Psychological Contract Employees

The psychological contract is a metaphor that includes the unwritten perceptions and mutual obligations of employees and employers from each other such as motivations, opportunity to develop, job security and decent wages. These perceptions may be the results of the formal contracts or they may be implied by the expectations which each holds of the other and which are communicated in a multitude of subtle or not subtle ways (Bratton and Gold, 2003 – Herriot et al 1997). A major feature of the psychological contract in that the individual believes that the agreement is mutual and that a common understanding exists between the parties.

The migration of earthlings is bringing us face to face with more culturally different people than ever before. During the last decade, the workplace has changed because of transitions such as mergers and acquisitions, restructurings and downsizings and privatisations. These transitions emphasizing flexibility and cost reduction have impacted not only organisations and jobs, but also the employer-employee relationship, bringing about a new employment contract (Burke & Cooper, 2002). For the managers to be successful in these international organisations with the variety of cultures it is vital to have the ability to work effectively in a situation of cultural conflict (Choi, C.J. 1994).

Employers can no longer offer job security and long-term career opportunities but they are responsible for providing their employees with an environment for growth and learning so that employees gain the experience and training needed to be employable in the organisation or elsewhere. Consequently, the primary expectations towards employees are no longer focused on loyalty and commitment but on adding value and being responsible for one’s own career (Hall & Moss, 1998; McCarthy & Hall, 2000). Although the current literature focuses extensively on discussing this new deal and its consequences, the question remains to what extent this new contract is widespread across employment relationships. It is the purpose of this research to examine employment relationships across a representative sample of the working population instead of expert informants or targeted populations.

One way to examine the new employment relationship is by analysing the employment relationships from psychological contract points of view (Herriot, 2001; Rousseau, 1995). The psychological contract is a metaphor that includes the unwritten expectations and mutual obligations of employees and employers from each other such as motivations, opportunity to develop, job security and decent wages (Bratton and Gold, 2003). It can be defined as an exchange agreement of promises and contributions between two parties, an employee and an employer. This implies that each of the parties might have a different perception of what these obligations are. It contains an individual’s belief regarding the mutual obligations of both parties to the relationship (Rousseau, 1990, 1995). Therefore, research on psychological contracts provides the opportunity to understand employment relationships by examining the types of obligations that both parties have promised each other. It can be argued that the initial anger at the breaking of the old deal of security for loyalty has given way to recognition that psychological contracts have changed (Herriot, 2001). The question, however, remains whether one can only distinguish between old and new psychological contracts or whether multiple types of psychological contracts can be distinguished.

Organisations across the globe are experiencing stiff competition and a business environment marked by uncertainty and change. In response, many companies have altered the psychological contracts that they have with their employees (Cappelli, 1999). Initial research on psychological contracts in the United States has focused on identifying various components of the psychological contract (Rousseau, 1998), and examining the negative consequences that arise when employees perceive that their organisation has breached the contract by failing to fulfill one or more of their obligations (Robinson and Rousseau, 1994; Robinson et al., 1994; Robinson 1996; Rousseau, 1995). While these early studies were informative and helped managers identify ways to better manage their domestic workforces, they still did not provide a complete picture of the challenges of (and potential solutions to) effectively managing the employee-employer relationship in other countries (Westwood et al., 2001). “Despite the academic origins of the term, many managers believe that the idea of the psychological contract offers a valid and helpful framework for thinking about the employment relationship against the background of a changing labour market (CIPD, 2008)”.

The psychological contract can be distinguished from the legal contract of employment. The legal contract suggests only a limited and uncertain representation of the reality of the employment relationship. The psychological contract on the other hand looks at the reality of the situation as perceived by the parties, and may be more influential than the formal contract in affecting how employees behave from day to day. “It is the psychological contract that effectively tells employees what they are required to do in order to meet their side of the bargain, and what they can expect from their job. It may not – indeed in general it will not – be strictly enforceable, though courts may be influenced by a view of the underlying relationship between employer and employee, for example in interpreting the common law duty to show mutual trust and confidence.” (CIPD, 2008)

My research will be based on psychological contract in multicultural organisations and the theories and methods used by HR managers and/or HR departments in practice, with an emphasis on the international organisations. Research into the psychological contract has produced a number of important messages for managers. In every multicultural organisation there are employees from different cultures. Any larger the geographical domain of the organisation, any more variety of the cultures will be present. These employees will have different expectations from their employers, base on their culture, religion and experience backgrounds. Different backgrounds result in different decisions makings based on interpreting things observed in the light of things believed (Leavitt H. J 1988). This mixture, clashing and co-evolution of cultures is fascinating and at the same time very important and challenging for the international organisations.

In harmony, this research will tend to cover the work-life balance as integral part of recently established psychological contract in Multinational Companies which have a diverse culture or workforce.

2.0 Research Question

Further to facts mentioned above, there are Reward, Remuneration and Perquisites as the underlying subjects which I will concentrate on. These, together with training, are important in employee relations in an organisation. And to what extent they may lead to labour turn over if not satisfied or absenteeism.

This research will contrast previous findings into the violation of the psychological contract in that it indicates that a more complex interpretation of the psychological contract is used by the management, the more readily influenced by/to an individual’s sociological environment.

I also want to point to the difference may exist in the psychological contract and the expectation in non-profit organisation such as Oxfam. There are continues debates on money as a motivator. Frederick Herzberg motivational theory, for example, whose ideas relate strongly to modern ethical management and social responsibility (BusinessBall, 2006). The theories of money as a motivator will not necessarily work for these organisations. Challenging the current debates and theories and applying them to non-profit organisation will be the next step in my research. I will also critically analyse the difference between people’s expectation according to their working environment and determine the extent to which they may be affected by the organisation nature. I also aim to critically analysis the role of gender and religion background to evaluate the importance of the correct implications of psychological contract.

And finally using the literature on international human resource management, the research will address some issues which may happen in international organisations when recruiting internationally, from psychological contract point of view. So the initial question of this research will be: How can international organisations manage their employees with different culture backgrounds in terms of psychological contract?

2.1 Background

The term ‘psychological contract’ was first used in the early 1960s by Argyris, but became more popular following the economic downturn in the early 1990s (CIPD, 2008). It was subsequently popularised and discussed by Levison (1962), Price, Muden, Mandl, Schein (1978; 1980) and Soley and much literature is written about the process of forming psychological contracts.

“Earlier works completed by Argyris, argues the psychological contract as a conceptually different form both formal and implied contract in that it considers the individuals beliefs in the terms of an agreement between the individual and their employer” (Hall R, 2003).

Career success encompasses the real or perceived achievements individuals have accumulated as a result of their work experiences (Judge, Higgins, Thoresen, & Barrick, 1999, p. 621). Real or objective career success reflects verifiable attainments in areas such as work performance (e.g., publications), pay, position, and promotions. Following Hughes’s (1958) emphasis on the importance of the beholder’s eye when assessing a career, career scholars (e.g., Hall, 1976, 2002; Sturges, 1999) have also addressed subjective career success as experienced directly by the person engaged in his or her career. A review of published empirical research on this topic over the past decade revealed that five of the most commonly identified precursors of career success are gender, personality, education, mentoring relationships, and career tactics. The first two are ascribed characteristics, the latter three are enacted. For instance, gender has been found to be related to salary and managerial level (Melamed, 1995), as well as salary increases, management promotions, and hierarchical levels (Cox & Harquail, 1991). The personality dimensions of conscientiousness and extraversion have both been generally associated with higher subsequent job satisfaction, income, and occupational status (Judge et al., 1999; Seibert & Kraimer, 2001), whereas emotional instability has been related to lower income, occupational status (Judge et al., 1999; Seibert & Kraimer, 2001), as well as job and career satisfaction (Boudreau et al., 2001; Seibert & Kraimer, 2001). Regarding education, a person’s educational level, quality, prestige, and type of degree have all been found to predict subsequent financial success (Judge, Cable, Boudreau, & Bretz, 1995).

This research will focuse on psychological contract in multicultural organisations and the theories and methods used by the human resources managers in practice, with an emphasis on the international organisations. Research into the psychological contract between employer and employees has produced a number of important messages for managers. In every multicultural organisation there are employees from different cultures. Any larger the geographical domain of the organisation, any more variety of the cultures will be present. These employees will have different expectations from their employers, base on their culture, religion and experience backgrounds. Different backgrounds result in different decisions makings based on interpreting things observed in the light of things believed (Leavitt H. J 1988)

The concept of the psychological contract has recently achieved considerable prominence in managerial texts in human resources discourse. The extant literature has emphasised the importance, the type and the nature of these expectations. Psychological contract must respect people’s difference, their emotions and feelings, thinking -learning -problem solving and reasoning differences, attitudes, beliefs and values etc.

Cross-culture management and power distance are other issues that need to be addressed. What are the reasons that generate distance? They can be social class, religion, nationality, education, quality of speaking the local language or the common language of the organisation etc (Tjosvold D., 2003). Even with the best intentions from the employer and employee, relations can break down and the psychological contract can be violated. Disruption to the contract may occur when circumstances make it impossible for one or both parties to satisfy their part of the contract, despite the fact that they might have been willing to do so. The subjective nature of psychological contracts may sometimes leave it open to interpretation which makes it easier to feel that a violation has occurred but harder to actually know if it really has.

3.0 Research Methodology

This chapter outlines discussion on the methodological concerns with regards to the analysis of the research question. The main focus of this chapter is the research approach and the research design adopted to conduct the analysis.

3.1 Research approach

The research strategy I intend to adopt is a combination of multi-methods, of deductive, inductive and exploratory. Quantitative data will be collected throughout, from secondary sources: journals, databases, books, newspapers and magazine articles etc. Secondary data includes raw and published; quantitative and qualitative data which can be used in both descriptive and explanatory research (Saunders et. al., 2003). A comprehensive review of the relevant literature including a computer-assisted search will be undertaken through secondary data derived from various case studies and administrated questionnaires in order to develop an understanding of previous work and practices in the field of Culture and Psychological Contract. It is important to be aware that some literature may contain out-of-date material. For this reason I also use articles from the databases through the university, because the information available in databases is relatively new.

I intend to use the following secondary databases:

• Emerald Full text, Reviews

• Proquest

• Swet Wise

• Reuters Business Insight

• Regional Business News

• Questia Media

I will also access the following information sources:

• Oxford Brookes University library

• Bodleian Library

• Oxfam GB library in Oxford

• Library of Bilkent University in Ankara, Turkey

Primary research will be conducted for the case study of this research, using a closed questionnaire. Saunders et al (2003) says that data collected using open-ended questions allows individuals more flexibility in answering, which may confirm a hypothesis or otherwise. The limitation or disadvantage of this approach is that it is subjective and can only be applied to a limited sample of participants (Saunders et el. 2003). The inductive approach takes to account social/cultural considerations, which enables to establish the intentions of the respondents more clearly.

3.2 Research design

According to Nachmias & Nachmias (1987) the research design is a logical model of proof that allows the researcher to draw inferences concerning causal relationships among the variables under investigation. Consequently, the appropriate research design will depend on the problem to be investigated (Churchill, 1991), the purpose of the research, the research questions, and the state of the knowledge existing prior to the research plan (Eisenhardt, 1989). The three basic types of research designs are: Exploratory (Case Studies), Descriptive and Causal. Research methods and data collection, form the elementary part of this research’s design.

The research title “How can international organisations manage their employees with different culture backgrounds in terms of psychological contract?” can be divided into its core components to provide the aims and objectives for research. The research’s terms of reference for investigating the relationship between culture and the psychological contract are:

• To explore the notion of culture, cultural differences and cross-culture issues within organisations

• To explore the notion of psychological contract and how it is perceived within international organisations

• To critically review the published theories and contributions to human resources management issues within international organisations.

3.2.1 Case Study

Beside the theories I will use case studies to develop the arguments that I need to achieve my research objectives. The case study approach is the most widely used in management fraternity. Case studies are detailed investigations of single individuals, single groups or departments in an organisation, or a whole organisation. Case study data can be extremely rich, varied and detailed. The sequence of events can help to establish cause and affect relationships.

Case study data can be collected over an extended time series to produce what are called longitudinal studies (Buchanan & Huczynski, 1985 p.25). Case study is not a new form of research; naturalistic inquiry was the primary research tool used until the development of the scientific method. There are four types of case studies, which are selected depending on the objectives/ goals of the investigator: Illustrative Case Studies, Exploratory Case studies, Cumulative case studies, Critical Instance Case studies (Buchanan & Huczynski, 1985 p.25).

For this research the critical instance case study will be used. This type of case study examines one or more sites for either the purpose of examining a situation of unique interest with little to no interest in generalisability, or to call into question or challenge a highly generalised universal assertion. This method is used to answer cause and effect questions.

I begin the case study after selecting from the different sub categories of case study and identifying a theoretical perspective. The process of deduction begins with theories from which hypotheses are derived, and thus providing generalisations. The process of induction, on the other hand, begins with the observation of some phenomena from which generalisations are derived, thus finally resulting in theorising.

Although prior evidence has demonstrated racial differences in employee absenteeism, no existing research explains this phenomenon. The present study will try to examine the roles of 2 diversity cues related to workplace support-perceived organizational value of diversity and supervisor-subordinate racial/ethnic similarity-in explicating this demographic difference among 659 Black, White, and Hispanic employees of U.K companies. There are a number of ways to estimate the financial impact of absenteeism on organizations. For instance, some analysts use the employees’ daily wages whereas others also include the costs of replacement workers and lost revenue. No matter what the method of estimation, there is no denying absenteeism is costly. In fact, conservative estimates place the cost around $200 dollars per employee per missed day (Anderson, 2005). More liberal estimates suggest costs may be closer to $700 dollars per employee per missed day and that the resulting annual losses for some employers exceed $1 million dollars (Armes, 2005). Accordingly, minimizing avoidable absence is a key concern among organizational administrators.

Despite a rich history of research examining absenteeism, it appears this trend has slowed of late. A recent review of topical coverage in scholastic human resource management (HRM) journals from 1994 to 2001 concluded that absenteeism articles were “quite scarce, despite the fact that Harrison and Martocchio (1998) have deemed absenteeism a ‘vigorous area of scholarship'” (Hoobler & Johnson, 2004, p. 671). The existing literature on absenteeism has provided a wealth of knowledge regarding its causes and consequences, but the recent paucity of research has left some pressing questions regarding the topic unanswered.

The participants in this study were a part of the Equal Employment Opportunity Commission 40th Anniversary Civil Rights in the Workplace survey, conducted by the Gallup Organization from January through September 2008. A total of 1,252 individuals working in the United Kingdom took part in the telephone-administered survey. Eight hundred sixty-one respondents were full-time employees. Because our focus is on racial and ethnic group differences, we included only data from the subgroups with large enough sample sizes to test the study hypotheses (TV = 755). Of the remaining participants with complete data (N = 659), 301 (45.7%) were men and 358 (54.3%) were women. In terms of race and ethnicity: 294 were White, 172 Black, and 193 Hispanic.

3.3 Questionnaire

The questionnaire is with the aim of collecting information on the management process of retaining psychological contracts in Multinational organisations in the United Kingdom and the elements affecting the process of implementation (absenteeism). The questioner (copy available upon request) was sent to the case study organisation’s employees thorough their local network. The same questions were given to this group which was a mixture of male and female, with different cultural backgrounds, holding various positions in different hierarchy levels.

3.4 Triangulation

All the data collected from secondary and primary sources are analysed to make any comparisons in data patterns within the sources, identify a new hypothesis or trend, and to identify any possible factors present in the results of the analysis, for future research. The findings for the research question are then compared with existing research carried out by psychological contract Monitor Trends Report (2004) to make relevant assumptions.

4.0 Literature Review

4.1 Absenteeism and Cultural Diversity

There is no shortage of studies examining employee absenteeism. Researchers have invested a great deal of time and effort in determining its antecedents and outcomes (see Harrison & Martocchio, 1998 for a review of this literature). In doing so, they have answered a number of important questions concerning who is more likely to be absent and why. Unfortunately, questions remain regarding the origin of racial differences in the propensity to be absent from work. In fact, we could find almost no theoretical or empirical inquiry devoted to explaining this phenomenon.

What theory and research do suggest, however, is support received from the organization, and its members, is a primary determinant of employee attendance. Perceived organizational support is proposed to relate to organizational outcomes, such as attendance, through a social exchange mechanism (Blau, 1964; Rhoades & Eisenberger, 2002). Employees who perceive their organization as supportive, in turn, feel an obligation to reciprocate in the form of enhanced job satisfaction and organizational commitment, and reduced withdrawal in terms of turnover and absenteeism (Eisenberger, Armeli, Rexwinkel, Lynch, & Rhoades, 2001). In addition, employees, particularly those in leadership, are perceived to personify the organization and its motives. A supportive supervisor, therefore, is equated with a firm caring for its employees, resulting in positive employee affect and reduced withdrawal (Eisenberger, Stinglhamber, Vandenberghe, Sucharski, & Rhoades, 2002).

A number of studies underscore the role of organizational support in influencing absenteeism. For instance, Eisenberger et al. (2001) found perceived organizational support significantly predicted attendance, with those perceiving more support being absent less often. Consistent with social exchange theory, employees’ “felt obligation” to reciprocate organizational goodwill mediated the perceived organizational support-withdrawal behavior relationship. In a subsequent investigation, Eisenberger et al. (2002) showed perceived supervisor support preceded perceived organizational support, suggesting employees view a supportive supervisor as a form of organizational support. Rhoades and Eisenberger’s (2002) meta-analysis further demonstrated the significant relationship between perceived organizational support and a number of relevant outcomes, including supervisory support, work attitudes, and withdrawal behaviors. Thus, it appears supportive supervisors and work environments are associated with lower employee absenteeism.

Unfortunately, the support experienced by an employee often differs as a function of race and ethnicity. Elsass and Graves (1997) discuss how minorities commonly find themselves excluded and denied the same type of support available to White employees. For example, Black managers feel less accepted by their organizations and are evaluated more harshly by their supervisors than comparable White managers (Greenhaus, Parasuraman, & Wormley, 1990). More recent evidence indicates Black employees routinely experience more discrimination and less supportive work environments than their White counterparts (Deitch, Barsky, Butz, Chan, Brief, & Bradley, 2003). Although the literature on Black-White differences in organizational experiences far exceeds that on Hispanic-white differences, there is reason to believe Hispanics also receive differential treatment, which may affect their perceptions of support (e.g., Foley, Kidder, & Powell, 2002; James, Lovato, & Khoo, 1994; Sanchez & Brock, 1996). In fact, a recent study showed Hispanic professionals face more stress than their White peers, and much of this discrepancy is attributable to a lack of organizational support (Rodriguez-Calcagno & Brewer, 2005).

The preceding discussion suggests perceived support predicts absenteeism, and experiences of organizational support differ by race and ethnicity. Spence’s (1973) work on market signaling provides a theoretical basis for understanding the manifestation of demographic differences in perceived support. Basically, he proposed that employees interpret cues in the workplace and assign meaning to them to represent unknown information. For instance, a supervisor providing mentoring for a subordinate could lead the subordinate to infer that the company values the development of its personnel. Highhouse and Hoffman (2001) further expanded on this process to include signals, cues, and heuristics. Signals are the messages organizations attempt to send, cues are the factors employees detect, and heuristics are the cognitive rules of thumb employees use to make sense of the cues.

Arguably, organizations attempt to send signals of support to all of their employees. The interpretation of support-related cues, however, could vary across groups. For instance, cues indicating the organization’s stance on diversity could precipitate racial or ethnic differences in interpretation because support for diversity is aligned more closely with identity affirmation for minorities than for White employees (Ashforth & Mael, 1989). Accordingly, the former should be more apt to enlist positive heuristics for interpreting these cues, such as inferring that more support for diversity equals more support for me. Consistent with this notion, several investigations have shown organizational support for equal employment opportunity and diversity to be perceived more favorably among women and minorities, relative to their White male counterparts (e.g., Konrad & Linnehan, 1995b; Parker, Baltes, & Christiansen, 1997).

Taking this argument one step further, research has shown psychological contract expectations to differ for minority and majority employees. A psychological contract is the implicit set of reciprocal obligations between an employee and the organization (Rousseau, 1990). Essentially, employees develop a sense of what is expected of them as well as a set of expectations concerning what the organization should provide for them in exchange. Though many elements of the psychological contract are consistent across racial and ethnic groups (e.g., performance-based pay, job security, career development), there appears to be an additional set of expectations unique to minorities (Chrobot-Mason, 2003). These include factors such as minority representation, elimination of systemic bias, support for unique minority issues, and equal valuation of diverse perspectives. Thus, cues pertaining to diversity should exert disproportionately more influence on employee perceptions of support among minority employees.

4.2 Work Satisfaction and psychological empowerment enhancing organisational commitment

According to Hackman and Oldham’s job characteristics model, the five primary job characteristics of skill variety, task identity, task significance, autonomy, and feedback have impacts on employees’ productivity, motivation, and satisfaction. In the organizational change process, if work characteristics can be changed and redesigned to enhance employees’ perceptions of psychological empowerment–which in turn makes them feel the meaning, impact, self-determination, and self-efficacy of their work–employees’ loyalty and commitment to their organization can be maintained.

Based on Hackman and Oldham’s job characteristics model, work redesign is defined as changes in skill variety, task identity, task significance, autonomy, and feedback. Good work performance results from an employee’s inner motivation, which can be improved by increasing work responsibility, meaning, and feedback. In a changing environment, employees’ work content and mission will become different, and the organizational structure will change. In this situation, work redesign can make employees feel that the organization has provided the necessary resources to help them deal with the stress arising from the change. Evangelista and Burke noted that corporate downsizings mean extended hours and a heavier workload for surviving employees, It is vital for managers to assess business unit obligations and internal tasks to effectively and fairly manage and balance workloads among the employees that remain after a downsizing. Engaging in work redesign is unavoidably necessary in such situations. Field experiments have provided fairly clear and consistent evidence of the effects of work redesign. In particular, studies have shown that employees perceive the changes that have been made to their jobs and express higher levels of motivation, satisfaction, or both. In addition, Mishra and Spreitzer noted that job redesign change could enhance the intrinsic quality of the remaining employees’ work, which is likely to help those employees feel better able to cope with the downsizing and increase the likelihood of more active responses to the resulting changes.

Theorists and practitioners discuss the empowerment concept from two different perspectives. First, some consider empowerment as a set of activities and practices by managers that give power, control, and authority to subordinates. In an environment characterized by intense competition and new technology, many top managers believe that giving up centralized control will promote speed, flexibility, and decisiveness in employees’ actions. In this regard, empowerment means an organization ensures that (1) employees receive information about organization performance, (2) employees have the knowledge and skills to contribute to achieving the organization goals, (3) employees have the power to make substantive decisions, and (4) employees are rewarded based on the organizations’ performance.

This concept of empowerment is rooted in practice and management. The second interpretation of empowerment comes from the view point of the follower. It can be stated simply as “employees are empowered if they perceive themselves to be empowered.” In support of this, Conger and Kanungo defined empowerment as a process of enhancing the feelings of self-efficacy among organizational members. Thomas and Velthouse presented a cognitive model of empowerment within which empowerment is defined as increased intrinsic task motivation and four cognitions are identified as the basis for worker empowerment: sense of impact, competence, meaningfulness, and choice. Spreitzer modified the Thomas and Velthouse model and defined empowerment as reflecting a personal sense of control in the workplace, as manifested in four beliefs about the person-work environment relationship: meaning, competence, self-determination, and impact. According to Mishra and Spreitzer, meaning reflects a sense of purpose or personal connection to the work, and competence indicates that individuals believe they have the skills and abilities necessary to perform their work well. Self-determination reflects a sense of freedom about how individuals do their own work, and impact describes a belief that individuals can influence the system in which they are embedded.

Organizational commitment is defined as the psychological attachment of workers to their organization. Commitment to an organization has been found to relate positively with a variety of desirable work outcomes, including job satisfaction, motivation and performance. Organizational commitment has also been found to be negatively correlated with absenteeism and turnover. The original definition of organizational commitment, proposed by Mowday, Porter, and Steers includes three components: acceptance of organizational goals and values, extra effort on behalf of the organization, and a desire to remain with the employer. Mowday and colleagues proposed a 15-item measure–the Organizational Commitment Questionnaire, or OCQ–that includes all three components. However, the OCQ is a one-dimensional measure.

O’Reilly and Chatmen attempted to clarify the organizational commitment construct as one focused on the basis of an employee’s psychological attachment to the organization. They distinguished three elements of commitment–compliance, identification, and internalization–and suggested that these three elements of commitment may represent separate dimensions of commitment. Knudsen and her colleagues noted that downsizing may have effects on both work processes and the social environment in which work takes place, resulting in lower levels of commitment among workers who survive the downsizing. Survivors’ work experiences may change because the downsizing results in an altered task structure, with each worker being responsible for a larger amount of work or a greater number of tasks than in the past. Survivors may resist the increased organizational demands by withdrawing or lessening their commitment to their organization.

Brockner and colleagues found that the extent to which jobs had been enriched after downsizing was a significant predictor of survivors’ commitment to the organization. Niehoff and his colleagues suggested that the job characteristics of skill variety, task identity, task significance, autonomy, and feedback were significantly associated with loyalty, supporting the prior research that found that job enrichment is associated with organizational commitment. Based on the same concept, a state-owned enterprise’s organization and structure may be changed when it is privatized. If work can be redesigned to increase skill variety, work integrity, and significance, with employees provided with opportunities to learn and grow, employee’s morale would be boosted accordingly. If work autonomy can be strengthened and if feedback from work results can be easily identified, employees will perceive that they play important roles in the unit and devote themselves to the organization. In this situation, employees will favorably identify organization values and stay in the unit. Thus, they will demonstrate high commitment to the organization.

Empirical studies have supported a positive relationship between empowerment and loyalty or

commitment. Niehoff and colleagues, studying an insurance company, found positive relationships between employees’ organizational commitment and top-management actions such as allowing employees to influence decision making and supporting employees’ efforts. Fulford and Enz found that perceived empowerment had a significant and positive relationship with loyalty among service employees in private clubs. Empowerment has also been found to be positively associated with teachers’ commitment to schools.

Personality has been defined as the unique combination of psychological characteristics that affect how a person reacts and interacts with others. Locus of control is one kind of personality trait that has proved to be powerful in explaining individual behaviour in organizations. Locus of control means the degree to which people believe they are masters of their own fate. Mitchell and colleagues wrote that individuals may have generalized expectations about whether environmental outcomes are controlled internally or externally. The individual with the internal expectation believes that he or she can control his or her own fate. The individual with the external expectation feels that much of what happens to him or her is controlled by external forces.

According to Spector, 5% to 25% of the variance in individuals’ work behaviour can be explained by their perceptions of locus of control. Spector found that internal locus of control people are more confident in their own abilities, more willing to search for information in a complicated environment, and exhibit higher work performance. Moreover, such people like to participate in management and hope to get more feedback about their work. On the other hand, according to Spector, external locus control people are inclined to follow the rules and more easily submit themselves to organizational direction and leadership. Many researchers have found that locus of control can affect work attitudes. Internal locus of control employees exhibit higher work involvement and satisfaction than do external locus of control employees.

When placed in the same organization, the two types of people will present different work behaviors. For example, when confronted with challenges, internal locus of control people will work harder to achieve success. However, external locus of control people will believe in destiny and not make extra efforts. The internal types express active and positive work attitudes, while the external types are more passive and negative. By the same token, it has been suggested that people with external locus of control need more external forces to assist them in coping with environmental changes. People with an external locus of control can be helped to adjust to such changes by being trained in a variety of new skills, allowed to assume more important duties, and engaged in more complicated tasks. They may be well served by being provided with more autonomy and feedback on their jobs. All of these forces can help them know what to do in times of uncertainty and increase their confidence and capabilities, thus making them understand their responsibilities and objectives more clearly. These work redesigns, in turn, will enhance the organizational commitment of employees with an external locus of control. Concerning the impact of employees’ psychological empowerment on organizational commitment, it has been argued that employees’ locus of control will exert moderating effects. Compared to people with an internal locus control, employees with an external locus of control lack confidence in their ability to master their destiny. If employees feel their work is full of meaning and impact, that they are able to determine methods for doing things, and that they are capable of doing things correctly, the impacts of psychological empowerment on organizational commitment will be much stronger.

4.3 Breach of Contract due to lower psychological contract dilemma

There are basically three ways breach has been measured. The first approach is what we refer to as a composite measure. This type of measure differs from the other measures in that it refers to various content items of the psychological contract (e.g., high pay, training, and job security) and asks respondents how much the organization has fulfilled its obligation or promise on each item.

The second approach is what we call a global measure. This type of measure does not refer to any specific content item but directly assesses subjects’ overall perceptions of how much the organization has fulfilled or failed to fulfill its obligations or promises. For example, one item of Robinson and Morrison’s (2000) global measure of breach is “Almost all the promises made by my employer during recruitment have been kept thus far” (reverse scored).

A third common measurement approach for breach is what we call a weighted measure. This type of measure is similar to the composite measure in that it uses a number of content-specific items of the psychological contract and asks respondents their perceptions of breach in these contents. However, it also asks subjects to indicate the importance on each of the content items. Each raw breach score is multiplied by the respective perceived importance score and then summed or averaged to yield a weighted breach score (e.g., Thompson & Heron, 2005; Turnley & Feldman, 1999). In this way, contract items that were highly important to employees were weighted more heavily in the calculation of the overall score of breach. A majority of the empirical studies on the psychological contract have used either composite measures or global measures. Because we did not find three or more studies using weighted measures on the same outcome variable, we were unable to form a separate category to be tested in the moderator analysis. Therefore, we develop a hypothesis comparing the composite and global measures only.

There have been some critics of composite measures of breach because what is valued in the psychological contract may vary from one employment relationship to the next. McLean Parks, Kidder, and Gallagher (1998) believe that the composite approach to measuring the psychological contract is not appropriate for contingent workers or complex employment arrangements where it is “difficult to develop a set of content measures that are useful across a variety of employment settings” (p. 700). Thus, for studies using the composite approach, there is a risk that the selected individual content items will not completely tap the content domain of what is valued for a given employee. Measuring employees’ evaluations of several content items and then taking an average (which gives every content item the same weight) may not accurately reflect individuals’ cognitive evaluation of the contract breach and thus fail to accurately predict their emotions, attitude, and individual effectiveness.

Transactional content refers to specific, monetizable exchanges over a limited period of time (e.g., obligations about high pay and merit pay), whereas relational content refers to long-term exchanges that maintain the employee-employer relationship (e.g., obligations about personal support and a meaningful job; Robinson, Kratz, & Rousseau, 1994). Although there is some ambiguity regarding the nature of some specific content items (e.g., training, see Coyle-Shapiro & Kessler, 2000), these two dimensions were widely used in many studies (e.g., Kickul, Lester, & Finkl, 2002; Robinson & Morrison, 1995), making a comparison possible.

To some extent, employment can be viewed as an economic transaction between employers and employees. Providing transactional rewards such as pay and wages is usually seen as the bottom-line obligation of employers and is an essential component of the psychological contract. Employers’ failure to deliver such extrinsic inducements will be most likely to cause immediate and extreme reactions from employees. In contrast, relational inducements are generally less tangible and are usually seen as extra rewards (in addition to transactional rewards) from the job. Although relational rewards can be highly desirable to employees, they usually understand that fulfillment is more unpredictable than transactional rewards. Employees may attribute the breach on relational contents of the psychological contract to miscommunication or bad luck rather than a deliberate betrayal on the part of their employer (Robinson & Morrison, 1995) and therefore react less strongly to breach. Therefore, we predict that breach of the transactional content of the psychological contract, in comparison to the relational content, will have a more negative impact on employees’ reactions.

5.0 Observations

Supervisor-subordinate similarity – In addition to providing selfdescriptive information, the participants were asked to indicate the race and ethnicity of their supervisor. Similar to prior research (e.g., Tsui & O’Reilly, 1989; Tsui, Porter, & Egan, 2002), we used dummy coding to account for supervisor-subordinate similarity, with those in dissimilar dyads coded as 0 and those in similar dyads coded as 1. In total, there were 387 same-race/ethnicity and 272 cross-race/ethnicity pairings.

Absences – Absences were the self-reported number of days of work (excluding vacation days) that the participant had missed during the last year. It should be noted that such self-reports tend to be quite valid. For instance, Dalton and Mesch (1991) found the difference between actual and self-reported absences was statistically nonsignificant. Johns (1994) reported an average validity coefficient for self-reports in 11 studies of .68. In addition, self-reports correlated highly (r = .69) with observations in another series of seven studies (Harrison & Schaffer, 1994). More recently, Sagie (1998) observed only a small mean difference (5.56 vs. 6.10) and a nearly perfect correlation (r = .91) between self-reported absences and company records.

Control variables – Prior research has shown that age, company size, income, tenure, union membership, satisfaction, education level, and family status influence absenteeism (Allen, 1984; Harrison & Martocchio, 1998; Winkelmann, 1999). Thus, these variables were included in the analyses as covariates to control for their effects on absenteeism. Age was recorded in years. Company size was coded: 1 = less than 15; 2 = 15-^19; 3 = 50-99; 4 = 100-499; 5 = 500-999; 6 = 1,000-4,999; 7 = 5,000-9,999; and 8 = 10,000 or more employees. Due to a large number of missing responses (N = 104), we used series mean imputation for this variable (Little & Rubin, 1987). Income was coded: 1 = under $15K; 2 = $15,000-24,999; 3 = $25,000-34,999; 4 = $35,000-44,999; 5 = $45,00O-$54,999; 6 = $55,000-74,999; 7 = $75,000-99,999; and 8 = $100,000 or more. Tenure was coded: 1 = less than 1 year; 2 = 1-less than 3 years; 3 = 3-less than 7 years; 4 = 7-less than 10 years; 5 = 10-less than 15 years; 6 = 15-less than 20 years; 1 = 20-less than 25 years; 8 = 25-less than 30years; and 9 = more than 30years. Union membership was dummy coded (1 = union). Employee satisfaction was assessed with an item from Harter, Schmidt, and Hayes (2002); “How satisfied are you with your place of employment as a place to work.” Education level was coded: 1 = less than high school graduate; 2 = high school graduate; 3 = some college; 4 = trade/technical/vocational training; 5 = college graduate; 6 = postgraduate work/degree. Two dummy variables were used to capture some degree of family status: the number of adults in the household that were working (number of working adults) and the number in the household that were not working (number of dependent adults).

In addition, because our data set included individuals in different work settings, occupations, and industries, we included two categorical controls. First, participants indicated the type of company they worked for as being agriculture/forestry/fishing, mining or oil and gas extraction, utilities, construction, manufacturing, wholesale or retail trade, transportation, information industries (e.g., publishing, broadcasting, telecommunications, or information processing such as data processing), finance or insurance, real estate, professional/scientific/technical services, waste management, education, health care, the arts, accommodation and food services, state or local agency, the federal government, or other. second, participants indicated what kind of work they did, which interviewers categorized as one of the following: professional (e.g., lawyer, doctor, teacher), manager, business director, clerical or office worker, sales worker, manufacturer’s representative, service worker (e.g., police, fire-fighter, barber), skilled trades worker (e.g., printer, baker, electrician), semi-skilled worker (e.g., machine operator, taxi driver), labourer (e.g., sanitation worker, plumber’s helper), or technology professional.

We found considerable heterogeneity across studies for nearly all outcome variables, and the moderator tests helped in explaining some of the heterogeneity. The type of breach measure was a moderator for four of the six outcomes we examined. Studies using global measures that were not content specific had larger effect sizes than studies using a composite measure with content specific items. There are three possible reasons for such a moderation effect.

First, global measures do not restrict the content of the psychological contract to certain items, thus subjects are able to access the full domain of the psychological contract content.

Second, subjects may unconsciously weigh the importance and salience of each item when assessing global breach. In contrast, composite measures not only limited respondents’ choice of content items but also assumed the same weight for every content item, which may bias the reported breach in an unpredictable way.

Third, composite measures sometimes use a difference score approach that has been widely criticized because of its poor reliability and ambiguity of the scales (cf. Irving & Meyer, 1999), whereas all global measures are based on subjective evaluation of the extent of breach. It is likely that the psychometric quality of difference score measures reduced composite measures’ validity in predicting employees’ reactions. In sum, we believe that global measures of breaches have advantages over composite measures when a specific type of content (e.g., pay) is not the research focus. The content of the psychological contract acted as a moderator but often in unexpected ways. Although transactional breach had a larger effect on organizational commitment than relational breach, as hypothesized, it did not for job satisfaction, turnover intentions, and OCB.

There may be three explanations for such an opposite effect. First, employers’ transactional obligations such as pay level and benefits package are often covered in the written employment contract and thus legally binding, making breach less likely. The limited variance in transactional breach in empirical studies may lead to its smaller effect size in the meta-analysis.

Second, Bunderson (2001) indicated work ideologies can shape psychological contracts and influence subsequent reactions to breach. It is possible that employees from different occupations have different psychological contracts and react to breach in different ways.

Third, employees may react to transactional breach in ways not captured in the outcomes examined in this study. For example, employees may “vent” by suing the employer instead of, for example, quitting or reducing their OCB. The outcomes in this metaanalysis do not include lawsuits because they have been rarely studied. Furthermore, these results should be interpreted with caution because the small number of studies used to test this relation (e.g., three studies for affective organizational commitment and four for in-role performance) might make the results unstable.

6.0 Analysis

Means, standard deviations, and correlations for the study variables. Of note, there were racial and ethnic differences in the likelihood that one’s supervisor was of the same background, with White participants being significantly more likely than Black (r = -.42, p < .01) or Hispanic (r = -A,p < .01) employees to have similar supervisors. Furthermore, Black and Hispanic respondents perceived their organizations to place less value on diversity than did their White counterparts (r = -.12 and -A0,p < .01, respectively).

We used hierarchical moderated multiple regression to test the hypotheses. Prior to conducting the analyses, we had to select coding schemes for our categorical variables. For industry, we elected to use “other” as the referent category. Thus, we created a dummy variable for each of the alternative categories wherein those working in that particular industry were assigned a value of 1 and all those who did not were assigned a value of 0. The partial coefficient for each variable in the regression analyses represents the comparison between individuals in that particular industry and those who selected the “other” category (Cohen et al., 2003).

Similarly, we opted to dummy code work type (referent = professional), sex (referent = male), race/ethnicity (referent = white), and supervisor subordinate racial similarity (referent = dissimilar). The partial coefficient of each of these variables, therefore, compares the category for which the variable is named to those in the referent group. In a model predicting the transformed absence variable, the control and demographic dummy variables were entered in Step 1. We entered perceived organizational value of diversity and supervisor-subordinate similarity in Step 2. In Step 3, the two-way interactions between race/ethnicity, value of diversity, and supervisor-subordinate similarity were added, followed by the three-way interactions in step 4.

Blacks were absent significantly more often than White employees after accounting for the effects of the control variables (6.19 vs. 2.90 days, B = .33, p < .05). However, no significant Hispanic-White difference emerged (2.82 vs. 2.90 days). One of the anticipated two-way interactions testing these hypotheses was significant. The Black × perceived value of diversity interaction was statistically significant (B = -.30, p < .05). As predicted, the Black-White difference in absenteeism was significantly higher when employees perceived their organization placed relatively less value on diversity.

To further probe this interaction, we computed simple slopes (Aiken & West, 1991) assessing the effects of race/ethnicity and perceived organizational value of diversity. Concerning the former, the results show that the only significant between-group difference was between Black and White employees who perceived the organizational value of diversity to be low (B = .70, p = .01). Regarding the latter, the effect of perceived organizational value of diversity was significant for Black (B = -.22, p = .02) but not White (B = .08, p = .45) or Hispanic (B = .09, p = .37) employees. The interaction between ethnicity and supervisor-subordinate similarity was not significant for either comparison. Black-White and Hispanic-White differences in absenteeism would be greatest when employees had similar supervisors yet perceived their organizations to place little value on diversity. Of the two 3-way interactions, only the Black x perceived value of diversity x supervisor-subordinate racial similarity term produced a statistically significant effect in Step 4 (B – -.87, p < .01).

A graphic depiction of this interaction shows that Black-White differences in absenteeism were most pronounced when the organization was perceived as not highly valuing diversity and the employee had a racially similar supervisor. Furthermore, an examination of the simple slopes indicated two findings. First, the only significant between-group difference was between Black and White employees who perceived a low value placed on diversity and had supervisors of the same race (B = 1.01, p < .01). second, the effect of perceived organizational value of diversity was statistically significant only for Blacks with same-race (B – -.52, p < .01) and cross-race supervisors (73 = – .18, p = .05). No significant effects were detected for White or Hispanic employees (all p values > .15).

Finally, in interpreting the sizes of the interactive effects reported here, it is useful to consider the recent findings of Aguinis, Beaty, Boik, and Pierce (2005). Their review of articles in Personnel Psychology, the Journal of Applied Psychology, and the Academy of Management Journal (spanning 1969-1998), examining categorical moderators using hierarchical moderated multiple regression, revealed that the mean and median effect sizes for ethnicity were 0.002 and 0.001, respectively. Thus, our effect sizes appear considerably larger than most of the comparable research reported in these prestigious outlets.

The purpose of this study was to shed light on previously detected yet largely unexplained racial differences in absenteeism (failure of psychological contract enhancing absenteeism). Although not all of the hypotheses received support, the results have considerable utility in this regard. For instance, we replicated the previously reported Black White difference in absenteeism (McKay & McDaniel, 2006; Roth et al., 2003). This main effect, however, was contingent upon perceived organizational value of diversity and supervisor-subordinate similarity. Moreover, the Black-White difference in absenteeism, or at least the one observed in this study, appears limited to instances when employees, particularly Blacks, perceive their organizations to place less value on diversity than suggested by other cues, such as racially similar supervisors. The results, therefore, demonstrate previously unknown boundary conditions for this racial difference in employee absenteeism.

In some respects, the failure to detect significant Hispanic-White differences is not altogether surprising. We could find no previous study documenting a significant Hispanic-White difference in absenteeism, and there was none present in our data. Furthermore, prior research reporting Black-White differences in person-organization fit perceptions observed no differences between the perceptions of Hispanic and White managers (Lovelace & Rosen, 1996). Although some evidence has shown disparities in the workplace support perceived by Hispanic and White employees (Rodriguez-Calcagno & Brewer, 2005), other inquiry has not (Amason & Allen, 1999). Given the apparent similarity in perceived support between Whites and Hispanics observed in some prior studies, it seems as though Hispanic employees experience a smaller lack of support than Black employees. Thus, one would expect the hypothesized Hispanic-white differences to be smaller in magnitude than the hypothesized Black-White differences, which indeed was the case.

Analyses of employees’ responses to our survey questionnaire show that employees’ psychological empowerment played an intermediating role between work redesign and organizational commitment. This means that work redesign can increase employees’ psychological empowerment and, in turn, enhance employees’ commitment to their organizations. This is different from what Niehoff and his colleagues found because their findings revealed that job enrichment exerts an intermediating effect between employee empowerment and loyalty. Our result is more similar to Hackman and Oldham’s job characteristics model, which implies that work characteristics can fulfill people’s psychological needs and, therefore, lead to work effectiveness. In our study, empowerment is a psychological status; work redesign can affect employees’ psychological perceptions and transform their inner sense of empowerment into work effectiveness reflected in enhanced organizational commitment. Our study provides evidence that employees’ locus of control has a moderating effect on the relationship between work redesign and organizational commitment. It was found that perceptions of work redesign among employees with an external locus of control employees had more significant impacts on their organizational commitment than did perceptions of work redesign among employees with an internal locus of control. This finding has not been stated by other researches before.

The contributions of our research can be summarized as follows. On the academic side, this study integrates related theories of work redesign, psychological empowerment, and organizational commitment to provide a research framework to interpret how an organization can apply work redesign to increase employees’ psychological empowerment and strengthen employees’ commitment to their organizations in a changing environment. Moreover, this article highlights the importance of people’s locus of control as a moderating influence on the relationship between work redesign and organizational commitment under changing conditions. This has not been examined in other studies. On the practical side, it is proposed that work redesign is important when an organization undergoes change. The skill variety, work identity, work significance, autonomy, and feedback of work are practical instruments to shape employees’ perceptions of their own psychological empowerment and prevent them from thinking negatively about the changing situation and, also, actively encourage them to enhance their efforts, to identify with organizational values, and to be willing to remain in their

organization. Furthermore, it is imperative to realize that the locus of control of employees can produce differences in their responses the reorganization process or changing conditions. Management should prepare to evaluate and understand their employees’ characteristics that can affect the smoothness of the transition process.

7.0 Propositions

These findings are important for a number of reasons. For organizations, it appears that demonstrating the company’s commitment to diversity may help to reduce racial discrepancies in absenteeism. This may be particularly true when other organizational cues (e.g., minority managers) suggest to minority employees that the company is committed to diversity, which is likely because organizations tend to match the race of supervisors and subordinates (Elliot & Smith, 2001). Avery and Johnson (2007) describe how this inconsistency can send mixed messages that may undermine the success of organizational diversity initiatives. Unfortunately, less than a third of employees in a recent survey thought their organizations were doing a good job of managing diversity (Fisher, 2004). This percentage is only slightly higher among executives (47%), many of whom concede that their own lack of involvement is at the heart of the problem. To eliminate the Black-White gap in absenteeism, this must change.

To truly capitalize on the potential returns on racial and ethnic heterogeneity, firms must commit resources to manage diversity more effectively (McKay & Avery, 2005). Establishing organizational systems of accountability for diversity and ensuring equal access to mentoring and networking appear to be key drivers of successful diversity management (Kalev, Dobbin, & Kelly, 2006). The existence of racial differences in absenteeism, as illustrated in this study, may signal Black employees’ psychological withdrawal from firms. Previous research has identified absenteeism as a significant precursor to withdrawal cognitions (Horn & Kinicki, 2001) and eventual voluntary employee exit from firms (Griffeth, Horn, & Gaertner, 2001). In fact, recent