Psychological Contracts and Employee Outcomes in Transition to Market Economy: A Comparison of two Slovenian Companies
Problems and Perspectives in Management
Psychological contracts and employee outcomes in transition to market economy: a comparison of two Slovenian companies Abstract Psychological contracts are mental models through which employment relationship information and experience are processed by individual employees. They affect employee satisfaction, commitment and guide their behavior ultimately influencing company performance. In transitional economies these contracts have been in the process of change. In the paper, attitude survey
... attitude survey data from two Slovenian companies in late transition are extensively analyzed to examine the characteristics of psychological contracts in time of transition to market economy. The results suggest that: 1) employees in companies in suggested setting have not yet differentiated their expectations regarding transactional and relational returns, but rather express high levels of expectations on all categories; 2) the differences in psychological contracts are larger within the companies than between them, suggesting that it is not company-specific policy, but rather the perception of the general social contract that importantly shapes psychological contracts; 3) in case of breach employees do not tend to change the employer due to lack of alternatives in the labor market or because the breach is not seen as violation; 4) perceived realization (and not the expectation-realization gap) has the strongest impact on employee satisfaction and commitment; 5) pay dissatisfaction has an overriding effect on employee attitudes towards employer. These results imply that employers in transition economies should strive for more realistic psychological contracts and put more efforts in effectively designing and executing HR practices, especially compensation.