Effect of Psychological Contract Violation on Organisational Commitment in India

Introduction Employees are very important in the normal running of organisations. According to Adetule (2011, p. 94), employees are the wheels upon which an organisation runs towards its goals and objectives. Many organisations that have achieved massive success realised the importance of employees. The management must ensure that there is satisfaction of all the employees, from the middle managers to the junior most workers.Advertising We will write a custom essay sample on Effect of Psychological Contract Violation on Organisational Commitment in India specifically for you for only $16.05 $11/page Learn More Motivated employees tend to deliver better results than those who work under frustrations. When hiring an employee, there is always a psychological contract that is signed between the employer and the employee. Shahnawaz and Goswami (2011, p. 210) defines psychological contract as â€Å"An individual’s beliefs regarding the terms and condit ions of a reciprocal exchange agreement between that focal person and another party.† The employer would have some expectations that should be met by the employee. The employee would also have some expectation about the benefits to be offered by the firm, and the kind of tasks that will be assigned. The main problem with this psychological contract is that it is rarely spoken about in a formal setting. In some occasions, these expectations are met in one way or the other. In other occasions, the expectations are not met at all. Failure to meet these expectations would constitute a violation of the psychological contract. Adetule (2011, p. 73) defines psychological contract violation as â€Å"The emotional or affective state that may result from the perception of psychological contract breach.† On the other hand, Shahnawaz and Goswami (2011, p. 211) defines psychological contract violation as â€Å"The feelings of anger, injustice, resentment and distrust that arise fro m the realisation that an organisation has not honoured the psychological contract.† This research paper will analyze the effect of psychological contract violation on organisational commitment, trust and turnover intention in public and private sector organisations in India. Critical Review of the Article This article has given a detailed insight into the role of psychological contract in boosting employees’ performance. According to McGregor’s Theory X, human being fear work naturally, and would always seize any opportunity available to avoid some of the tasks that they are fully aware they should undertake. For this reason, the management must always subject them to strict supervision in order to avoid any form of laziness within the organisation. However, McGregor was also conscious of the self-driven people who were always focused on achieving good results even without supervision. He therefore, developed Theory Y which holds that people always have the inte ntion of working hard, and with minimal motivation, they can deliver good results without any strict supervision.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The two cases can possibly occur within different organisations depending on the perception of the employees. It is very rare for an employee to get into an organisation with a culture of team spirit and commitment amongst all employees and apply contrary. As Shahnawaz and Goswami (2011, p. 211) say, if such a lazy employee finds that the culture of this organisation do not tolerate this laziness, he or she will have the option of quitting the firm or joining others in their organisational culture. This article observes that when an employee is hired, he or she will develop a psychological contract with the firm and the management on various issues. Some of these issues may include the salaries to be earned, and its possible adjust ment as time goes by based on the output of the employee. Others may not be discussed in a formal setting during the process of signing a contract such as organisational culture and team spirit amongst the employees. However, the employee would develop these expectations with the anticipation that they shall be met. Successful organisations have learnt how to manage these expectations in order to ensure that their employees remain motivated. One of the ways of managing these expectations would be to engage the new recruits in consultative forums about what they expect out of the organisation. This should be the case both in public and private sectors because the reaction of the employee in both cases would always be similar. When the employee expectations are understood, it would be possible to find a way of addressing them to be in line with the organisational culture, and to find a way of maximising the exact potential of the employees. Understanding individual employee’s e xpectation within the firm makes it possible for the management to manage them as a way of maintaining focused workforce. This research article observes that the commitment, trust and turnover of employees will always depend on the ability of the employer to respect their psychological contract. As Adetule (2011, p. 6) says, people would like to be respected. Employees like an environment where their views are given consideration. This way, they feel that they are part of the organisation. Respecting employees is one of the ways of respecting the psychological contract. It helps cement the relationship between the employer and the employee. The employee will feel committed to the organisation and this will be reflected in the turnover. They would feel obligated to give back to the firm as a way of realising a mutual benefit. Adetule (2011, p. 4) notes that successful firms- both private and public- have realised the importance of respecting their employees and giving their views ser ious consideration. This helps in eliminating the perception that they are just employees who will one day leave the firm when the terms of service ends. In its place, it develops the feeling that employees are part of the organisation that forms its future. When the employees are made to feel that their future is tied together with the future of the firm they work for, they tend to be committed, a fact that promotes their output within the organisation.Advertising We will write a custom essay sample on Effect of Psychological Contract Violation on Organisational Commitment in India specifically for you for only $16.05 $11/page Learn More Any form of disrespect from the management or any employee in authority is always reflected as a breach of this contract. When employees feel that there is some form of breach of the contract, they would develop withdrawal symptoms. The feeling that they are not part of the organisation sets in, and their commitment to the firm wanes away. This would result into a massive drop of their output, a fact that would be reflected in the dismal performance of the firm. According to this article, it is very challenging to meet the psychological expectations of employees. Firms have started embracing downsizing and rightsizing as a way of improving their output. According to Shahnawaz and Goswami (2011, p. 217), one of the factors that have devastating effect on the morale of the employees is the act of retrenchment. It is a fact that many would expect that after retrenchment, those who remain within the organisation would be expected to be happy, not just because of their luck, but also because it is a sign that the organisation recognises them as pillars that cannot be eliminated. However, this is not always the case. The employees who remain after others have been retrenched always develop a sense of insecurity. They feel that the way psychological contract of their peers were violated, so shall theirs ’ be after some time. This alone, will make them feel that the management has betrayed them. They will feel that their psychological contract with the firm has already been violated. The effect would always manifest itself almost immediately. Employees would focus more on issues that would protect their future than those that are meant to bring success to the firm. They will develop a feeling that their future is not tied with that of the firm, and therefore, any futuristic benefit to the firm would not be shared with them. This makes them develop a negative perception about their assigned tasks. A lot of their efforts will be taken in looking for alternative jobs that have a sense of security. This happens in both public and private sectors within the environmental context that this research was conducted. Organisational trust is one of the factors that have been associated with positive output of employees. Shahnawaz and Goswami (2011, p. 214) defines trust in the organisat ion as â€Å"The evaluation of an organisation’s trustworthiness as perceived by the employee.† Employees should develop trust with the organisation they are working for, especially the management. In India, and many other developing nations, there has been a lot of confrontation between employers- in both the public and private sectors- and the employees in the organisations. One of the factors that have been associated with this confrontation according to Adetule (2011, p. 112), has been due to unfulfilled promises.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More An organisation can make a promise, out of collective bargain, that it will make a given payment to its employees at a given period. It is the responsibility of that organisation to ensure that such promises are met in order to build trust between the employer and the employees. It is natural that there might a case where the promise made may not be fully met within the originally set period. It would be appropriate to ensure that such information is communicated to the relevant people within the right time. The reason given should be valid, and the management should not forget to emphasise on the fact that it is still committed to its promise. It may be necessary to give a date when the promise would be met. This will help maintain trust that exists between the employer and the employee. According to Adetule (2011, p. 215), the top management is the agent of the owners, and when they make promises to employees, they always believe that the promise is made by the firm itself. These promises made at individual levels should also be fulfilled to ensure that the individual develops trust with the firm at a personal level. It may appear that fulfilling these promises can be a very expensive process. However, it goes a long way in building a strong trust between the employer and the employee. One factor that the management should keep in mind is that promises should be as minimal as possible. The management should try to avoid making promises that may not be fulfilled because it may lead to a lot of problems in the future. Psychological contract violation was also considered to be closely related to employee turnover within an organisation. According to Adetule (2011, p. 53), it is important to understand the difference between intention to turnover and the actual turnover. The intention to turnover refers to the resolve that an employee has to quit his or her current job. This drive may make an employee develop some justification that would make him or her quit th e current company to look for other employers. The intention to turnover would lead to actual turnover. The intention to turnover is always affected by the perception of the employees towards the employer. When the employee feels that the employer is not caring for him or her, the intention to turnover would exist. The drive to deliver good results would go down, and this would lead to low actual turnover. When the employee feels that the psychological contract that existed between him or her and the employer is violated, the intention to turnover would be very high. This will affect the overall performance of such an employee, a fact that reflects the intention to quit the current employment. Implications of Shahnawaz and Goswami’s Findings The findings of Shahnawaz and Goswami have a clear message to the employers about effective management of employees and how this affects their commitment to the employing organisation. This article clearly states that employees are very i mportant assets within an organisation. However, unlike other assets, employees are human beings with feelings and emotions which have direct impact on their output. When an employee is hired, he or she will develop a psychological contract with the employer. In some cases, the psychological contract would be based on the formal agreements that the management has made with the employee when signing the contract. In other cases, the psychological contract would be based on some personal feelings and expectations of the employee based on various environmental issues. From this article, it is important that the management understands this psychological contract in order to maintain a pool of motivated employees. Employees’ commitment will always be influenced by the ability of the employer to respect this psychological contract. This article clearly indicates that when the management breaches the psychological contract that exists between it and the employees, then it would not be possible for the firm to achieve its strategic goals with the same employees. According to Adetule (2011, p. 97), many unsuccessful organisations have failed to appreciate the importance of respecting employees. This is particularly common in the public sectors where those trusted with the management do not feel that they own the organisation. Instead of employing transformational leadership approach that would ensure the rights of employees are respected and their views taken into consideration, some managers still use the dictatorial management approach where their statements are supposed to be respected without any challenge. This may be in contravention of the rights of employees. Such management practices would constitute the psychological contract violation. When this happens, Shahnawaz and Goswami (2011, p. 213) say that employee’s output will drop, leading to a lower output of the organisation. When the employees feel that they are not respected, their commitment t o the firm fades away. They develop the feeling that if the management is not committed to their rights, then it is unnecessary for them to remain committed to the firm. They would start treating various issues and assignments casually. Their intention to turnover increases because of lack of commitment. They feel that they are not obliged to give a positive output to the firm. This is particularly dangerous in a work setting where the output of a firm directly depends on the attitude with which, employees approach their work. According to Shahnawaz and Goswami (2011, p. 212), there are some work settings that are more sensitive to the attitude of employees than others. For instance, a hotel that operates with a team of disillusioned employees is more likely to have an instant negative impact on its overall performance. When customers visit the facility only to be met by gloomy employees who feel that they are not obligated to deliver good results, then it becomes almost impossible to satisfy such customers. Some of the customers may ignore such cold receptions, but others would leave such facilities even before they can be given any service. This article also emphasises on the relevance of managing employees’ expectations. The two scholars realised that managing expectations of the employees is one of the ways of keeping them constantly motivated within the firm. Different employees will have different expectations when they are hired. Some of these expectations can be met by the firm within the time they shall be working in the firm, while others may not easily be achieved because of various reasons. These expectations would constitute factors that would define the psychological contract that an employee develops with the firm. Adetule (2011, p. 74) says that it is important to ensure that all the expectations of the employee are addressed before they are hired. This can only be possible by engaging them in a consultative forum where they will be expe cted to share their expectation with the employing authority. The employer is required to evaluate the expectations with the view of addressing them before hiring the individual. The management should be clear to the employees about the needs that can be met, and those that are beyond the capacity of the firm. This makes the employee re-evaluate the psychological contract to make it fit within the environment that has just been explained. This will avoid cases where employees harbour some expectations that may appear wild to the management. This means that when they accept the job, they will be accepting the terms offered by the management. They will feel obligated to the firm even when their initial expectations are not met because they were informed before their deployment. Conclusion Employees form a very important part of an organisation. They are the policy implementers whose activities are expected to make a firm succeed in the market. Public and private organisations have the obligation of maintaining high levels of motivation among their employees. From the discussion above, it is clear that a team of motivated employees can be very important in helping a firm achieve its operational and strategic goals. This motivation largely depends on the way employees feel that they are treated within the organisation. If they feel respected, then they will be committed to the firm, and this will motivate them to deliver good results. The employer must therefore, maintain respect with the employees. List of References Adetule, J 2011, Handbook on management theories, Author House, Bloomington. Shahnawaz, M Goswami, 2011, Effect of Psychological Contract Violation on Organisational Commitment, Trust and Turnover Intention in Private and Public Sector Indian Organisations. Vision, vol. 15. no. 3, pp. 209–217. This essay on Effect of Psychological Contract Violation on Organisational Commitment in India was written and submitted by user Brodie J. to help you with your own studies. 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