GLOSS LAMINATE

The Employment Relationship

 For Sue, whose patient and generous spirit is put upon
every time I undertake a project like this, but whose skill I
draw upon. For my mother, whose quiet pride in all her
children is so appreciated but rarely publicly acknowledged.

To my mentor and close friend, Professor Sir Roland Smith,

whose support and guidance in my career and in my
personal life has been my rock.
ISBN - 978 0 7506 4941 4
 Contents

Foreword ix
About the Authors xi

1 Challenges facing the employment relationship: introduction 1

Nine key challenges 1
The structure of the book 3
The problem of hypercompetition: managing the employment
relationship in times of disorder? 5
New organizational forms and knowledge-based competition 6
The political economic context for work 10
The new flexibilities 11
New psychological contracts, new careers? 14
Critical views of the psychological contract 18
Future psychological contract scenarios 19
References 23

2 The psychological contract 28

Key mechanisms of the psychological contract 28
Getting the measure of the psychological contract 30
The employment contract: legal regulation of the relationship 32
Theory of psychological contracting: promises and mental models 34
Managing change in an individual’s psychological contract 39
Psychological contract violation 41
References 49

3 The changing structure of employment 53

Introduction 53
Have we been here before? Historical changes in the employment
relationship 55
Demand factors behind the changing structure of employment 57
The slow demise of long-term attachments 62
The growth of non-traditional employment 64
vi Contents

Episodes of temporary employment 66

Is the growth of temporary and part-time employment a demand
or supply factor? 68
References 71

4 Job stability and employee outcomes 76

Introduction 76
Job stability 76
Changes in commitment? 80
A future model? 85
Or a risk of economic apartheid? 89
References 90

5 Quality of the employment relationship: trust and job insecurity 93

Quality of the employment relationship: social climate factors 93
The role of organizational justice 96
The nature of trust 99
The downsizing phenomenon 105
Life beyond downsizing: survivor syndrome 106
Job insecure or not? 108
Trust and security in abeyance? 112
The self-adjusting animal? The view from longitudinal studies 114
References 117

6 Work and career transitions 128

Introduction: new patterns of career behaviour? 128
Negotiating career contracts 130
Re-engaging the workforce 136
Theoretical insights into work transitions 141
Career adjustments: underemployment and relative deprivation 147
References 150

7 Individualization of human resource management 155

Individualization of work 155
War for talent thinking and employee value propositions 158
Career success and social capital 161
Idiosyncratic dealing 165
Limits: the price of individual stars 168
References 173

8 Managing the new individual–organization linkages 177

Individual differences in the relationship with the organization 177
Organizational commitment 180
Commitment and boundaryless workers 188
Organizational identification 189
Identifying with atypical organizations 193
 Contents vii

Psychological ownership 196

Job satisfaction and part-time work 197
The desirability of job-crafting behaviours 200
Overidentification and engagement: workaholism 202
References 204

9 work–life balance 215

Work–life balance and the employment relationship 215
Theoretical perspectives on work–life balance 218
Employer policies and strategies 219
Moving beyond the feminization of work 224
Commitment and the link to non-work obligations 227
The long work hours culture 229
Long work hours and well-being 231
The agenda for change 234
References 236

10 New generations: new expectations and new problems? 242

Introduction 242
Generational research on work values 244
The work values, attitudes and behaviours of ‘young workers’ 248
Family influences and imaging inertia theory 250
Will the next generation trust in business? 252
Demography as destiny? 254
Who will pay my pension? 255
Immigration as opposed to a longer working life? 258
Scaling the different options 260
References 261

Name index 267

Subject index 279
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 Foreword

This book contains some valuable insight for employment specialists, human
resource practitioners and policy makers alike. It provides a balanced analysis
of what is happening inside organizations, both to the type of jobs and to the
experience of working. As organizations continue to face unprecedented levels
of competition, then the challenges discussed in this book will surely need
serious attention. The authors draw a number of considerations to our
attention. The relationship between employers and employees is in a state of
change, with trade unions less relevant in the private sector. However, the
pressure is on employees in other ways, especially at a time of skill shortages.
Employers require new skills and competencies and high levels of commitment
if they are to survive in a globalizing economy. However, in return they also
have to meet rising employee expectations – demands for challenging work
and more attention being given to the quality of life. We see shifts taking place
in what people value at work, and pressures for young and old alike to better
manage the work–life balance. Trust is a central theme to this book. We have
to build trust in corporate governance, trust in business strategies, trust in the
future success of work and trust in the skills, abilities and desires of the
workforce. As we manage our way through the changing landscape at work,
organizations will have to learn how to manage people more effectively in a
world in which the nature and meaning of careers is changing markedly.
Organizations will have to adopt and develop tools and techniques that allow
them to capitalise on individual talent, while maintaining a sense of fairness
and justice for the wider workforce. Demographic challenges, skills shortages,
the need for ever better productivity, and changing values across generations
all herald the need for greater flexibility. As organizations and individuals
develop this flexibility, the relationship between employers and employees will
evolve. This will not be an easy road to tread. I commend this book for helping
to signpost the challenges that we face on this journey and the opportunities
that will arise.

Digby Jones
CBI Director-General
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 About the Authors

Paul R. Sparrow is the Ford Professor of International Human Resource

Management and Academic Director Executive Education at Manchester
Business School. He graduated from the University of Manchester with a BSc
(Hons) Psychology and the University of Aston with an MSc Applied
Psychology and was then sponsored by Rank Xerox to study the impacts of
ageing on the organization for his PhD at Aston University. From 1982 to 1984
he was a freelance consultant principally involved in projects relating to
changing patterns of work. He then became a Research Fellow at Aston
University and a Senior Research Fellow at Warwick Business School
researching emerging human resource strategies in the computer and retail
sectors. In 1988 he joined PA Consulting Group working as a Consultant and
finally a Principal Consultant. In 1991 he returned to academia and took up a
Lectureship in Organizational Behaviour at Manchester Business School,
moving to Sheffield University to take up a Readership in 1995, and then a
Chair in 1997. He returned to Manchester Business School in 2001. He has
written and edited a number of books including European human resource
management in transition, Designing and achieving competency, Human resource
management: the new agenda and The competent organization: a psychological
analysis of the strategic management process. He has also published several articles
concerning the future of work, human resource strategy, management
competencies, the psychology of strategic management, international human
resource management and cross-cultural management. He is associated with
the ESRC Centre for Organization and Innovation, at the Institute of Work
Psychology; Sheffield; the Center for Global Strategic Human Resource
Management, Rutgers University; and the Centre for Research into the
Management of Expatriates, Cranfield University. He was Editor of the Journal
of Occupational and Organizational Psychology from 1998 to 2003.

Cary L. Cooper is currently BUPA Professor of Organizational Psychology and

Health in the Manchester School of Management, University of Manchester
Institute of Science and Technology (UMIST). He is the author of over 100 books
(on occupational stress, women at work and industrial and organizational
xii About the Authors

psychology), has written over 300 scholarly articles for academic journals, and is
a frequent contributor to national newspapers, TV and radio. He is currently
Founding Editor of the Journal of Organizational Behavior and co-Editor of the
medical journal Stress and Health. He is a Fellow of the British Psychological
Society, The Royal Society of Arts, The Royal Society of Medicine and the Royal
Society of Health. Professor Cooper is the President of the British Academy of
Management, is a Companion of the Chartered Management Institute and one of
the first UK-based Fellows of the (American) Academy of Management (having
also won the 1998 Distinguished Service Award for his contribution to
management science from the Academy of Management). Professor Cooper is
the Editor (jointly with Professor Chris Argyris of Harvard Business School) of
the international scholarly Blackwell Encyclopedia of Management (12-volume set).
He has been an advisor to the World Health Organisation, ILO, and published a
major report for the EU’s European Foundation for the Improvement of Living
and Work Conditions on ‘Stress Prevention in the Workplace’. He was awarded
the CBE by the Queen in 2001 for his contribution to health and safety at work.
 1
Challenges Facing the
Employment
Relationship:
Introduction

Nine key challenges

The purpose of this book is to integrate and synthesize the latest work from the
fields of work and organizational psychology, organizational behaviour and
human resource management (HRM), which is concerned with the changing
nature of the employment relationship. We deal with nine challenges that face
organizations in this new relationship.
The first challenge is to gain insight into the changing psychological contract at
work, the way in which it is formed, the things that lead to a breach or violation
of psychological contract, the consequences or otherwise of doing this, and the
extent to which psychological contract change is a manageable process. This
requires that we examine the processes that surround the workings of the
psychological contract – a task undertaken in the next chapter.
A second challenge is to consider what is really meant by flexibility at work.
Are we indeed facing a new employment relationship or have we been
here before? We need to understand the patterns of continuity and change in
the employment relationship. We do this by presenting an analysis of the
employment trends associated with contingent work and identifying the
managerial challenges that these data signal.
The third challenge is to consider whether we have a social climate in
organizations that makes the management of a changing psychological contract a
feasible objective or not. We examine the factors that first create and then
determine the social climate within which the employment relationship exists.
2 The Employment Relationship

The ‘social exchanges’ on which the employment relationship is founded – and

from which the psychological contract develops – do not exist in a vacuum.
Perceptions of justice and trust, among other factors, affect the health and
functioning of the psychological contract. We need to explore the experience of
job insecurity and examine the reactions that employees have had to the new
form of capitalism that flourished from the 1980s onwards. Are people
insecure? Can they and have they recovered from the experience of downsizing
in the 1990s?
The fourth challenge is to unravel the work and career transitions that are taking
place. What are the new career behaviours that are emerging, and is there a
need for organizations to negotiate and contract with a more diverse
workforce? Organizations in some high-change sectors have faced the
challenge of having to re-engage large segments of their workforce. What is
involved in this and can we identify the important factors in transitions so that
they may be managed better in future?
The fifth challenge is to identify the challenges that are created for organizations
by the increasing individualization of the employment relationship. We explore some
of the managerial strategies that have been used to cope with this process of
individualization. This takes us into an examination of some of the factors that
are important in careers such as the role of social capital, the difficulties of
fighting a war for talent, and the challenges of developing idiosyncratic deals
for talented people whilst maintaining a climate of fairness, and the risks of
excessive individualization.
The sixth challenge is to understand whether the new employment relationship has
had any significant impact on the most salient ways in which the individual and the
organization are linked to each other. We need to understand the challenges faced
by organizations as they have to cope with potential changes in the nature of
commitment, the way in which people identify with the organization, and the
extent to which people will feel any sense of psychological ownership in the
employment relationship. This also requires that we develop insight into some
of the new behaviours that are desirable, such as the propensity to craft one’s
own job in the face of uncertainty, as well as insights into the problems that
occur with overidentification at work, such as workaholism.
The seventh challenge is to appreciate some of the barriers and limits that might
affect the health and well-being of individuals and indeed of organizations. This takes
us into an analysis of the quality of life and some of the dysfunctions that can
be created by today’s employment relationship. In particular, we have to
address the issue of work–life balance and the long work hours culture.
The eighth challenge is to predict and understand the impact that the new
employment relationship will have on different generations at work. How stable are
some of the work behaviours that we see today? Are there really differences
between the generations? We have to understand the generational context
within which images of the employment relationship are formed and the extent
to which these create new patterns of behaviour.
The ninth challenge is to consider some of the longer-term institutional changes
faced by individuals and organizations alike. As we face the future with a very
 Challenges Facing the Employment Relationship: Introduction 3

different demographic profile, as the level of trust in national business models

continues to erode, what are the implications for the way in which people will
seek to deal with and engage with the organization?

The structure of the book

Why is such a book necessary? First and foremost it is because of the changing
shape and form of organizations. This is where we begin the story. This is the
context we must understand before we examine the impact on the psychology
of work and organizational behaviour. Therefore, while much of the discussion
in this book draws upon psychological principles, in this opening chapter we
weave together the main dialogues that are now taking place in the broader
organization theory literature. In so doing, we make no comment about the
long-term sustainability of the new forms of organization, nor the psycho-
logical consequences of this pursuit by organizations of strategic flexibility.
This task is undertaken in the later chapters when we apply a series of different
‘lenses’ to the evidence and build up a picture of the challenges that we face in
managing our way through the new employment relationship.
In Chapter 2 we explain what is meant by the term ‘psychological contract’
and discuss how this contract is considered to regulate the employment
relationship. We examine how this contract is typically measured and draw
some parallels between its implicit nature and the implied terms of the legal
contract of employment. The essential elements of psychological contracting
theory are explained along with the way in which the contract is formed. We
show that it is the perception and the emotional experience of the employment
relationship that has the most important impact on individuals – and we
highlight the challenges that these reactions will create for organizations.
Clearly these challenges will vary depending on the intensity of the individual
relationship with the organization.
How can we best understand the different intensities in the employment
relationship? In Chapters 3 and 4 we shall consider the evidence behind claims
that there has been a fundamental change in the employment relationship. We
consider whether we have experienced some of the phenomena associated
with a more contingent employment relationship (the end-of-jobs thesis and
job insecurity thesis) before and examine whether there is indeed a new
employment relationship, and if there is, whether it is more a product of
demand or of supply. What is the level of individual volition? We create a
picture of a slow demise in long-term attachment to the organization and
explore the evidence behind the growth of non-traditional employment
arrangements. In subsequent chapters we build up understanding around a
series of important discussions that have taken place about the employment
relationship in recent years.
In Chapter 5 we consider the social climate within which the psychological
contract is now operating. We shall discuss the issues of trust, justice and
organizational support and examine the experience of downsizing and of
4 The Employment Relationship

survivors in post-downsized organizations. We shall explore the evidence and

ask if any important changes are taking place in the way that employees
perceive their job security. In Chapter 6 we consider the issue of the career
behaviour resulting from the employment relationship. We ask whether there
are indeed new patterns of careers. The assumed individualization of the
employment relationship has created a challenge for organizations to negotiate
and engage with individuals over what they expect and will accept in return
for accepting a relationship based more on employability rather than
employment security. In order to understand the issues involved we consider
the attempts made by organizations to re-engage their workforces. We outline
the work transitions that individuals now have to cope with as they take on
more individual responsibility for the employment relationship and note the
importance of career transitions. In Chapter 7 we pick up this theme of
individualization of the employment relationship and examine some of the
challenges that this presents. These range from the need for organizations to
compete for talent and create idiosyncratic psychological contracts for many of
its employees, through to the price that can be paid for focusing too much on
the contribution of the individual in the employment relationship and for
unfair ‘dealing’.
In Chapter 8 we return to some of the psychological challenges faced in the
employment relationship and focus in particular on the ways in which the link
between the individual and the organization is being challenged. The
psychological contract captures an important way in which the individual and
the organization become linked to each other, but there are other important
linkages that surround the psychological contract. We discuss a series of
important and related concepts such as commitment, organizational identifica-
tion and the experience of psychological ownership in more detail and
consider what is happening to each of these in the context of today’s
employment relationship. We examine some of the important individual
outcomes from the new employment relationship that organizations need to
manage much better, including job satisfaction, job-crafting behaviours and
workaholism.
In Chapter 9 we consider the challenges that are created when the
employment relationship becomes imbalanced, and examine recent evidence
on work–life balance and the problems created by a long work hours culture.
We consider the link between commitment and non-work obligations and also
deal with the problem of reactive and dysfunctional behaviours to the
employment relationship.
In Chapter 10 we tackle two of the challenges raised above together. First, we
examine whether it is appropriate to assume that the new generations entering
work will behave and react in the same way as their predecessors. The
challenges associated with managing generational differences across the
employment relationship are developed. We look at the work values of young
workers and speculate on some of the theories about change. Second, we
examine some of the challenges that will test these values, such as the shift
towards being a consumer of the organization with increasing reward through
 Challenges Facing the Employment Relationship: Introduction 5

stock options, the problems of corporate governance and the collapse of trust
in business itself, the difficult choices that will have to be made to cope with
demographic trends such as the trade-off between a longer working life and
large-scale immigration.

The problem of hypercompetition: managing the

employment relationship in times of disorder?
Why is it necessary to consider whether there are such fundamental changes
taking place in the employment relationship? We would argue that it is
necessary because many organizations are now managing in times of severe
disorder. D’Avini1 has coined the term hypercompetition to characterize the
nature of the disorder, stress and unpredictability that is confronting modern
organizations. Hypercompetition is not the force driving the changes. It is the
response expected to these changes. A series of long-wave economic cycles are
considered to have created this period of turbulence. Disorder is created at the
interface between the end of a cycle of economic growth that was based on the
post-war economy, and the beginning of a new cycle based on technological
drivers of information, communication, and biotechnology. The economic
opportunities are immense and the social disruptions will be very challenging.
Academics of course disagree over the scale of this disorder. Business
economists and strategic management researchers such as Porter2 argue that
these changes are constrained only to particular sectors, whilst organizational
behaviour specialists and organizational analysts such as Zohar and Morgan3
suggest that corporate anarchy will be the ultimate result of the economic and
competitive forces that have been unleashed.
To resolve this issue a three-year collaborative project involving several
hundred strategic management, marketing, international management and
business policy specialists, organizational scientists, and social psychologists
was organized by the US Academy of Management and the journal
Organization Science. In introducing the resultant book, Ilinitch, Lewin and
D’Avini4 pointed out that:

. . . The language and metaphors of today’s managers make one point

abundantly clear: they are experiencing the strongest and most
disruptive competitive forces of their careers. Rather than a game,
business has become war. Rather than an honourable fight with the
best firm winning, the goal has become extermination of the enemy.
CEOs from industries ranging from telecommunications to auto parts
describe the competition they face as ‘brutal’, ‘intense’, ‘bitter’ and
‘savage’. In the words of Andrew Grove, the CEO of Intel, ‘only the
paranoid survive’ in a world of hypercompetition. Increasingly, man-
agers are turning to academics and consultants to understand why the
nature of competition is changing and for insights about how to
compete in chaotic and disorderly times.
6 The Employment Relationship

Few managers would disagree with this sentiment. For academics and
practitioners alike, however, it raises some important challenges. A number of
critical questions are now being asked. How can firms reinvent themselves as
they become more flexible? What do disposable organizations really look like?
How can organizations manage the employment relationship to exploit both
flexibility and knowledge creation?
Clearly, both the technological revolution and globalization have trans-
formed the competitive landscape. Volberda5 argues that in order to cope with
the demands of hypercompetition – indeed in order to survive – organizations
have to build new core competences and develop their human capital and
work systems in new ways that will enable them to pursue more flexible
strategies. We believe that it is this pressure for strategic flexibility that will
continue to challenge the employment relationship, most notably because it
will require the development of new organizational forms.

New organizational forms and knowledge-based

competition
Before we examine the evidence-based implications of this drive towards
flexibility on employee behaviour, we therefore begin by outlining the reasons
behind the demands for such strategic flexibility – the changes in organization
form – as seen by organizational scientists. Commentators on organization
design today, such as Bartlett, Ghoshal, Brown, Eisenhardt, Floyd, Woolridge
and Nohria, all agree that organizations are experimenting with a range of new
organizational forms and strategies to adapt to or manage the unprecedented
levels of change generated in this period of hypercompetition.6
A theme that serves as the capstone for most of the issues discussed
throughout this book is the attention that has been given to the topic of
organizational forms designed for strategic flexibility. The term organizational
form refers to the combination of strategy, structure and internal control and co-
ordination systems that provide an organization with its operating logic, its
rules of resource allocation and its mechanism of corporate governance.7
Managers are the primary designers of this ‘organizational form’ through the
choices they make – whether these decisions are planned and thought through
or not – about the organization and the shape of jobs. Organizational forms and
the structures and processes through which they are realized have traditionally
emerged to protect the organization from, and create a buffer against, the sort
of external uncertainty outlined above when we discussed the phenomenon of
hypercompetition. Aldrich8 therefore argues that organizational forms serve
three purposes. They:

1 Help identify and disseminate the collective aims of the organization;

2 Regulate the flow of resources into and out of it; and
3 Identify and govern the duties, rights, functions and roles of the members of
the organization.
 Challenges Facing the Employment Relationship: Introduction 7

Organizational theory considers that new organizational forms are generally

produced by technological innovations, although other agents of organiza-
tional form creation such as social movements and collective action can also
play a role.9 There is a consensus that knowledge-based assets within an
organization will form the foundation for success in the twenty-first century
and will guide the way that we design organizational forms.10 In economies
based on information, competitive advantage is now presumed to result from
the ability of firms to charge economic rents (defined as above-normal profits in
relation to others in the industry). These economic rents are in turned gained
only by those firms that can create new knowledge and keep it to itself. We
assume today that knowledge-based enterprises are the most efficient way of
gathering information and disseminating understanding because they have
reduced communication costs and heightened capabilities to support individ-
ual learning and the management of knowledge.
Competitive advantage is then now considered to flow from the creation,
ownership and management of knowledge and to reside within ‘knowledge
assets-based enterprises’.11 Turuch12 outlines four main reasons why such
knowledge-based competition has already assumed heightened importance in
the world economy:

1 The bulk of fixed costs associated with knowledge-based products and

services now accrue in respect of their creation, as opposed to their
dissemination or distribution.
2 As knowledge grows, it tends to branch and fragment. Rapid and effective
re-creation of knowledge comes to represent a source of competitive
advantage.
3 The value of investments in knowledge, whilst difficult to estimate, are more
volatile and have a more direct linkage with overall business performance,
with outcomes ranging from disappointment of expectations through to
extraordinary knowledge development.
4 Even when knowledge investments create considerable economic value, it is
hard to predict who will capture the lion’s share of these investments.

However, there is a conflict between the need to operate in today’s

hypercompetitive environment and the current reliance on bureaucratic forms
of organization. Although the structural implications of the shift towards a
more information-intensive economy are clearly varied, Child and McGrath
have specified some of the main conceptual elements that are influencing the
design choices that are being made by organizations13 in a Special Research
Forum on New and Evolving Organizational Forms in Academy of Management
Journal.
It is argued today that bureaucratic organizations have an inbuilt design-
fault. They are designed for the efficient allocation of resources and assume
that knowledge has already been codified. Codified knowledge can be treated
as a commodity and can therefore be built into stable routines within the
organization.14 Control over knowledge flows has become much more difficult
8 The Employment Relationship

to exert and dissemination of insights has become much more open. At the
same time, organizations are beginning to appreciate that control and reliance
on conformity to core processes actually inhibits the creative process and
exploratory learning. There has been much experimentation in recent years
and a fragmentation of bureaucratic organizational forms. A wide variety of
terminology has been used to capture the looser set of organizational forms
that have evolved as part of this fragmentation. The most well-known
descriptions of new organizational forms include:

䊉 Post-bureaucratic and Post-modern organization15

䊉 Re-engineered corporation16
䊉 Virtual organization17
䊉 Boundaryless company18
䊉 Network organizations19
䊉 Modular organizations20
䊉 Fractol and modular factories21
䊉 Atomized organization22
䊉 High-performance or High-commitment work system23
䊉 Knowledge-creating company24
䊉 Distributed knowledge system.25

What is shared by these varied concepts? They all argue that tightly integrated
hierarchies will be supplanted increasingly by ‘. . . loosely coupled networks of
organizational actors’.26 This becomes possible because greater flexibility has
been built into organizational systems by developing ‘modularity’. Modularity
enables the components of any system to be recombined in different ways and
to be tasked with different functions, with little loss of function through
reconfiguration. Child and McGrath27 summarize three common features of
the above prescriptions and the differences between the conventional and
emerging perspectives on organizational form that they highlight is outlined in
Box 1.1.
This book concerns challenges to the employment relationship. It seems only
sensible to outline from the outset the challenges that are faced by
organizations. Their actions become more understandable for doing so. Child
and McGrath identify four core theoretical issues or challenges associated with
these new more loosely coupled organizational forms, which they call
interdependence, disembodiment, velocity and power:

1 Interdependence: The scope and depth of interdependence prevalent in

business today is at unprecedented levels. Advances in information and
communication technologies, coupled with changes in regulatory regimes
and control over capital flows, have made interdependent operations both
more desirable and more cost-effective. The outcome for all parties in any
business transaction are fundamentally entwined with the actions and
outcomes of other parties. The management of interdependent systems has
become more complex as authority is dispersed across several parties, and
 Challenges Facing the Employment Relationship: Introduction 9

Box 1.1 Common features of new organizational forms

There are three common features shared by the many prescriptions for
future organizational forms. As far as the employment relationship is
concerned:

1 The setting of goals, identifying and dissemination of aims, decision

making and the exercise of power stresses: decentralized rather than
top-down goal setting; distributed rather than concentrated power; a
preference for smaller rather than larger units; leadership roles that
provide guidance and conflict management rather than control, monitor-
ing, exercise of formal authority and concrete objectives; vision that
emerges in the organization rather than being dictated; and team and
work group structures rather than formal hierarchies.
2 The maintenance of integrity, regulation of resources and establishment
of boundaries within and between organizations stresses: the production
system or network as the primary unit of analysis, rather then the firm;
permeable and fuzzy boundaries rather than durable and clearly set
ones; flexibility rather than reliability and replicability; horizontal regula-
tion rather than vertical regulation; relationship-based rather than rule-
based integrity; and structures that are independent of assets rather than
assets being linked to particular organizational units.
3 The differentiation between rights and duties, functions and roles
stresses: general and fuzzy role definitions, not specialized and clear
ones; adaptation rather than the attempt to absorb uncertainty; imperma-
nent rights and duties rather than permanent ones; and an orientation on
innovation rather than efficiency.

Source: Child and McGrath.27

coordination of changes has become more unpredictable. The presumption

that there is some advantage to the organization in controlling resources
within its own boundaries is being challenged.
2 Disembodiment: The traditional link between ownership and control of assets
and performance has been broken. It is not necessary physically to own an
asset to utilize it and as a consequence the definition of what should be core
activities for the firm has shifted. Large hierarchical entities have been
replaced by loosely interconnected organizational components with semi-
permeable boundaries. The locus of production occurs at the nexus of
relationships between these parties rather than within the boundaries of a
single firm. The presumption that efficient production is more valuable than
inefficient innovation is challenged.
10 The Employment Relationship

3 Velocity: From product development down to internal communications,

forces such as trade liberalization, deregulated capital movement and new
communication technologies have accelerated the velocity at which the
organization has to function. This has led to hypercompetition in many
sectors, and a reduction in the stimulus–response time open to organizations
(hence experiments with how organizations use time). Pressure is placed on
vertical information and decision flows.
4 Power: Power has shifted both in terms of locus and concentration. Power
derived from possession of tangible assets has been superseded by power
derived from the possession of knowledge and information. There is
growing asymmetry of power between managerial agents in charge of large
global firms and most other groups in society (consumers, employees and
local communities). Power becomes a more complex matter, with multiple
stakeholders who are not organized hierarchically.

To summarize the situation now faced by organizations, there are many

challenges that are being created by the path that they have taken. They have
become much more dependent on the fortunes and actions of others, they
cannot be sure that they will perform better just by owning important assets,
the speed at which they have to function effectively has accelerated, and power
now resides in the location of knowledge. All these developments carry
important messages for the employment relationship.

The political economic context for work

The editorial to a recent Special Issue of Journal of Organizational Behavior on
Brave New Workplace: Organizational Behavior in the Electronic Age recently
began by stating that:28

. . . The very nature of the ‘business model’ which dominates organiza-

tional thinking is changing. Contracts rather than hierarchies are
becoming essential co-ordination tools. Information systems and
electronically linked workgroups are prevalent. New frames of refer-
ence and new stakeholders are emerging. And the social role of the
corporation is undergoing important transformations as markets
dominate communities.

It is now generally assumed by critical management theorists such as Beck29 –

if not also by the average citizen – that there is an increasing divide between
capital, the welfare state and the free market. Political economists draw
attention to two difficulties currently faced by a risk regime based on
insecurity, uncertainty and a loss of boundaries. The first is motivational,
experienced when economic and social expectations are not met and when
members of society sense a lack of meaning and motivation in their
employment life. The second concerns legitimation, where the legitimacy of
 Challenges Facing the Employment Relationship: Introduction 11

key state and organizational institutions become threatened with disintegra-

tion and fragmentation as people neither trust them nor continue to behave in
a normative manner. New work practices are therefore designed to create a
flexible labour market that serves the purpose of shifting some of the risks of
employment away from the state and the economy and onto individuals.
Personal risk has now become diffused across a wide range of organizations
and occupations. Smith identifies three important divides that have been
created in the new economy:30

1 A movement towards flexibility in the workplace and flexible specialization

within production systems, with control systems that either allow workers to
learn new skills and retool for new more complex tasks, or which just
introduce new structures of power and inequality.
2 A divide between ‘good jobs’ and ‘bad jobs’, i.e. either high information or
technology intensity jobs, or jobs requiring low skill, giving low pay, and
affording low training.
3 Differences between a stable workforce versus a new contingent
workforce.

The new flexibilities

The effect that these new organizational forms will have on the employment
relationship is still broadly unknown. The shift towards an information-based
economics of production as opposed to a materials-based economics does
appear to be redefining what is core employment and what is peripheral
employment and core work increasingly consists of knowledge work and
professional work that leads to the design of soft concepts and hard
technologies. For individuals too there are a number of deep changes taking
place within their employment relationship. We have argued in other work
that a series of complex changes in the psychological contract at work are
taking place.31 Most of the popular business literature points to a series of deep
qualitative shifts taking place in the nature of work. Although the issue of
flexibility has been discussed now for nearly 20 years within the HRM
literature, Sparrow argues that three issues lie at the heart of this debate:32

1 The link between changes in technology and how these affect the
organization structure and process
2 The impact that the resultant structural changes and new organizational
forms have on the integration, organization and distribution of roles and
tasks
3 Changes in the content of jobs, the form in which they are designed, and the
way in which they need to be coordinated by HRM systems.

Organizations have been seeking for quite a while to increase their versatility
by tapping (and better matching) the skills, capabilities, adaptability and
12 The Employment Relationship

creativity of the workforce through a range of interventions such as total

quality management, just-in-time, call centres, lean manufacturing, team work
and empowerment. In combination these phenomena have already had
significant implications for what is now meant when we talk of a ‘job’ and also
for employees. Examining the impacts of changes in job design in the 1990s,
Parker and Wall33 pointed to five common developments in job content that
occurred throughout the 1980s and 1990s. These were the increased relevance
of operational knowledge, higher levels of work interdependence, a greater
proportion of job responsibilities based around direct production and service
interfaces, higher cognitive-abstract qualifications needed for proficient perform-
ance, and more emphasis on social competencies.
Yet, until relatively recently, certainly within the HRM literature, much of the
debate about flexibility was still very narrowly focused. It tended to
concentrate at the level of the job – the various tasks or work elements that
were being bundled up into ‘jobs’ – and also on the process of negotiation
about changes to these job conditions. This does not capture the quite profound
changes taking place within the nature of jobs, work and the relationship that
surrounds employment. Just consider what has already been happening to
‘jobs’. Organizations have been repackaging significantly the work elements,
tasks, duties and positions that are together bundled into definable ‘jobs’. They
have been redesigning the relationship between jobs and the organizational
context into which these jobs are placed. In short, they have been simultane-
ously manipulating four things:34

1 The components that are bundled together into definable ‘jobs’ (through the
tasks, operations, work elements and duties that are deemed still necessary
for employees)
2 Redesigning the context into which jobs are placed and positioning new jobs
into a broader organization design (through the family of jobs to which any
one job is deemed to belong, the occupation of the job holder, the career
stream to which jobs belong, and the work process of which it forms a
part)
3 Changing the ways in which jobs relate to and interact with each other
(through the roles assigned to particular jobs, the information and control
systems applied to them, and the relative levels of power they possess)
4 Changing the ways in which HRM systems integrate the new bundles of jobs
into the organization’s strategic process (by reshaping the competence and
commitment that must be possessed by employees).

Sparrow and Marchington35 outlined seven flexibilities that were discussed in

the HRM literature throughout the 1990s that summarize these job-level
changes (see Box 1.2).
The seven flexibilities outlined in Box 1.2 should really be considered simply
as consequences of there being a much deeper drive within organizations
towards what may be termed ‘strategic flexibility’. The rhetoric from the
management gurus therefore has suggested that radical changes are taking
 Challenges Facing the Employment Relationship: Introduction 13

Box 1.2 The pursuit of seven simultaneous flexibilities in

organizations
Sparrow and Marchington noted that organizations may chose to pursue
one of seven flexibilities discussed in the literature. Historically they tended
to pursue one form of flexibility for one job, a combination of flexibilities for
another, but are increasingly attacking the whole organization across a
series of fronts. Each type of flexibility also tends to be associated with a
different ‘battle’ or struggle between interested parties (stakeholders) in the
employment relationship:

1 Numerical flexibility, where the battle is around who owns (and therefore
has some legal obligation towards) the employment relationship. Does
the job need to be one within the internal labour market, or can it be
sufficiently controlled through outsourcing, peripheral forms of employ-
ment, or the use of various associate relationships?
2 Functional flexibility, an organization’s ability to deploy employees
between activities and tasks to match changing workloads, production
methods or technology. The battle is around the roles and competencies
deemed appropriate for the job. When the new package of elements,
tasks and duties are considered, does the job need to staffed by a multi-
skilled individual, are there new core competences that must be
delivered, or are there important cross-business process skills that must
be acquired?
3 Financial flexibility, where the battle is around the reward–effort bargain
to be struck with the job-holder. What is the best balance between the
type and nature of reward and the delivery of performance? Would a
more efficient wage–effort bargain be struck by the use of performance-
related pay, gainsharing, or cafeteria benefits?
4 Temporal flexibility, where the battle is the need for continuous active
representation on the job. What time patterns should the job be fitted into
and will employees be able to switch themselves onto the highest levels
of customer service and performance throughout these time patterns?
What is the role, for instance, of flexitime, nil hours, or annual hours?
5 Geographical flexibility, where the battle is around the ideal location of
the job and its constituent tasks. Does the job need to be carried out in
specific locations, or is there latitude for homeworking, or even operating
through virtual teams?
6 Organizational flexibility, where the battle is around the form and
rationale of the total organization and its design, into which the job may
be fitted. Does the organization operate as an ad-hocracy, a loose
network of suppliers, purchasers, and providers, or a temporary alliance
or joint venture?
14 The Employment Relationship

7 Cognitive flexibility, where the battle is around both the mental frames of
reference required effectively to perform in the job and the level of
cognitive skills required. Does the job require people with a particular
sort of psychological contract? What sorts of strategic and cognitive
assumptions cannot be tolerated?

Source: Sparrow and Marchington.35

place within organizations and that the end of the ‘job’ is nigh, that there are
fewer old-style jobs in existence, and that it has become increasingly hard to
package work into discrete ‘jobs’. Despite much of this rhetoric – which we
shall explore through different ‘lenses’ throughout this book – the reality is that
organizations are still currently structured around jobs. Yet, at the same time,
it is undeniable that the flexibility they seek is far more profound than simply
considering new time patterns of work, high-commitment work practices, and
new forms of pay. Whilst all these issues have to be considered, increasingly
this consideration is just as part of a total package of changes intended to
deliver what the strategists refer to as strategic flexibility.36
HR practitioners, work and organizational psychologists, and social scien-
tists in general, are trying to find an acceptable path through the many
dilemmas that we know we shall face in dealing with the issues raised by this
pursuit of strategic flexibility. Moreover, no one field seems to have all the
answers. As we work our way through the changes, the fields of academic
knowledge that will carry most weight will also change rapidly.37 We are
witnessing a dialogue and sharing of ideas between a number of disciplines:

䊉 Work and organizational psychologists, who consider how best to partition

work into manageable units, and the behavioural and employee mindset
outcomes that one should expect from the nature of the employment
relationship
䊉 Organization design academics, who seek to understand how best to
coordinate work across important vertical, horizontal, and external bound-
aries within and across organizations
䊉 HRM specialists, who consider how best to create systems to both control
and gain commitment from employees that will enable them and the
organization jointly to implement the new systems.

New psychological contracts, new careers?

We shall see throughout this book that the consequences of changes in the
employment relationship are viewed in quite different ways. For some writers
many developments associated with the creation of flexibility are resulting in
 Challenges Facing the Employment Relationship: Introduction 15

a worker underclass with low wages, few benefits, negligible job security, little
investment in their capabilities and deteriorated chances of advancement.38 We
shall review the reality of these trends in Chapters 3 and 4 in particular.
Associated with this view is discussion and awareness of the negative
consequences of changes in the employment relationship, with concern
expressed about problems to do with work–life balance, coping with a long
work culture and impacts on stress, health and general well-being. These issues
are considered in Chapter 9. However, the changing employment relationship
has many faces and not all are negative. Much attention has also been given to
the new opportunities that exist for individuals and the benefits that might
flow from an unfettering of their careers and capabilities. The evidence that
argues that we are faced with a greater individualization of work, the
associated war for talent, the need for organizations to create far more focused
and individualized ‘deals’ with their employees and the psychological factors
that make such a world more or less attractive to individuals are considered in
Chapters 6 and 7.
We begin the analysis, however, in Chapter 2 which considers the topic of
psychological contracts at work. Why do we start our analysis of the
employment relationship by looking at it through psychological lenses?
Regardless of the ideological stance that one takes on our future, it is clear is
that the impact of changes taking place in organizational form is extremely
pervasive. One of the reasons for this is that the new organizational forms
actually send very important signals about the level of trust that exists within
the employment relationship. Trust – be it the lack of it or changes within it –
has strong behavioural consequences. We need to understand the impact that
changes in trust will have. In Chapter 10 we speculate about possible
consequences that arise from recent trust shocks – such as the US corporate
governance crisis – but we begin by linking changes in trust to the changing
nature and shape of organizations.
Trust has always been seen as a pervasive feature of organizational design
choices. For example, Bradach and Eccles39 argue that the level of trust in
employees is reflected in the way that a new organizational form is realized. In
particular, the discretion afforded control and coordination systems, and the
way that incentives are used to direct behaviour, tell us much about the extent
to which we are trusted. Higher levels of trust are associated with fewer
controls and fewer controls mean that there are lower ‘transaction costs’
incurred by the organization. When managers redesign the organization, they
are making two important trust-related judgements, again either consciously
or unconsciously:

1 Is there implicit employee ‘task reliability’, i.e. do employees have the

capabilities and potential to exercise responsible self-direction and self-
control?
2 Is there sufficient ‘values congruence’ with the purpose of the organization,
i.e. is there a dominant written and spoken philosophy that will guide the
ultimate way in which employees will act?
16 The Employment Relationship

We consider the nature of trust from a psychological perspective in Chapter

5, but shall return to the topic throughout this book. This is because for
psychologists there is often a conflict between the higher levels of trust that are
both implicit in and a necessary ingredient of the operating logic of many of the
new organizational forms (such as network organizations) and the levels of
trust that are actually reflected in the attitudes and psychological contract of
employees.
Given many of the changes in organizational design outlined above and the
pursuit of flexibility, the traditional boundaries that used to demarcate the
world of work (such as job, function, hierarchy) continue to be eroded. But as
these boundaries dissipate, then organizations find that they are having to
manage the psychological boundaries that still seem to govern the extent to
which employees remain committed at work, engaged in the organization’s
strategic purpose, and capable of enjoying the rewards that work offers whilst
balancing its demands on their life. Sparrow40 argued that in the new
employment relationship HR practitioners do not just have to manage the
employment or job contract. They have to manage the consequence of the
changes taking place in the minds of their employees – what have been called
the psycho-social or ‘soft-wired’ boundaries that still determine employee
behaviour.41 There is a soft set of expectations held by employees that have to
be managed and coordinated.
In early work on the psychological contract – a term which we define more
formally in the context of recent research in the next chapter – the
organizational perspective on the employment relationship was generally
treated simply as the context for the creation of each individual psychological
contract. In describing this context, researchers were able to compare and
contrast the ‘old’ versus a ‘new’ psychological contract and then use discussion
of the ‘new’ psychological contract to articulate some of the challenges at work.
Baruch and Hind42 reviewed literature on career management to show how a
series of new concepts had been used to signal the realities of the new
employment relationship. Handy brought the concept of ‘employability’ into
mainstream management thinking in the late 1980s.43 It refers to the absence of
long-term commitments from the organization, but commitment to provide
training and development that enables the employee to develop a portable
portfolio of skills and find alternative employment when the relationship
ends.
A series of generic changes, summarized in Table 1.1, are often used to
represent the shifting balance in the psychological contract that has resulted
from the pursuit of ‘employability’. Cavanaugh and Noe point out that there
is no consensus on the components of the new psychological contract.44
Nonetheless, the majority of commentators would agree that there has been
a shift from relational aspects in the employment relationship to more
transactional components. The old deal was stereotyped as one in which
promotion could be expected, and when granted was based upon time-
served and technical competence. As long as the company was in profit and
you did your job then you had no cause to fear job loss. The organizational
 Challenges Facing the Employment Relationship: Introduction 17

Table 1.1 Past and emergent forms of psychological contract.

Characterstic Past form Emergent form

Focus Security, continuity, loyalty Exchange, future

Format Structured, predictable, Unstructured, flexible, open

stable to (re)negotiation

Underlying basis Tradition, fairness, social Market forces, saleable,

justice, socio-economic class abilities and skills, added
value

Employer’s Continuity, job security, Equitable (as perceived)

responsibilities training, career prospects reward for added value

Employee’s Loyalty, attendance, Entrepreneurship, innovation,

responsibilities satisfactory performance, enacting changes to improve
compliance with authority performance, excellent
performance

Contractual relations Formalized, mostly via trade Individual’s responsibility to

union or collective barter for their services
representation (internally or externally)

Career management Organizational responsibility, Individual’s responsibility, out-

in-spiralling careers planned spiralling careers by personal
and facilitated through reskilling and retraining
personnel department input

Composite from Hiltrop47 and Anderson and Schalk.48

culture was paternalistic, and essentially encouraged an exchange of security

for commitment. Responsibilities were always part of an instrumental
exchange, but were progressively linked to the career hierarchy. Personal
development was the company’s responsibility. High trust in the old
employment relationship was not widespread, but was deemed to be
possible.
The new employment contract has been stereotyped in a different way.
Change is seen to be continuous. There is less opportunity for vertical grade
promotion and is against new criteria. Anyway, isn’t promotion only
something for those who deserve it? Tenure cannot be guaranteed. In a
globalizing economy you are ‘lucky to have a job’. More responsibilities are
encouraged, balanced by increased accountabilities. Status is based on
perceived competence and credibility. Personal development is the employees’
responsibility – individuals have to keep themselves employable whilst the
organization offers employability (the opportunity to develop marketable
skills). High trust is still deemed desirable, but organizations accept that
employees are less committed to them, but more committed to the project they
18 The Employment Relationship

work on, their profession and their fellow team members. Organizations
therefore build attachment to proxies – such as the team – for whom employees
will still perform. It is argued that managers’ loyalty to their employer has
declined45 and that commitment to type of work and profession appears to be
stronger now than commitment to organization.46
Globalization therefore, has induced both organizations and employees to
take a different perspective on the psychological contract and the way the
change agent manages these changes. In the light of the many changes taking
place in the nature of work, a number of writers such as Sparrow and Cooper
have argued that today, as the process of globalization continues and in the
aftermath of downsizing, the increased levels of flexibility, more short-term
contracts, greater reliance on virtual workers and pursuit of more boundary-
less careers may be resulting in a new and very different psychological
contract.49 In line with this view, Hartley50 and Tetrick and Barling51 have
argued that new theories and approaches are therefore needed in the field of
organizational psychology.

Critical views of the psychological contract

The concept of the psychological contract has then helped to jump-start this
process of reassessing both academic theory and the practical challenges facing
the employment relationship. It has provided academics and practitioners with
an umbrella concept to understand the changes taking place in the nature of
work. It has brought a new vocabulary into their discussions – with talk about
employee mindsets, implicit deals, disengaged behaviour and a host of other
issues in modern organizational life about which people are concerned.
By the 1990s this management of ‘hearts and minds’ had become a central
human resource management task.52 Sparrow53 notes that it has been used to
bring together a series of organizational behaviour studies on related topics
such as commitment, job satisfaction, socialization and the fit between the
employee and employer and in terms of definition it has been used to
encompass several psychological phenomena – such as perceptions, expecta-
tions, beliefs, promises and obligations – each of which actually implies
different levels of psychological engagement. In the same way that ideas about
culture, climate and competencies were used to help practitioners capture
complex changes needed in their organization, the psychological contract has
been used as a frame of analysis that helps to:

䊉 Capture changes taking place at the individual, organizational and societal

level
䊉 Discriminate between organizational responses
䊉 Serve as a basis for predicting individual behaviour.

Research on the psychological contract tends to concentrate on the implicit

and open-ended agreement about what is given and what is received within
 Challenges Facing the Employment Relationship: Introduction 19

the employment relationship. Discussion of the psychological contract there-

fore is often closely associated with discussion about the nature of trust in
organizations.54 We discuss this in the next chapter. At this point, however, it
is important to note that in capturing expectations of reciprocal behaviour in
the employment contract, discussion of the psychological contract also covers
a range of societal norms and interpersonal behaviour and is based on
changing perceptions of the employer–employee balance of power. Indeed,
this has been one of the main benefits of early work on the topic. It has diverted
attention back to the employee side of the employment relationship in an era
of change when the needs of the firm and economic markets took centre-stage.
The sense of mutuality implicit in the psychological contract has proved a
useful vehicle to capture the consequences of perceived imbalances of
exchange in the new employment relationship.
It has begun to open the ‘black box’ of the employment relationship and
helped to reveal some of the important psychological processes that serve to
‘regulate’, ‘legitimate’ and ‘enact’ the employment relationship. Guest ques-
tions whether a contract in which all the terms are explicit, written down or
expressed remains a psychological one. He also expresses the concern that in
opening up this ‘black box’, as with other constructs such as flexibility, job
satisfaction and commitment, discussion about the psychological contract can
easily present an ‘analytic nightmare’.55 He feels that our understanding of the
construct does not yet enable us to either build theory or to develop precise
operationalizations. Despite such concerns, he too feels that the construct
should still be retained because of its ability to capture complex organizational
phenomena and to act as a focus for organizational policy. He notes three
reasons why the psychological contract has become a viable construct for
capturing changes in the employment relationship:

1 It reflects the process of individualization of the employment relationship

that has been taking place, in which the market philosophy views the
individual as an independent agent offering knowledge and skills through a
series of transactions in the marketplace,
2 It focuses attention on the relative distribution of power and the cost of
power inequalities in the new employment relationship,
3 It has the potential to integrate research on a number of important
organizational concepts such as trust, fairness and social exchange, and to
add additional explanatory value to the prediction of a series of con-
sequences such as job satisfaction, organizational commitment, sense of
security, motivation, organizational citizenship, absence and intention to
quit.

Future psychological contract scenarios

It must be noted that we do not for sure yet understand the outcomes that will
follow from the nine challenges that we have used to inform this book. Indeed,
 20 The Employment Relationship

providing more insight into these challenges is the purpose of this book. The
fact that there is room for debate was of course signalled in our first attempt to
construct a framework to examine the challenges presented to organizational
HRM systems of changes in the psychological contract at work. Sparrow and
Cooper56 reviewed a range of published work and noted four different
assumptions – or scenarios – that were being presented by various writers.
These four scenarios were not considered to represent alternative futures but
rather reflected the different findings that emerged from work in this area.
These different findings sometimes reflected the methodologies that were
being used by researchers – and the levels of behaviour that their method-
ologies were capable of exposing. To some extent the different pictures also
reflected what was happening in different industrial sectors being studied and
the reaction of employees traditionally employed in such sectors.
Figure 1.1 presents four quadrants that each describe and capture a different
set of assumptions that are being made about the adaptive responses that are
being exhibited by individuals as they adjust to the demands of the new
employment contract. We argued then that the combination of varied
individual responses, and the assumptions we make about the level of
environmental complexity and change that is really taking place, inevitably
generates a range of different scenarios and discussions about what is
happening to the psychological contract.

Nature of the Contract

State of mind Trait
Influenceable More fixed set
Generic adaption Individual difference

Continuity
Low breach RECONFIGURED
Adjustments to SELF-CORRECTING
LABOUR MARKET
incremental change ANIMAL
DIVERSITY
Level of Transition

Dynamic change
High breach
NEW RULES OF LIMITED
Permanent
THE GAME CAPACITY
adjustments to radical
change

Figure 1.1 Four different adaptation processes to the new employment contract
 Challenges Facing the Employment Relationship: Introduction 21

There are two sets of bi-polar conclusions that can be drawn from existing
research when considering the sort of adaptations that we are seeing to the new
employment contract. The first axis reflects assumptions that are being made
about the nature of the organizational environment and the scale of changes
that are required in individual behaviour and adaptation. This axis really
concerns the level of transition that we believe we are witnessing. This
transition may be seen as low or high. Those who feel that the level of change
in psychological contract is currently low will point to much continuity in the
nature of the employment contract, argue that we are witnessing relatively low
levels of breach of contract, or that research tends to overstate the amount of
breach of contract. They argue that people have to make relatively modest or
incremental adjustments to change. Those who feel that the level of transition
– or change in the psychological contract – is high will tend to point to very
dynamic changes taking place in the level of employment. They highlight some
of the more subjective views that people might have about the level of
insecurity, conduct research that suggests relatively high levels of breach of
contract, and draw attention to some more permanent changes that might be
taking place in employee behaviour.
The second axis in Figure 1.1 highlights our first attempt to draw some
conclusions about the nature of the individual adaptive reaction to change.
This dimension reflects the level of flexibility or malleability that is assumed
will govern the individual adaptive response to the challenges facing the
employment relationship. Again, two contrasting pictures have been painted
by research. On the one hand, some researchers argue that the challenges
facing individuals (and their psychological contract) depends very much on
their attitudes and state of mind. This state of mind – and the scale of challenge
presented – is flexible and open to influence. It tends to argue that most people
are actually capable of adapting. In any event, don’t people compensate for the
challenges that they face, perhaps by the sort of activity that they engage in
outside work (such as their leisure or non-work activities)? This position tends
to present people as being a lot more flexible than we often give them credit for.
On the other hand, some researchers question this flexibility. They do not
present the challenges facing the psychological contract as a state of mind to
which we can all adjust. Instead they tend to present individual reactions to
changes in the employment contract more like a stable individual difference.
The level of flexibility is considered to be relatively low and therefore some
people can make the adaptations and some simply cannot, or will not. People
have limits to how much change they can take. Therefore they tend to describe
the psychological contract in much more inflexible ways and with more serious
or dysfunctional consequences for a significant number of individuals. The
four different scenarios are briefly outlined here:

1 The self-correcting animal scenario is based on assumptions about the generic

capacity of individuals to adapt to the environment that they face. This
generic ability of individuals to cope with the challenges faced in the
employment relationship in turn makes them more manageable from an
22 The Employment Relationship

HRM perspective – it is a case of changing their state of mind or attitude. In

any event, the scale of changes that they face are not that different from what
has gone before. We face incremental change and not radical change.
2 The reconfigured diversity scenario. This type of research generally assumes
that the scale of change is not necessarily dramatic or radical, i.e. we face a
more limited and measured scale of change. However, even though perhaps
the majority of individuals are capable of adjusting to the new employment
contract, there are significant individual differences in terms of individual
reaction, there are some clear limits to some people’s adaptability, and there
will be wide variation in the responses seen. This scenario – while arguing
that changes in the employment relationship may not be radical – still tends
to focus on difficulties that will be faced by organizations. It argues that
organizations will need to devise new and more effective ways of
understanding the individual reactions to the new employment relationship
and better ways of managing the greater variety in psychological contracts
that will exist. These more diverse responses may also be driven along
unfamiliar lines because the factors that are associated with different
individual responses tend not to have been too important in the past.
3 The third scenario is labelled the limited capacity scenario. Research here also
concerns the differential ability of people to adjust and adapt to their
environment and some of the inflexibilities that will exist. However, it
presents the changes being faced by individuals as being more rapid, radical
and paradigm-breaking. Therefore the issue facing organizations is not just
one of coping with greater diversity in response, but one of perhaps having
to understand that the capacity of many individuals to adapting to this
radical change will likely be more limited. Again, a series of important
individual differences will account for the responses, there will be higher
levels of failure to cope and more dysfunctional effects such as decreases in
well-being and higher costs of stress, at least for a significant time to come.
This fallability of significant numbers of individuals will make them much
more unmanageable from the perspective of the organization.
4 Finally, we signalled what we called a new rules of the game scenario. Again,
this type of research presents the environment as being unstable, changing
quite radically and in directions that we haven’t faced before. However,
individual differences are less important in helping us understand the
adaptive response, the issue is much more to do with different states of
mind, and what differences do exist pattern in much broader and more
generic ways – perhaps across different generations and the age or life-
cohorts that they represent. People, then, are presented as being pretty
flexible and adaptable to the challenges that they face. However, because the
level of change in the employment relationship is high and more novel, then
the adaptations that we will see may be characterized as new rules for
‘playing the game’ at work. In this scenario it is the organization that might
have limited capacities, rather than individuals, in that many organizations
will find it hard to cope with the new behaviours and the new rule-sets that
will govern the adaptive response of all employees.
 Challenges Facing the Employment Relationship: Introduction 23

The reality is of course more complex than this. In the subsequent chapters
we unravel the evidence that enables us to understand with more certainty
what changes are taking place in the employment relationship and the
challenges that these create.

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7. See Pfeffer, J. (1992). Managing with power, Boston: Harvard Business School
Press; and Creed, W.E.D. and Miles, R.E. (1996). Trust in organizations: a
conceptual framework linking organizational forms, managerial philoso-
phies and the opportunity costs of control. In R.M. Kramer and T.R. Tyler
(Eds.), Trust in organizations: frontiers of theory and research. London: Sage.
8. Aldrich, H.E. (1999). Organizations evolving. Thousand Oaks, CA: Sage.
9. Rao, H., Morrill, C. and Zald, M.N. (2000). Power plays: How social
movements and collective action create new organizational forms. In B.M.
Staw and R.I. Sutton (Eds.), Research in organizational behavior: an annual series
of analytical essays and critical reviews. Volume 22. New York: JAI Press.
10. Offsey, S. (1997). Knowledge management: linking people to knowledge
for bottom line results. Journal of Knowledge Management, 1 (2), 113–122.
24 The Employment Relationship

11. McKeen, J.D. (2001). Editorial. Special Issue on The Study of Knowledge-
based Enterprises. International Journal of Management Reviews, 3 (1), iii–
iv.
12. Turuch, E. (2001). Knowledge management: auditing and reporting
intellectual capital. Journal of General Management, 26 (3), 26–40.
13. Child, J. and McGrath, R.G. (2001). Organizations unfettered: organiza-
tional form in an information-intensive economy. Academy of Management
Journal, 44 (6), 1135–1148.
14. See, for example, Boisot, M. (1995). Information space: a framework for learning
in organizations, institutions and culture. London: Routledge; McGrath, R.G.
(2001) Exploratory learning, adaptive capacity, and the role of managerial
oversight. Academy of Management Journal, 44, 118–131.
15. Clegg, S.R. (1990). Modern organization: Organization studies in the post-
modern world. London: Sage.
16. Hammer, M. and Champy, J. (1993). Reengineering the corporation: a manifesto
for business revolution. New York: Harper Business.
17. See, for example, Chesbrough, H. and Teece, D. (1996). When is virtual
virtuous? Organizing for innovation. Harvard Business Review, 74 (1), 65–73;
Davidow, W.H. and Malone, M.S. (1992). The virtual corporation: structuring
and revitalising the corporation for the 21st century. New York:
HarperCollins.
18. Devanna, M.A. and Tichy, N. (1990). Creating the competitive organization
of the 21st century: the boundaryless corporation. Human Resource
Management, 29, 455–471; Hirschhorn, L. and Gilmore, T. (1992). The new
boundaries of the ‘boundaryless’ company. Harvard Business Review, 70 (3),
104–115.
19. Castells, M. (1996). The rise of the network society. Cambridge, MA: Blackwell;
Jones, C., Hesterly, W. & Borgatti, S. (1997). A general theory of network
governance: Exchange conditions and social mechanisms. Academy of
Management Review, 22, 911–945; Miles, R.E. and Snow, C.C. (1986). Causes
of failure in network organizations. California Management Review, 34 (4),
53–72; Nohria, N. and Eccles, R.G. (Eds.) (1992). Networks and organizations.
Boston, MA: Harvard Business School.
20. Daft, R.L. and Lewin, A.Y. (1993). Where are the theories for the ‘new’
organizational forms? An editorial essay. Organization Science, 4 (4), i–vi;
Lei, D., Hitt, M.A. and Goldhar, J.D. (1996). Advanced manufacturing:
organizational design and statistical flexibility. Organization Studies, 17,
501–523; Sanchez, R. (1995). Strategic flexibility in product competition.
Strategic Management Journal, 16, 135–159; Sanchez, R. and Mahoney, J.
(1996). Modularity flexibility, and knowledge management in product and
organizational design. Strategic Management Journal, 17, 63–76.
21. Warnecke, H.J. (1993). Revolution der Unternehmenskultur. Das Fraktale
Unternehman. Berlin: Springer; Wildermann, H. (1994). Die Modulare Fabrik.
Kundennahe Produktion durch Fertigungssegmentierung, Munchen: TCW.
22. Ryf, B. (1993). Die atomisierte Organisation: ein Konzept zur Ausschöpfung von
Humannpotential, Wiesbaden: Gabler.
 Challenges Facing the Employment Relationship: Introduction 25

23. Pfeffer, J. (1998). Seven practices of successful organizations. California

Management Review, 40 (2), 96–124.
24. Nonaka, I. (1991). The knowledge-creating company. Harvard Business
Review, November-December, 96–104; Nonaka, I. (1994). A dynamic theory
of organizational knowledge-creation. Organization Science, 5 (1), 14–37;
Nonaka, I. and Takeuchi, H. (1995). The knowledge-creating company. New
York: Oxford University Press.
25. Tsoukas, H. (1996). The firm as a distributed knowledge system: a
constructionist approach, Strategic Management Journal, 17, 11–25.
26. Schilling, M.A. and Steensma, H.K. (2001). The use of modular organiza-
tional forms: an industry-level analysis. Academy of Management Journal, 44
(6), 1149–1167, p. 1149.
27. Child and McGrath, (2001). Op. cit. p. 1149
28. Gephart, R.P. Jr (2002). Introduction to the brave new workplace:
organizational behavior in the electronic age. Journal of Organizational
Behavior, 23, 327–344. p. 327.
29. See Beck, U. (1992). Risk society: towards a new modernity. Thousand Oaks, CA:
Sage; Beck, U. (2000). The brave new world of work. Cambridge: Polity Press.
30. Smith, V. (2001). Crossing the great divide: worker risk and opportunity in the
new economy. Ithaca, NY: ILR Press.
31. See, Sparrow, P.R. and Cooper, C.L. (1998). New organizational forms: the
strategic relevance of future psychological contract scenarios. Canadian
Journal of Administrative Sciences, 15 (4), 356–371; Sparrow, P.R. (2000). The
new employment contract: Psychological implications of future work. In R.
Burke and C. Cooper (Eds.), The organization in crisis: downsizing,
restructuring, and privatization. London: Basil Blackwell.
32. Sparrow, P.R. (1998). The pursuit of multiple and parallel organizational
flexibilities: reconstituting jobs. European Journal of Work and Organizational
Psychology, 7 (1), 79–95.
33. See Parker, S.K. and Wall, T.D. (1996). Job design and modern manufactur-
ing. In P. Warr (Ed.), Psychology and work. 4th edition. London: Penguin
Books; Parker, S.H., Wall, T.D. and Cordery, J.L. (2001). Future work design
research and practice: towards an elaborated model of work design. Journal
of Occupational and Organizational Psychology, 74, 413–440.
34. Sparrow, P.R. (1998). New organizational forms, processes, jobs and
psychological contract: resolving the HRM issues. In P.R. Sparrow and M.
Marchington (Eds.), Human resource management: the new agenda. London:
Financial Times/Pitman Publishing.
35. Sparrow, P.R. and Marchington, M. (Eds.) (1998). Human resource manage-
ment: the new agenda. London: Financial Times/Pitman Publishing.
36. Hitt, M.A., Keats, B.W. and DeMarie, S.M. (1998). Navigating in the new
competitive landscape: Building strategic flexibility and competitive
advantage in the 21st century. Academy of Management Executive, 12 (4),
22–42; Nadler, D. and Tushman, M. (1999). The organization of the future:
strategic imperatives and core competencies for the 21st century. Organiza-
tional Dynamics, 28 (1), 45–60.
26 The Employment Relationship

37. Sparrow, P.R. (2000). New employee behaviours, work designs and forms
of work organisation: what is in store for the future of work? Journal of
Managerial Psychology, 15 (3), 202–218.
38. See, for example, Kalleberg, A.L., Rasell, E., Cassirer, N., Reskin, B.F.,
Hudson, K., Webster, D., Appelbaum, E. and Spalter-Roth, R.M. (1997).
Nonstandard work, substandard jobs: flexible work arrangements in the US.
Washington, DC: Economic Policy Institute and Women’s Research and
Education Institute; Parker, R.E. (1994). Flesh peddlars and warm bodies.
New Brunswick: Rutgers University Press; Rogers, J.K. (2002). Temps: the
many faces of the changing workplace. Ithaca, NY: Cornell University
Press.
39. Bradach, J.L. and Eccles, R.G. (1989). Price, authority, and trust: from ideal
types to plural forms. Annual Review of Sociology, 15, 97–118.
40. Sparrow, (1998). Op. cit.
41. Hirschhorn, L. and Gilmore, T. (1992). The new boundaries in the
‘boundaryless’ company. Harvard Business Review, 7 (3), 104–115.
42. Baruch, Y. and Hind, P. (1999). Perpetual motion in organizations: effective
management and the impact of the new psychological contracts on
‘survivor syndrome’, European Journal of Work and Organizational Psychology,
8 (2), 295–306.
43. Handy, C. (1989). The age of unreason. London: Hutchinson.
44. Cavanaugh, M.A. and Noe, R.A. (1999). Antecedents and consequences of
relational components of the new psychological contract. Journal of
Organizational Behavior, 20 (3), 323–340.
45. Stroh, L.K., Brett, J.M. and Reilly, A.H. (1994). A decade of change:
managers’ attachment to their organizations and their jobs. Human Resource
Management, 33, 531–548.
46. Ancona, D., Kochan, T., Scully, M., Van Maanen, J.V. and Westney, D.E.
(1996). The new organization. Cincinnati, OH: South-Western College
Publishing.
47. Hiltrop, J.M. (1995). The changing psychological contract. European
Management Journal, 13 (3), 286–294.
48. Anderson, N. and Schalk, R. (1998). The psychological contract in
retrospect and prospect. Journal of Organizational Behavior, 19, 637–647.
49. Cooper, C.L. (1999). The changing psychological contract at work. European
Business Journal, 11 (3), 115–120; Sparrow, P.R. (1996). Transitions in the
psychological contract: Some evidence from the banking sector. Human
Resource Management Journal, 6 (4), 75–92; Sparrow (2000). Op. cit.; Sparrow
and Cooper, (1998). Op. cit.
50. Hartley, J. (1995). Challenge and change in employment relations: issues for
psychology, trade unions and managers. In L.E. Tetrick and J. Barling
(Eds.), Changing employment relations: behavioral and social perspectives.
Washington, DC: American Psychological Association.
51. Tetrick, L.E. and Barling, J. (1995) (Eds.) Changing employment relations:
behavioral and social perspectives. Washington, DC: American Psychological
Association.
Challenges Facing the Employment Relationship: Introduction
D'Avini, R. (1994). Hypercompetition: managing the dynamics of strategic maneuvering. New
York: Free Press.
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Zohar, A. and Morgan, G. (1998). Refining our understanding of hypercompetition and
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Ilinitch, A.Y. , Lewin, A.Y. and D’Avini, R.D. (1998). Introduction. In A.Y. Ilinitch , A.Y. Lewin and
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Volberda, H.W. (1996). Towards the flexible form: How to remain vital in hypercompetitive
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See, for example, Bartlett, C.A. and Ghoshal, S. (1993). Beyond the M-form: Toward a
managerial theory of the firm. Strategic Management Journal, 14 (Special Issue), 23–46; Brown,
S. and Eisenhardt, K.M. (1997). The art of continuous change: linking complexity theory and
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(1990). The multinational corporation as a differentiated interorganizational network. Academy
of Management Review, 15, 603–625; and Nohria, N. and Ghoshal, S. (1997). The
differentiated network: organizing multinational corporations for value creation. San Francisco,
CA: Jossey-Bass.
See Pfeffer, J. (1992). Managing with power, Boston: Harvard Business School Press; and
Creed, W.E.D. and Miles, R.E. (1996). Trust in organizations: a conceptual framework linking
organizational forms, managerial philosophies and the opportunity costs of control. In R.M.
Kramer and T.R. Tyler (Eds.), Trust in organizations: frontiers of theory and research. London:
Sage.
Aldrich, H.E. (1999). Organizations evolving. Thousand Oaks, CA: Sage.
Rao, H. , Morrill, C. and Zald, M.N. (2000). Power plays: How social movements and collective
action create new organizational forms. In B.M. Staw and R.I. Sutton (Eds.), Research in
organizational behavior: an annual series of analytical essays and critical reviews. Volume 22.
New York: JAI Press.
Offsey, S. (1997). Knowledge management: linking people to knowledge for bottom line results.
Journal of Knowledge Management, 1 (2), 113–122.
McKeen, J.D. (2001). Editorial. Special Issue on The Study of Knowledgebased Enterprises.
International Journal of Management Reviews, 3 (1), iii–iv.
Turuch, E. (2001). Knowledge management: auditing and reporting intellectual capital. Journal
of General Management, 26 (3), 26–40.
Child, J. and McGrath, R.G. (2001). Organizations unfettered: organizational form in an
information-intensive economy. Academy of Management Journal, 44 (6), 1135–1148.
See, for example, Boisot, M. (1995). Information space: a framework for learning in
organizations, institutions and culture. London: Routledge; McGrath, R.G. (2001) Exploratory
learning, adaptive capacity, and the role of managerial oversight. Academy of Management
Journal, 44, 118–131.
Clegg, S.R. (1990). Modern organization: Organization studies in the postmodern world.
London: Sage.
Hammer, M. and Champy, J. (1993). Reengineering the corporation: a manifesto for business
revolution. New York: Harper Business.
See, for example, Chesbrough, H. and Teece, D. (1996). When is virtual virtuous? Organizing
for innovation. Harvard Business Review, 74 (1), 65–73; Davidow, W.H. and Malone, M.S.
(1992). The virtual corporation: structuring and revitalising the corporation for the 21st century.
New York: HarperCollins.
Devanna, M.A. and Tichy, N. (1990). Creating the competitive organization of the 21st century:
the boundaryless corporation. Human Resource Management, 29, 455–471; Hirschhorn, L. and
Gilmore, T. (1992). The new boundaries of the ‘boundaryless’ company. Harvard Business
Review, 70 (3), 104–115.
Castells, M. (1996). The rise of the network society Cambridge, MA: Blackwell; Jones, C. ,
Hesterly, W. & Borgatti, S. (1997). A general theory of network governance: Exchange
conditions and social mechanisms. Academy of Management Review, 22, 911–945; Miles, R.E.
and Snow, C.C. (1986). Causes of failure in network organizations. California Management
Review, 34 (4), 53–72; Nohria, N. and Eccles, R.G. (Eds.) (1992). Networks and organizations.
Boston, MA: Harvard Business School.
Daft, R.L. and Lewin, A.Y. (1993). Where are the theories for the ‘new’ organizational forms? An
editorial essay. Organization Science, 4 (4), i–vi; Lei, D. , Hitt, M.A. and Goldhar, J.D. (1996).
Advanced manufacturing: organizational design and statistical flexibility. Organization Studies,
17, 501–523; Sanchez, R. (1995). Strategic flexibility in product competition. Strategic
Management Journal, 16, 135–159; Sanchez, R. and Mahoney, J. (1996). Modularity flexibility,
and knowledge management in product and organizational design. Strategic Management
Journal, 17, 63–76.
Warnecke, H.J. (1993). Revolution der Unternehmenskultur. Das Fraktale Unternehman. Berlin:
Springer; Wildermann, H. (1994). Die Modulare Fabrik. Kundennahe Produktion durch
Fertigungssegmentierung, Munchen: TCW.
Ryf, B. (1993). Die atomisierte Organisation: ein Konzept zur Ausschöpfung von
Humannpotential, Wiesbaden: Gabler.
Pfeffer, J. (1998). Seven practices of successful organizations. California Management Review,
40 (2), 96–124.
Nonaka, I. (1991). The knowledge-creating company. Harvard Business Review, November-
December, 96–104; Nonaka, I. (1994). A dynamic theory of organizational knowledge-creation.
Organization Science, 5 (1), 14–37; Nonaka, I. and Takeuchi, H. (1995). The knowledge-
creating company. New York: Oxford University Press.
Tsoukas, H. (1996). The firm as a distributed knowledge system: a constructionist approach,
Strategic Management Journal, 17, 11–25.
Schilling, M.A. and Steensma, H.K. (2001). The use of modular organizational forms: an
industry-level analysis. Academy of Management Journal, 44 (6), 1149–1167, p. 1149.
Child and McGrath , (2001). Op. cit. p. 1149
Gephart, R.P. Jr (2002). Introduction to the brave new workplace: organizational behavior in the
electronic age. Journal of Organizational Behavior, 23, 327–344. p. 327.
See Beck, U. (1992). Risk society: towards a new modernity. Thousand Oaks, CA: Sage; Beck,
U. (2000). The brave new world of work. Cambridge: Polity Press.
Smith, V. (2001). Crossing the great divide: worker risk and opportunity in the new economy.
Ithaca, NY: ILR Press.
See, Sparrow, P.R. and Cooper, C.L. (1998). New organizational forms: the strategic relevance
of future psychological contract scenarios. Canadian Journal of Administrative Sciences, 15 (4),
356–371; Sparrow, P.R. (2000). The new employment contract: Psychological implications of
future work. In R. Burke and C. Cooper (Eds.), The organization in crisis: downsizing,
restructuring, and privatization. London: Basil Blackwell.
Sparrow, P.R. (1998). The pursuit of multiple and parallel organizational flexibilities:
reconstituting jobs. European Journal of Work and Organizational Psychology, 7 (1), 79–95.
See Parker, S.K. and Wall, T.D. (1996). Job design and modern manufacturing. In P. Warr
(Ed.), Psychology and work. 4th edition. London: Penguin Books; Parker, S.H. , Wall, T.D. and
Cordery, J.L. (2001). Future work design research and practice: towards an elaborated model of
work design. Journal of Occupational and Organizational Psychology, 74, 413–440.
Sparrow, P.R. (1998). New organizational forms, processes, jobs and psychological contract:
resolving the HRM issues. In P.R. Sparrow and M. Marchington (Eds.), Human resource
management: the new agenda. London: Financial Times/Pitman Publishing.
Sparrow, P.R. and Marchington, M. (Eds.) (1998). Human resource management: the new
agenda. London: Financial Times/Pitman Publishing.
Hitt, M.A. , Keats, B.W. and DeMarie, S.M. (1998). Navigating in the new competitive
landscape: Building strategic flexibility and competitive advantage in the 21st century. Academy
of Management Executive, 12 (4), 22–42; Nadler, D. and Tushman, M. (1999). The organization
of the future: strategic imperatives and core competencies for the 21st century. Organizational
Dynamics, 28 (1), 45–60.
Sparrow, P.R. (2000). New employee behaviours, work designs and forms of work organisation:
what is in store for the future of work? Journal of Managerial Psychology, 15 (3), 202–218.
See, for example, Kalleberg, A.L. , Rasell, E. , Cassirer, N. , Reskin, B.F. , Hudson, K. ,
Webster, D. , Appelbaum, E. and Spalter-Roth, R.M. (1997). Nonstandard work, substandard
jobs: flexible work arrangements in the US. Washington, DC: Economic Policy Institute and
Women's Research and Education Institute; Parker, R.E. (1994). Flesh peddlars and warm
bodies. New Brunswick: Rutgers University Press; Rogers, J.K. (2002). Temps: the many faces
of the changing workplace. Ithaca, NY: Cornell University Press.
Bradach, J.L. and Eccles, R.G. (1989). Price, authority, and trust: from ideal types to plural
forms. Annual Review of Sociology, 15, 97–118.
Sparrow , (1998). Op. cit.
Hirschhorn, L. and Gilmore, T. (1992). The new boundaries in the ‘boundaryless’ company.
Harvard Business Review, 7 (3), 104–115.
Baruch, Y. and Hind, P. (1999). Perpetual motion in organizations: effective management and
the impact of the new psychological contracts on 'survivor syndrome’, European Journal of
Work and Organizational Psychology, 8 (2), 295–306.
Handy, C. (1989). The age of unreason. London: Hutchinson.
Cavanaugh, M.A. and Noe, R.A. (1999). Antecedents and consequences of relational
components of the new psychological contract. Journal of Organizational Behavior, 20 (3),
323–340.
Stroh, L.K. , Brett, J.M. and Reilly, A.H. (1994). A decade of change: managers’ attachment to
their organizations and their jobs. Human Resource Management, 33, 531–548.
Ancona, D. , Kochan, T. , Scully, M. , Van Maanen, J.V. and Westney, D.E. (1996). The new
organization. Cincinnati, OH: South-Western College Publishing.
Hiltrop, J.M. (1995). The changing psychological contract. European Management Journal, 13
(3), 286–294.
Anderson, N. and Schalk, R. (1998). The psychological contract in retrospect and prospect.
Journal of Organizational Behavior, 19, 637–647.
Cooper, C.L. (1999). The changing psychological contract at work. European Business Journal,
11 (3), 115–120; Sparrow, P.R. (1996). Transitions in the psychological contract: Some
evidence from the banking sector. Human Resource Management Journal, 6 (4), 75–92;
Sparrow (2000). Op. cit.; Sparrow and Cooper , (1998). Op. cit.
Hartley, J. (1995). Challenge and change in employment relations: issues for psychology, trade
unions and managers. In L.E. Tetrick and J. Barling (Eds.), Changing employment relations:
behavioral and social perspectives. Washington, DC: American Psychological Association.
Tetrick, L.E. and Barling, J. (1995) (Eds.) Changing employment relations: behavioral and social
perspectives. Washington, DC: American Psychological Association.
Guzzo, R.A. and Noonan, K.A. (1994) Human resource practices as communications and the
psychological contract. Human Resource Management, 33, 447–462; Rousseau, D.M. and
Greller, M.M. (1994) Human resource practices: administrative contract makers. Human
Resource Management, 33, 385–401.
Sparrow, P.R. (2000) The new employment contract: Psychological implications of future work.
In R. Burke and C. Cooper (Eds.) The organization in crisis: downsizing, restructuring, and
privatization. London: Basil Blackwell.
Herriot, P , Hirsh, W. and Reilly, P. (1998) Trust and transition: managing today's employment
relationship. Chichester: Wiley; Sparrow and Cooper (1998). Op. cit.
Guest, D. (1998) Is the psychological contract worth taking seriously? Journal of Organizational
Behaviour, 19 (Special Issue), 649–664.
Sparrow and Cooper (1998). Op. cit.

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Work–Life Balance
The work summarized by R. Taylor draws upon several emerging outputs, including research
by: M. White at the Policy Studies Institute and S. Hill from the London School of Economics on
attitudes to paid employment and pressures faced at work; J. Hyman from Glasgow Caledonian
University on call-centre and software firm employees; survey work by the Institute of
Employment Research at Warwick University and IFF on work–life balance; S. Himmelweit and
M. Sigala at the Open Univerity into the work experience of mothers with pre-school children; I.
Bruegel from South Bank University looking at educational and employment experiences of
young Pakistani and Bangladeshi women; and D. Houston and G. Marks at Kent University on
employment choices of young mothers.
Taylor, R. (2002) The future of work–life balance. Swindon: Economic and Social Research
Council, p.17.
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Organizational Dynamics, 18, 5–18.
Moss, P. (1996). Reconcilary employment and family responsibilities: A European prospective.
In S. Lewis and J. Lewis (Eds.), The work–family challenge: rethinking employment. London:
Sage, pp. 20–33.
Fletcher, J. and Rapoport, R. (1996). Work–family issues as a catalyst for organizational
change. In S. Lewis and J. Lewis (Eds.), The work–family challenge: rethinking employment.
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status and future directions. In G.N. Powell (Ed.), Handbook of gender in organizations.
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Walton, P. (2002). The flexibility take-up gap. Flexible Working Briefing, Issue No. 105, 4–5.
Taylor (2002). Op. cit., p. 15.
Boje, D. , Gephart, R.P. and Thatchenkery, T. (Eds.) (1996). Postmodern management and
organizational [Link] Park, CA: Sage.
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NY: Cornell University Press.
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New York: Henry Holt and Company.
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Britain: Consequences for children, families and the community. Community, Work and Family,
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Felstead, A. , Jewson, N. , Phizacklea, A. and Walters, S. (2002). Analysing the opportunity to
work at home in the context of work–life balance policies and practices. Human Resource
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Institute for Economic Research, No. 168, April 2/99, 99–116.
See DiMaggio, P.J. and Powell, W.W. (1983). The iron cage revisited: institutional isomorphism
and collective rationality in organizational fields. American Sociological Review, 48 (2),
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Management Review, 16 (1), 145–179.
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P. and Simons, T. (1995). Institutional and resource dependence determinants of
responsiveness to work–family issues, Academy of Management Journal, 38 (5), 1466–1482;
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Gallie, D. , Felstead, A. and Green, F. (2001). Employer policies and organisational commitment
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performance organization. British Journal of Industrial Relations, 37 (3), 391–417.
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Felstead et al. (2002). Op. cit.
People Management ([Link]/work-life) provides a series of useful
links. Long-term research is accessible at [Link]. The
Work–Life Balance Centre ([Link] ) has links to the Cabinet Office
resources at [Link] and the Women Returners’ Network at
[Link]. The Work–Life Research Centre provides a forum for the
exchange of information between researchers and practitioners at [Link].
The Work Foundation (formerly Industrial Society) publishes the Work–Life Manual at
[Link]. The DTI's work–life balance team ([Link]/work-
lifebalance) disseminates good practice alongside legislation on flexible working.
Cooper, C.L. and Lewis, S. (1998). Balancing your career, family and life. London: Kogan Page.
Examples taken from 1999 Employer of the Year Awards conducted by PARENTS AT WORK in
association with Lloyds TSB, at [Link]
Lewis, S. and Cooper, C.L. (1987). Stress in two earner couples and stage in life cycle. Journal
of Occupational Psychology, 60, 289–303; Neal, M. , Chapman, N. , Ingersoll-Dayton, B. and
Amlen, A. (1993). Balancing work and caregiving for children, adults and elders. London: Sage
Publications; Bacharach, S.B. , Bamberger, P. and Conley, S. (1991). Work–home conflict
among nurses and engineers: mediating the impact of job stress on burnout and satisfaction at
work. Journal of Organizational Behavior, 12, 39–53.
Frone, M.R. , Russell, M. and Cooper, M.L. (1992). Antecedents and outcomes of work–family
conflict: testing a model of work–family interface. Journal of Applied Psychology, 77, 65–78.;
Jones, F. and Fletcher, B. (1993). An empirical study of occupational stress in working couples.
Human Relations, 46, 881–903.
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Cooper, C.L. and Williams, S. (1994). Creating healthy work organizations. Chichester: Wiley.
Lambert, S.J. (2000). Added benefits: the link between work–life benefits and organizational
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Ganster, D.C. and Schaubroeck, J. (1991). Work stress and employee health. Journal of
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Grover, S.L. and Crooker, K.J. (1995). Who appreciates family responsive human resource
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non-parents. Personnel Psychology, 48, 271–288.
Judge, T.A. , Boudreau, J.W. and Bretz, R.D. (1994). Job and life attitudes of male executives.
Journal of Applied Psychology, 79, 767–782.
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224. Brighton: Institute of Manpower Studies.
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equality of opportunity. Gender, Work and Organization, 2, 102–112.
Giele, J. (1995). Women's changing lives and the emergence of family policy. In T. Gordon and
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McRae, S. (2001). Mothers’ employment and family life in a changing Britain. Economic and
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Taylor (2002). Op. cit.
Hochschild, A. (1997). The time bind: when work becomes home and home becomes work.
New York: Henry Holt and Company.
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Hakim, C. (2000). Work-lifestyle choices in the 21st century: preference theory. Oxford: Oxford
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Seneviratna, C. and Turton, S. (2001). Dependants’ day. People Management, 7 (24), 38–40.
Higginbottom, K. (2001). Flexible working policy rings in rewards for BT. People Management,
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Kodz, J. , Harper, H. , and Dench, S. (2002). Work–life balance: beyond the rhetoric. Institute
for Employment Studies Report 384. Brighton, Sussex: IES.
Lewis, S. and Cooper, C.L. (1995). Balancing the work/home interface: a European perspective.
Human Resource Management Review, 5 (4), 289–305.
See, for example, Campbell, D.J. , Campbell, K.M. and Kennard, D. (1994). The effects of
family responsibilities on the work commitment and job performance of non-professional
women. Journal of Occupational and Organizational Psychology, 67, 283–296; Grover, S.L. and
Crooker, K.J. (1995). Who appreciates family human resource policies: the impact of family-
friendly policies on the organizational attachment of parents and nonparents. Personnel
Psychology, 48, 271–288; and Honeycutt, T.L. and Rosen, R. (1997). Family-friendly human
resource policies, salary levels, and salient identity as predictors of organizational attraction.
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