The need to effectively manage people in an organization and improve human resource management as a discipline has bolstered the evolution process of managing human capital. Managers in different organizations and academic scholars have experimented different theories and made trials and errors with the aim of being able to properly manage the work environment, acquire effective ways of utilizing human labor, accurately evaluate and appraise employees, and develop the organization. Currently, the human resource managers have come to understand that psychological contract and discretionary efforts are essential elements that influence the management of people within an organization. As such, this paper delves into discussing the relevance of the psychological contract and discretionary efforts and evaluates the particular ways in which various organizations can manage their employees in order to enhance the psychological contract as well as their discretionary effort.
The Psychological Contract
According to Conway, Kiefer, Hartley, and Briner (2014, p.34), psychological contract refers to a set of agreed expectations based on promises between different parties in a work environment. The parties could be managers and employees, employees within a team, or an individual employee with his or her work colleagues. The psychological contracts, unlike the formal contracts, are tacit, thus, are always unspoken, assumed and invisible. The author elaborates that expectations or personal beliefs are mostly the basic points of reference that an employee relies on to figure out his or her employer’s behavior, manger’s responses, and the extent to which the expectations or rather the promises are fulfilled. The managers and employees, therefore often have to find out what could constitute the preferable implications. In the event that promises, as well as obligation, are breached, then there would be a cause for different adjustments regarding the expectations and believes taking into account the achievements or expectations against the fulfilled promises.
Consequently, as inferred from De Ruiter, Blomme, and Schalk (2015, p.56), the psychological contract is a vital element of human resource management since it influences an employee’s level of job satisfaction and commitment. The transactional contracts enable the employers to understand the employees’ attitudes and behaviors in regards to economic performance based on their ability to deliver on their responsibilities within the defined time frames. The relational contract, on the other hand, is significant to the employers and the employees since it is more of open-ended creating an opportunity for establishing the long-term agreements and varying types of obligations. The hybrid contract harmonizes transactional and relational contracts, thus, allows the employers and the employees to incorporate their shared values as well as commitments to obtaining certain desired results within specific time frames (Rodwell, and Ellershaw, 2015; Quratulain et al., 2016).
Discretionary Effort
Mai, Ellis, Christian, and Porter (2016), explains that the discretionary efforts of an employee are the level of commitment and energy they could give and put on their assigned obligations if they desired to, above as well as beyond what an organization pays for. In order to deliver more and beyond what an organization expects of an employee, the employees generally need to feel that they are trusted, appreciated, treated fairly and equitably. As such, it is obvious how discretionary effort is related to employee engagement. In most scenarios, effective execution of the latter results in the former.
The human resource management finds discretionary effort to be vital since there is the need to be informed on constant changing ways and approaches of motivating and empowering the employees. Employees who feel empowered tend to deliver more on their respective areas of operations. De Ruiter, Schalk, and Blomme, (2016) points out that the employers always want to engage with the employees in better ways that encourage them to continue working and remain productive for their organizations. As such, it is essential that employers discover their employees’ unique strengths, find out what motivates them, discover specific ways they like to be appreciated and be recognized, and know and understand them in more than one dimension (Mai, Ellis,Christian, and Porter, 2016,p.45; Lodha, and Pathak, 2017, p.101).
Evaluation of Ways of Enhancing the Psychological Contract and Discretionary Effort
In examining the influence of the psychological contract and the discretionary effort in different organizations, it is inferred that little research exists to exhibit their implication. However, organizations do admit that the psychological contract and discretionary effort that exist between them and their employees have greatly impacted the level of productivity of the employees and the general performance of the organization. As such, the organizations’ management has employed certain techniques and approaches to enhance their employees’ psychological contract and discretionary effort.
A chief executive officer in one of the leading athlete's shoe producing and sports company revealed that in order to motivate and boost their employees’ morale to deliver more than the company expects, they have ensured that they make the terms of the psychological contract and discretionary effort explicit. While explaining ways in which they achieved that, the officer elaborated that taking into consideration that discretionary effort is one of the desired behaviors of the psychological contract, they have made the terms of the contract more unambiguous to eliminate the possibilities of breaching the expectations of the contract that could arise from misunderstandings. In so doing, the management through the human resource personnel has ensured that they make discussions between them and the employees open and honest such that each of the party’s mutual expectations, promises, and obligations are clear. Nevertheless, openness and honesty about the psychological contract foster establishment of comprehensive induction programs create opportunities for wide-ranging aspects of productivity and creates channels for prompt feedback. Allowing the employees to exercise discretion as well as self-autonomy through tolerating and accommodating their diversified needs and preferences, make them feel appreciated and valued (De Ruiter et al., 2017, p.155; Johnston, 2017,p.77). As a result, the employees find themselves pushed to ensure that the objectives and goals of the company are accomplished within the set deadlines.
Consequently, it is inferred from Frenkel and Bednall (2016, p.33), that organizations in order to manage their employees and enhances their psychological contract and discretionary effort have often managed changes to the psychological contract. For instance, a human resource personnel of a fast food industry with a leading market share in the fast food industry notes that managers of organizations have to recognize that organizational changes always affect the psychological contract despite the intended changes not involving the changes to the formal terms of working as well as the work environment. According to Gupta, Agarwal, and Khatri, 2016, p.22), failure to manage change in regards to changes to the psychological contract is one of the root causes of resistance to the desired changes in various organizations. Thus, in order to effectively implement changes, the management of various organizations, companies, and businesses have ensured that their change agents employ strategies that anticipate and capable of managing resistance emanating from employees by accommodating their perceived promises, expectations and obligations. The human resource personnel further explained that their business has been able to enhance the psychological contract of their employees by effectively communicating and educating the employees whenever there is the need for change. The business’s management has made the employees who feel affected by the change to be part of the changes process in which their concerns have always been addressed. The management has often placed support programs that have endeavored to facilitate the change process by training the employees on the new job demands as well as providing them with the essential learning materials.
According to Haynie et al. (2018, p.96), some organizations also manage their employees’ psychological contract and discretionary effort by employing reward strategies. In order to avoid possible scenarios of breaching the psychological contract as well as the discretionary effort, the manner in which rewards and expected bonuses are to be given to the employees has been well communicated. The employees are not given an opportunity to second-guess their likelihood of qualifying for the rewards (Özçelİk and Uyargİl, 2018,p.73). Rather, they are made to work as a team such that the bonuses are channeled to them through their team leaders. The management is informed that through delivering the gifts, bonuses, and promised rewards through team leaders, every employee shares the credit for having successfully completed a task. Moreover, working as a team provided the employees with the opportunity to share ideas on how to go about assigned tasks, hence they find it easy working together to meet the desired expectations of the organizations. The managers, on the other hand, are in admission that they often feel obliged to honor their promises since they have do not want to risk instances where operations of the organization are derailed by low levels of job satisfaction and greater intention of the employees quitting their jobs (Kilroy and Dundon,201 5; Kasekende, 2017).
In summary, the noted importance of the psychological contract and discretion effort as vital elements in the management of human resource in respective workplaces needs critical research. Managers need to effectively manage their employees’ psychological contract as well as discretionary efforts by taking into consideration the realities of the business operations. The assumptions that there are promises, expectations, and obligations to either of the parties should be dealt with accordingly. As such, both the parties should make it clear what is expected of them and what they are obliged to do in regards to the psychological contract. The distinction and clarity would eliminate instances of either of the parties breaching their obligations since the perceived conditions including rewards, promises, and expectation are unlimited.
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