Organizational Behavior

Assignment 02
Faisal Iqbal Sharif
30227
BBA-H
Submitted to: Hassan Baig

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Q) The role of “Psychological Contracts” in organizations
towards the employees’ job-satisfaction?

Psychological contract represents the implicit assumptions of the employees (or

employer) regarding the content of their mutual exchange in addition to those
that is specified in the formal employment contract. In the case of breaching it,
many negatively consequences could arise. One of them is the lower level of job
satisfaction.
Psychological contract refers to the unspoken agreement between an employer
and an employee that communicates their expectations from each other. There
are no written promises between the two parties. The parameters used in the
psychological contract questionnaire are divided into two parts, employee
obligations and employer obligations. There are 8 same parameters each for
employee and employer obligations, short-term obligation, loyalty, narrowness,
performance support, development, external marketability, stability and
psychological contract fulfillment.

Job satisfaction is the level of contentment an employee has for his job. When the
expectations of an employee from employer and organization get fulfilled, the
employee feels a part of the organization and more satisfied.

The parameters used for measuring job satisfaction with the help of
questionnaires are, general working conditions, pay and promotion potential,
work relationships, use of skills and abilities and work activities.

By this research it was found that psychological contract of an employee with

his/her employer does affect the job satisfaction level of the employee. The
stronger the contract between the employee and the employer more satisfied the
employee feels in the organization.

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Psychological contracts serve an important purpose when honored
by both parties:

When both parties honor the psychological contract, a bond of loyalty is formed
between the two. When the employee shows that he is willing to put in as much
work as he implied and the boss’ expectations prove fair, both parties will go out
of their way to maintain this positive relationship.

The ability to perceive one another as human beings and being empathetic can
make a big difference. A productive psychological contract depends on the
employer’s ability to occasionally let an employee’s shortcomings slide, which will
then result in the employee returning the favor.

When trust has been established through the psychological contract, it makes it
easier for both parties to exhibit openness and honesty. When neither the
employee nor the boss fears the possibility of betrayal, it is easier for each to
open up about personal needs, frustrations or experiences. This allows each to
respond in a healthy, productive manner.

When the terms of the psychological contract are honored, all aspects of the
working relationship should run more smoothly. This greater degree of trust,
respect and understanding can lead to a positive, healthy relationship, a
workplace that is run in a more efficient manner and a greater degree of job
satisfaction by both parties. Greater enthusiasm for the job and higher morale go
hand in hand, and may feed positively into all other areas of the job.

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Exploring the moderating role of psychological contract breach in
National Collegiate Athletic Association coaches

This study examined the relationship between psychological contract and three
work attitudes, job satisfaction, affective commitment, and turnover intention in a
sample of National Collegiate Athletic Association coaches. This study also
explored the moderating role of the psychological contract by examining coaches'
perceptions of the intentional and unintentional breach. A total of 383 coaches
responded to the survey that included items in the transactional and relational
psychological contract, job satisfaction, affective commitment, and turnover
intention. In addition, the sample was split into two groups, intentional breach
and unintentional breach based on their responses to a single question regarding
the perceived breach status. Results revealed that the transactional contract had
a positive influence on job satisfaction and a negative influence on affective
commitment. On the other hand, the relational contract had positive influences
on both job satisfaction and affective commitment. Job satisfaction had a positive
influence on affective commitment, which negatively led to turnover intention,
while affective commitment had no significant influence on turnover intention. A
multi-group analysis was conducted to test whether the psychological contract
breach moderated the paths in the hypothesized model. The paths from
transactional contract to satisfaction and commitment as well as from satisfaction
to turnover intention were moderated by the psychological contract breach. The
transactional contract–job satisfaction relationship was meaningful for the
unintentional breach group, while the transactional contract–affective
commitment relationship was stronger with the intentional breach group. The job
satisfaction–turnover intention relationship was stronger with the intentional
breach group than with the unintentional breach group.

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References:
https://www.essaysauce.com/business-essays/impact-of-psychological-contract-
on-job-satisfaction-in-banking-sector/

https://journals.sagepub.com/doi/abs/10.1177/1747954119848420