INTRODUCTION:

A psychological contract is considered an important concept for understanding employee relations with their employers and their consecutive consequences, including work attitudes and performance. The psychological contract is usually defined in the literature as implicit and explicit promises that the two parties give each other. Knowledge of psychological contracts and their various components is vital for managers to understand, manage and work in order to avoid adverse consequences. A psychological contract refers to the faith of an individual employee in mutual obligations between him and his employer.

Psychological contracts are a key challenge for management, as they can affect employee attitudes and behavior in ways that affect organizational effectiveness and performance.

Traditionally, it was believed that the main expectation of employees in return for their input to the company was a level of employment stability both in terms of working environment and job security. However, the rapid changes in the economic and business life the last decades transformed significantly organizations.

Intense competition on a global scale, political developments and numerous other factors forced organizations to adapt its structure towards a leaner, flexible more efficient approach that could withstand competitive pressures. As a consequence, there was a restructuring on people management and corresponding changes in the employment relationship. Human resources are considered as most important valuable resource for any company. To manage these resources, organizations require a Human Resource Management (HRM) that provides the adequate work force within the new global economy. Managing psychological contract includes solid agreements between company and its employees, beyond the written contract, specifying their contributions, expectations, beliefs, promises, and obligations between both parties. Concerning the ‘new’ workplace there have been indeed being changes in the employment relationship, mainly attributed to global movements in economies and labour markets. The most interesting point in this theoretical framework is the recognition of the Psychological Contract as a tool in the manager's efforts to handle the employment relationship.

LITERATURE REVIEW:

Several studies have examined the contents of the psychological contract which can be considered as the basic terms of the conceptual agreement. Theory in this area provides a theoretical foundation for the psychological contract concept which is examined in the Systematic Review. In terms of the employee-centred view of the psychological contract, one of the most comprehensive studies of contents was that of Herriot et. al. (1997) which examined perceptions of both employer and employee expectations. The twelve employer obligations identified were training, fairness, recognition of employee’s personal needs, consultation, discretion with regards to managerial action, humanity, recognition, creating a safe working environment, justice, pay, benefits and job security. Employee obligations fell into seven main categories which were working contractual hours, doing a good job, being honest, being loyal, respecting company property, maintaining self-presentation and being flexible. This list was particularly strong giving the collection of both employee/employer obligations, the good sample size and the clarity in the categories observed. The psychological contract deals with commitments made by both parties starting with the formal employment contract. In contrast to the formal, often written agreement based on labour market laws, regulations and collective agreements, the psychological contract consists of the subjective perceptions held by both employer and employee of the formal and informal entitlements and obligations between them. These perceptions are dynamic and highly sensitive and susceptible to change in times of organizational restructuring. Apart from the content, researchers have also investigated the basis for the psychological contract in terms of mutual trust and justice.

Vanessa Dahlke (2017) has examined the possible adjustments to job characteristics middle managers can make to enhance satisfaction, commitment, and motivation amongst employees.

Anggraeni (2017) has empirically analyse the effect of the psychological contract and organisational support on the organisational commitment and organisational citizenship behaviour of the employees of small-scale enterprises run by young entrepreneurs, especially in the cohort generation.

Dr. D. S. Chaubey and Sonal Bist (2016) did an empirical study the relationship between perceived psychological contract and job satisfaction, among employees working in select service organisation in Dehradun District of Uttarakhand state.

The results of the study have practical implication for managers and employees or finding suggest that mangers on employee’s satisfaction, and it would be possible if employees feel emotional attachment with the organization.

Xiaoman Cheng and Deng Xu (2016) has discussed about the Links between Psychological Contract and Job Performance of Employee in E-Business Company. Transaction dimension, relational dimension, team member dimension of psychological contract between employee and enterprise have significant positive influence on job performance.

Zagenczyk, et. al. (2015) studied the Psychological Contracts as a Mediator Between Machiavellianism and Employee Citizenship and Deviant Behaviors. Research contributes to scholars’ understanding of the theoretical underpinnings of the relationship between Machiavellianism and contextual performance as well as to the psychological contracts literature by demonstrating that Machiavellianism influences contextual performance because it affects the manner in which employees construe their employment relationships.

Trarontraron Neal Moore (2014) has researched Empirically testing of the relationship between psychological contract fulfilment and employee engagement furthers understanding with regard to how the relationship functions. Research results suggest that 49% of the variance in employee engagement is explained by psychological contracts.

Markus and Kitayama (2003) stressed the cultural shaping of psychological processes. The societal cultural values are reflected and promoted by customs, norms, practices and institutions. These become lived experiences in “local” worlds (e.g. the workplace) and result in a set of habitual psychological tendencies (ways of thinking, feeling, and acting). The psychological contract can be seen as a specific work-related experience where employee and employer live out their core cultural values. The employment relationship is based on an exchange: the employer offers certain returns (e.g., pay, benefits, employment security) in exchange for employee contributions (e.g., effort, commitment, productivity) and the level of exchange depends on expectations from both sides. In this way, psychological contract can be defined as a set of beliefs, evaluations and assumptions held by employees about their employment relationships (Rousseau, 1995).

Psychological contracts serve as a filter through which the information about the employment relationship is processed, thus guiding employee attitudes and behaviors. There are many elements that shape employees’ psychological contracts. Thus far, a few variables pertaining to the individual have been identified as having an impact on the psychological contract including career motivations (Larwood et. al., 1998), previous work experiences (Cavanaugh and Noe, 1999), and availability of job alternatives (Turnley and Feldman, 1999). With regard to company policies and actions psychological contracts are shaped by both economic (e.g., pay and benefits) and non-economic (e.g., support, participation in decision making) returns offered by the organization (Rousseau and Geller, 1995).

Beck (2000) classify the worker into fixed-term and temporary contracts that might plausibly be associated with higher job insecurity, a sense of marginalization and loss of opportunity for development, for career and for organizational identification. Accordingly he described the growth of such contracts as shifting the risk from the employing organization to the individual.

Shapiro and Kessler (2002) in their study explores the consequences of contingent work arrangements on the attitudes and behaviour of employees using the psychological contract as a framework for analysis. results suggest that contract status plays an important role in how individuals view the exchange relationship with their employer and how they respond to the inducements received from that relationship.

Robinson, Kraatz and Rousseau (1998), in their study on Changing Obligations and the Psychological Contract: A Longitudinal Study investigated changes in employment obligations as perceived by employees. The study revealed that during the first two years of employment, employees came to perceive that they owed less to their employers while seeing their employers as owing them more. An employer's failure to fulfill its commitments was found to be significantly associated with decline in some types of employee obligations.

OBJECTIVES OF THE STUDY:

· To analyze the employee’s obligation in Psychological contract.

· To analyze the employer’s obligation in Psychological contract.

· To find out various factors of psychological contract.

Research Design:

The research design used for this study is Exploratory and Descriptive. Employees of IT industry were considered for the survey. The sample size is of 123 employees of IT firms. The technique used for drawing the sample from population is convenience sampling. A questionnaire was administered with a five-point Likert’s scale, with ‘Strongly Agree’ rated as 5 and ‘Strongly Disagree’ rated as 1. The collected data was coded in the SPSS 21. Exploratory Factor analysis was used for analysis.

Data Analysis and Interpretation:

Demographic Profile:

Table 1: Age

Categories	% of Respondents
Less than 25	56.45
25-35 Years	32.25
36-45 Years	08.06
46-55 Years	03.24

Table 2: Gender


Categories	% of Respondents
Male	40.3
Female	59.7

Table 4: Marital Status

Categories	% of Respondents
Married	62
Unmarried	38

Table 5: Experience
Categories	% of Respondents
1-3 Years	75.09
3-5 Years	08.70
5-10 Years	12.21
More than 10 Years	04.00

Table 6: Educational Qualification

Categories	% of Respondents
Post Graduate	40.33
Graduate	59.77

Reliability Test:

The Cronbach alpha (equivalent to the average of all the split half correlation coefficients) was used to test the reliability of several constructs of the questionnaire. It was found to be 0.930 which implies that the data is consistent and can be relied upon.

Exploratory factor analysis was applied for measuring various factors that affect the employee job crafting skills using SPSS V 21. For this pool of 20 items were subjected to exploratory factor analysis. Exploratory factor analysis reduced variable to four factors. Kaiser- Meyer-Olkin measure of sampling adequacy was found out to be 0.858 which is above 0.65 (the acceptable level) as shown in Table 6. This shows that the items selected for the questionnaire are appropriate. The chi- square value of Bartlett’s Test of Sphericity was also found to be significant (chi sq= 682.076, p= .000), which signifies that the factor analysis is acceptable. The factor analysis gave four components with eigenvalues above 1 with total variance explained 76.837%. The varimax rotation clubbed the items on four components as shown in Table 7.

Table 6: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.		.858
Bartlett's Test of Sphericity	Approx. Chi-Square	682.076
	df	190
	Sig.	.000

Table 7: Factor Analysis

Identified Factors	Variables	Component
Employer Obligation	My organisation promises to provide me with interesting and challenging work.	.530
	Present organisation ensures its employee fair treatment by managers and supervisors and provide a good working environment.	.804
	My organisation provides me opportunity for career development within this firm.	.681
	My organisation helps me develop externally marketable skills.	.658
	My organization provides secure employment	.681
	This organisation reciprocates the effort put in by its employees.	.739
	My organisation promises to provide violence and harassment free environment.	.599
	My organisation encourages employee for participation in the decision- making.	.695
	Present job facilitates with stable benefits for employees’ families.	.697
Relational Contract	I commit myself to go to work even if I do not feel particularly well.	.762
	I promise myself to protect my company's image.	.503
	I promise to work enthusiastically on jobs which others would prefer not to do.	.693
	I seek out developmental opportunities that enhance my value to this employer.	.608
	I accept increasingly challenging performance standards.	.577
	I plan to stay here for a long time.	.592
Internal advancement	I build skills to increase my future employment opportunities.	.711
	I commit to be a good team player.	.691
	I always try to increase my participation in the decision making.	.520
Transactional Relationship	My job is limited to specific, well-defined responsibilities.	.707
	I only perform specific duties I agreed to when hired.	.655
	I do this job just for the money	0.862
	my organization promises to provide me with good pay for the job I perform.	0.798
Employee Obligations	It is important to get too involved in your job	0.627
	I promise to accept an internal transfer if required?	0.796
	I commit myself to go to work even if I do not feel particularly well?	0.801
	I promise to work enthusiastically on jobs which others would prefer not to do.	0.802

Principal components and associated variables indicates that first factor Psychological contract was found to be Employer obligations like providing safety, security and overall good working environment. The second factor Relational contract indicating the employees preference towards building relational contact strategies by the organisation. The third factor emerged as transactional relationship which is the combination of variables like financial and economic benefits offered by the organization in lieu of their services offered to the organisation. Fourth factor emerged out as Internal advancement in which the employees see the future benefit for the good job done in the organisation. Fifth factor emerged as employees obligation which is the combination of variables like employees involvement, his commitment and enthusiasm towards the organisation. It is clear from the above that a combination of all these factors leads to better working environment and strong psychological contract between employer and employees.

CONCLUSION:

Psychological contract is based on employees and employers mutual trust and relationship and obligations with each other. The important variables of psychological contract are also influenced by employee’s internal factors as well as exogenous factor. The study indicates that the perceptions of mutual trust, mutual understanding and perceived reciprocity forms the strong psychological contract. These components are viewed together since they are highly interdependent and together represent forces that influence employees to react to the object. The research findings using factor analysis reveals five important factors building psychological contract among employees and employers. These are named as Relational contract, Employer obligations, transactional relationship, employees’ obligation and Internal advancement. It is clear from the above that a combination of all these factors lead to better working environment and strong psychological contract between employer and employees.

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Received on 04.06.2019 Modified on 10.06.2019

Int. J. Rev. and Res. Social Sci. 2019; 7(2):379-383.

DOI: 10.5958/2454-2687.2019.00030.3