Thepurpose of this study is to investigate relationship between PsychologicalContract Breach, Job Satisfaction, while focusing on the mediating role of OccupationalStress.
The original concept of the Psychological Contract first took shape inthe 1960s (“The Psychological Contract”, 2017), and gained much recognition inDenise Rousseau’s article “Psychological and implied contracts inorganizations” (Rousseau, 1989). Since then, there have been many contributionsto this topic and there is an increasing focus on its relationship andimplications with other workplace factors, namely such as, job satisfaction andoccupational stress. Job satisfaction develops through cognitive and affectivereactions of employees to their jobs (Locke, 1969; Judge and Ilies, 2004; Richet al., 2010) and Psychological Contract Breach, as suggested by theliterature, appears to have a significant and inverse relationship withemployees’ job satisfaction (Portwood & Miller, 1976). The perceived fulfillment of thePsychological Contract has been found to serve as a motivational factor for theemployee that ultimately leads to an enhancement in work and a perceived breachleads to a loss of motivation and loss of effort (Parzefall & Hakanen,2010). Occupational stress, also knownas job stress, is an employee’s psychological and physiological reaction in thesituation where the demands of their work exceed their abilities and resources(Colquitt, LePine & Wesson, 2013). Extreme stress occurring due to unmetexpectations, can lead to decreased productivity and according to Yaacob (2015) individuals with a higher percentage of occupational stress may notbe satisfied with their job and would, as a result, therefore not feel happyworking in the organization.
1.1.Problem StatementResearchesin the past have placed more focus on the development of the PsychologicalContract and what factors may contribute to either its fulfillment or breach inthe workplace (“The Psychological Contract”, 2017). Through current researchconducted in recent years, the Psychological Contract has gained prominence inliterature with more emphasis now being placed on the impactions and effects ofits fulfillment and breach.
As a result of findings of such studies, thepsychological contract has been linked to significant work outcomes such ascommitment, job satisfaction, worker engagement and performance (“ThePsychological Contract”, 2017).Withregard to the Pakistani context, very limited research has been done on thetopic of Psychological Contract and its implications, however the studies thathave been conducted support the general consensus that perceived psychologicalcontract fulfillment or breach impacts the employees’ attitude towards theirjobs (Mubeen, 2009; Ahmed, Nisar & Naqvi, 2016; Khalid & Malik, 2016).Severalstudies have also been conducted within different sectors concerning the impactof occupational/job stress on job satisfaction and have found similar resultsthat support the overall negative relationship between the two variables(Mansoor, Fida, Nasir & Ahmed, 2011; Khan, Ramzan, & Butt, 2013;Razzaghian & Ghani, 2015; Danish, Shah, Aslam & Ali, 2015; Riaz, Ahmed,Riaz, Murtaza, Khan & Firdous, 2016). PsychologicalContracts play an essential role in deciphering employer-employee relations andemployee behavior in general. The breaching of such contracts have asignificant negative impact on an individual’s well-being (Reimann & Guzy,2017), therefore, it is important to shed more light on how PsychologicalContract Breach acts a workplace stressor and what implications it holds onemployees’ overall job satisfaction while looking into what other constructsmay influence or facilitate this particular relationship.
Since no evidence of aresearch focusing on all three variables together was found and it is believedthat such a study is expected to contribute to literature. 1.2.Deficiency/GapTheidea of the Psychological Contract first emerged in the 1960s, and since thenthere have been many contributions, with the focus of research now shiftingtowards the implications of the Psychological Contract in the workplace and itsrelationship with other workplace factors and outcomes, as compared to earlierresearches such as those of Morrison and Robinson (1997) and Cullinane andDundon (2006) that primarily focused on its development (“The PsychologicalContract”, 2017).
This, however, isstill a relatively new area of research and while the relationship betweenPsychological Contract Breach and Job Satisfaction has been established, a gapstill exists concerning what other factors or variables may facilitate orimpact this relationship, which is particularly why this research focuses onthe role of occupational stress, one of the major health hazards of the modernworkplace, as mediator.1.3.Importance of research Asmade evident by the literature, Psychological Contract is becoming anincreasingly relevant aspect of workplace relationships and employee behaviorin general (“The Psychological Contract”, 2017).
Previous researches onpsychological contract breach have sought to understand its relationship withjob satisfaction. This current study will add to the existing body ofliterature by exploring the mediating effect of occupational stress on therelationship between psychological contract breach and employee’s jobsatisfaction. Furthermore,by realizing the implications of a psychological contract breach, organizationswould perhaps be better able to assess and manage how to avoid such breachesand enhance job outcomes. Finally, the findings of this study would also add tothe importance of the Psychological Contract in the workplace, the breaching ofwhich has become a norm rather than an exception and the serious implicationsit can hold on an employee’s health and their work. This study will alsohighlight how the psychological contract serves as an important factor indetermining an employee’s level of satisfaction with their job and work. Implicationsof the findings would be discussed to gain better understanding on how theavoidance of PCB can lead to better management of job satisfaction.
1.4.ObjectivesThemain objective of this research is to study the relationship between PCB andJob Satisfaction in small-scale companies in private sector of Lahore,Pakistan. The role of Occupational Stress as a meditating variable is also tobe investigated in order to shed more light on the importance of PsychologicalContract Breach and its implications and consequences within the workplace.1.5.
Research QuestionAs the purpose of this research is to gainfurther understanding of Psychological Contract Breach based on its impact onJob Satisfaction through Occupational Stress, this study deals with thefollowing research questions:· Whatis the relationship between Psychological Contract Breach and Job satisfaction?o To what extent does PCB act as a predictorfor Occupational Stress?o To what extent does occupational stressmediate the relationship between PCB and Job Satisfaction?2. Literature Review2.1.Psychological Contract BreachApsychological contract is an unsaid, unwritten contract that refers to themutual expectations that exist between the employer and employee (Rousseau,1989). The Psychological Contracts play an essential role in understatingemployee behavior as well as the employee-employer relationship. Accordingto Rousseau (1989), there are essentially two types of psychological contracts.
A transactional psychological contract is short-termed and places emphasis onthe exchanging of extrinsic factors (De Cuyper & De Witte, 2006). Employees who base their contract ontransactional terms may expect monetary rewards and financial gains in exchangefor their services and efforts (Bellou, 2009). However, on the other hand,employees whose psychological contract is relational in nature seek rewardbased on status, recognition, job security and promotion (Bellou, 2009). Thisis because a relational psychological contract is established on more than justtangible rewards and involve intrinsic factors (Rousseau, 1990).Thedevelopment of a psychological contract begins on the basis of the potential employee’ssubjective point of view that there will be a fair exchange of needs once hiringis complete (Hess & Jepsen, 2009). Rousseau (1989), while seeking toexplain the nature of a psychological contract, its development, evolvement, maintenance,and violation, stated that during the starting phase of a psychologicalcontract, the organization would offer consideration to the employee whileexpecting that the employee would return the benefit. Such expectations andpromises are both implicit and based on subjectivity, and the employee generallybelieves that the contract is founded on trust and fair dealing.
In turn, theorganization expects an employee to perform their responsibilities and dutiesthrough the use of their abilities and skills. This reciprocity ofconsideration and promise allows for the relationship between the employee andthe organization to take root.Duringthe course of the psychological contract, there are times when the employee andthe organization may have different expectations. Such incongruence between theexpectations of the employer-employee may lead to the violation of thepsychological contract (Ballou, 2013). Psychological Contract Breach is definedas the perception of the employee that the organization they are affiliatedwith has failed to meet the obligations and promises offer to them during theinitial stage (Gakovic & Tetrick, 2003).
In the employee’s view any actionthat goes against their expectation holds the potential to create a contractbreach (Rousseau, 1989).Thebreaching of such contacts is associated with multiple significant work placeoutcomes such as, decrease in organizational commitment, citizenship behaviorand workerengagement, and an increase in demotivation, intent to leave and absenteeism (Ballou,2013; Rayton & Yalabik, 2014). As established by research there is also asignificant negative effect on an employee’s well-being as well as their jobsatisfaction, however the nature and impact of this relationship is still opento further research and debate (“The Psychological Contract”, 2017).2.2. Job SatisfactionJobsatisfaction is the extent to which an employee’s job needs are met and inturn, perceived by the employee to be met (Porter, 1962).
It is “a positive (or negative) evaluativejudgment one makes about one’s job or job situation” (Weiss, 2002, p.175). Itis essentially a combination of both what an employee feels about his/her joband what s/he thinks about the various aspects of his/her job (Colquitt, LePine& Wesson, 2015).Beingone the most desirable outcome of workplace behavior, Job Satisfaction is one ofthe most extensively studied workplace behavior and found to be quite prevalentin the literature (Judge & Church,2000). Job satisfaction has been explained through a number of workmotivation theories such as Maslow’s (1943) Hierarchy of Needs, Bandura’s(1977) Social Learning Theory and Hackman and Oldham’s (1976) JobCharacteristics Model.However,the theory of Job Satisfaction that hasgained most prominence and acceptance was proposed by Locke (1976), who explainedjob satisfaction as “a pleasurable or positive emotional state resulting fromthe appraisal of one’s job or job experiences” (Locke, 1975, p.1304).
Accordingto Bernstein and Nash (2008), job satisfaction consists of cognitive, emotionaland behavior components. The cognitive component of job satisfaction alludesto thoughts and beliefs regarding the extent to which the job is considered tobe challenging or rewarding. The emotional component pertains to feelings ofexcitement, happiness, sadness, anger or boredom that are affiliated to thejob. The behavioral component consists of actions performed by individualsrelated to their work such as working overtime, being absent, coming late, etc.(Bernstein & Nash, 2008).Jobsatisfaction has become a central focus of organizational behavior owing to itssignificant association with important work factors such as job performance,job withdrawal behaviors, organizational commitment, turnover, and absenteeism(Judge, Thoreson, Bono, & Patton, 2001; Kazi, & Zadeh, 2011; Medina,2012). It is important to study what factors shape job satisfaction as it is animportant element that enables organizations to gain an advantage over itscompetitors. Employees often regarded as the most valuable asset of anorganization as it is the workforce that sets apart successful organizations,and such success can only be achieved if the employees are satisfied with theirwork and organization (Grant, Fried & Juillerat, 2010).
2.3. Relationshipbetween Psychological Contract Breach and Job SatisfactionThenegative impact of PCB on job satisfaction has gained much recognition inliterature (Robinson & Rousseau, 1994; Coyle-Shapiro and Kessler, 2000;Gakovic and Tetrick, 2003; Rigotti, 2009). It has been illustrated that PCB leadsto a decrease in job satisfaction due to a number of reasons, such as “unmetexpectations, loss of trust, loss of inducements, feelings of inequity andimpediments to goal progression” (Conway& Briner, 2005, p.
71).Cavanaughand Noe (1999) focused on the evolution of the Psychological Contract and foundsupporting evidence that the Psychological Contract mediates the relationshipbetween work experiences and work outcomes such as satisfaction and intentionto leave. Researchalso shows that the extent to which employees perceive psychological contractbreach has a significant effect on not only their behavior but their attitudestowards their job as well (Kuang-Man, 2013). Furthermore, Chaubey and Bist(2016) after conducting a descriptive research study also found that jobsatisfaction is affected by the Psychological Contract. Thefindings of a study by Rayton and Yalabik (2014) also revealed a significantrelationship between Psychological Contract and job satisfaction and similarother researches also support such findings and have identified thePsychological Contract as a predictor of job satisfaction (Zhao et al. 2007;Bal, De Lange, Jansen, & Van Der Velde, 2008).
Despitegaining a firm-footing in the body of literature, the relationship betweenPsychological Contract Breach and Job Satisfaction, is still open to furtherscrutiny and debate. Taken as a whole, evidence points toward the existence ofa significant relationship between PCB and Job Satisfaction and this study aimsto further the research by focusing the role of occupational stress, one of themajor health hazards of the modern workplace, as mediator and exploring how itmay facilitate or impact the relationship between PCB and job satisfaction.2.4.Occupational Stress as a MediatorOccupationalstress is a major, recognized problem that occurs within the workplace andoften adversely affects employees (Oginska-Bulik, 2006).
As reported byJahanzeb (2010), due to increasing technological changes, information overload,and demand for greater productivity, fierce competition and uncertain future,the workplace has become a source of extreme stress. To remain in stride withthe dynamic and ever-changing nature of today’s organizations, employees moreoften than not are preoccupied with meeting the obligations and demands oftheir jobs while not paying attention to “stressors” that are adverselyimpacting their lives. As a consequence, work demands may end up harming bothmental as well as the physical health of the employee (Yaacob & Long, 2015).Ageneral review of the literature present reveals that Psychological ContractBreach is believed to have a negative impact on overall employee behavior andhealth (Kuang-Man, 2013). For instance, Jong, Clinton, Rigotti andBernhard-Oettel (2015), conducted a research that demonstrated an negativerelationship between breached obligations and employee well-being.
Anotherstudy by Bocchino, Hartman, and Foley (2003), concluded that individuals withhigher levels of perceived psychological contract violations reported higherstress symptoms than those with lower levels of perceived psychologicalcontract violations.Similarly, Gakovic andTetrick (2003) investigated the role of psychological contract breach inemployees’ experience of emotional exhaustion and found that psychologicalcontract breach contributes to employee experience of job strain and feelingsof stress. Reiman and Guzy (2017) also sought to elaborate on the effects ofpsychological contract breach (PCB) on mental and physical health of theemployee and called for further study to further establish the role of PsychologicalContract Breach as a psychosocial, workplace stressor.With regard to jobsatisfaction, a study conducted by Burke (1976) revealed that there is asignificant relationship between occupational stress index and job satisfactionindex, that is; the greater the amount of stress, the lower the level of jobsatisfaction.
Similarly, meta-analysis of 485 studies by Faragher, Cass &Cooper (2005) provided evidence of a strong association of an employee’s jobsatisfaction with their mental and physical health, and that jobdissatisfaction was strongly related to feelings of burnout, depression andanxiety. A recent research by Annamalai and Kamalanabhan (2016) also found anegative association between job satisfaction and occupational stress.As a whole, the effect ofoccupational stress on job satisfaction has also been well-documented acrossdifferent contexts and professions and findings of multiple studies have cometo the same conclusion: occupational stress has a strong, negative impact on anemployee’s job satisfaction (Ahsan, Abdullah, Gun Fie & Shah Alam, 2008;Trivellas, Reklitisa & Platis, 2013; Yaacob & Long, 2015). 2.
5.Theoretical SupportThe relationship between PsychologicalContract Breach (PCB) and Job satisfaction can be better understood on thebasis on the Social Exchange Theory (SET) (Cropanzano & Mitchell, 2005).According to the Social Exchange Theory, PCB can be established as a predictorof Job satisfaction because the perception of un-fulfilled promises andobligation would lead to employees feeling less satisfied with their job (Conway& Briner, 2005). Additionally the role ofoccupational stress as a mediator can be established through the Effort-RewardImbalance (ERI) model (Siegrist, 1996). Similar to the SET, the ERI theoryproposes the relationship between the employer and employee is based on thereciprocity of efforts and a deficit in this reciprocity would lead to a stateof emotional distress stress which in turn to lead to a loss of motivation and effort(Siegrist, 1996).
In short, so long as both parties (the employer and theemployee) perceive fair exchange, a healthy relationship would continue whereboth parties would demonstrate willingness to make sacrifices and efforts forone another, however, when an imbalance in the contract is perceived theexchange relationship would deteriorate (Rupp & Cropanzano, 2002).2.6.ConclusionThePsychological Contract is an evolving concept that holds many implications inthe workplace.
Taken as a whole, evidence points toward the existence of asignificant negative relationship between Psychological Contract Breach (PCB)and Job Satisfaction and this study aims to further the research by focusing onthe mediating role of Occupational Stress. Furthermore, since there is yet tobe a study in Pakistan that has investigated the influence of PCB on anemployee’s job satisfaction with regard to occupational stress, this currentresearch can be considered a pilot study concerning the issue.