, etc. The employer should keep up with its own end of the bargain when it comes to areas such as pay and promotion, fairness, security, training and development. When these ones are met and at the same time, my employer can expect me to do my job right.
Question 2: Were the expectations you explained earlier clarified before you began to work in the company?
Yes. We clarified almost all of the issues during the meeting when my fate was to be decided, I mean when I was getting employed here in this company. We talked about my salary at the right time, and opportunities for training and development.
Question 3: What do you think should be the relationship between employees and employers in an organization?
In my opinion, I believe there should be trust and fairness in any business relationship between the employer and his workers.
Question 4: Do you feel your inputs are commensurate with the rewards you receive? Could you give reasons why?
Yes. I am being paid for what I do.
Question 5: What would you say your attitude is concerning how your organization is run?
In a way, I am satisfied with the way my organization is run.
Question 6: What changes would you want to be incorporated in your organization?
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 and all the likes.

Respondent Four
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?
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 especially in terms of money, then putting more time and hours to the job would not be difficult.
Question 2: Were the expectations you explained earlier clarified before you began to work in the company?
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 and I do my own part.
Question 3: What do you think should be the relationship between employees and employers in an organization?
There should be a high level of trust and sincerity in any relationship in which money is involved especially a business relationship. Each party should also be open to each other as regards expectations and obligations.
Question 4: Do you feel your inputs are commensurate with the rewards you receive? Could you give reasons why?
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 my own work productivity, so this makes it kind of difficult being paid for what I do.
Question 5: What would you say your attitude is concerning how your organization is run?
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 to the last detail.
Question 6: What changes would you want to be incorporated in your organization?
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.

Respondent Five
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?
I expect to be promoted to the next level as at when due. I also expect the employer to pay me at the right time. My employer can also expect my loyalty and maximal input.
Question 2: Were the expectations you explained earlier clarified before you began to work in the company?
No. But the organization should know when to promote its employees. They don’t have to be told that.
Question 3: What do you think should be the relationship between employees and employers in an organization?
I think there employees should be treated with fairness in every sense of the word, and trust also, because this makes it easy to work in a more conducive environment and every one goes home happy.
Question 4: Do you feel your inputs are commensurate with the rewards you receive? Could you give reasons why?
No. I am not being appropriately rewarded as much as I should have. In short, I am being underpaid.
Question 5: What would you say your attitude is concerning how your organization is run?
I am not happy at all because the organization is not fulfilling its own end of the bargain in terms of what we and most of my colleagues agreed on at the beginning of the job contract.
Question 6: What changes would you want to be incorporated in your organization?
Some of the necessary changes would be to reward workers appropriately and adequately as much as they deserve, and to provide an atmosphere of trust and sincerity.

Respondent Six
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?
Well, I expect job security and I also want to be paid and promoted when I deserve it, all of which would enable me contribute my own quota to the achievement of the organization’s goals.
Question 2: Were the expectations you explained earlier clarified before you began to work in the company?
No one discusses job security at the beginning of a job especially in my own case, but how much I would be paid was already stated, and it seems we kind of agreed on that before starting.
Question 3: What do you think should be the relationship between employees and employers in an organization?
I believe that workers would best work in a healthy working relationship which cannot survive without trust.
Question 4: Do you feel your inputs are commensurate with the rewards you receive? Could you give reasons why?
No. I don’t think that it is all about money. It is far much more than that. But really, not all of my inputs are completely rewarded. I’m not being given opportunities for training and development, health benefits, pensions, control, etc, like colleagues in other places.
Question 5: What would you say your attitude is concerning how your organization is run?
I am not completely sure of what my attitude is in this regard.
Question 6: What changes would you want to be incorporated in your organization?
If there is anything to be changed, then it should be the employer-employee relationship. It should be enhanced as much as possible in terms of communication and transparency, and every other important dimensions.

Respondent Seven
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?
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.
Question 2: Were the expectations you explained earlier clarified before you began to work in the company?
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 I perform.
Question 3: What do you think should be the relationship between employees and employers in an organization?
I believe that there should be transparency, trust, sincerity, fairness, and equity in any relationship between an employer and employee. Also, each party must have integrity when it comes to being able to keep to the terms of the agreement.
Question 4: Do you feel your inputs are commensurate with the rewards you receive? Could you give reasons why?
I’d think so. My input as an employee deserves to be rewarded, which I get at the end of the month, as agreed.
Question 5: What would you say your attitude is concerning how your organization is run?
If left to me, I would say that what exists mostly in this organization is an attitude of trust and commitment on the part of both the workers and the management.
Question 6: What changes would you want to be incorporated in your organization?
Employees should be treated more fairly and all agreements should be adhered to as strictly as possible.

 

 

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