EMPLOYEE WELL BEING

AND
THE PSYCHOLOGICAL CONTRACT

The Pilot Research Study

By
Ahmed Sheikh
Zeeshan Muneer Siddique
Muhammad Qasim
Raza Abbas Zaidi
Barkat Ullah Qadri

MAT-404
Inferential Statistics for Research
Sir Muhammad Haris Hayat

1
2
 EMPLOYEE WELL BEING
AND
THE PSYCHOLOGICAL CONTRACT

The Pilot Research Study

By
Ahmed Sheikh
Zeeshan Muneer Siddique
Muhammad Qasim
Raza Abbas Zaidi
Barkat Ullah Qadri

MAT-404
Inferential Statistics for Research
Sir Muhammad Haris Hayat
3
 Acknowledgment

At first we would like to thank our course instructor Mr. Muhammad Haris
Hayat, who has supported and guided us, and helped us in preparing the
foundations of this pilot research all throughout this research and without
his help and guidance we would not have been able to complete this
research. His teachings were a guiding light for us all throughout this
research and the compilation of the report. We are very thankful to him.

We would also like to take this opportunity to thank all of the Human
Resource executives and employees, as without their support this research
would not have been possible and that they took out time from there busy
schedules to help us for the completion of this report.

And lastly I would appreciate the help of many graduates of Institute of

Business & Technology who guided us for our project.

4
 Executive Summary

The motive of this study is to find out or disclose if there is a relationship

lie between the employee wellbeing and the psychological contract.

People know the thing to assume, we twist up to work, done that was
required by the organization and the organization provided the security and
future development. It was very difficult relationship and for the most of
organizations it worked very good, providing them with honesty, faith,
committed and steady work force.

Times is different now,

• Business institutions are not more stable nor long lived in future-
unpredictability overcome and job insurance is no more proposed by
the organizations who are less afraid to maintain a stable work force.

• Flexibility, adjustability and pace of feedback are all very crucial and
employee roles can be likely to continual change- constancy and
uniformity are generally no more available for the employees in the
organizations.

• Learner employers mean that race might be primarily develop sidelong

– assumptions that growth will be made by elevation through the hierarchy
are generally no more valid.

5
• Learner employers can make great appeal on an individual’s employees
of the company and they are less likely to accept those people who are
no more accurately fit to their requirements.

• Due to this the one thing which also effects on employee and that is its
well-being on work which causes much on an individual’s
performance.

Many companies are now accomplishing that the strides have to be

appropriated to create bond and to provide the extension for oblique career
development and improvement in expertise and intelligence through
different events for learning.

And the keygoal/aim of this study is to disclose the link b/w the
psychological contract and the employee well being in an organization.
The data collected for the research is conducted through primary source.
The instrument for the collection of data is questionnaire, having 33
questions in it and having 5 choices containing in each question and the
questions are divided along with both the variables so that the person who
is filling it out can feel and understand easily.

The analysis of the regression has been done to check the stability and the
authentication of the variables.

As this research which is showing a relationship between employees well

being and the psychological contract and we can clearly see through the
statistical results of this that psychological contract is dependent on
employee well being and there is a significant relationship between both of
them. And if there is a rise in the units of the psychological contract of any
employee then than there is a significant increase in the well being of that
employee.

6
 Table of Contents

S.No. Contents Page

1
Acknowledgement 4
2
Executive Summary 5

3
Introduction 8
4
Variables 10
5
Results 14
6
Conclusion 18
7
Recommendations 18
8
References 20

9 24
Appendix

7
 Introduction

Managing compensation, premium or award is generally about

administration of assumptions, hope, forecast about what things the
employees expect in return from their organizations against their
productivity and what the organizations expects from their representatives
in return for their pay and the time to work and establish their own inter
personal skills. Assumptions are created into the link of this employment
period, starting point of which is an understanding by an individual to work
with effort, hard work and skill to their organization, in return for which
the company blesses the employee with a monetary benefits like salary or a
wage.

The two different categories of psychological contract which clearly

defines the employment relationship:

Transactional Contracts: The type of psychological contract which have

very well explained conditions of conversion. It is based on the legal laws
and they are given in the terms of finance line, wages, salary etc.

Relational Contracts: Another type of psychological in which it is not much

defined or we can say that it cannot be defined at all. This contract relates
to the job security, job satisfaction etc.

Transactional or economical contracts are disclosed informal terms of

employment, which are in the drafted or undrafted and point out the
provisions and the situations of the employment service. Relational
contracts are defined, in so far if they are disclose at all, in what is mostly
called a Psychological Contract, a core of which is so it is indirect kind of
than declared and is not likely to the contract. The word psychological
means the adjustments is only in the minds of those anxious; it is not admit

8
between them. The image or approach of the psychological contract is a
crucial one so anybody get involved in it with reward administration
because it is very much anxious with explaining and meeting assumptions
anxious pay, performance and the establishment and application of
expertise and personal skills.

Problem Statement:

People know the thing to assume, we twist up to work, done that was
required by the organization and the organization provided the security and
future development. It was very difficult relationship and for the most of
organizations it worked very good, providing them with honesty, faith,
committed and steady work force.

Times is different now,

• Business institutions are not more stable nor long lived in future-
unpredictability overcome and job insurance is no more proposed by the
organizations who are less afraid to maintain a stable work force.

• Flexibility, adjustability and pace of feedback are all very crucial and
employee roles can be likely to continual change- constancy and
uniformity are generally no more available for the employees in the
organizations.

• Learner employers mean that race might be primarily develop sidelong

– assumptions that growth will be made by elevation through the hierarchy
are generally no more valid

• Learner employers can make great appeal on an individual’s employees

of the company and they are less likely to accept those people who are no
more accurately fit to their requirements.

• Due to this the one thing which also effects on employee and that is its
well-being on work which causes much on an individual’s performance.

9
Many companies are now accomplishing that the strides have to be
appropriated to create bond and to provide the extension for oblique career
development and improvement in expertise and intelligence through
different events for learning.
And the key goal/aim of this study is to disclose the link among the
employee well being and the psychological contract in an organization.

Variables

Dependent - Psychological Contract

Independent - Employee Well Being

Psychological Contract

Psychological contract is give and take between the "wants" and "offers"
surrounded by individuals, the employees and the employers. When there
is an engagement between them that what is needed by the employees and
what is proposed by the organizations, we are talking of the psychological
contract. So, as such with any kind of the contract, the contract named
psychological contract contains a conversion between individuals the
employees and the employers. Distinct from the other kinds of the contract
yet, is that the psychological contract doesn’t mean that it contains
substantial products or services but fairly intangible goods determine that
how public feel and act (Makin et al. 1996)

Clutterbuck (2005) also explained about the psychological contract as it is

the undefined / unwritten assumptions of individual’s the employees and
the organizations that they get about the fulfilled of the social conversion
b/w both of them. These kind of assumptions aren’t naturally shared, the

10
limit to which the employees and the organizations hold different kind of
assumptions which threaten the terms and the contents of this contract.

Rousseau (1990) explained about this psychological contract as an

employee's acceptance, faith and trust regarding mutual necessity'. They
begin in the background of “cooperation’s and conversions with the
assumptions of some continuity into the future” (Rousseau 1990).

Rousseau (1990) quarreled that the contented of the psychological contract

by querying the immediate bosses about the guarantee and pledge made to
newcomer employees. Guarantees employers desired by the newcomer
included faith, suggesting, advance note if appropriated a job else
somewhere, eagerness to accept the relocation, rejection to coordinate the
organizations competitors, working extra hours in an organization, and
keeping on job with the company for a at least of 2 years. Many promises
made to the newcomers contained long run job security / safety, elevation;
coordinate with private issues, wage was supposed to be given according to
the scope of work, career growth, and the high wages / salaries.

Dainty., et al. (2004) also defined about the psychological contract in the
structure design and create that the promises or commitments were built
about the debatable arrangement such as assuring the equal & stable
salaries / wages to the employees of an organization and perk advantages,
and comparative form contained realization of input against the
organizational development, training, job security / safety, career growth
and charm, realization and assessment on the performance, equality and
justice in the 5 things i.e. staff methods, help on the personal bias and
family linked issues, consultations, and elevations.

Shen (2010) also elaborates about the psychological contract that it

contains both the transactional component and the relational component.
The transactional component are identify with the wage, salary / pay

11
working times, and the job period. And the relational component relates to
the career anticipation, duties, and work area convenience.

Employee Well Being

A visionary framework that may be tested to the research of an employee

well being and that indicates the number of the conditions in the Affective
Event Theory (AET; Weiss & Cropanzano, 1996). In the briefings, AET
also nominates about many circumstances on work have a prompt effective
importance that means they are the effective events in that they create
passionate feedback and differs in the temporary effective cases (Weiss
&Cropanzano, 1996). In angle, feelings and temporary effect not only
impact the employee’s action but also take them to the evolution of
comparably stable work behaviors. Most imperatively, AET ‘‘draws much
essential consideration to flow of an events that may spread in different
workplaces’’ and therefore gives the concepts for modeling constructs
needed decisive for the employees well being at the intraindividual match.

Highly serviceable employees feels that they are able of dealing with
present and in future advancements, in addition to the differences in the
psychological contract, and it is fairly to acknowledge their well being (De
Cuyper et al., 2008).

The attributes of the employee well being to the psychic, substantial and
behavioral well being of the staff of the organizations and assumes that \the
specific assessment of employee's work background is helpful to one’s well
being (Cartwright and Cooper, 2009)

Guest, Isakson & De Witte (2010) they used a signal of achievement on job
and in a life, psychic health, inflammation, disquiet and dejection and the
job life equity to allot work-relevant well being as resulted factor in their
psychological contract study. Although serviceable employees can be

12
favorable to the company, the specific kind of a relationship b/w
employability and hope to leave remains a matter for the employer.

Fugate et al. (2004) confirms that anticipated calm of evolution by

indication anticipated serviceability, inspire employees to scrutinize
substitute different employment options, which are examined to the very
initial step towards composing a hope to quit. An individual’s hope to quit
the company is a powerful seer of exact turnover.

In an organization the work culture identify by the feelings of uncertainty,

employees might sense that their organizations may not guarantee them for
ongoing employment with the organization and then they might therefore
take responsibility of the points by making them own more serviceable.
They thus no more feel any loyalty or faith towards their employer and
would quit the organization in quest of better events, since they are feeling
that they cannot rely on the organizations (Benson, 2006)

Studies attracts on assessment of the circumstances of the psychological

contract participate to analytical study comparatively than definitive study
permissive investigators to conclude convinced components which relates
to the employees behaviors, attitudes, actions and well being (Garcia, Silla,
Peiró& Fortes-Ferreira, 2007).

Ng and Feldman (2008) did a study which results employees background

an increased want to be in an organization with and which they keep faith
they have a commitment that cannot be reproduce in some other
organization.

13
 Results

Validity and reliability test:

Table – 1

Table showing the reliability of the variable employee well being:

Reliability Statistics

Cronbach's
Alpha N of Items

.978 16

This statistics of the reliability of an employee well being is showing that

the model is fit and reliable.

Table – 2

Table showing the reliability of the variable psychological contract:

Reliability Statistics

Cronbach's
Alpha N of Items

.985 17

This statistics of the reliability of the psychological contract is showing that

the model is fit and reliable.

14
 Table - 3

Table showing the summary of the model:

Model Summary

Mod R Adjusted R Std. Error of

el R Square Square the Estimate

1 .981a .963 .963 .221

a. Predictors: (Constant), psychological contract

The ‘R’ value shows the Coefficients of the Correlation which is the
numerical measurement of strength of the linear relationship between the
two variables. The ‘R’ value (.981a) showing that there is a positive
correlation between the Independent Variable, psychological contract and
the Dependent Variable employee well being.

The ‘R Square’ is showing the Coefficient of the Determination which

defines the square of the Coefficient of Correlation. The ‘R Square’ value
indicates that the total of (.963) which means 96.3% which has been
described by the psychological contract in the dependent variable which is
employee well being, and this is a healthy indicator.

15
Table – 4

Table showing the ANOVA of psychological contract

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 125.490 1 125.490 2572.301 .000b

Residual 4.781 98 .049

Total 130.271 99

a. Dependent Variable: employee well being

b. Predictors: (Constant), psychological contract

The ‘F’ statistics (2572.301) shows the consolidation of the variable, and
the overall significance of the model. It means that the independent
variable, psychological contract on Dependent variable employee wellbeing
model is overall significant and fit.

16
Table - 5

Table showing the coefficients of psychological contract.

Coefficientsa

Standardized
Unstandardized Coefficients Coefficients

Model B Std. Error Beta T Sig.

1 (Constant) .273 .066 4.139 .000

psyc .906 .018 .981 50.718 .000

a. Dependent Variable: employee well being

The coefficients are important because they shows the effects of

independent variable on dependent variable and in B we can see (0.906)
which is the significantly positive impact on employee well being which is
our dependent variable, it shows that if 1 unit of psychological contract
increases then there will be an increase in employee well being for about
0.906 units.

17
 Conclusion
As this research which is showing a relationship between employees well being
and the psychological contract and we can clearly see through the statistical
results of this that psychological contract is dependent on employee well being
and there is a significant relationship between both of them. And if there is a rise
in the units of the psychological contract of any employee then than there is a
significant increase in the well being of that employee.

Recommendations
Here is what I will recommend for the organizations working in Pakistan to
follow, in order to take in the shape and define the psychological contract,
create a more productive employment relationship, and rises in the
employment commitment and hence to increase productivity.

 During the interviews of recruitment, which presents the unfavorable as

well as the favorable conditions of the job

 During induction / socialization programs communicate well the policies

and procedures expressing to them the standards of the performance

 Create performance management systems, which could make sure that the
performance, contributions and the competence assumptions are discussed
agreed and reviewed regularly

 Use training and management establishment programs to underpin the main

values and define the performance assumptions.

 Concentrate on managers and team leader training so that they can

understand their character in managing the employment relationship

18
 Strengthen up the maximum volume of the contact between the managers,
the team leaders and the employees

 Adoptance of the general policy of transparency

 Create a total reward approach and make it sure that they are implemented
equally, fairly and consistently

 Pay the employees on the basis of their contribution and performance to

their organization

 Reward people according to their establishing the competence and the skills

 Create team reward system that emphasize the importance of the team work,
flexibility and multi skilling

 Involve employees in the decision making processes

 Provide the trainings to managers and other employees

 Organizations should have to be daily monitoring the attitudes of the

employees of the company to determine the state of the psychological
contract.

 Human Resource practices and that how they operate which are critical
consequences in developing a positive psychological contract and the high
organizational performance and contributions. Hence Human Resources
professionals should have to implement their ability to respond to problems
which raised and create a positive factor of the psychological contract in the
organization.

 Make sure that the truly capable and talented employees are correctly
classified. You can only give the best career choices to a few employees.
Poor classification risks give the wrong people the best breaks while the
genuinely capable and the talented people leave or quit to work elsewhere.

19
 References

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employee well-being. Work & Stress, 12(1), 29-49.

Ilies, R., Schwind, K. M., & Heller, D. (2007). Employee well-being: A

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Dahlgaard-Park, S. M. (2014). Enhancing quality and employee well-

being. Total Quality Management & Business Excellence, 25(11-12), 1207-
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De Cuyper, N., Van der Heijden, B. I., & De Witte, H. (2011).

Associations between perceived employability, employee well-being, and
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contracts?. The International Journal of Human Resource
Management, 22(07), 1486-1503.

Weiss, H. M., &Cropanzano, R. (1996). Affective events theory: A

theoretical discussion of the structure, causes and consequences of
affective experiences at work.

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Guest, D. (2000). The psychological contract in the public sector: The
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Atkinson, C. (2002). Career management and the changing psychological

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Associations between perceived employability, employee well-being, and
its contribution to organizational success: a matter of psychological

23
contracts?. The International Journal of Human Resource
Management, 22(07), 1486-1503.

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24
 Appendix

INVESTIGATING THE RELATIONSHIP BETWEEN EPMLOYEE WELL

BEING & PHYSCHOLOGICAL CONTRACT

NAME:
GENDER:
AGE GROUP: 18-21 21-25 26-30 30 & Above

EMPLOYEE WELLBEING

STRO
NGL
S.N STRONGLY DISAGR DON'T AGRE
Y
O DISAGREE EE KNOW E
AGR
QUESTIONS EE

1 Are you satisfied with your current job?

2 Are you loyal to your organization?

Do your commitments towards your
3 employer is uncertain?
Is it difficult to ascertain your future
4 with your employer?

5 Do you plan your work?

Are you ready to make personal
6 sacrifice for your organization?

25
 Are you ready to seek job assignments
7 that would enhance your career?

8 You perform only the required tasks?

Do you feel proud to be a part of
9 your organization?
Do you leave office at the time of your
10 choice?
In your opinion does the psychological
contract effects the employee’s
11 wellbeing?
Is there a strategy for reward
management that staff at all levels
understands and believes to be fair and
12 rational?
Are there any conflicts between practice
13 and organization values?
Is there a preference for equal treatment
in relation to
14 contribution and performance?
Are you satisfied with the overall policy
15 on pay structure?
Are you satisfied with the meal, leave,
health, sick pay
16 allowances and loans policy?

PHYSCHOLOGICAL CONTRACT

DON'
S.N STRONGY DISAGR T AGRE STRONGLY
QUESTIONS
O DISAGREE EE KNO E AGREE
W
Do you trust your immediate
1 manager to look after your best
interests?
Are you involved in the decision
2
making regarding your department?
Is there a load on you with a lot of
3
work?
Are you heavily involved in the
4
place of work?

26
 Is there a consistent and fare basis
5
for allocating benefits?
Are allowances of various kinds
offered to
6
compensate for specific
circumstances?
Do you get an opportunity to learn
and develop your
7
professional capabilities by on the
job training?
Are you satisfied with the Pension
8
scheme?
Do you find the current reward
9 system in
your organization motivational?
Your employer pays you less and
10
gets more work done?
Does your employer provide you
11 with the resources
required to complete your job?
Does your employer provide you
12 with opportunities
for promotion?
Does your employer provide you
13
job security?
Does your employer provide you
14
fair pay for the work?
You are doing this job just for the
15
money?
Your career path in the
16
organization is clearly mapped out?
You are motivated to contribute
100% to this company
17
in return for future employment
benefits?

27