Discuss the key factors affecting change in the Psychological Contract. Name : Flora Tutor : Jonathan Culvert 06/08/2013 Along with the flourishing development of Human Resource Management, increasingly more enterprises have attached great importance to the relationship between employees and employers, which is, put into professional terms, psychological contract. This concept was first introduced by Arises in 1960 and has experienced several changes over the subsequent 50 years. However, what are the key factors that affect changes in the psychological contract?

Personally, the fierce competition caused by globalization is more important than the other two factors like higher education level and the finalization in workplace, in terms of causing changes in psychological contract. All of these three factors will be introduced and explained in each paragraph according to the above order. Then there would be a comparison of these factors based on importance. Initially, globalization plays a significant role in affecting the changes in psychological contract.

As a driving force of economic development, libations has bring prosperity to some countries. But it also raises the pressure of competition and imposes heavy burden of unemployment on employees. To pursue more profits, enterprises may lay off some staff under the rat race, and they may have higher expectation on employees. Specifically, employers prefer to recruit those who do not simply do what companies require them to do, but have the consciousness and ability to explore new solutions to the task and create value for their companies.

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Besides, employers hire more short-term staff than before, like Cooper(2002) mints out “most organizations will have only a small core of full time, permanent employees. ” He considers the behavior of companies to buy the skills they need, or hire short term employees to do particular projects is a strategy to remain flexibility and to adapt the rapidly changing world. However, the use of temporary workers as well as outsourcing of projects have drastically lessen employee’s sense of security and belongingness.

As a result of it, employees may expect companies to help them to improve quickly. According to Hilltop(1 995), instead of status and promotion, employees nowadays require challenging assignments, personal reputation and teamwork to lay foundation for a better future, so that they can have more choices when being laid off by employers. He believes that “This is the promise that the employee’s skills will be enhanced, and access to other tasks and assignments will be facilitated. Another factor is the improvement of educational level among employees. Generally, the workforce is better educated than before, and at the meantime they are less deferential to authority (Hamlet, 1 984). Under this situation, employers expect their employees to spend more time on some training courses on weekends to gain more knowledge and skills. Also, employers may have a higher tolerance towards their subordinates’ disobedience as long as they benefit companies. Moreover, changes can be seen from the expectation of employees.

They look forward to know more about their personal training plan offered by employers as well as the long- term development plan Of their companies. For example, whether there is a relatively transparent mode of management, so that employees can clearly know the striation method of wages and welfare; how many staff have the chance to get promoted; and how long a time would a promotion take. Additionally, employees’ desire to participate has been increased, they want to be engaged in the process of making a decision or evaluation.

That is to say, employees have a stronger feeling of expressing their ideas than before, and expect to make a contribution to companies and be valued by employers. Finally, the changing workforce demographics is also a factor that has influence on psychological contract changes (Hilltop, 1995). More female employees in the workplace can be one factor. In the past, women only have to cope with the household duties, acting as good wives and good mothers. But now, with increasingly more females entering the job market, heavier burdens have been added to women.

Therefore they need more free time and more understandings from their employers. Hilltop(1995) had written an article about this, indicates ‘the increasing employment of women shifting the balance between the family and the workplace, creating increased demands or more autonomy and more flexibility in the way individuals are treated. ” Apparently, among professional women and couples, companies which offer more flexibility in working time, more autonomy and more opportunities to their employees seem to be the best choice to work for.

Above all, it can be suggested that globalization is the most crucial factor that affects psychological contract to change. Not only because it brings more changes to psychological contract than the other two factors, but also because it is the main cause of the other two factors. Specifically, it is libations that introduces fierce competition to employees, which impel them to obtain more knowledge and skills, so that they are better educated than before.

More than that, globalization also acts as One major reason in terms of promoting more women to work, because it makes the attitude towards female employees in the job market to change. To conclude, globalization, better educated workforce and more females in workplace are three key factors that cause changes in psychological contract. And among them, globalization can be the most important one.


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