How’s your psychological contract with your employer? Positive, engaging and happy - or negative and unhealthy? The CIPD has been asking such questions to a sample of more than 1,000 UK employees every year since 1996. Last week I discussed the findings from the latest study with a group of managers from 20 different organisations in Glasgow.
Professor David Guest of Imperial College London, who does the research for us, defines the psychological contract as “the perceptions of individuals and organisations as to their employment relationship and the reciprocal obligations involved”. In other words it’s the deal between employers and employees, going beyond the written contractual terms and defining what the employer expects and what employees receive in return.
Job advertisements are a good place to spot the deals that employers are offering. Under the heading Good Jobs, Good People, Pret a Manger “is growing slowly, one shop at a time, no rush. We offer our hardworking, wonderful staff as much as we can afford, rather than as little as we can get away with.” Staff in its shops even have the final say over who gets hired.
Aldi offers “superior talents” management traineeships with “all the support and freedom you need”, in return for £37K and an Audi A4. Timberland, on the other hand, seeks employees who “reflect our core values: humanity, humility, integrity and excellence”.
Trainee inspectors at the Health & Safety Executive, supposedly “one of the least bureaucratic and most forward-thinking government agencies”, can look forward to “a different challenge every day” with “comprehensive training and excellent benefits”. But they must be “well-educated and energetic, taking a high level of responsibility… persuasive, with commitment to ensure compliance with health and safety law”.
Setting out such a positive working experience to potential recruits is one thing, but delivering on it is quite another. Fuelled by the tight labour market, external promises have been getting richer. Yet almost all of the Scottish managers in my workshop identified a dissonance between the deal their organisation wants to have with its employees, and how employees actually perceive it.
“Young people aren’t as loyal, don’t have the commitment and are looking for different things,” was one HR manager’s lament. Another was worried that “we’re demanding more of people, changing things, and I am not sure we have been explicit enough - it’s causing serious stress”.
The CIPD research suggests they are right to be worried about this misfit, both in regard to employee wellbeing and company performance. Overall, across all the employees we survey, levels of job satisfaction have declined over the past three years. This is related to lower levels of trust in management, declining levels of the type of job freedom promised by Aldi, and the experience of higher levels of change in the workplace, which employees feel they have no influence over. Barely half trust senior managers in their organisation; a third think their boss never helps them to improve their performance; and only 45% feel their employer has kept promises and commitments.
Why should bosses worry about moaning employees? Our Glasgow managers gave us plenty of reasons - stressed and absent employees, resistance to change and declining productivity. They echoed the HR director of the Department for Work and Pensions, Kevin White, who was not surprised at a recent vote for strike action, because proposed pension changes represented “a further threat to the psychological contract the Civil Service has always had with its staff”.
Our research finds a negative psychological contract is associated with poor workplaces, an absence of good HR practices, uninteresting and low-skilled jobs, ineffective leadership and a lack of delivery on the desired deal. Such environments breed higher stress, lower levels of loyalty and a higher intention to leave. The HSE now has power to intervene if it finds evidence of such unhealthy environments, and has developed questionnaires to help companies assess such risks.
The then education, now HR, department of Selfridges defined its original purpose in 1920 as being “to promote happiness in work and, through happiness, true efficiency”. Too many managers today still defeat the latter by ignoring the former.