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This study examines the status of psychological contracts as we enter the 21st century. Employees identified the importance they placed on various aspects of the psychological contract and the degree to which their organization had fulfilled these obligations. Results showed that organizations were struggling to fulfill components of the psychological contract that their employees valued most (e.g., open and honest communication). These discrepancies (between perceived importance and perceived fulfillment) significantly impacted employee satisfaction and intention to leave the organization. These discrepancies also affected employee performance, although to a lesser extent. Organizational implications and suggestions for improving psychological contract fulfillment are discussed.
The current economic and employment landscape continues to place pressure on how organizations structure, motivate, and retain their employee workforce (Cappelli, 1999; Hitt, 1998). As new markets, competitors, and technologies begin to emerge, there will be an increased need for skilled employees at every level and functional area of the organization (Neilson, et al., 2000). Employees today are often selected and recruited into an organization because their particular skills and expertise can assist the organization in achieving high standards of performance, especially in the short term. As competition for the best employees increases, managers, human resource directors, and recruiters are all looking for the right combination of inducements to attract these individuals. Gaining a better understanding of what individuals desire for their employment relationship is critical to the success of these efforts.
Psychological contracts, in general, are the set of beliefs held by an individual employee about the terms of the exchange agreement between the employee and his/her organization (Rousseau, 1989). For example, an employee may perceive that he/she has been promised competitive wages, promotional opportunities, job training, and meaningful work, and in return has promised to give the organization his/her energy, time, technical skills, and commitment. Unlike formal employee-employer contracts, the psychological contract is inherently perceptual and therefore one party's interpretation of the terms and conditions of the obligations within the contract may not be shared by the other (McLean Parks and Schmedemann, 1994; Rousseau, 1995, 1998).
This study examines the types of inducements businesses currently offer to their employees in an attempt to attract and retain their skills and expertise. The purpose of this study is threefold. First, we examine which employer...