The Importance of Psychological Contracts in Human Resource Management within the New Global Economy

The Importance of Psychological Contracts in Human Resource Management within the New Global Economy

Inocencia M. Martínez-León
DOI: 10.4018/978-1-61350-207-5.ch006
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Human resources are considered the company’s most valuable resource. For that reason, organizations require a Human Resource Management (HRM) that provides the adequate work force within the new global economy. The psychological contract includes solid agreements between company and its employees, beyond the written contract, specifying their contributions, expectations, beliefs, promises, and obligations between both parties. Their management requires the definition of the concept of psychological contract, the analysis of its main characteristics and contents; and the identification of its stages of development. Electronic Human Resource Management (e-HRM) introduces a way of implementing HRM strategies through Web-based tools, improving the psychological contract management. Information phase, Intranet, and internal electronic mail have an important role in socialization stage. The consolidation of psychological contract (maintenance phase) is favoured by Intranet, business-to-employees, internal electronic mail, database, videoconference, and groupware. Finally, in breach phase, intranet, electronic mail, database, videoconference, and groupware are important E-HRM.
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2. Main Purpose

The classical employment relationship, open-ended as to both its task content and its duration, was tying stable rates of pay to indefinite duration jobs. Employers offered job security and internal career opportunity with little risk of exposure to their workers (Kluytmans and Ott, 1999; Rousseau & Schalk, 2000), because workers did not leave, and certainly not to the competitor (Kluytmans and Ott, 1999). Employees were obedient and disciplined when carrying out their function and when requesting reallocation; and provided maximum performance at present function (Kluytmans y Ott, 1999).

In return, employees expected the reward of loyalty through continuation of the labour relationships and job security (Hiltrop, 1995; Kluytmans and Ott, 1999), irrespective of economic circumstances; the control of career by employer (Kluytmans and Ott, 1999) and payment of a guaranteed wage (Garud & Shapira, 1997; Rousseau and Shperling, 2003).

In the new global economy, increasing international competition, deregulation and globalization of markets have demanded greater flexibility and productivity of organizations. Firms have made the organizational structure change from a hierarchical to a flat form, accompanied by rapid reduction of the permanent core workforce, supplemented by a larger group of temporary contract and contingent employees, which has become a common employment staffing practice in today’s modern organizations (Byrne, 1993; Allred et al., 1996; Nicholson, 1996). New forms of labour contract has therefore emerged, such as fixed-term contracts, temporary contracts, etc (atypical contract). They are more short-term contracts and provide fewer career development activities (Pieters, 2009). Companies introduce new strategies, methods and techniques to attract and retain talented workers (Hiltrop, 1995, 1999; Ermel and Bohl, 1997; Rousseau and Shperling, 2003). Large companies had a core group of professional employees who were dependable, who would work hard and who would sacrifice the present for the future (Hiltrop, 1995).

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