Academic journal article Contemporary Management Research

Psychological Contract Breach: Consequences of Unkept Promises of Permanent Employment

Academic journal article Contemporary Management Research

Psychological Contract Breach: Consequences of Unkept Promises of Permanent Employment

Article excerpt


Organizations employ temporary employees in order to be flexible in managing human resources to reduce employee costs and to simplify administrative complexity (Burgess & Connell, 2006; Chambel & Alcover, 2011; Chambel & Castanheira, 2012; De Cuyper et al., 2008; Guest, 2004a; Guest, 2004b; Kim & Lee, 2014). Given the increasing global uncertainty, the use of temporary employment in organizations has increased significantly in the last decade in Europe, North America, and Asia (Chambel, 2014; De Cuyper et al., 2008; Karim, 2014). Although some employees may choose temporary employment voluntarily, past research has indicated that most temporary employees directly recruited by organizations wanted to become permanent employees (De Cuyper & De Witte, 2007; Kim & Lee, 2014). Transitioning temporary employment into permanent employment fosters fairness in employment systems by making working conditions equivalent and increases employee identification with the company (Kim & Lee, 2014).

Organizational researchers have found that involuntary temporary employment affects work behaviors, attitudes, and performance (De Cuyper et al., 2008; Connelly & Gallagher, 2004; Ongera, 2015). However research is lacking on the perceptions of temporary employees toward the organization, job performance, and job attitudes when their temporary status is continuously extended. To fill this gap in the literature, we investigated the consequences of continued involuntary temporary status. In this study, we adopted a psychological contract perspective to assess temporary employees' reactions when employers repeatedly break promises of permanency and employees end up working on temporary employment contracts for several years. In a competitive employment environment, a permanent job is the dream of every temporary employee. In order to attract good employees, Bangladeshi banks promise permanent employment upon completion of a prescribed temporary employment period. Thus, temporary employees generally form a psychological contract in which a permanent job is the reward for successful completion of a prescribed temporary period of service. New temporary employees work extremely hard, demonstrate high levels of commitment, and engage in organizational citizenship behaviors in order to be made permanent. The organization's failure to uphold the promise of permanency is likely to have severe adverse consequences on employee performance and behavior. Our study investigates the attitudinal and behavioral consequences of temporary employees when their job status is not made permanent in the organization. The study also identifies the impact on individuals' job performance after the breach of the psychological contract. Accordingly, our empirical study seeks to obtain a comprehensive understanding of temporary employees' cognitive and behavioral reactions after a psychological contract breach.


The Concept of Temporary Employment

Researchers have differentiated temporary employment from standard employment in terms of a) permanency and continuity of jobs, b) continuity of work premises, and c) entitlement of statutory benefits (De Cuyper et al., 2008). Temporary employees can be fixed term or on call as well as from a temporary agency or directly hired (Chambel & Castanheira, 2007). "Temporary employment" has been termed "contingent employment" in North American management studies and "temporary," "fixed term," and "non-permanent employment" in the European management literature (Allen, 2011; De Cuyper & De Witte, 2005a; De Cuyper, De Witte, & Isaksson, 2005b; Connelly & Gallagher, 2004). Organizational researchers have revealed that temporary employees employed directly by the organization would prefer permanent employment status in the organization (De Cuyper et al., 2008). One of the reasons for temporary employees' desire to become permanent is their perception of job insecurity and uncertainty attached with temporary employment status (Berton, Devicienti & Pacelli, 2011). …

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