Examples of psychological contracts in industry
There are many organizations that have created
corporate cultures with the purpose of supporting a foundation of positive,
productive and meaningful understanding between employees (Yarbrough, 2018).
Two examples will be discussed, Dollywood and Lego. Each explains effective
aspects of reciprocity with their employees (Yarbrough, 2018).
Dollywood
Dollywood
opened in May 3, 1986 in Pigeon Forge, Tennessee. Per the Pigeon Forge Chamber
of Commerce, the organization has experienced over $110 million in expansions,
shows, attractions and rides. Further, Dollywood is the biggest tourist
attraction in Tennessee and employees about 3000 local workers and supports 2.5
million guests to Pigeon Forge and Gatlinburg a year (Jackson, 2011). But, one
of the reasons for Dollywood's ongoing success is due to the organizations
focus on giving to and supporting stakeholders (Yarbrough, 2018). Per the
Appalachian Regional Commission, most the counties in East Tennessee are
economically distressed or at risk, the region has historically lagged the rest
of the country in economic indicators and income in the Appalachians is about
25% less than the US average (Yarbrough, 2018). For this reason, creating,
supporting and sustaining Dollywood in this region, is offering opportunities
for jobs, employee development, professional growth, entertainment and
advancement in a region where opportunities were scarce (Yarbrough, 2018).
Dollywood
was discovered, with a purpose of bringing opportunity to East Tennessee (Yarbrough,
2018). The entire Dollywood experience is paying tribute to the lives of people
that have lived and are living in the Appalachians (Yarbrough, 2018).
At the
organization’s core, there is intent to contribute to and improve the quality
of life for the organizational stakeholders, whether it is through creation of
economic opportunity or through entertainment, thus, creating an organizational
culture that actively engages in reciprocity, through giving first (Yarbrough,
2018).
Lego
Lego,
the family owned business, was started in Denmark by Ole Kirk Christiansen in 1932
(Lauwaert. 2008). The name Lego, as it translates from Danish, means to “play
well” and “play well” is the foundation of the organization’s ideals (Yarbrough,
2018). The organization seeks to create a construction toy that offers
opportunity for imagination, construction and ultimately innovation (Yarbrough,
2018). To reach these goals Lego drives innovations through collaboration
between organization, employees and stakeholders. "A very important aspect
of the strategy of bringing the fans into the company and tapping into their
creative potentials is community building, providing a fertile basis for the
user communities to thrive on" (Lauwaert, 2008). The organization actively
seeks a broad stakeholder base through ongoing feedback and communication
between users and engineers to build strategic plans. The organization believes
in creating loops of “feedback bringing the consumer into the magic circle” of
innovation (Lauwaert, 2008).
Lego
seeks to be inclusive with stakeholders, communicative with stakeholders and responsive
based on stakeholder feedback (Yarbrough, 2018). Recognizing a broad
stakeholder base and seeking to understand their needs creates a culture that
acknowledges, responds to and streamlines stakeholder perceptions and
assumptions (Yarbrough, 2018).
References
Jackson,
S, 2011, ‘The Road to Dollywood’, GO Magazine, Retrieved on 26 December 2016,
<http://www.gomag.com/article/the_road_to_dollywood>.
Lauwaert,
M, 2008, ‘Playing outside the box - on LEGO toys and the changing world of construction
play’, History & Technology, pp. 221-237.
Yarbrough,
JR, 2018, ‘Understanding the importance of the employee/employer psychological
contract’, Journal of management and marketing research, vol. 24, viewed
on 30 November 2020, <http://aabri.com/manuscripts/172572.pdf>.
The Psychological Contract has the greatest potential influence on employee engagement and as a result, the overall employee experience. Hidden in our hearts are the ideas, hopes, and dreams that truly define us. These expectations cannot be addressed adequately by clauses in an employment contract or hiring slogans that attempt to align expectations.
ReplyDeletein 2001 Douglas Conant took over as CEO of Campbell’s Soup and called it a “bad” company. Its products were bleeding market share, and research showed that 62 percent of the company’s managers did not consider themselves actively engaged in their jobs. Yet by 2009, 68 percent of the company’s employees said they were actively engaged, while just 3 percent considered themselves actively disengaged.
How did Conant do it? He made a commitment to his people, embodied in the phrase “Campbell valuing people, people valuing Campbell.” Conant improved the physical surroundings by removing the barbed wire fence around the offices and focused on improving manager communication. Conant also instituted programs to celebrate individual success, from sending them personal thank-you notes to having lunch with employees.
Campbell’s built a culture of engagement. It had nothing to do with air-hockey tables in the break rooms or on-site clinics. People engage with people, and they give more when they feel heard, empowered, and appreciated (Warner, 2018).
Psychological contracting reflects the employee trust system of mutual responsibility and commitment between individuals and organizations. But the difference between them is this: the content of organizational commitment is one-sided and reflects not only the employee's emotions in the organization, but also the bilateral relationship associated with the psychological contract, which reflects the trust of the employees in accepting responsibility and the organization accepting responsibility. In the process, both parties will compare and vary the extent to which the contract is performed in order for employees to reach equilibrium (Jianwu, 2014).
ReplyDeleteScholars have increasingly recognized that the theoretical underpinnings of employee-organization relationships (EOR) are in in need of further extension in light of recent organizational changes. In prior research, the EOR has been based on social exchange theory, and the psychological contract (PC) has played a central role in understanding this crucial aspect of organizational life. The psychological contract emerged as a concept in psychological literature almost fifty years ago in a footnote in Understanding Organizational Behavior. The perceived violation of Psychological Contract of employees reflects unfulfilled promises from the employer’s side. This could also lead to adverse effects on the organization. (Jani 2014)
ReplyDeleteAgreed with you, Lego, the family owned business, was started in Denmark by Ole Kirk Christiansen in 1932. The organization seeks to create a construction toy that offers opportunity for imagination, construction and ultimately innovation. Lego seeks to be inclusive with stakeholders, communicative with stakeholders and responsive based on stakeholder feedback (Yarbrough, 2018).
ReplyDeletePsychological Contract theory (Rousseau, 1995) suggests that employees with family responsibilities may negotiate new psychological contracts that include family- responsive benefits such as flexible work hours. Job involvement and quality of work life are more among long term employees and permanent employees than contract employees (Lijo & Amurtha, 2013). Rousseau & Schalk (2000), found that employers offered job security and internal career opportunity with little risk of exposure, because workers did not leave, and certainly not go to the competitor. Employees were obedient and disciplined when carrying out their function and when requesting reallocation; and provided maximum performance at present function. In return, employees expected the reward of loyalty through continuation of the labour relationships and job security, irrespective of economic circumstances; the control of career by employer and payment of a guaranteed wage (Rousseau and Shperling, 2003).
ReplyDeleteIn the same context, if you consider Netflix, they have a culture that is embedded within all their employees and the management. The culture they have created is a ‘No Rule’, culture. All employees are required to work by one rule, which is ‘work in best interest for Netflix’ (WeAreNetlix, 2020). This is a very good example of a psychological contract between an employer and an employee.
ReplyDeleteThe Psychological Contract has influence on employee engagement . According to Armstrong (2006) Development of a positive psychological contract by treating people as stakeholders, relying on consensus and cooperation rather than control and coercion, and focusing on the provision of opportunities for learning, development and career progression.
ReplyDeleteFurther, the physical, psychological, social, or organizational features of a job that are functional in that they help achieve work goals, reduce job demands, and stimulate personal growth, learning, and development and Job resources, which initiate a good employee relations(Weire & Berghe (2004).
ReplyDeleteCorporate culture is defined by “the values, norms and
ReplyDeletebehaviors of individuals that collectively form and define the unique social environment of an
organization.” ( Tewari & Sharma, 2019)
Psychological contract is a newly arousing organizational term that interprets the fulfillment and non-fulfillment of organizational relationships in terms of mutual obligations, expectations and promises ( Rachael & Aarulandu ,2017).
ReplyDeleteThe literature on the psychological contract has expanded considerably over the past 10 years, primarily under the influence of Rousseau (1989; 1995; 2001). However, the concept has a much longer and deeper pedigree, with its antecedents evident in earlier work on social exchange theory. Central to this theory is that social relationships have always been comprized of unspecified obligations and the distribution of unequal power resources (Blau, 1964). In terms of organizational analysis, social exchange constructs are clearly evident in the work of Argyris (1960), Levinson et al. (1962), and Schein (1965; 1978). Argyris (1960) used the term ‘psychological work contract’ to describe an embeddedness of the power of perception and the values held by both parties (organization and individual) to the employment relationship. Significantly, this earlier literature illustrates the point that employment relationships are shaped as much by a social as well as an economic exchange (Fox, 1974).
ReplyDelete