Rethinking Psychological Contracts in the Context of Organizational Change

The employee–employer relationship is said to be affected by extensive workplace transitions, and yet little is known about how employees make sense of these changes while deciding on their responses to them. Our study investigated two factors, social comparison and the nature of the exchanges, as moderators of the effects of psychological contract (i.e., employee beliefs regarding the terms of exchange between the employee and the organization) and psychological contract fulfillment (i.e., employee beliefs regarding the extent to which the employer is fulfilling these terms of exchange) on employee performance. Analysis of data before and after organizational change showed that unfavorable social comparison is associated with lower employee performance for transactional, relational, and balanced psychological contracts. Employees’ perception of the social nature of exchange was associated with lower performance in response to relational and balanced psychological contract fulfillments.