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4. Managing IR through
Psychological Contract
and
Employee Engagement
Debi S. Saini
ProfessorHRM Area
Management Development Institute, Gurgaon-122007
1. Globalization changed the business world
2. Competition: What do CEOsexpect fromHR?
3. Use of Psychological contract for promoting engagement
4. Meaningof engagement &its incidence acrosscountries
5. Engaging orgs. necessitatetransformational leadership
6. 12Key factors thathelpCos. promoteengagement
7. Practicesof somecompanies to promote engagement
Issues Dealt with in this Presentation
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We know that the World
has Changed substantially
in the Past
two Decades!!
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Employee Engagement
is expected to be promoted
through
Psychological Contract:
What is it?
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What is Psychological Contract?
Theperception of
overall set of expectations
held by employees and theemployer regarding
what employees will contribute to the org. (contribution)
and what theorg. will providein return (inducement)
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HR Practices, Org. Culture & Leadership as Factors for Outcome
Psychological
Contract
Employee care
Empowerment
Competency-bldg.
Career Development
Reward/recognition
=
Engagement
High performance
Formal
Employment
Contract
Performing duty as
per job description &
Adhering to Co. Rules
+
Compensation &
Job security
Business
Environmental
Context
Strategic HR Systems
& Interventions
Leadership
Formal
Outcome
Fig.: Psychological contract between employer & employee is a tool of engagement
Org. Culture
Values
Positive Emotions
Debi S. Saini 2009
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Employees Expect various Types of Justice
Organizational Justice:
Extent to which peopleperceive overall fair treatment at work by the org.
Distributive Justice
Perceived fairness of how resources/rewards are distributed
Procedural Justice
perceived fairness of theprocedures used to make allocation
Interactional Justice
Fairness in process of making decisions
(Interpersonal side of decision-making)
Psychological Contract
is expected to result in
Employee Engagement
& Excitement
What is Employee Engagement?
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An employee is said to beengaged when s/he
believes in an org.sgoals & makes efforts in their realization
Has passion for work; says that s/he is satisfied doing thework
Says that s/he is enthusiastic/proud about work
Is willing to recommend the organization to others
Stays with the organizations despite other attractions
Is prepared to gobeyond job requirements
What does Employee Engagement Involve?
People Engagement at Work in Britain: Study
Source: Gallup Poll data of Great Britain, working population 18 years and older June 2005. n = 1,006
Copyright 2005 The Gallup Organization, Princeton, NJ. All rights reserved.
Engaged Engaged Not Engaged Not Engaged Actively Disengaged Actively Disengaged
These employees are loyal
and psychologically
committed to the
organization. They are more
productive, more likely to
stay with their company, less
likely to have accidents on the
job, and less likely to steal.
These employees may be
productive, but they are not
psychologically connected
to their company. They are
more likely to miss
workdays and more likely
to leave.
These employees are
physically present but
psychologically absent. They
are unhappy with their work
situation and insist onsharing
this unhappiness with their
colleagues.
16% 60%
24%
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Gallups Questionnaire
Q uest ions A Response
D o I know what is expect ed of me at wor k?
Yes
D o I have t he mat er ial and equipment I need t o
do my wor k r ight ?
Yes
At wor k do I have t he oppor t unit y t o do what I
do best ever y day?
Yes
In the last 7 days, have I r eceived r ecognit ion or
pr aise f or good wor k?
Cert ainly
not
Does my supervisor or someone at work, seem t o
car e about me, as a per son?
Cert ainly
not
I s t her e someone at wor k who encour ages my
development ?
Yes
Employee Engagement Around the Globe is Low
Source: Towers Perrin Global Workforce Study: Executive Report, Winning Strategies for a Global Workforce, 2006
Towers Perrin was later on taken over by Watson WyottThis study was based on a sample of 86000 employees from
16 countries and covered all actegories of employeesshop floor, supervisory, middle & senior management
* Global weighted average,
basedontotal survey
sample
Countries are not
necessarily comparable,
due to cultural
differences in survey
response patterns
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Promoting Engagement
Shift taking place
from Traditional Personnel management
to Strategic HRM
through Soft Levers:
But Still, in many cases
P&A is still negative
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Engaging &
Organizations are Creations of
Transformational Leadership:
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Leaders Focus on Culture & Outcome; not Rules
1. Develop business vision
2. Culture toachievevision
3. Flatten theorganization
4. Eliminatebureaucracy
5. Empower individuals
6. Raise quality & efficiency
7. Eliminate boundaries
Welchs 7 Point Program for
Mgt by Leadership
GE Market
Capitalization
Some Factors that lead
to Promoting
Engagement in
HPOs: Research?
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--Relationship with boss is the greatest motivator
--People wish tolead a meaningful, dignified life
--They need to be heard
--They need tobe inspired
Some cos. are trying to createthousands of leaders
1. Creating Leaders in place of Bosses
In Search of Excellence revealed Importance of:
Shift in people mgt. fromHard toSoft Model
People
Emotion
Engagement
Empowerment
Caring & Enjoyment
Power of Trust: C-DOT Library
From effectiveness to: creativity, enthusiasm, excitement
2. Focus on Peoples Care & Trust
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3. Living Wage and Benefits 3. Living Wage and Benefits
Pay
Benefits
Meeting reasonable reward expectations of the employee
4. Culture of Respect & Dignity 4. Culture of Respect & Dignity
Marching towards realization of bundle of needs
It requires nurturing & sustaining a conducive culture
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5. Job design & Interesting Work 5. Job design & Interesting Work
Devise the job design that
makes the employee feel unique!
Job Features Important to applicants?
For Males
Interesting Work
Chance for promotion
Good benefits
Job security
Opportunity to learn new skills
High income
Annual vacations
Geographical location
Flexibility in work hours
Able to work independently
For Females
Interesting Work
Good benefits
Job security
Chance for promotion
Opportunity to learn new skills
Geographical location
Annual vacations
High Income
Flexibility in work hours
Able to work independently
Survey by Time: 11,666 people in all: 10,221 ages 18-28 (average age: 22) 1,046 ages 29-39; 310 ages 40-50; 89
ages 51-61 Of the 10,221 emerging adults: 3,120 males (30%), 7,122 females (70%)
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6. Growth Opportunities & Development
People want challenging work so that
they develop their employability
7. Employee Empowerment & Ownership
Giving power to make work decisions
Decisions delegated to lower levels
Aim: SoftHRtrust & developmentEngagementHRD
Individual Empowerment: J ob enrichmentFlexitimeRotation
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Empowerment through Employee Involvement:
The Elixir of 1990s in West
In-house newsletters
Suggestion schemes
Attitude surveys
Quality Circles
Communication is key
The synergy of team
8. Communication is an Important Aspect of
Open & Caring Culture: MBWA in HP
Sustained interactions
that mutually benefit
the parties concerned
Proves magnetic
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Encouraging Encouraging
Informal Peer
Culture
Open Forums
(Transparency)
News Letters,
House Journals
Indi vi dual
Group
Mass
Informal
Goal-setting/
Review
Video
Magazines
Get
togethers/
Picnics
Open door
Caring
Culture
Formal
Meetings
Communication can be Enhanced in Various ways
9. Engagement through Getting the Family Involved
Family buttresses feelings of employee;
So Care for Family
Invite family to company premises before joining
Welcome letter to parents & spouse onemployees joining
Inviting family oncelebration/ annual days, family excursions
Support to family when employee is abroad
(Medical coverage for dependent parents; assistance, 2
nd
house maintenance)
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10. Engagement
through
Diversity Management
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The processof developing an environment
thatmaximizes potential of
all people in an org
that involves learning tovalue qualities
that are different between groups & even individuals
What is Diversity Management?
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Engagement
Through
Individuality &
Diluting Rule-centricity
in Google
Google has become a magnet
for like-minded geniuses:
#1 on Fortunes 100 Best Places to Work
Google: $200 billion market cap.
Larry Page and Sergey Brin
Co-founders, Google
Google Creating Joy by Giving Employees
what they need: casualness, diversity, fun
The only U.S. companies
with larger market caps are:
Exxon Mobil, at $328.4 billion
Microsoft, at $276 billion
Wal-Mart, at $207.6 billion
.
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1. Pre-school & after-school child care
2. Extended maternity/paternity leave
3. Safeguards against sexual harassment
4. Flexible working hours
5. Work-life balance
Some Initiatives in Diversity Mgt. in the West
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6. Alternativecareer paths
7. Training to avoidmid-career plateau
8. Telecommuting facilities
9. Harassment prevention training
10. Networking opportunities for the diverse:
Share experience & learn from others
Some Initiatives in DM contd
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11. Raising the profile of women employees through
dissemination of info. on their achievements/issues
12. Awareness about potential of disabled/aged
13. Adjustment audit for disabled, women, aged
14. Mentoring of disabled for advancement
Some Initiatives in DM contd
11. Ingrain Positivity at the Workplace
Little victories celebrated
Praise, praise, praise
Sports/co. clubs arranged
Creating your small world of living joyfulness
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12. Involving Employees
in
Community Programmes
Community Programs & Culture: e.g. IBMs Smarter Planet
Employees contributions towards the organization being a
responsible citizen and enhancing satisfaction
Its objective is: Caring for emotional & spiritual needs of employees
Implementing the practice
Sabbatical for social work including funding
Encouraging Socially responsible behaviors
--Adopting villages, working for charitable cause-- included as official work
Community work week--certain hrs per month available for community work
Choose your social project
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The Above Ideas in Action:
How have Some
Companies Created
Engaging Environment
through Different Practices?
Benchmark the Suitable ones
Sasken
Communication
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Sasken Communication Technologies, Bangalore
Values, Culture, Trust, Transparency, Informality
State of the art soft HRM in operation
Unique HR policy:
No attendance systemNo limit on sick leave
Freedomto come & go; & think/innovate
Policy Change Request can be made by any one
Same rules for all categories of people
Same hotels when on travelCEO sits in similar cubicles
Prudential:
Culture & Affiliation
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Prudential Process Mgt. Services (PPMS)
Company with 1,200 employees
Serves Prudential UK
Well thought out HR Strategy: conducive environment
Hasreduced attrition to20% (Industrys attrition is 45%)
HR Strategy: Competes on culture; not compensation
Involves families in get together; funds their HRD needs
Vitas Inc. USA
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Employees highly cared; wear the 4 Co. values on Shirts
1. Patients and families come first
2. We take care of each other
3. Ill do my best today &do even better tomorrow
4. I am proud to make a difference
Live asense of pride: Great excitement in working for Vitas
HR-VP received: HR Leadership of the Year 2006 award of SHRM
One nurse said: Sometimes we wonder why we came here so late.
Vitas Inc. USA
Miscellaneous Practices
that Promote
Joyfulness in
Different Companies
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Some Other Culture-Building HR Practices
Associate Delight Index (ADI): How do people feel in the co.
Trust Index (Credibility, Respect,
Fairness, Pride & camaraderie)
(Used by Grow Talent for Best Places to Work Survey)
New planes linked to
its employees childrens name