Free Changing Employment Relationships Essay Sample

According to the author, a psychological contract refers to the manner in which an employee relates with his organization, promises made by the organization to the employee and his obligations to the same organization. The author notes that these contracts are subject to biases and errors because of their perceptual nature. However, he exerts that these contracts play a key role on employee motivation.

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Determinants of Psychological Contracts

  • Direct communication: Comprises of information an employee gets during recruitment and the information he gathers from other employees and supervisors at work. Employees should provide realistic job previews to new recruits to promote satisfaction, motivation and retention of employees.
  • Observation: Employees observe how all workers are treated by the organizations and how they behave and the manner and nature in which the management makes important decisions.
  • Written documents: Employees look at organizational policies, employee handbooks and human resource documents as well as the company website.

Types of Psychological Contracts

  • Transitional contracts: They are short term, narrow, very specific and relatively flexible. A replacement could also be found if the relationship is terminated by either party. In addition, the parties are concerned more about extrinsic outcomes like pay.
  • Relational contracts: They are general, long term, and gradually evolve over time. Both parties have a mutual commitment. They also cover broad and extensive promises and obligations. Most organizations are switching from relational contracts to transitional contracts as demonstrated by the alarming increase in outsourcing of employees for white collar jobs.

Consequences of Breaking Psychological Contracts

The motivation and performance of employees deteriorates. They can also experience negative moods and emotions, become dissatisfied with their jobs and begin looking for employment elsewhere. It also affects their trust in the organization.

Performance Appraisal

It refers to the evaluation of employees’ performance to encourage their motivation and performance which gives them feedback about their contribution intrinsic motivation. It also provides managers with information for decision making on how to distribute outcomes. Motivation is mainly determined by expectancy and instrumentality. As the procedural justice theory suggest, motivations can only be high if the means of performance appraisal is perceived as fair.

How to Develop a Performance Appraisal System

Information from performance appraisal can be used for developmental purposes or for evaluation and decision making. Nonetheless choices have to be made when developing an appraisal system. The first choice is the use of mixture of formal and information appraisal. Here records on employees’ performance could be taken during official meetings or managers and subordinates could meet on unofficial circumstances and make comments about their employees.  The second is choice in looking at factors to evaluate where one could look at behavior, traits or results. When traits are used, an evaluation is made on personal attributes that are considered relevant to the performance of employees. The third choice is choosing methods of appraisal such as subjective measures, objective measures, behavioral anchored rating scale, behavioral observation scale or graphic rating scales. The last choice is choosing the individual who appraises performance. It could be the subordinates, peers, customers, workers themselves or the supervisors. Since each of these sources has its own disadvantages, the 360-degree appraisal is the most appropriate. This is where different people in different position evaluate the performance of employees.

Possible Problems of Using Subjective Performance Appraisal

Various biases and problems could arise from inaccurate perceptions of individuals in organizations. An understanding of these problems and biases can help a lot in preventing them from leading to inaccurate appraisal. These include; stereotype; primary effect; contrast effect; halo effect; similar to me effect; leniency, harshness and average tendency biases; and knowledge-of predictor bias.


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