Psychological Contract Breach &
Violation
Dr. David McGuire
Napier University Business School
Agenda
Rousseau Model of Psychological Breach/Violation
Distinguishing Breach and Violation
Pate et al. Psychological Contract Violation Model
Response to Psychological Contract Violation
Role of Trust
Outcomes of Psychological Contract Breach/Violation
Layoffs & Psychological Contract
Expatriate Psychological Contract
Psychological Contract Drift
Rousseau’s (1995) model of
contract breach/violation
Relationship
Strength
Monitoring
Contract
Outcome
Dependency
Perceived
Size of Loss
Violation
Sources of Contract Violation
Inadvertent
– Able and willing
• Divergent interpretations made in good faith
Disruption
– Willing but unable
• Inability to fulfil contract
Breach of Contract
– Able but unwilling
• Reneging
Failure to keep commitments
Opportunism
– Active, self-serving behaviour by one party at the expense of
another (e.g. quitting an employer with whom there is an
agreement to stay)
Negligence
– Passive: Failure to perform specified responsibilities
(e.g.mentors who fail to follow through on support to those
they counsel)
Failure to cooperate
– Behaviour that undermines ability of parties to maintain their
relationship (e.g. refusing to participate in attempts to resolve
disputes)
Types of Violation
Absence of training, training not as promised 65%
Discrepancy between promised and actual pay 61%
Promotion schedule not as promised 59%
Misrepresentation of the nature of the job 40%
Promises regarding job security not met 37%
Feedback inadequate compared to promised 35%
Ees not asked for change input or told about it 29%
Ees given less responsibility than promised 27%
Psychological Contract
Breach
Psychological Contract Breach is relatively common
Morrison & Robinson (1997): Breach is “the
cognition that one’s organisation has failed to meet
one or more obligations within one’s psychological
contract”
May be a relatively short-term phenomenon
May result in an individual returning to returning to a
relatively stable psychological contract state
Psychological Contract
Violation
Morrison & Robinson (1997): Violation is “an
emotional and affective state that may follow
from the belief that one’s organisation has failed
to adequately maintain the psychological
contract”
Violation response more intense than breach as
respect and codes of conduct are called into
question as a “promise” has been broken and it
is more personalised
Guest & Conway Psychological
Contract
Background
Factors
Individual
Age
Gender
Union Member
Level in Org.
Type of work
Hours worked
Marital Status
Children
Organisational
Sector
Org. size
Location
Policy
Influences
HR Policy &
Practice
Direct
Participation
Job Alternatives
Organisational
Support
Work Centrality
Surveillance
Org. Change
Suitably qualified
Promises made
The Outcomes
Trust
Attitudinal
Consequences:
Org. commit
Work & Life sat.
Job Security
Motivation
Delivery of
the Deal
Behavioural
Consequences:
State of
Psychological
Contract
Fairness
Intention to stay
or quit
Knowledge
Sharing
Pate et al. Psychological
Contract Violation Model
Organisational
Justice Triggers
Distributive
Justice Issues
Procedural
Justice Issues
Interactional
Justice Issues
Attitudinal Outcomes
Lower Job Satisfaction
Lower Org. Commit
Increased Cynicism
Behavioural Outcomes
Lower Org. Citizenship
Lower effort
Understanding
Psychological Contract Violation
Violation is most likely when:
There is a history of conflict and low trust
Social distance exists between the parties
Incentives to breach contracts are high
One party places little value in the relationship
Factors that cause resistance to violation include:
Strong relationships
Frequent interactions
Sacrifice and previous investments
Responses to Psychological
Contract Violation
Nature of Ee Response
Constructive
Destructive
Active
Voice
Neglect
Destruction
Loyalty
Silence
Exit
Type of Ee Response
Passive
Exit & Neglect/Destruction
Exit is most likely following violation when:
–
–
–
–
–
Contract is transactional
Many other potential jobs or potential employees exist
Relationship is brief
Other people are leaving
Attempts to address issues have failed
Neglect/Destruction is most likely when:
– History of conflict, mistrust and violation
– No voice channels exist
– Other people demonstrate neglect and destruction
Voice & Loyalty/Silence
Voice is most likely when
–
–
–
–
A positive relationship and trust exists
Voice channels exist
Other people are using voice
People believe they can exercise influence
Loyalty/Silence is most likely when:
– There are no voice channels or ways of complaining
– No alternative opportunities exist elsewhere
Role of Trust in
Environmental Turbulence
Trust influences the likelihood that an action
would be perceived as a psychological breach
Trust acts as a mediator of the relationship
between the psychological contract and
employee’s subsequent contribution
Employees with low initial trust will experience a
greater decline in their trust following a
perceived breach
Types of Trust
Calculus Based Trust: Individual rationally
weighs up the value of sustaining the
relationship. Usually economically based
Knowledge Based Trust: This concerns the
predictability of the other party’s behaviour and
their likely future course of action
Identification Based Trust: Involves identification
with other party’s values, desires and intentions.
Violation of this form of trust engenders
strongest reaction
Outcomes of Psychological
Contract Breach
After a breach Employees are motivated to reduce their
commitment to the organisation or to contribute less to
the organisation in terms of in-role of extra-role
performance (Turnley et al. 2003)
Negatively influences employee attitudes towards
organisations and their jobs (Lester et al. 2002)
Leads employees to believe that organisation does not
care about their well-being & cannot be trusted
(Robinson 1996)
Negatively related to affective commitment & positively
related to intention to quit (Raja et al. 2004)
Outcomes of Psychological
Contract Breach
Less motivated to restore balance to the
employment relationship in some way (Lester et
al. 2002)
Organisational Citizenship Behaviour (OCB)–
discretionary, extra-role behaviour intended to
benefit the organisation not formally recognised
or rewarded during performance review
In cases of breach, employees will reduce OCB,
because it is discretionary and likely to go
unpunished (Robinson & Morrison 1995)
Outcomes of Psychological
Contract Violation
Psychological Contract Violation will be a key
intervening variable that will explain (mediate)
when psychological contract breach will influence
intention to quit (Suazo et al. 2005; Turnley &
Feldman 2000)
Psychological Contract Violation will mediate the
relationship between psychological contract
breach and professional commitment (Suazo et
al. 2005)
Layoffs & Psychological Contract
Edwards et al. (2003): Organisations with Ee
ideology of self-reliance perceived less of a breach
of contract following a layoff
High levels of work ethic and self-esteem influence
reactions of survivors to layoffs (Brockner et al.
1985; 1988)
Astrachen (1995): Layoff announcement induces
separation anxiety and degree of this depends on
size of layoffs
Mone (1997): Trust decreases following a layoff
Layoffs & Psychological Contract
Leana et al. (1992; 1987): Victims experience
overwhelming pessimism, anger, stress and
feelings of learned helplessness
Interpersonal Treatment/Interactional Justice
accords layoff victims increased perceived justice
(Naumann et al. 1998; Bennett et al. 1995)
Marks & Mirvis (1998): The way in which a merger
is handled by top mgt. affects Ees feelings about
their jobs and sense of personal stability.
Psychological Contract Change
Internal Change
– Contract Drift: Changes to the contract without any
formal effort to change the terms
External Change
– Accommodation: Mutually acceptable adjustments
within the existing contract
– “We must adjust to changing times and still hold to
underlying principles”
– Transformation: Redefinition and renegotiation of the
contract
Psychological Contract Drift
Gradual External Change
Zone of Acceptance
Cognitive
Tendencies
Working
Contract
Model
Contract
Schema
Maturation
Managing Psychological
Contract Drift
Periodic Conferences: Discussions and
reminders of contract terms can prevent erosion
or expansion of contract terms due to drift
Training & Development Exercises: Identifies
manager and subordinate expectations and
allows highlighting of differences/similarities
Updates: Resigning of contract on a regular
basis allows renewal and re-examination of
terms and conditions as well as reciprocal
expectations