How and Why the Notion of ‘Psychological Contract’ Can Be Applied To an Employer’s Recruitment and Selection Process

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Introduction

Recruitment and Selection are processes of hiring new employees. The two run hand in hand. Generally, recruitment involves an organization recognizing and acknowledging that it needs to fill a certain vacant or yet-to-be-vacant position within its hierarchy. The company then advertises the vacant position, describing what it entails and the qualifications required of the potential candidates.

The main purpose of recruitment is to, amongst others: create a pool of talent from which to select the best candidates; determine the organization’s present and future needs and requirements in relation to its personnel planning and activities for job analysis; ensure successful selection rate; and to meet the social and legal obligations of the organization regarding workforce composition (Spector, 1997).

Then selection involves picking out one or a number of applicants who satisfy the qualification requirements (Spector, 1997). Ultimately, recruitment is a crucial step towards getting a suitable candidate. It is therefore important to conduct effective recruitment and selection of right candidates. One such way is through use of ‘psychological contracting’.

‘Psychological Contract’ generally refers to the individual perceptions or beliefs in relation to the reciprocal obligations between the organization and the employee (Knights & Kennedy, 2005). It does influence the behavior and attitude of an employee towards his/her job and organization.

A number of theories have been presented to explain psychological contract: Motivation theory, Expectancy theory and Equity theory (Knights & Kennedy, 2005).

It is important that both parties share clear perceptions on what their obligations to each other are. This helps the employees not to over-expect and later feel let down by their organization when any such expectations are not met. And it helps the employer to decide if a candidate is suitable or not based on such expectations.

Those with bigger expectations than the employer can meet would not be suitable even if they are qualified enough. The employer can partly make known expectations clear in any of the seven elements of recruitment advertising.

With focus moving from the size of workforce to the output of the available workforce, many organizations and companies have adopted psychological contract strategies. One such company is ASDA, a supermarket chain. This paper takes a more detailed look into these elements of psychological contracts in an effort to answer the prime question on which this paper is based, and how these elements are at work in ASDA.

Psychological Contract

As already briefly mentioned, the main purpose of recruitment is to recruit and identify suitable candidates. Therefore, it is important to have employees who are not only qualified but also who has the right attitude towards the earmarked job and the organization.

This will directly affect the level of commitment to the advertized position, the firm and ultimately determine the productivity and output of the employee. One of the major things that motivate an employee is to know that the organization takes his/her feelings into consideration.

Usually, there are written formal contracts that clearly spell out what the obligations of the employer and employee to each other are. However, ‘psychological contract’, as the name suggests, refers those ‘contracts’ that are not explicitly spoken of or written down. Each party only assumes the other knows what these are.

For example, the employee always expects promotion, regular pay, job security, training, career development and so on to be provided by the employer.

And the employer expects that the employee will be willing to work extra hours, volunteer in non-required duties, be loyal, not support competitors, accept transfer, protect organization information, hand in advance notice before quitting and spend a certain minimum number of years before at least moving from the organization.

Unlike a written contract, most of these are merely perceived promises that both parties believe they have made to each other and are willing to keep them. It is important therefore that both parties know and understand each other’s expectations before recruitment or there may be cases of perceived psychological contract violation.

How Psychological Contract Can Be Employed In Recruitment and Selection

Some researchers have stated that it is important to form psychological contract as early as during the hiring and selection process. This is because psychological contract concepts are greatly significant during the recruitment and selection stage.

They hold the key to the attraction of the right human resource pool and therefore have a direct relation to employee productivity and performance in the organization (Onici, 2009). As we have seen, lack of a clearly defined psychological contract creates a higher chance for relational troubles between the employer and employee, especially when psychological contract violations are perceived.

Carrying out recruitment and selection in a way that includes the ideas of psychological contract is important as it helps both parties to predict any potential relational hurdles. With this prediction, efforts can be made at reaching a mutual understanding between the organization and a potential candidate and cases that are likely to be more troublesome in the future can be avoided.

For instance, if the recruiter realizes that a candidate has more expectations than the organization can satisfy, then such a candidate may as well be rejected because in the end, that employee may be unhappy due to perceived psychological contract violations, and ultimately be more of a liability than an asset to the organization.

Since the company is ultimately concerned with hiring high-quality workforce, the theories of psychological contract can be used to attract this pool of high-quality talent.

In order to illustrate why and how psychological contracts might be used in both employee selection and recruitment, an assessment of the ASDA Company will be done. Asda is a supermarket chain that operates in Britain retailing food products, clothing, general merchandise and financial services (BBC, 2011).

The company has close to 145,000 employees and has consistently seen its employee retention rates go up (BBC, 2011). This has partly been attributable to Asda’s adoption of psychological contract strategies in its recruitment and selection processes. The details below will demonstrate how.

Recruitment

Recruitment involves the organization acknowledging that there’s need to fill certain posts in its hierarchy. This recruitment may be done internally, which involves promoting old employees to higher positions, or publicly, which is an open recruitment of suitable candidates from both within or without the organization.

Advertising is the standard method for recruiting employees. Adverts are placed depending on the experience and skills needed. Since many today are looking for the “employer of choice” (Leighton and Proctor, 2006) who meet their careers as well as ethical concerns, adverts are also a way by which an organization ‘sells’ itself, including its distinctive mission and vision, and ethics to the potential employees.

The advert itself as well as the impression it gives are important in this regard. Those who feel that the organization reflects their concerns can then knowingly apply.

In this light, advertisement is the first stage in forming and establishing a psychological contract between the organization and potential employees. It shapes and conditions the applicant’s expectations of the organization and the vacancy advertised. Leighton and Proctor (2006) further advice that an organization must not forget this while drafting an advertisement.

In other words, the advert must contain all the seven key elements of advertisement: title of job, company background, description of the job, information on the benefits and treatment of employees, opportunity for career development, how to apply and qualifications required of applicants (Leighton and Proctor, 2006).

The advertisement must not only clearly give the title of the job vacancy but also offer a clear description of the job advertised and how to apply. There should also be information on the organization: its historical background, opportunities for employee development, the employee benefits and treatment.

And from a legal perspective, the advertisement must specify the qualifications and skills the applicant must have in order to apply for the vacancy.

In line with this, Asda has taken upon selling itself through giving clear information on its operations and working policies. For instance, on its corporate website, it has various sections. One such section is ‘Opportunities for All’, which asserts its non-discriminatory recruitment policy.

It goes on to explain this stance as regards women, ethnic minorities, age and disability. It also says that it offers opportunities for personal development through the execution of personal development plan (Asda, 2010).

Also, one of its adverts expresses a reigning mood of freedom during work. This particular advert adopts many advertising techniques, such as color and a catchy slogan amongst others. But still it manages to express the seemingly key subject; freedom through use of cartoon images.

For instance, an image of people embracing has the word ‘Huddles’ next to it, showing that the organization helps its employees through personal and work troubles. Another image of people seated around a table has ‘Coffee Chats’ next to it. Another sentence is ‘No Jackets’, which perhaps expresses a certain degree of freedom when it comes to dress-code.

All these and more such tactics are meant to win the hearts of those who would like to apply for jobs with Asda. This advert for instance clearly expresses Asda’s promise to its employees while another advert shows employees serving customers and are accompanied with the words ‘Respect, Service & Excellence’ (Asda, 2010). Here Asda is expressing its own expectations of the employees.

Unfortunately, advertisements do not usually have much employment contract and do not legally bind the advertisers to any obligations. As such, it is only in a few cases that contractual terms have been implied in advertisements.

Nevertheless, forming psychological contract at this stage is important since it ensures that those who apply are conversant, to a certain degree, with the demands of the job vacancy and the organization.

Selection

Selection involves picking out the best candidates out of the applications received. It is not only about fairness but also the accuracy of the selection method. These methods vary in their ability to predict an applicant’s on-the-job performance. Researchers have begun to appreciate the essential role of theoretical development in the field of recruitment, assessment and selection.

For instance, Leighton & Proctor (2006) assert that “it is important for the selection method to approach the interface between the employer and the employee as a process of social exchange”. The predictability of the psychological contract provides a systematic and logical process of finding evidence upon which to judge an applicant’s match to a job or organization.

An applicant’s future psychological contract nature can be predicted by studying one’s personality. Research has shown that an employee’s psychology with his employer is influenced by his personality. Apparently, individuals with high neuroticism scores are likely to have transactional psychological contracts, and are more likely to perceive violation of psychological contracts.

Those who score highly on conscientiousness are highly likely to build relational contracts. These relational contracts have been linked with high job satisfaction, organizational commitment levels, and lesser likeliness to quit the organization (Scroggins et al, 2009).

A number of theories have been forwarded in an effort to explain the content of psychological contract and explain the ways in which it can be carried out. These theories can be equally important in setting out guidelines for forming psychological contract during recruitment and selection.

Motivation Theory

Motivation is defined as “the act or process of providing a motive that causes a person to take some action” (Shanks, 2010). This theory emphasizes the importance of understanding the motivation of employees and how such an understanding can provide a window for achieving the organizational goals.

It aims at incorporating the motives of the employees to perform specific tasks in the mutual relationship between the employee and the employer.

The psychological contract approach assumes that the employee is motivated to perform tasks on the organization’s behalf only as far as the organization is willing to reciprocate for such an effort (Aselage and Eisenberger, 2003). The argument here is that those who receive valued resources as a reward for their works feel obliged to play increased and extra roles, and are less likely to be absent.

The expectations harbored by both the employer and the employee are however unstated and are implicitly understood to be clear to both. This is however not always the case.

Organizations should therefore take steps to make sure that the employees understand what to expect. At the same time, it should make assumptions about what the expectations of potential employers might be. When it comes to job vacancy adverts, for instance, the organization can assume that potential employees might be motivated by a good salary and job security which are some of the key motivating actors.

These could be included in recruitment adverts. Indeed the motivational skills adopted by Asda in its adverts have had great impact on its operations. In 2003, it was awarded by ‘Sunday Times’ for its flexibility, and it once reported 4 million pounds worth of reduced absenteeism (Brown, 2005).

Expectancy Theory

The main argument here is that in order for an organization to maximize the expectancy of the potential candidates, it must clarify the psychological contracts, which involves clearly communicating the possibilities for performance versus outcome, and demonstrating the rewards contingent on work-performance.

Asda also makes clear what the employees should expect. For instance, it offers employees flexibilities for other personal issues. These include numerous leaves (Maternity & paternity leaves, study leaves, etc) store swap, shift swaps, etc (Brown, 2005). This does not only detail clearly the expectations of both teams, but is also motivational, especially to the employees.

This is in line with the motivation theory. Doing this ensures that an employee does not arrive in the organization with over-blown expectations. As it were, it helps one come to terms with the situation early enough and psychologically adjusts in accordance with the prevailing circumstances.

Equity Theory

This theory, as the name suggests, has to do with fairness. It sates that employees expect that their remuneration will be equivalent to their input (Practical Management, 2011).

If there is a perceived discrepancy in the input-output ratio, the employees might decide to take any of the following actions: reduce their input, ask for higher output, influence other employees to reduce their input or quit their job. The input variable is in form of time, expertise, education and effort (Practical Management, 2011).

During recruitment, it is important for the organization to show potential candidates that it is against discrimination both during recruitment as well as in the remuneration perks it offers. Some organizations, for instance, may offer higher or lower pay based on gender and disability, among other discriminatory practices (Practical Management, 2011).

Taking these into consideration during recruitment and selections stages sets the ground for smoother future psychological contract between the employee and the employer. Since this is not only important to the employee but also to the organization.

Why Psychological Contract Is Necessary

Failing to form psychological contract, as seen above, creates space for a perceived violation of the psychological contract. This is where one party feels that the other party has failed to meet one or more of its obligations and promises.

The employee, in such a case, may feel emotionally distressed, angry, a sense of injustice and betrayal (Wolfe & Robinson, 1997). It is this emotional state that results in behavioral and attitudinal response on the following areas:

Job Satisfaction

Knights & Kennedy (2005) refer to this as an attitudinal variable reflecting how and what people feel about their jobs. This variable emphasizes the immediate and specific task environment within which an employee performs their duties.

It reflects the employee’s immediate reactions to specific concrete aspects within their work environment. The most common facets of job satisfaction are classified as pay, benefits, job security, promotion, job conditions, coworkers, supervision, work nature and communication. Psychological contract violation results from a perception on the part of an employee that one or more of the job satisfaction facets has not been met.

The theoretical model of the violation of psychological contract proposes that an employee’s response may show job dissatisfaction when he/she perceives a discrepancy in the reciprocal promises made by the organization.

This may lead to increasing absenteeism and turnover. Spector (1997) agrees that dissatisfied employees, as long as they remain in the organization, may engage in un/counter-productive behaviors, including theft, poor service, destructive rumors and sabotage of the organization equipment.

All these result in financial loses in terms of replacement costs and lost productivity. Moreover, it has been found that dissatisfied employees report physical symptoms like anxiety, tension, tiredness, sleeping troubles and depression (Spector, 1997).

Organizational Commitment/ Citizenship

This refers to an employee’s strong involvement with and in the organization. This is reflected in the employee’s acceptance of organizational goals, readiness and willingness to work hard, and the desire to stay with the organization (Mowday et al, 1982).

These attitudes develop slowly and consistently in time as a result of good relationship between the employer and the employee, and are strongly influenced by how the employee perceives the procedural and distributive justice in the organization (Mowday et al, 1982).

Perceiving the circumstance as fair is likely to motivate an employee to exceed normal performance expectations. On the other hand, when an employee feels that the outcomes are unfair, he/she is likely to respond with counter-productive behavior as is the case above.

Low commitment levels have also been associated with decreased morale, compliance and altruism. Plus these employees may describe the organization to other people in negative terms, thereby hindering the organization’s recruitment plans (Mowday et al, 1982).

Conclusion

As we have seen so far, the needs of employees have generally changed. Initially, employees cared more about salary. Today they care more about job security and opportunities to develop their careers and build their resumes among others. With this trend many companies have had to change their tactics for attracting and retaining employees are unceasingly adopting psychological contract strategies to win job recruits in the market.

As Asda testifies, the companies are reaping good harvests from this strategy. This is clearly determined by the fact that organizations are getting more out of the motivated employees than before.

While the earlier human resource model stressed the significance of qualification, the current system emphasizes on, over and above qualifications and the attitude of the employees towards work. As has been shown above, the attitude of employees towards their employer is heavily reliant on psychological contracts.

References

Asda. 2010. Reward and Development. Web.

Aselage, J. & Eisenberger, R. (2003). Perceived Organizational Support and Psychological Contracts: a Theoretical Integration. Journal of Organizational Behavior, 24: 491-503.

BBC. (2011). Asda staff to share £27m bonus pool. Web.

Brown, D. (2005). The Psychological Contract: What It Is, Why It’s Important, How to Manage and Use It. West of Scotland Masterclass Series. Web.

Knights, J. & Kennedy, B. (2005). Psychological Contract Violation: Impacts on the Job Satisfaction and Organizational Commitment Among Australian Senior Public Servants. Applied H.R.M. Research, 10(2): 57-72.

Leighton, P. & Proctor, G. (2006). Effective Recruitment: a Practical Guide to Staying Within the Law. London: Thorogood Publishing Ltd.

Mowday, R., Porter, L. & Steers, R. (1982). Employee-Organization Linkages: the Psychology of Commitment, Absenteeism and Turnover. New York: Academic Press.

Onici, T. (2009). An Investigation into Psychological Contract Formation From Recruitment Material in the Context of Public Administration System: A case study on Moldovan Ministry of Finance. Web.

Practical Management. (2011) Employee Motivation. Web.

Robinson, S., Kraatz, M. & Rousseau, D. (1994). Changing Obligations and the Psychological Contract: Longitudinal Study. Academy of Management Journal, 37(1): 137-152.

Robinson, S. & Rousseau, D. (1994). Violating the Psychological Contract: Not the Exception But the Norm. Journal of Organizational Behavior, 15: 245-259.

Scroggins, W., Thomas, S. & Morris, J. (2009). Psychological Testing in Personnel Selection, part III: the Resurgence of Personality Testing. Public Personnel Management, 38(1): 67-78.

Shanks, N. (2010). Management and Motivation. Sudbury, MA: Jones and Bartlett Publishers.

Spector, P. (1997). Job Satisfaction: Application, Assessment, Causes, and Consequences. London: Sage Publications.

Wolfe, M. & Robinson, S. (1997). When Employees Feel Betrayed: a Model of How Psychological Contract Violation Develops. Academy of Management Review, 22(1): 226-231.

Click Here To Order Now!