Appraisal of the psychological contract from the organisations perspective Employment relationship describes dynamic interlocking relations that exist between individuals and their work organisations. At its most basic, the relationship embraces an economic relationship, the exchange of service for monetary rewards. The second component of this relationship involves a legal contract; where by a contract of employment is agreed. The third aspect involves social relationship; this part of the relationship is increasingly becoming significant given the increase utilisation of work teams.
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The forth component of this relationship revolves around psychological contract. This is essentially a dynamic two way exchange of perceived promises and obligations between employees and their employers. Bratton J. (2003) Effective people management is not only critical to organisation performance; it is very possible to state that its effect on the bottom line easily outstrips emphasis on, technology, quality, research and development. It is generally the case that in organisations where there are high levels of job satisfaction and job commitment among employees shows improving financial performance.
In order for organisations to attain set business strategy, alongside human resource strategy, their HR practices would have to embrace effective recruitment and selection, strategic training and appraisal, jobs (re)design to promote autonomy, flexibility, reward system and involvement climate for their employees. Mullins L. J. (2005) Recruitment and selection have always been critical processes for organisations. In recent years, there has been growing evidence that the formulation of a positive psychological contract with employees would provide the basis for a positive outcome in terms of organisational commitment and motivation.
It has been known for some time now that recruitment and eventual selection are crucial stages in the formation of the expectations that form the basis of a two way contract and communication between employer and employee. It is generally the view of employers especially in the knowledge industries that employees select the organisation and the work on offer as much as employers select employees. Bratton J. (2003) Nowadays employers are routinely seeking not just to attract, but also emphasize the need to retain employees as part of their evolving employment relationship.
Much value is ascribed to mutual and reciprocal understanding of expectations, as well as attempting to predict future behavior of their employees, with the use various psychometric testing, this is due to the high cost recruitment, retraining and the potential adverse impact on organisational goals. Organizations need to capitalise on surpluses in capabilities within their workforce, as well as developing their core workforce to meet the challenges of the ever changing business environments.
Human resource planning is crucial within any learning organisation to deliver the right kind of conditions of employment (psychological contract) their employees would appreciate. A critical appraisal of changes to the psychological contract Where over the last few decades personnel management is mainly built on a legally constructed exchange, employees are generally expecting to stay for life in return for their commitment, but the new HRM is keen to build a more dynamic construct concerned with developing a reciprocal commitment and obligation between each of the parties. Bratton J.
and Gold J. (2003) Contemporary managers are increasingly using the high commitment management approach to manage their workforce, which unlike the traditional approach of control, put emphasis to the development of organisational commitment amongst the employees, on the assumption that this will lead to overall increase in productivity, lower staff turnover and better motivated employees. On balance it considered that the new HRM approach with regards to psychological contract is different from old approach because it represents a different mindset and approach to managing people in the work.
It sees employees, both managerial and non-managerial as part of the solution rather than the problem. In essence empowered and continuously learning employees are central to organisational success. It has also been noted that the rise in prominence of the new HRM has coincided with a period of decline in trade union membership; this is ultimately due to the heavy focus on the individuals’ needs and the ways in which to motivate them to attain individual and organisational goals. An analysis the psychological contract and changes to it in the chosen organization
I have worked for London borough of Waltham forest in variety of roles for the last seven years, but in the last two years we have been subjected to rolling restructuring. But in the last six months, I have seen a lot of upheaval in the context of jobs cuts and teams being strip or merge, which is having a detrimental effect on staff morale. It has been announced that Waltham forest and Haringey council will be merging some of their services, which is leading to further job cuts.
Due to the social demographic factor within my current workplace and the growing shortfall in the local government pension budget, the government has made it clear to us that with the coming pension reform, we would have to work longer and as well as significantly increase our contribution in order to remedy the expected future shortfall. In my discussion with the HR section, I was able to obtain the council’s HR Scorecard record over two years. The statistic indicates staff absences and grievances have increase, but not significantly enough to suggest any breakdown in trust.
The training budget has definite been cut off now. Legal: many of the performance driven targets of the last decade are now been done away with gradually by the new local government minister. Public sector pension reform will be coming into existence within next few years due to the perceived high cost of present system to general taxpayers at large. The coalition government has also, proposed a reform of the social housing sector, thus reducing the scope of local government liabilities to future homeless families.
The implication of this reform potentially would lead to job losses, because our jobs depend on attending to homeless families and new social tenants. The government is also looking at the possibility of bringing in legislation to eventually free council from rendering social housing services altogether and handing it to housing associations solely. This is now making most of my colleagues to start considering prospect of remaining in their present employment.