THE IMPACT OF PSYCHOLOGICAL CONTRACT ON EMPLOYEE MOTIVATION IN THE SERVICES SECTOR


 


                                    


 


A Research Proposal submitted in partial fulfilment of the requirements for the award of MSc Degree in Human Resource Management


 


 


ABSTRACT


 


The following report outlines research which intends to examine the Impact of psychological contract on employee motivation in the service sector using Carlisle Cleaning and Support Services as a case study. It also seeks to evaluate the nature of the psychological contract and the impact of breach or violation of psychological contract on employee and organisation at large.


In achieving this aim, the research will first undertake a background research into the formation of psychological contract as well as factors that influence employee motivation. The research is also intended to expand further on previous write ups by past researchers in this field by assessing secondary data. As such a comprehensive literature review will be undertaken.


 


The methodology to be used in conducting this research will involve use of quantitative and qualitative research method. The data will be collected using survey questionnaire and structural interview. These approaches will enable the researcher to obtain all the relevant information that is required for this study.


 


 


 


TABLE OF CONTENTS


Statement of research………………………………………………………………..4


Introduction …………………………………………………………………………….….4                                                                            


Research Question……………………………………………………………………..5


Research aim……………………………………………………………………….……..6                                


Research objectives ………………………………………………………….……… 6                 


Literature review…………………………………………………………………..….…7               


Concepts of psychological contract…………………………………….……..7                                                     


Transactional and relational………………………………………………….……9


Expectations and breach…………………………..………………………….….. 9                                        


Methodology………………………………………………………………………….…..10                              


Framework…………………………………………………………………………….…..10


Research Design ………………………………………………………….……….…..10                                                                        


Data collection……………………………………………………….…………………..11


Questionnaire design…………………………………………………………………12


Sample……………………………………………………………………………………….12


Data Analysis……………………………………………………………………………..13


Limitation…………………………………………………………………………….……..13


Ethical considerations………………………………………………………..……..13


Time Plan……………………………………………………………………….……….….14                                                                               


References……………………………………………………………………….….…….15                  


 


 


 


 


1.0 THE STATEMENT OF RESEARCH


 


1.1 Introduction


Carlisle Cleaning and Support Services is a trading name of Carlisle Cleaning Services Limited, which is a company registered in England. It is one of the top 10 providers of cleaning and support services in the UK, and employs more than 3,000 staff across Britain. Its aim is to offer an innovative and personalised service that focuses on your company’s objectives.


 


It reduces the total cost to its clients of maintaining clean, hygienic and pleasant environments in the public service, retail and transport sectors. It strives to be innovative in its approach, and benchmark itself against its competitors as well as ‘best in class’ companies in other sectors (www.carlislecleaning.co.uk)  


 


There is abundant research on psychological contract but not much has been done on its impact on employee motivation. Analysis of the relationship between employers and employees has been a preoccupation of social scientists and other commentators for decades. The post-war period discussion in this area, within different academic disciplines and at various points in time, has focused on concepts of employee motivation, exchange, trust and the employment relationship (Davidson, 2001). The changing terminology reflects alterations in the dominant perspectives adopted by writers, as well as shifting fashions in academia. The renewed interest in the concept of the psychological contract is an example of these shifts.


However, raising motivation levels and ensuring commitment are two of the key success factors when managing people at work. Increasingly managers, whether consciously or not, are turning to the psychological contract as a way to retain and motivate key staff (Hayesj, 2008). In a recent CIPD survey, 9 out of 10 HR managers agreed it was a useful tool when managing and recruiting staff, while over one third said they used the concept of the psychological contract in their everyday work.


 


Psychological contract is a series of mutual expectations of which the parties to the relationship may not themselves be even dimly aware but which nonetheless govern their relationship to each other. (Levinson et al., 1962-quoted in Gammie, 2006)


 


Argyris (1960) originally developed the concept as a means of analysing employer and employee expectations. More recently, this analytical tool has been used by Handy (1993), Herriot and Pemberton (1995), Guest and Conway (1999), Sparrow (1996) and many others as quoted in Gammie (2006) to explain changes in the nature of employment within organisations in the UK and elsewhere.


 


A key theme in these analyses has been the suggestion that what employers and employees offer to motivate one another at work has changed in fundamental and consistent ways over the years. It is this proposition that this research focuses on. Using information gathered from questionnaires and interview with employees of Carlisle Cleaning and support services, this paper will outline the nature of the psychological contract and its impact on employee motivation.


 


1.3 RESEARCH QUESTIONS


In this study, the following are some of the research questions that will be designed to guide the research;




  • What are employee’s expectations from his manager/employer?




  • What do employees think will give them the greatest sense of meaning in their role?




  • Do the employees understand the culture and how does this fit with their values?




  • What would it take for an employee to walk the extra mile for the employer?




  • What elements of work give the employee greatest satisfaction?




  • How did employees respond to perceived breach and violation of




their psychological contracts.


 


 


1.4 AIM AND OBJECTIVES OF RESEARCH


Research Aim


The aim of this research is to examine the impact of psychological contract on employee motivation in the service sector, using Carlisle Cleaning and support services as a case study.


 


Research Objectives


To achieve this aim, the following objectives will be addressed;


1. To assess the existing psychological contract between the employees


     and managers of Carlisle.


2. To review relevant literatures on psychological contract as it relates to


     employee motivation.


3. To assess the perception of employer and employee on issues of


     motivation to work in relation to psychological contract.


4. To evaluate the effects of breach and violation of psychological


     contract.


5. To draw a conclusion and make appropriate recommendation to the


    management.


 


 


 


2.0 LITERATURE REVIEW


2.1 Concept of Psychological Contracts


One significant aspect of organisational behaviour and the relationship between the individual and the organisation is the concept of the psychological contract (Mullins, 2005). The concept of a psychological contract was introduced in 1960 by Argyris. Argyris (1960) created the term psychological work contract to encapsulate the unwritten expectations that were held by factory employees and their line managers in respect to each other (Gammie, 2006, Anderson and schalk, 2000, CIPD, 2008).


 


Over the years the concept has got much attention from various researches but the changes in its nature was as a result of the economic downturn which led to the restructuring, downsizing, mergers and takeovers in many organisations. That was accompanied by changes in how personnel felt and acted towards their employers. The psychological contract helped explain those changes and, therefore regained attention (Van den Brande, 1999, 2003).


 


Psychological contracts is an individual’s belief regarding the terms and conditions of the reciprocal exchange agreement between that focal person and another party. Key issues include the belief that a promise has been made and a consideration offered in exchange for it, binding the parties to some set of reciprocal obligations (Rousseau, 1989, 2001). Similarly, CIPD (2008) stated ‘that psychological contract is the perception of two parties, employee and employer, of what their mutual obligations are towards each other. These obligations will often be informal and imprecise.’


 


Psychological contracts are based on specific promises made by both parties and on generally accepted promises that are based on general obligations of employers and employees. Even if an employer has not made specific promises in that regard, every employee will appreciate clarity, fairness and good communication. Every employer will appreciate employees dealing properly with confidential information and doing good work. In addition to general obligations, the psychological contract is further augmented with written agreements, such as employment contract (Huiskamp and schalk, 2002).


 


Employers’ obligations to employees are; to provide safe working environment, job security, good career prospects, opportunity to be involved in decision making, up to date training and development e.t.c. Moreover, employees are expectated to demonstrate loyalty, work extra hours when necessary, look for ways to save cost, accept transfer to different job in the organisation, work diligently in pursuit of organisational goals, and maintain harmonious relationships with work colleagues (Coyle-Shapiro et al, 2004). Psychological contract is influenced by both employers and employees’ expectations.


Psychological contract, if properly managed helps organisations achieve their goals through their motivated employees.


 


However, motivation is an internal state or condition (sometimes described as a need, desire, or want) that serves to activate or energize behaviour and give it direction (Kleinginna and Kleinginna, 1981-quoted in Franken, 2001). Research has shown that it is important for managers to understand what motivates their employees within the context of the roles they perform. This concept was the focus of many researchers following the publication of the Hawthorne Study results. Five major approaches that have led to our understanding of the concept of motivation are Maslow’s need-hierarchy theory, Hertzberg’s two- factor theory, Vroom’s expectancy theory, Adams’ equity theory, and Skinner’s reinforcement theory (lindner, 2000). These theories will be examined in details in the course of this research. Moreover, research has shown that motivating employees is the most complex function of management. This is due to the fact that what motivates employees changes constantly (Bowen & Radhakrishna, 1991). For example, research suggests that as employees’ income increases, money becomes less of a motivator (Kovach, 1987). Also, as employees get older, interesting work becomes more of a motivator (lindner, 2000).


 


 


2.2 Transactional and Relational


Transactional and relational are fundamental components of most employment contracts. Rousseau (1995) proposed a 2×2 model of contemporary psychological contracts which includes the transactional and relational contracts


Transactional contract are usually short-term and performance related involving set monetary exchange. A good example of such a contract would be temporary secretarial work; commitment and development of skills are negligible and a specific wage rate and period of employment is agreed on.


Relational contracts are based on emotional involvement as well as merely financial reward. They tend to be far more long term and involve significant investment by both the employer and employee. Relational contracts are present in occupations that involve extensive training, such as law (Rousseau, 1995).


 


2.3 Expectations and Breaches


When employees commence a new job, they evaluate many of their experiences in relation to what they expected the job would be like and what they thought the job should provide them. For example, employees may enter an organization with the expectation that they will be provided with opportunities for further education. They may also believe that during their recruitment phase, they were promised advanced computer skills training in exchange for satisfactory progress reports. (Wanous & Collella, 1989, 2001),


 


However, breach or violations of psychological contract occur when an employee perceives the organisation has failed to fulfil one or more of its obligations comprising the psychological contracts (Rousseau, 2001). The breach of psychological contract leads to the following; job dissatisfaction, emotional exhaustion, high staff turnover, increased absenteeism and lateness. Management should remember that preventing breach in the first place is better than trying to repair the damage afterwards (Coyle-Shapiro and Shore 2007)


 


 


3.0 METHODOLOGY


This chapter will discuss the research methodology applied to each phases of the study under consideration. This would include a review of the sources and reliability of the data analysis method.


 


3.1 FRAMEWORK


For the purpose of this study, a theoretical framework will be developed by integrating concepts drawn from two theories: psychological contract theory and motivation theory. Given the changing environment in which servicing firms operate, there is a continuing need for organisations to develop progress and embrace change. It is imperative for management to focus attention on improving the employer-employee relationship. This theoretical frame work proposes a need for management to create a balance between the expectations of employees and management.  


 


3.2 RESEARCH DESIGN


The aim of this research is to examine the impact of psychological contract on employee motivation in the service sector, using Carlisle Cleaning and support services as a case study.


 


Basically, there are two different traditional approaches of research inquiries, namely qualitative and quantitative research. The qualitative research method focuses on few variables and, a large number of cases studies for analysis. While the quantitative research focuses on a large number of variables in a few selected case studies (Saunders et al, 2003).


The effectiveness and efficiency of the quantitative analysis is driven to an important extent by the quality of the qualitative analysis and the join interpretation of both.


 


However, the research will involve the use of qualitative and quantitative research methodology in other to maximize the in- depth analysis which such an action offers. Researchers refer to this approach as multi strategy approach (Bryman, 2004, Burns, 2000). According to Bryman, (2004) multi strategy approach is a research that combines research methods that cross the two research strategies. Hamersley (1996) proposed the argument for a multi strategy approach of research process, when he contended that the use of quantitative method to corroborate qualitative research findings or vice versa, would strengthen the confidence derived from data obtained and arguments proffered in a study. Easterby-Smith et al (1995) also contends that a use of both methods allow for a more in-depth analysis of an issue. They advocated that it allow for an imaginative way of maximizing the amount of data collected, and under the short frame of time given for this research, it seems the best practice to allow for a better overview of the research report.


 


Moreover, structured interview and questionnaires will be designed to assess how psychological contract could be managed to motivate employees. Based on the sensitive nature of the study, that entails collating of information from employees, some of the information might be classified if requested by the organisations or treated as an anonymous.   


 


3.3 Data Collection:


In this study, two sources of data collection will be considered namely, the primary and secondary data collection procedures. The primary data collection will focus on information from employee and management of Carlisle while the secondary data collection will focus on related literatures on the issues of psychological contract and employee motivation.


The primary data will be collected through questionnaire and structured interview while the secondary data will be from textbooks, journals, newsletters, magazines and relevant internet sources to support the research work.


 


3.4 QUESTIONNAIRE DESIGN


The questionnaire will be designed in order to gain insight into the impacts of psychological contract on employee motivation within the services industry for the population of respondents selected for the purpose of this research. The design of the questionnaire will ensure avoidance of ambiguous words in order to minimize misinterpretation of key issues and to avoid bias. In addition, the questionnaire should comprise the following features in its design:




  • Initial of questions be routine, easy to answer questions designed to ease a respondent into a questionnaire.




  • Open- ended questions should appear before closed- ended questions on the same topic to avoid influencing respondents with fixed option choices of closed-ended questions.




  • Where appropriate, open-ended question should be reserved for placement at the 2/3 point of the questionnaire to provide variation that will maintain the respondent’s interest for the reminder of the questionnaire.




 


 


3.5 SAMPLE


A purposive sampling technique will be adopted by the researcher in identifying the target individuals within the population selected for study or perhaps to interview the entire individual within the subpopulation that is estimated to be the whole (David 2007). The primary consideration for choosing purposive sampling method is supported by the perception of the researcher as to who could provide relevant information toward achieving the primary objectives of the research work (Kumar, 2005). However, the study will be conducted in Carlisle cleaning and support services with an organisational structure that consists of MD, GM, Supervisor and junior staffs. The inclusion criteria are the managers, team heads and other employees. The target sample is 250 employees.


 


.


 


 


3.6 DATA ANALYSIS


In order to empirically investigate the impact of psychological contract on employee motivation, data will be collected using qualitative and quantitative method for the proper analysis. However, the use of questionnaires and structured interview will provide the basis for computation of information for analysis. In order to fully analyse the data generated, the ‘Grounded Theory approach’ of data analysis will be employed. The use of a grounded theory approach for this research allows for a good fit to develop between the social reality of the research participants and the theory which emerges – it will be grounded in that reality (Saunders, et al 2003).  As Strauss and Corbin (1998) stated that the value of the GT approach “lies in its ability not only to generate theory but to ground that theory in data”. For this reason grounded theory appears to be particularly suitable for this study.


 


4.0 LIMITATION


Apart from financial and travel constraints, reluctance may be encountered as some of the respondents might not be willing to reveal vital information which will aid this research.


 


4.0 ETHICAL CONSIDERATIONS


The following ethical issues will be considered carefully during the period of the research and its subsequent publishing. These include.




  • Seeking consent- proper authorisation must be obtained from the university in order to proceed on the research and the contents of the questionnaire duly scrutinize in avoid ambiguity. While on the side of the company(s) to use for the research, a formal letter will be sent first in order to secure their consent for the research.




  • Maintaining confidentiality- information provided by respondent will be reported as anonymous and organisations top secrets will be classified if any.




 


 


 


 


5.0 TIME PLAN


Planning is quite important to the success of this project. This will ensure a more thorough estimate of the level of work required. Planning will also make it possible to see immediately what should have been achieved at a point in time. The table below shows the targeted dates for each of the chapters of the research work.


 


 


TARGETS DATES


DATES


Relevant Dates


Briefing, research methods etc


9th MAY.2008


Background to the Research proposal


E.g. selection of topic, overview of research strategy, sources of information, aims and objectives.


22nd MAY.2008


Submission of Research proposal


9th JUNE. 2008


Literature Review


29th JULY. 2008


Methodology


14th AUGUST. 2008


Primary Research


21st  AUGUST.2008


Presentation of Results and Analysis


 4th SEPTEMBER. 2008


Conclusions and Recommendations


18th  SEPTEMBER 2008


Final Draft


 


Ask someone who is impartial to look over the Report.


Be critical. Proof Read


25th  SEPTEMBER 2008


Submission of Research Report.


Three typed, bound copies


30th SEPTEMBER 2008


 


 


 


REFERENCES AND BIBLIOGRAPHIES


Burns, R. (2000) Introduction to research methods, London sage.


 


Bryman, A. (2004). Social research methods, 2nd edition. Oxford University Press, United State.


 


Chartered Institute of Personnel and Development (2008). Factsheet on Psychological Contract. London: CIPD. Available at


http://www.cipd.co.uk/subjects/empreltns/psycntrct/psycontr.htm?IsSrchRes=1


Accessed on 21st May, 2008


 


Davidson, P (2002) The psychological Contract in the IT industry: 1997-2001. Research paper in HRM, Kingston Business School, Kingston University


 


Franken, R. (2001). Human motivation (5th ed.). Pacific Grove, CA: Brooks/Cole.


 


Gammie, R (2006), Psychological contract in a Business Context Thesis for the award of Doctor of Education (EdD). University of Stirling.UK


 


Hammersley, M., (1996) The Relationship between quantitative and qualitative research paradigm loyalty versus methodological eclecticism in Bryman, A., (2004)


 


Kumar, R. (2005) Research methodology: a step by step guide for beginners 2ed Sage Publications


 


Huiskemp, R. and Schalk, R (2002), Psychologische contracten in arbeidserlaties:de: de stand van zaken in Nederland In: Van de Ven (2004), The psychological contract: a big deal. Available online at www.emeraldinsight.com . Accessed on 16th April, 2007


 


 


Mullins, L.J. (2005), Management and organisational behaviour. 7th edition. Prentice Hall


 


Neil, J. (2006) Qualitative Research Methods; Information, resources, & links for qualitative research methods


Available online at;


http://wilderdom.com/qualitative.html


Accessed on 18thmarch, 2008. 


 


Rousseau, D.M. (1995) Psychological Contracts in Organisations: Understanding Written and Unwritten Agreements London, Sage.


 


Saunders et al (1997), Research Methods for Business Students. Financial Times publishers.


 


JOURNALS


Anderson, N. & Schalk, R. (2000), The psychological contract in retrospect and prospect. Journal of Organizational Behaviour, 19, pp. 637-647.


Available (online) http://www.emeraldinsight.com/Insight


(Accessed May 4th 2008)


 


Coyle-Shapiro, J. and Shore, L.M. (2007) The employee-organization relationship: where do we go from here? Human Resource Management Review. Vol 17, No 2, June. pp166-179


 


Coyle-Shapiro et al (2004),The psychological contract and individual differences: the role of exchange and creditor ideologies. Journal of Vocational Behaviour. Vol.64, pp.150-164


 


Coyle-Shapiro J. A. (2002), A psychological contract perspective on organizational citizenship behaviour. Journal of Organizational Behavior, vol. 23, pp. 18-23. Available (online) 


http://www.sciencedirect.com/science (Accessed May 4th 2008).


 


Radhakrishna, R. B. and Bowen, B. E (1991) Job satisfaction of agricultural education faculty: A constant phenomena. Journal of Agricultural Education, 32 (2), 16-22.


 


Rousseau, D.M. (2001). Schema, promise and mutuality: The building blocks of the psychological contract. Journal of Occupational and


Organisational Psychology, 74,           511-541.


 


Starnes B. J. (2007),An Analysis of Psychological Contracts in


Volunteerism and the Effect of Contract Breach on Volunteer


Contributions to the Organization. The International Journal Of


Volunteer Administration. Volume XXIV, Number 3. 31


http://www.emeraldinsight.com/Insight . (Accessed May 6th 2008)


 


Strauss, A and Corbin, J (1998), Basics of qualitative research: Techniques and procedures for developing Grounded theory. Sage publications.


Lindner, J. R. (2000), Understanding Employee Motivation. Journal of extension.volume36 ,no3.


Kovach, K. A. (1987). What motivates employees? Workers and supervisors give different answers. Business Horizons, 30. 58-65.


 


Implications for Management


If Maslow’s theory holds, there are some important implications for management. There are opportunities to motivate employees through management style, job design, company events, and compensation packages, some examples of which follow:


Physiological needs: Provide lunch breaks, rest breaks, and wages that are sufficient to purchase the essentials of life.


Safety Needs: Provide a safe working environment, retirement benefits, and job security.


Social Needs: Create a sense of community via team-based projects and social events.


Esteem Needs: Recognize achievements to make employees feel appreciated and valued. Offer job titles that convey the importance of the position.


Self-Actualization: Provide employees a challenge and the opportunity to reach their full career potential.


However, not all people are driven by the same needs – at any time different people may be motivated by entirely different factors. It is important to understand the needs being pursued by each employee. To motivate an employee, the manager must be able to recognize the needs level at which the employee is operating, and use those needs as levers of motivation.


 


 



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