Forced Employment Contract Change and the Psychological Contract

Abstract

Purpose: To explore the implications for all employees’ psychological contracts of a forced change from permanent to temporary employment status for some employees within an organisation.

Methodology/Approach: A random sample of 30 employees, stratified by employment status was selected. Each employee undertook a structured card sort of possible emotional responses to change followed by an in-depth interview to explore and explain their categorisation of these responses.

Findings: The nature of psychological contracts and organisational attachments for both permanent employees and forced temporary workers is complex. Permanent employees generally continue to exhibit relational forms of attachment to the organisation. These, they believe, are reciprocated by the organisation. Reactions from forced temporary workers are more varied. After a period of denial, some develop a more calculative approach to their interactions. Others maintain aspects of their previously developed relational attachments. Only some temporary workers appear to recognise that their future direction is no longer a concern of the organisation.

Research limitations/implications: Although only based upon one organisation, the findings suggest that the process of psychological contract adjustment is likely to emerge through gradual re-interpretation, rather than through re-negotiation.

Practical implications: Management actions need to be recognised as important in re-defining the nature of psychological contracts. The transitional nature of this process may be prolonged where management imposes transactional contracts and where communication and negotiation to create clear expectations is lacking.

Originality/value of paper: The findings provide new insights into the implications of forcing employees from permanent to temporary contracts for their, and remaining permanent employees’, psychological contracts.

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