Ambiguity/uncertainty, High turnover/termination, Instability, Short term duration, Performance terms not specified
Adapted from: Rousseau, 1995
Both components draw on aspects of relational contract theory, particularly Macneil’s (19858) concept of a spectrum of contractual behaviour. This is the idea that the extent to which social relations characterise an exchange relationship can be shown as ranging along a spectrum with certain of them intensified at one end and others at the other end (Macneil, 1985, 2000). Macneil’s (1985) concept reflects the view that every exchange transaction is embedded in complex relations, and that understanding any transaction requires recognition and consideration of all essential elements of those relations that might affect the transaction significantly. In relational contract theory, social exchange is the essence of contract and all types of contract are considered to be relational in nature to one degree or another (Macneil, 1985).
Rousseau’s (1995) adaptation of Macneil’s (1985) spectrum concept to
psychological contracts entailed placing so-called ‘transactional’ contract terms which are considered conceptually as-if-discrete from social relations, opposite to those which are highly embedded in social relations, so-called ‘relational’ terms. In so doing, Rousseau (1995) simplified and clarified basic conceptual
differences in the character of contract terms. For example, those terms dealing with material matters and less relationally-oriented, such as wage increases and effort required, are classified as ‘transactional’, and those dealing with non- material matters and more highly embedded in social relations, such as loyalty and welfare, are classified as ‘relational’. Notwithstanding this conceptual distinction between transactional and relational terms, research has shown them not to be mutually exclusive and often found blended together in psychological contracts (Rousseau, 1995; Millward & Herriot, 2000).
The second component of the bidimensional framework uses the conceptual distinction between transactional and relational contract terms and features to provide a basis on which four psychological contract types can be identified: (i) transactional, (ii) relational, (iii) balanced, and (iv) transitional. The transactional and relational contract types are the basic contract types with the balanced contract representing a blend of the two basic contract types. The transitional contract represents a situation in which no psychological contract operates (Rousseau, 1995).
Content terms that are explicit, short-term and economic in nature are the currency of transactional exchange. Contracts based on transactional exchange
assume rational and self-interested parties, are likely to remain stable over time, and do not result in an ongoing interdependence of the parties. Relational
exchange, on the other hand, is more complex. Its currency comprises open-ended terms that are socio-emotional in nature. Contracts based on relational exchange involve investments that are interdependent and difficult from which to withdraw. Such contracts evolve over time, create a commitment to the other party that promotes interdependence, and lessens the weight of self-interest (Rousseau, 1995).
The wide acceptance of the bidimensional framework has been reflected in its use in empirical research to help facilitate understanding of how and why individuals respond to changes in the employment relationship (Anderson & Schalk, 1998; Cavanaugh & Noe, 1999; Herriot, Manning & Kidd, 1997; Millward & Hopkins, 1998; Robinson & Rousseau, 1994; Robinson, Kraatz, & Rousseau, 1994; Rousseau & McLean Parks, 1993; Rousseau & Wade-Benzoni, 1995). In particular, the transactional/relational conceptual distinction at its heart has been instrumental in linking the nature of the currency exchanged to the way in which individuals respond to non-delivery by the organisation (Guzzo et al., 1994; Herriot & Pemberton, 1996; Morrison & Robinson, 1997; Rousseau & McLean Parks, 1993; Robinson & Morrison, 1995, 2000; Robinson & Rousseau, 1994; Turnley & Feldman, 1999).
Chapter summary
Early theorists from Barnard (1938) to Schein (1965, 1970, 1980) conceptualised the psychological contract as a mutual, dyadic exchange process between
employee and employer. Central to this concept was the notion that implicit, unwritten expectations, particularly regarding reciprocity and mutuality, were crucial in determining the behaviour of both parties to a psychological contract in the workplace. The psychological contract was conceived as a dynamic, slowly evolving process of interaction that reflected interdependence between employee and organisation. As such, it was held to be fundamental to co-operative
relationships in organisations that produced benefits to both parties. Such benefits included not only personal material gain, but could also could include non-
material benefits such as rewarding experiences arising from an individual’s desire to further humanitarian ideals or spiritual values.
Research over the last decade and a half built on this earlier work and has resulted in definition of the psychological contract in cognitive-perceptual terms. This approach defines a psychological contract as resulting from a subjective act of cognition by the individual that his or her contributions obligate the organisation to reciprocate. The cognitive-perceptual approach does not assume that the employee and the employer have a shared objective understanding; in this way the psychological contract is defined as the employee’s solo conceptualisation of a dyadic relationship. The psychological contract serves an interpretive and inferential function in enabling individuals cognitively and intuitively to make meaningful interpretations of organisational actions and intent.
Because it is an enduring schema or mental model of the employee-organisation relationship, the psychological contract forms an important aspect of the
in the psychological contract can have a major impact on the individual’s attitudes and behaviours as manifested in job performance, job satisfaction, organisational citizenship behaviour, organisational commitment, intent to leave, and turnover.
An integral component in operationalising the cognitive-perceptual definitional approach has been the bidimensional interpretative framework that links the character of contract terms – economic and socio-emotional – to two basic contract types – transactional and relational. The bidimensional classification of psychological contracts has helped facilitate understanding of how and why individuals respond to change in the employment relationship. However, while this conceptualisation of the psychological contract is parsimonious it does not allow for the possibility identified by early theorists, that the psychological contract might embrace the possibility of contributions arising out of an individual’s ideological leanings that go beyond the employee-organisation relationship, to be explicitly recognised.
The following chapter argues that the simplicity of the bidimensional
interpretative framework conflates ideology-related contributions with relational contributions. In so doing it masks essential differences between the three forms of contribution. It also obscures the increasingly important role that professional ideologies play in the new employee-organisation relationship, and the
implications that an organisation’s failure to recognise the significance of such ideologies has for the attitudes and behaviour of professional employee.