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Journal of Managerial Psychology Making sense of psychological contract breach Marjo-Riitta Parzefall Jacqueline A-M.
Journal of Managerial Psychology Making sense of psychological contract breach Marjo-Riitta Parzefall Jacqueline A-M.

Journal of Managerial Psychology

Making sense of psychological contract breach Marjo-Riitta Parzefall Jacqueline A-M. Coyle-Shapiro

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Received June 2009 Revised April 2010 May 2010 Accepted June 2010

Making sense of psychological contract breach

Marjo-Riitta Parzefall

Department of Strategy, Management and Leadership, European Business School, Wiesbaden, Germany, and

Jacqueline A-M. Coyle-Shapiro

Department of Management, London School of Economics and Political Science, London, UK

Abstract

Purpose – A small number of psychological contract studies have explored the cognitive processes that influence employees’ evaluation and reactions to perceived contract breach. The aim of this paper is to extend this reseaerch with a qualitative study on breach using a sense making perspective. Design/methodology/approach – In total, 15 interviews employing critical incident technique to examine employee sense making processes were carried out. Findings – The findings highlight the variety of ways employees perceive contract breach and the processual nature of the experience. Emotions and actions were intertwined in the process of attributing responsibility and finding an explanation for the breach. Research limitations/implications – Contract breach is not necessarily a discrete event and reciprocity is integral to the sense making process. The findings provide a basis for future research that could explore the role of time, contextual factors and various employer representatives as sense-givers in psychological contract evaluations. Practical implications – Employer representatives can aid employees to make sense of critical events that occur in organizations to minimize the effects of breach. Originality/value – The paper provides an under-researched sense making-perspective on psychological contract breach. Through a qualitative inquiry, the complex nature of the employees’ experience of and reaction to breach, is highlighted.

Keywords Psychological contracts, Breach of contract, Critical incident technique, Interviews, Employees, Finland

Paper type Research paper

Interviews, Employees, Finland Paper type Research paper Journal of Managerial Psychology Vol. 26 No. 1, 2011

Journal of Managerial Psychology Vol. 26 No. 1, 2011 pp. 12-27 q Emerald Group Publishing Limited

0268-3946

DOI 10.1108/02683941111099592

Psychological contract breach captures employees’ perceptions of the extent to which the employer has failed to fulfill one or more of its obligations (Conway and Briner, 2005). The beauty of the concept is “in the simple idea that breach has a straightforward negative relationship with outcomes” (Conway and Briner, 2009, p. 101). Empirical studies have demonstrated the downward adjustments in various employee emotions, attitudes and behaviours, including organizational commitment (Lester et al., 2002), increased turnover (Maertz and Griffeth, 2004), reduced organizational citizenship behaviors and in-role behaviors (Hui et al., 2004; Turnley et al., 2003), and increased deviant behaviors (Kickul, 2001) following the experience of breach. A smaller strand of research emphasizing the role of cognitive processes in influencing breach perceptions and their outcomes highlights the importance of attribution for the breach (Morrison and Robinson, 1997; Turnley and Feldman, 1999; Robinson and Morrison, 2000). How employees respond to contract breach is also

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influenced by the quality of the relationship that the employee has with the organization and its agents. For example, employee trust in the employer, the level of perceived organizational support (Dulac et al. , 2008), and support from supervisors and mentors (Zagenczyk et al. , 2009) help mitigate the negative outcomes of breach. In addition, recent evidence supports the view that employees have a certain zone of acceptance for employer behaviour that violates their expectations (Rigotti, 2009). Researchers have thus begun to unravel the complexity of cognitive processes in understanding how individuals respond to perceived employer breach. However, to date empirical studies have not given voice to employees in terms of letting them explain how they experience breach. Researchers have suggested that sense making may provide a useful basis (Morrison and Robinson, 1997; Chaudhry et al., 2009) to advance understanding of the potentially complex intraindividual cognitive processes that are triggered by contract breach. Theorizing on sense making posits that when something out of the ordinary happens, it triggers sense making processes (Louis, 1980; Weick, 1995). As contract breach represents an unexpected event that disturbs the exchange relationship, sense making is particularly well suited for illuminating what takes place in the eye of the beholder. Our aim in this interview study is to address this gap and examine how employees explain their experience of psychological contract breach. Our specific research questions are as follows: what constitutes a breach from an employee’s perspective?; How do employees make sense of the event of breach?; And how do they explain their own responses to the breach? We make three contributions to the literature on psychological contracts. First, by examining breach from the sense making perspective in a qualitative study, we extend prior research by shedding light onto what takes place in the eye of the beholder. Prior empirical work has not examined the assertions (Morrison and Robinson, 1997, Chaudhry et al., 2009) that sense making is triggered by contract breach perceptions. Furthermore, previous studies exploring the cognitive processes in psychological contract evaluations have been quantitative (e.g. Turnley and Feldman, 1999; Robinson and Morrison, 2000). It is our view that the use of qualitative interviews can extend our understanding of the nature and experience of breach. Second, although previous literature (Rousseau, 1995; Morrison and Robinson, 1997; Conway and Briner, 2005) has acknowledged that promises can be broken in a variety of ways and contract breach can take on a number of forms, little attention has been given to the nature of a broken promise or the ways in which it can be broken. We examine the different experiences employees’ label as breach and therefore shed light onto what constitutes breach in the minds of employees. Finally, we advance understanding of employees’ emotional, attitudinal and behavioral reciprocation as an integral part of the complex sense making and thereby complement the traditional view of reciprocity as a balancing act that concludes a transaction in the exchange relationship.

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Psychological contract breach Psychological contract breach is the cognition that the organization has failed to fulfill one or more of its obligations (Morrison and Robinson, 1997) and has been distinguished from violation, which captures the emotional response that may arise from breach (Morrison and Robinson, 1997; Zhao et al., 2007; Bordia et al. , 2008; Dulac et al. , 2008). Although the negative consequences of contract breach have received the greatest empirical attention (Conway and Briner, 2009), an increasing number of

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studies are beginning to acknowledge the role of employee interpretations and the subjective nature of the experience of breach. A few studies have explicitly focused on the role of attribution in breach perceptions arguing that a breach that is believed to be intentional has more severe outcomes than a breach that is believed to be caused by environmental factors, or by an honest misunderstanding (Rousseau, 1995; Morrison and Robinson, 1997; Chaudhry et al. , 2009). Empirical support for these propositions, is provided, by Robinson and Morrison (2000), Turnley and Feldman (1999), and Conway and Briner (2002). Indirectly recognizing the importance of cognitive processes, another strand of research has drawn attention to the contextual factors that influence employees’ evaluation of employer breach. Robinson (1996), Dulac et al. (2008) and Bal et al. (2010) have demonstrated that the quality and level of trust in the social exchange relationship have an effect on how employees evaluate contract breach and the extent to which they reciprocate. Similarly, Zagenczyk et al. (2009) argue that supportive supervisors and mentors play a role in psychological contract evaluations. We extend this line of research on cognitive processes that shape how employees interpret and respond to contract breach by drawing on sense making theory to give voice to how contract breach is experienced and explained.

Sense making perspective to psychological contract breach As one of the key applications of sense making theory is to advance understanding of organizational life from the employee perspective, it is especially well suited for the study of psychological contracts (Chaudhry et al. , 2009). Sense making concerns the ways in which individuals understand, interpret, and create meaning based on information available to them (Weick, 1995). Sense making theory posits that when something out of the ordinary happens, an explanation is needed (Weick, 1995). Therefore, discrepant events trigger sense making through which interpretations are developed (Louis, 1980). As breach represent an unexpected event that disrupts the exchange relationship, it is likely to necessitate sense-making processes (Morrison and Robinson, 1997). Weick (1995) identifies seven key properties of sense making that are useful for illustrating how employees may experience and explain an employer’s failure to fulfill its obligations. First, individuals attempt to maintain a coherent self-identity through sense making. Contract breach is likely to constitute a threat to an individual’s identity as an employee (Rousseau, 1995; Conway and Briner, 2005) and attempts to make sense of the employer’s behavior are likely to serve to protect employees’ self-identity (Rousseau, 1995; Morrison and Robinson, 1997). Second, sense making is retrospective and it is influenced by what people notice, how far they look back and what they remember. When a breach occurs, employees look back to potential triggering events, trying to understand what happened, and why. Third, sense making involves enactment whereby individuals make sense of their environment through action (Weick, 1995). In the case of breach, employees may try to understand the event through action – whether this is through negative reciprocity or asking questions in order to find an explanation. Fourth, sense making is social and sensible explanations tend to be those for which there is social support. Employees are thus likely to observe others, make comparisons and discuss the breach with relevant others in order to understand what has happened (Rousseau, 1995; Morrison and Robinson, 1997).

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Fifth, sense making takes place amid the ongoing flow of events and the interruption

to

the flow provides the opportunity to sense make about the previous flow (Weick, 1995).

In

this respect, breach can be viewed as an interruption to the ongoing fulfillment of

promises, prompting sense making which subsequently influences future behavior. Sixth, the sense-maker selects cues from the previous flow of previous events that may include pertinent pieces of information to help form coherent stories about what has happened. When an individual experiences contract breach, the cues become contradictory which makes it difficult to maintain a coherent picture of the employment relationship (Rousseau, 1995). Therefore, breach might activate employees’ conscious information search. Finally, sense making is more concerned with the construction of an account of events that serve the interest of the sense-maker, are pragmatic and persuasive rather than necessarily accurate (Weick, 1995). For the employee, the key is thus to maintain a coherent understanding of the employment relationship – even if this understanding is only partial or contradicts that of the employer. Adopting the view that contract breach is an event that disrupts the ongoing reciprocal exchange relationship and triggers a sense making process (Rousseau, 1995; Chaudhry et al. , 2009), we move on to study our research questions: What do employees interpret as psychological contract breach? How do they make sense of the event of breach? and How do they explain their responses to contract breach?

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Method The context of the study We carried out our study in a Finnish company that provides integrated information and communication solutions for a variety of customers, ranging from public sector organizations to international enterprises and associations. At the time of the study, the company employed a total of 250 people, of which approximately 25 per cent were women and about 40 per cent had a university degree.

The interviews

A representative pool of potential interviewees were selected by the HRM manager of

the company. We contacted 20 employees and conducted 15 semi-structured interviews using a critical incidence technique (CIT). CIT is a qualitative interview procedure that

is particularly suited for the investigation of significant events or processes as identified and experienced by the respondents (Chell, 1998). As CIT facilitates the understanding of the details of the processes and behaviors in the phenomenon under examination, it is suitable to understanding how employees interpret and respond to contract breach. Each interview lasted approximately an hour, with an exception of one interview with an employee with the shortest tenure, which lasted only 30 minutes. The length of tenure ranged from six months to six years with the average being two years seven months. Apart from two older employees, the participants were around 30-35 years old and had university degrees. The interviews took place in meeting rooms at the employer’s premises during working hours and they were conducted in Finnish by a native Finnish speaker. Of the 15 interviews, 14 were audio-recorded and transcribed. Notes were taken for the interview that was not audio-recorded. The selected quotations for the analysis were later translated into English and double-checked by another researcher in order to confirm the accuracy of the translations.

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Our interview guide was developed drawing on the seven properties of sense making (Weick, 1995) and the existing psychological contract research (e.g. Morrison and Robinson, 1997; Conway and Briner, 2002). At the beginning of each interview, the participant was told about the purpose of the study and assured of confidentiality. The interviews began with a few general questions that both provided demographic and background information and served to establish a relaxed atmosphere. The interviewees were then asked to describe an incident when they thought their employer had failed to fulfill an obligation towards them and to clarify when this had happened. Interviewees were probed with questions such as who had been involved in the incident, who they had held responsible, why they believed the incident had happened, what had happened prior to the incident, how they had felt about it, what had it meant for them, how and why they had responded, and what had happened after the incident.

Data analysis The analysis procedure followed template analysis, which combines elements of grounded theory approach and of content analysis (King, 1998). Grounded theory assumes that the explanatory framework is developed through the process of analysis without a priori definition of codes, whereas content analysis assumes a coding frame based on a set of preconceived categories for which evidence is sought in the data. Template analysis in turn consists of some initial codes, which are revised over-and-over-again during the analysis (Chell, 1998). It is more appropriate here as the questions and theoretical background provided an initial set of codes but the idiosyncratic nature of breach experiences discussed by participants demanded refinement of the coding frame. As the number of interviews was rather small, the analysis was carried out by hand, using colour coding and notes. The template is a collection of codes that are organized hierarchically, with groups of similar codes grouped together to produce more general, higher order codes. The initial template was developed on the basis of the interview guide (e.g. relating to the type of obligation breached, attribution of responsibility, timeframe within which the incident occurred and emotional, attitudinal and behavioral responses) and each transcription was marked with the appropriate codes. The further development of the template proceeded hand-in-hand with further reading and analysis of the text (King, 1998). When we found a relevant issue that did not match any of the existing codes, we added a new code, which added detail to our overall analysis (e.g. a codes relating to reframing the events, self-identity and attempts to actively disconfirm the breach). The central higher-order codes remained the same throughout the coding process the lower-order codes went through fine-tuning. For example, “breached obligations” constituted a higher-level code in the initial template. It was then extended to cover different types of breaches (e.g. minor breaches and a secondary breach) in line with the participants’ accounts.

Findings The triggering event(s) for breach The identification of an event that triggered contract breach fell into four categories:

breach of a specific obligation (single event), chains of breaches (connected events), secondary-breaches (secondary event), and everyday breaches (minor event). Figure 1 presents examples of representative quotations for each category of events.

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Figure 1. Events that triggered sensemaking

Specific obligation . For most individuals ( n ¼ 13), a breach was interpreted as the violation of specific obligation at a single point in time. The obligations most frequently mentioned as breached were related to salary/remuneration ( n ¼ 3), benefits ( n ¼ 2), the employment contract (n ¼ 2), and temporary layoffs ( n ¼ 2). As transactional benefits such as salary and benefits are more narrowly defined and usually more clearly observable than relational obligations (Morrison and Robinson, 1997), a failure to fulfill these may be more likely to challenge the psychological contract and demand an explanation. It was also typical that interviewees who focused on a specific obligation were able to pinpoint a specific discussion or negotiation with an employer representative during which a clear discrepancy between what they had expected and what happened. Furthermore, when an explicit specific promise was violated, participants mentioned immediate strong emotional responses, such as anger and rage. The immediate emotional response - both demanded and aided the sense making process and forced the individual to face the question “what did I expect” and further clarify the situation (Weick et al. , 2005). Connected events . Often the triggering event was embedded in a chain of connected events ( n ¼ 5), which had taken place over a long period-of-time. The shock or surprise caused by an unfilled expectation set in motion a process during which the employees attempted to clarify “what’s the story here” (Weick et al. , 2005). Typically, the employees started by simply noticing the discrepancy, which was quickly followed by clarifying actions. When these actions failed to restore order, they evaluated the actions

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and counter-actions again before assigning the actual label of breach to the original event, or to the chain of events. Secondary breach . Two of the respondents focused on the knock-on-effect of a breach in which a secondary breach occurred. Morrison and Robinson (1997) call these knock-on-effects as second-order outcomes and suggest that the experience of contractual violation is intensified the more varied the second-order outcomes. A breach that is accompanied by a number of second-order outcomes is thus likely to lead stronger outcomes than a breach with no, or limited, secondary outcomes. For example, one participant perceived that the employer had deliberately lied about travel time compensation and breached its obligation to compensate the time needed for traveling to a customer site. As the travel was not compensated, the employee drove too fast and dangerously in order to minimize the time loss. Although lying and the lack of travel time compensation was the triggering event, it simultaneously caused second-order outcomes in terms of the breaching an obligation to provide occupational safety. Everyday breaches. Although for the majority of participants recalling a single triggering event was easy, two participants referred to “everyday breaches” of which none stood out as especially significant. These interviewees described how their “nearly daily” negative experiences accumulated and eventually led them to believe that the employer is not keeping its part of the deal. That is, a single small discrepancy experienced between what was promised and what was received was not salient enough to stand out as a psychological contract breach. However, when such minor discrepancies occurred frequently and the negative experiences accumulated, a limit was reached in terms of “the straw that broke the camel’s back”.

Labelling of breach Critical to evaluating a disruptive event is an attempt to find a plausible explanation of why the event has occurred (Louis and Sutton, 1991; Weick, 1995). Consistent with Morrison and Robinson’s (1997) model, our findings suggest that the attribution of responsibility is central to the sense making process. Respondents attempted to clarify whether there was initially a misunderstanding, who they could hold responsible for the event and why, and whether there were contextual factors that would help explain the event (see Figure 2). Attempt to clarify. It is worth noting that those employees who experienced an immediate emotional reaction were also ready to take action, which is a crucial part of sense making (Weick, 1995; Weick et al. , 2005). Typically, employees described their first action as an attempt to reconfirm or clarify whether the breach had really occurred and whether there was a misunderstanding or misinterpretation. That is, the initial emotional responses gave rise to sense making aided by action, which can be described in Hirschman’s (1970) terms as “voice”. Employees saw their voice as an invitation to the employer to justify its behavior, to aid in finding a plausible explanation and to take corrective action. When voice was ignored or did not bring about an acceptable explanation, employees were unable to continue as if nothing had happened. Consequently, the sense making process evolved with time and was influenced by the cycle of reactions between the employee and the employer. As Weick (1995) points out, identification of any given action or event is subject to infinite revisions and depends on its context, which can be expanded into the future and the past. Hence, the anchor

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Figure 2. Making sense of the breach

point for a label of breach appeared to rely on a network of interdependent and

modifiable interpretations. Attribution of responsibility . In the interviewee accounts, immediate managers emerged as the main party to the psychological contract and held responsible for the perceived breach. Statements such as “As I said I hold my immediate manager at the

time totally responsible for this” or “He (the immediate manager)

good before ours” were provided by several interviewees. Interestingly, these statements reflect what Knobe and Male (2002) describe as trait and reason explanations of behavior. Trait explanations focus on “that is how he/she is”, and therefore somewhat paradoxically imply unintentional behavior (e.g. my manager treated me badly because he is so career-driven and he cannot change this). In a case of trait explanation, the breach was solved for example, if the immediate was replaced by somebody else. To some extent, a trait explanation thus allowed the employee to isolate the event and attribute it to a disturbance caused by one person “who is just like that” while maintaining a workable relationship with the organization on the whole. On other hand, reason explanations try to understand the reasoning of the exchange party and view the behavior of the actor as intentional (Knobe and Male, 2002). For example, the interviewees often explained that their immediate managers were forced to behave in the way did due to a reason beyond their control. While intentional, this type of reasoning freed the immediate managers from the ultimate responsibility as they had a justified reason for what they did. A reason explanation often served as a mechanism to maintain an exchange relationship with the immediate manager yet at the same time questioned the behavior of the employer representatives above the immediate manager, or the organization, on-the-whole. In such cases, employees

is putting his own

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expected higher-level managers to do something about the situation, or blamed them for putting pressure on the lower-level managers. Sometimes, it was unclear who could be held responsible for the breach causing frustration and hindering the sense making process. Contextual explanations. The interviewees consistently painted a picture of the organization as one in which employees were resources and everything was decided on the basis of shareholder value. Employees’ interpretation of the organization and its culture thus reflected the principle of balanced reciprocity; the employer carefully counts potential employee contributions to the exchange before committing anything other than what is necessary to maintain the relationship. Hence, employees explained the breach through the perception that the employer/organization was not committed to a social exchange relationship in the way the employees expected. This highlights the importance of context and the overall meta-psychological contract or social contract in psychological contract evaluations (Morrison and Robinson, 1997; Ho and Levesque, 2005). In addition, interviewees frequently referred to the IT sector and to the context of “knowledge work” in order to externalize and to some extent normalize their breach perceptions. By explaining that all employers were similar, or that shareholders drove the employers to behave in such ways, the employees freed their employer from the final responsibility. References to contextual factors often reflected the acknowledgement of the so-called new psychological contract, which in turn mirrored the changing realities of the current labor market (Roehling et al. , 2000) but also protected the employee-employer exchange relationship.

Reactions to breach The explanations that the interviewees provided for their responses to breach concerned their emotional reactions, adjustments in reciprocity or by attempts to reframe the event (see Figure 3).

Figure 3. Explaining reactions to the breach

in reciprocity or by attempts to reframe the event (see Figure 3). Figure 3. Explaining reactions

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Emotions . Although the participants recalled strong emotional responses immediately following breach, they also recalled further strong emotions when the breach was not disconfirmed after their attempts to find a justification for employer behavior. This emotional response both demanded and aided the sense making process and forced the individual to face the question “what did I expect” (Weick et al. , 2005) rather than a discrete emotional reaction to breach. Nonetheless, individuals who recalled particularly intense emotional responses had typically been quick to name an event of breach at the beginning of the interview, highlighting the role of emotions in the experience of breach (Dulac et al. , 2008). All in all, the breaches that had triggered intense emotional reactions also had enduring effects; these were the events to be remembered. Changes in reciprocity . Several interviewees mentioned that they had lost trust in the organization or the manager which made it difficult for them to “switch back” to the pre-breach mode of exchange. The employee accounts demonstrated what Hallier and James (1997) call “calculative acceptance of the breach” – irrespective of the employee’s seeming adherence to the norm of reciprocity, they were more wary of the balance in the exchange relationship. One could argue that the quality of the exchange relationship had changed even if the exchange relationship appeared to continue as before. Others reported changes in their work-related attitudes and behaviours such as reduced commitment to the organization and lack of motivation to go beyond their formal duties. Although almost all the interviewees discussed the possibility of exit, only one of the interviewees was actually leaving the organization. For this employee, the experience of breach had evolved over time as a result of everyday disappointments, combined with the employee’s unsuccessful attempts to address these issues. Reframing the event . When failing to “pay back” the employer, some employees dealt with the inconsistency between how they should have behaved and how they actually behaved by reframing or rationalizing the event of breach (Festinger, 1957; Dulac et al. , 2008). These employees thus achieved cognitive consistency by selectively interpreting and reframing information (Rousseau, 1995, 2001; Dulac et al. , 2008) – the overall positive evaluation of the employer or the job helped some employees to maintain a positive psychological contract even if a breach had occurred. The initial saliency of the breach was thus reduced by taking into account a number of other factors that diminished the negative meaning of the breach, placed it in a context of other events, and emphasized the positive aspects of the job. Some employees responded to breach in a way that was consistent with their image of themselves. For example, two interviewees portrayed themselves as professionals who were not influenced by “such experiences”. For an older employee, age, and experience helped to create consistency between the breach and their failure or decision not to reciprocate the breach. He explained the lack of reciprocity by contrasting his self-image as an experienced, even heroic worker with the images he had of younger colleagues, always complaining about the smallest issue.

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Discussion We began our study by asking what employees perceived as psychological contract breach, how they made sense of and reacted to the breach. Our findings support and extend prior work by offering a more complete albeit complex understanding of the

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Figure 4. The process of making sense of psychological contract breach

experience of psychological contract breach (see Figure 4). Our study highlights the variety of meanings ascribed to a breach, ranging from a breach of a singular obligation to repeated daily failure to live up to an expected standard. Second, employees needed to make sense of the incongruous event in the exchange – they wanted to understand, explain, and construct an account of what happened and why. By searching for a “culprit” and trying to understand the reasons, the interviewees attempted to construct a plausible story of the employers’ failure to fulfill its obligations, and their own reactions to this failure. Finally, our study highlights the interplay between cognition, emotion, and action in understanding individual responses to breach. Our study contributes to the psychological contract literature by providing evidence that contract breach is not necessarily a discrete event as operationalized in the majority of psychological contract studies but supports the idea that there are a number of ways in which promises can be broken (Conway and Briner, 2005). Breach is thus more complex than an employee balancing the lack of inducements with a reduction in subsequent contributions. Employees may arrive at a verdict of breach as-a-result of continuous minor events that alone are insufficient to trigger breach perceptions – however, the accumulation may lead to perceptions of breach. This supports the assertion of Morrison and Robinson (1997) and the empirical work of Rigotti (2009) that suggest that employees have a certain zone for tolerating negative behaviors. That said, if breach consists of connected events, it may escalate following employees’ attempts to actively find a reason for the initial employer behavior. Breach of one obligation may also imply breach of another obligation, thereby making the situation more severe (Morrison and Robinson, 1997). Our study thus highlights the importance of extending the current view of contract breach as an isolated “exchange event” to one that triggers a subjective employee interpretation. Such sense making entails attributions and explanations that extend over time and highlights how the schema-basis of the psychological contract helps to capture what takes place in the eye of the beholder. Our study confirms the key elements in the process through which employees attempt to make sense of breach. Central to sense making is attribution (Weick, 1995) and finding a culprit. Previous research has suggested that intentional breach has more severe outcomes than a breach that is perceived to be a result of external factors or

that intentional breach has more severe outcomes than a breach that is perceived to be a

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misunderstanding (Rousseau, 1995; Morrison and Robinson, 1997). In our study, employees viewed intentional breach as reflecting unchangeable manager characteristics. This allowed them to protect their overall employee-employer relationship and to isolate the cause of the breach to one person. Alternatively, employees explained their managers’ behavior through the culture of reciprocity in the organization, which was characterized as “tit-for-tat”. Furthermore, references to contextual factors provided justification for the employer behavior and reflected acknowledgement of the so-called new psychological contract, or changing psychological contract, which in turn mirrored the changing realities of the current labor market (Roehling et al. , 2000). This indicates the central role of meta-psychological contract as setting the tone for what is an appropriate exchange relationship (Rousseau, 1995) and the social nature of sense making processes (Weick,

1995).

A final contribution to psychological contract theory is the consideration of employee reciprocity as integral to sense making. While the questions “what happened and why?” bring an event into existence, they are followed by another question regarding what the individual should do next (Weick et al. , 2005). Our study suggests that employees’ emotional, attitudinal and behavioural responses do not necessarily complete an unsuccessful transaction in the exchange relationship as balancing actions, but that they evolved as a part of a sense making process. Therefore, changes in attitudes and behaviors are intertwined and an integral part of sense making during which the meaning assigned to the breach is still subject to negotiation in the mind of employees. Above all, employees actively engage in attempts to clarify what in fact happened in the exchange relationship. This somewhat challenges Morrison and Robinson’s (1997) view that sense making occurs after the occurrence of breach but before employees’ reactions to it. Rather, in line with sense making literature (Weick, 1995), our study suggests that cognitive acknowledgement, emotions and action were all intertwined: employees often remembered initial affective responses that triggered the sense making, which was supported and aided by further employee action and emotions. Possible adjustments in reciprocity thus appear to occur over time, partially integral to the sense making process but, also, as its outcome once the individual has reached a plausible explanation for what has taken place. It was also interesting to note that although employees labeled employer behavior as a breach, they did not always reciprocate. This lack of “tit for tat” created a need to explain the non-adherence to the norm of reciprocity. Often these explanations were influenced by the schemas employees had about themselves and their self-identity. For example, comparisons to colleagues or to professionalism may enable employees to reframe the event of breach. Similarly, and as indicated by previous research (Turnley and Feldman, 1999, Dulac et al. , 2008), if overall working conditions are satisfactory, employees can downplay their breach perceptions. This illustrates how working conditions may buffer and rationalize the absence of matching the employer’s breach with a counterbalancing employee breach.

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Limitations First, the number of interviews we carried out is small, although comparable to other qualitative psychological contract research (Dick, 2006). Our findings may also reflect a particular organizational setting in which we carried out our study. Future studies

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should treat our findings as preliminary, and explore sense making in an event of breach across different organizational contexts. Second, one disadvantage of critical incident technique is that the accounts are always retrospective. At the same time, the

criticality of the event means that the individual remembers its occurrence well. Furthermore, sense making is always retrospective and it is not about telling an accurate account of events, but about a plausible explanation for an event (Weick et al. ,

2005).

Finally, critical incident technique may overlook some of the mundane day-to-day activities in the exchange relationship (Conway and Briner, 2005). By focusing on a negative event (i.e. breach), our study has admittedly failed to give a comprehensive picture of exchange relationships. This “bias” was also noted by the participants, some of who mentioned that “it is not always like this” or that there is “so much good in this

employer, too, but if we now have to focus on these negative events

”. However, any

investigation of an unusual event is likely to give “the best access” to sense making processes (see Louis and Sutton, 1991).

Implications for future research, practice and society Future research should recognize that employer-provided inducements (or lack thereof) should not only be seen as “objects” to which employees react – rather they are partially what employees make of them, at times through more conscious sense making. Therefore, future research should consider the role of time, contextual factors, various employer representatives and their role as sense-givers in the exchange relationship. Above all, future empirical work needs to recognize the processual nature of the employee-employer exchange relationship and think of alternative study designs to move beyond exploring one-time “transactions”. Although the participants to our study made very few explicit comparisons to significant others, an interesting and important area of future research is to explore how individuals align their psychological contracts with those of other members in their organization. As Louis and Sutton (1991) point out, members of the same social system share cognitive structures that guide their interpretation and behavior. In fact, it is in the interest of the members of a social system to establish common meanings and shared schemas, as this makes the social reality more predictable (Harris, 1994). While research has explored the influence of socialization processes (De Vos et al. , 2003) on psychological contracts, it would be interesting to investigate the sense making processes involved in the process of adjusting one’s schemas to a particular organizational context. As sense making typically occurs over time and evolves as a process, employers should take care to “assist” employees in sense making in the aftermath of a breach. In particular, at times of organizational change or an economic downturn when breach perceptions are more likely, employer representatives should recognize their role as sense-givers (Rousseau, 1995; Maitlis, 2005). By providing a justification for its behavior or proving employee suspicions of breach at least partially unfounded, the employer may enable the employee to cognitively recast the event in such a way that it does not harm the exchange relationship (Harris, 1994). Even if the label of breach is unavoidable, the employers’ honest explanation for its behavior can help employees to make sense of the breach and to resume their exchange relationship with minimum alterations to their psychological contract.

Conclusions This study has examined employee sense making of an incongruous event in the employee-employer relationship and paints a complex picture of how employees interpret contract breach and create meaning to it. Such sense making entails attributions and explanations that extend over time; cognitive processes, emotions and action are intertwined in the search for a plausible reconstruction of what happened and why.

Making sense of psychological contract breach

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Marjo-Riitta Parzefall (PhD) is an Assistant Professor in the Department of Strategy, Organization and Leadership at the European Business School in Germany. Her research interests include social exchange theory based concepts, innovation and employee innovativeness. Her work has appeared in both Finnish and international journals, including International Journal of Human Resource Management , Creativity and Innovation Management and Journal of Managerial Psychology . Marjo-Riitta Parzefall is the corresponding author and can be contacted at: marjo-riitta.parzefall@ebs.edu Jacqueline A-M. Coyle-Shapiro is a Professor in Organizational Behaviour in the Department of Management at the London School of Economics and Political Science. Her research interests include psychological contracts, perceived organizational support, justice and communal relationships. She has published in journals such as Journal of Applied Psychology , Academy of Management Journal , Journal of Organizational Behaviour , Journal of Vocational Behaviour and Journal of Management Studies and is currently Senior Editor at the Journal of Organizational Behavior .

 

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