INTRODUCTION:

Today’s knowledge based economy and challenging work environment with change management would be conceivable to implement by the talented, skilled, experienced and committed employees who will perceive the organization as the center of their heart¹. As a result, such employees are emotionally attached to their organization, report optimistic work outcomes, minimum turnover intentions and customer friendly as well^2,3. Even they are the driving force to achieve yielding gain in the competitive market if only when they feel the sense of belongingness toward the organization.

And that sense of belongingness can’t be found to the employees over night. Rather it should be earned by fulfilling the implicit and unspoken expectations of psychological contract and even relational employment commitment⁴.

Moreover, the committed employees would become sustainable human resources who will serve their best efforts with utmost trust, beliefs, obligations and commitment⁵.

Psychological contract relies as a complex interplay of expectations from both the employer and the employee⁶. This relationship is the pure combination of constitutional and psychological relationship in employment⁷. It also can be defined as the terms of the beliefs between employers and employees regarding the reciprocal obligations that exist between them⁸. Also, it is highly subjective in nature and any lacking in the formality cannot bind the parties legally⁹. Thus, it is treated as shedding lights in the employment relationship between employers and employees or the exchange relationship between them where individual perception is comprised with mutual promises, beliefs obligations and expectations^10-14. Hence, the classical psychological contract can be detailed as mutual exchange agreement with a proposal of commitment by the employee in exchange of the employer offering¹⁵. But it includes the common ground of factors; values, beliefs, expectations and aspirations of both parties into the contract. If all the cognitive expectations are mitigated then employees would feel to stay at the workplace with emotional attachment.

Employment relationship is getting a great experience of transformation with renegotiation of psychological contracts due to workforce diversity and demanded by skilled employees^16,17,18. Even workforce diversity is the inevitable part for the working relations and it comprises with existing experienced employees along the newly recruited young energetic force. To replace and retain this talented new pool against the aging workforce, there must have some strategic retention policies¹⁹. In fact, some mental and emotional bonding between employer and employees may create more attached and belonging to the organization such as promoting the eligible employees and encouraging the personnel to do the right things²⁰. On the contrary, if the employees are not fulfilled by psychological contract at their jobs, then their commitment level will decrease that might tend to be turnover²¹. As a result, they sometimes show violating behaviors and might feel social or emotional loneliness within the organization²²; such type of loneliness may cause the individual isolation and not sharing personal and work life feeling, opinions, knowledge, experiences communicating with other co-workers²³.

This study attempts to show the impact of psychological contract factors on employee commitment. This commitment may arise with the good impression of organization to employees and their heartiest acceptance of organizational values and goals²⁴. Although psychological contracts have effect on trust and commitment within the business, so it associates for settling a comfortable condition of working²⁵. Psychological contract may vary for individual differences. Here four factors have been covered by this study such as transactional, relational, balanced and transitional contracts. The perception of employees in Bangladesh mostly goes in the favor of long term relational sustainable employment. It seems that give less importance to the high incentive pay for short term project work or contingent employment. Because short term relational contract like transactional and transitional often cause the less committed employees or even absence of commitment.

At first, this study will present the background of the research topic with relevant references. Secondly, the literature review will narrate the concepts of psychological contract along a conceptual framework with relevant theories. Subsequently, the discussion will

carry on throughout the methodology and analytical procedures with some proven assessment tools. Finally, the discussion will cover the elaborative interpretation on analytical results and the possibility of implementation of study outcomes.

Theoretical Foundation and Hypotheses:

Psychological contracts are the prime means for employer to make the organization successful by creating employees committed^26,27. It is mostly implicit in nature and this the basic difference with formal contract^28,29. Also, it contains the responsibility of sharing between the two parties³⁰. More specifically, the psychological contract emphasizes on employee’s career advancement influencing the commitment levels³¹. Such commitment is the outcome of values, beliefs and trust which may lead to the higher individual and eventually the firm’s performance^32,33. As a result, the expectation fulfillment contained in the job contract is likely to provide a sense of emotional attachment to the organization for employees³⁴. It is mostly used in management to narrate the relationship between employers and employees^35,36. Therefore, psychological contract has close tie to the employee commitment when it appears to influence the beliefs of employees and their relationship with the organization³⁷.

However, literature categorized psychological contract into four dimensions; transactional, relational, balanced and transitional contract from the Four Dimensional Model of Psychological Contract³⁸(Model citation). In this regard, this study selects four independent variables of psychological contract and employee commitment as dependent variable. To know the interplay among variables, the following hypotheses are developed in this literature review.

Employee Commitment:

Employee commitment is the emotional attached level of employees toward organization where employees feel intentions to actively participate in advancing the organisation³⁹. It can be earned by creating cooperative atmosphere with organizational policies and facilitating employee satisfaction. Because commitment is either as an employee’s attitude or a force that binds an employee to an organization⁴⁰. Therefore, satisfied employees can develop loyalty or commitment to the organization with lower employee turnover rate and higher productivity level⁴¹. Dissatisfaction often arises from the unmet expectation of jobs to employees⁴². Usually, psychological contract causes the unmet expectations. As a result, employees get demotivated and it could be turned into turnover intention. Besides, employee engagement or involvement in the assessment process gives the chance for employees to get the better insight of full organizational performance measurement procedure⁴³. By fulfilling the expected expectations in psychological contract, employees would be high associated with emotional attachment and intelligence⁴⁴. The employees who have high level of commitment has influence on psychological contract⁴⁵. In this regard, the following assumptions can be made:

H₀: Psychological contract indicators have no relationship with employee commitment.

H₁: Psychological contract indicators have relationship with employee commitment.

Transactional Psychological Contract:

Transactional psychological contracts are short term contractual job requirements focusing on highly financial gain. This type of contract is consistent with the present labor market condition, more negotiable and competitive demanding. Here the employees don’t expect the long-term relational employment with intensive loyalty and job security rather they seem the job as a transaction with high contingent pay. Thus, transactional contract requires explicit formal agreement where the long-term commitment sometimes remain absent. Moreover, this contract is on the basis of employees’ contracts on financial rewards, money, and timely paid. Because it is close ended, very specific, extrinsic and economic factors oriented and working in the organization for the long term.

Sometimes, transactional psychological contracts are considered as inflexible, short term, economic-oriented and often focuses on the compensation and job security matters. The most common outcome from this contract is that it is either unrelated or related negatively to the target level of employees’ attitudes and behaviors⁴⁶. That’s why the following hypothesis has been developed:

H₁: Transactional psychological contract has significant impact on employee commitment.

Relational Psychological Contract:

Relational psychological contract can be defined as the repetitive promises, trust commitment and implicit emotional attachment of employees toward the organization. Often it is relatively broader, more nebulous, open ended and subjectively understood by the parties to the exchange regarding the personal, socioemotional, and value based economic resources for a particular period of time. It is long term relational, more committed and flexible form of employment. Due to rising of individualism in workforce, informal arrangements are becoming more effective to orient the new and existing pool of employees. Because conventional employment system is very lethargic and time consuming negotiation process⁴⁷. As a result, relational psychological contract has strong influence on the employee commitment as the hypothesis is designed below:

H₂: Relational psychological contract has significant impact on employee commitment.

Balanced Psychological Contract:

Balanced contracts are the combination of both transactional and relational contracts which are dynamic and open-ended employment arrangements with conditional work opportunities on the economic success of organization to advance their career. Here, the employers and employees both contribute equally to each other for acquiring new knowledge and experiences. Thus, employees are recognized with their best performance and contribution in the comparative advantages due the increasing and changing market pressure⁴⁸. Although balanced contracts are the combination of transactional and relational contracts according to the individual differences, so it creates more obliged employees who may in the motive to adjust in the firm. In any economic changes, they are willing to take challenges and renegotiation for the interest of organization. Moreover, it is the sharing of risk between employer and employees. So, the following hypothesis can interconnect this concept to the employee commitment:

H₃: Balanced psychological contract has significant impact on employee commitment.

Transitional Psychological Contract:

Transitional psychological contract is the employment relationship between two parties where employee commitment regarding the future employment is absent⁴⁹. It is the passing phase of employment relationship with cognitive statement showing the consequences of organizational transition and change. In fact, employees don’t feel job security and continuation of services here. Rather they couldn’t up bring themselves as committed employees due to the lacking of trust, beliefs and employment relations⁵⁰. In this regard, the following hypothesis can be developed:

H₄: Transitional psychological contract has significant impact on employee commitment.

As the main purpose of this study is to analyze the effects of different types of psychological contracts on employee commitment, we developed a research model that depicts the relations presented in the four hypotheses (Fig. 1)⁵¹.

DISCUSSIONS:

The findings of the research suggest that the level of employees’ commitment is highly influenced by the factors of psychological contract and even they are not committed when the psychological contract is not fulfilled completely⁵⁹. Nowadays, organizations are giving more emphasis on retaining their experienced employees⁶⁰. But to make them engaged and committed to their work and also create productive employees are the challenging issues for employers⁶¹. In this regard, there is no alternative to create the relational and balanced committed employment which may provide engagement among employees, in contrast to the transactional and transitional psychological contract⁶². The study results found that the transactional and transitional psychological contracts are less committed and contingent oriented where employees feel less emotionally attached toward the organization. Rather relational and balanced psychological contract may bring the positive response from employees. When the expectations of employees have been met then they might feel obliged to give their best efforts as commitment to the organization⁶³.

This study results get similarity with previous several studies such as the effective mitigation of psychological contract may create more committed employees^64,65,66,67. Similarly, another study investigates that there is a close link among three main components; psychological contract, employee engagement and employee commitment from the perspective of positive management⁶⁸. Hence, there is mediating relationship between the psychological contract and mental health of employees which is mediated by employee commitment⁶⁹.

However, the psychological contract variables are verified by the correlation result which represents most of the variables have significant relationship with employee commitment along 1% significance level. The most significant one in between balanced psychological contract and employee commitment with r = 0.369 and P-Value = 0.000 (P<0.001). Besides, the dependency level has been validated by the coefficient ‘R’ = 0.781 or 78.1% which means that the regression model valid. Balanced and relational psychological contracts have influence on employee commitment with (β₃) = 0.767 or 76.7% and (β₂) = 0.443 or 44.3% significant regression coefficient⁷⁰.

Moreover, commitment is the concerning link between the psychological contract and employee engagement to work together toward the organizational goal achievement. In fact, it is also examined here the relationship between psychological contract and commitment which confirms that psychological contract fulfilment is strongly related to employee commitment. In fact, the quantitative analysis of psychological contract and employee commitment has not been extensively researched. So, it was an important requirement for this study to show the quantitative relational outcome among variables. Consequently, the results present that relational as well as balanced employment are the most preferred psychological contracts over the others. Even other contracts are the reason of less commitment and the ultimate turns could be employee turnover. So, it is the responsibility of proactive employer be concern about the expectations of individual and if possible then renegotiate with employees to avoid unexpected turnover⁷¹.

CONCLUSION:

Psychologically attached and committed employees are the significant means of improving the overall organizational performance⁷². They perceive the feelings of belongingness in more cognitive way and highly committed toward the tangible outcome or the incremental growth of the organization. Hence, the perceptible concentration and investment on employee commitment and engagement can be beneficial for performance and sustainable retention of employees⁷³. This study proves that the stronger relational and less transactional psychological contract employment relationship between employee and employer can create more committed employees for existing and future job. Thus, psychological contract is firmly related to employee’s commitment, trust, belief to the employment relationship and which will help an employee to establish his/her identity. Typical psychological trend in our socio-cultural value has been revealed by this study where most of the employees prefer stability in the job rather than contingent high incentive pay. So, stability of the tenure can be the reason of more satisfied as well as committed employees and also the influential factor of psychological contract. Because the workplace dissatisfaction regarding psychological contract may impact to the attitudes, beliefs, behaviors and value practices of employees. That’s why the employer should play equal role to ensure the workplace dignity of employees. The research findings reveal the strong relationship with psychological contract and employee commitment⁷⁴. Hence, the employers can get an opportunity through psychological contract to share work values and expectations from employees and the business goals which they want to be achieved. And this can only be possible with the relational work attachment to employees who would be dedicated and committed as well. Moreover, proactive employers should implement the effective training programs to fulfil the career needs of employees by training, personal development and creating a pleasant atmosphere in the workplace. Furthermore, this study attempts to show the overall framework of psychological contract and its factors which can lead the employees to be more attached and committed to their workplace and their willingness to actively contribute to the incremental growth of the organization.

LIMITATION AND FUTURE RESEARCH:

Findings of this study is limited within the sample from the private sectors’ white-collar employees who are especially employed in the city of heart in Bangladesh. Due to this restriction, the result couldn’t explore the more generalized view of the relationship between employee commitment and psychological contract. Besides, more potential variables such as fair human resource governance, ethical culture, organizational performance and organizational innovativeness could be used for the extensive examination of the relationship.

CONFLICT OF INTEREST:

The authors have no conflicts of interest regarding this investigation.

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Received on 08.04.2023 Modified on 03.06.2023

Asian Journal of Management. 2023;14(4):246-254.

DOI: 10.52711/2321-5763.2023.00041

Constants	Cronbach’s Alpha	No of Items
Employee Commitment	0.751	3
Transactional Psychological Contract	0.722	4
Relational Psychological Contract	0.713	4
Balanced Psychological Contract	0.716	4
Transitional Psychological Contract	0.737	4

Constants	Mean	Standard Deviation	EC	Transactional PC	RPC	BPC	Transitional PC
Employee Commitment	4.2149	0.97220	1.000
Transactional Psychological Contract	3.9029	0.88547	0.265^**	1.000
Relational Psychological Contract	4.3118	0.94845	0.146^**	0.137	1.000
Balanced Psychological Contract	4.1059	0.92521	0.369^**	0.148^**	0.243^**	1.000
Transitional Psychological Contract	3.8441	0.95123	0.240^**	0.017	0.090	0.273^**	1.000

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	Statistical Changes
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	R Square Change	F Change	df1	df2	Sig. F Change
1	0.781a	0.609	0.605	0.29032	0.609	138.100	4	335	0.000b

Coefficients^a
Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.
Model		B	Std. Error	Beta	t	Sig.
1	(Constant)	-1.224	0.305		-4.009	0.000
	Transactional Psychological Contract	0.032	0.018	0.062	1.781	0.076
	Relational Psychological Contract	0.443	0.056	0.388	7.928	0.000
	Balanced Psychological Contract	0.767	0.083	0.457	9.227	0.000
	Transitional Psychological Contract	0.023	0.018	0.044	1.264	0.207
a. Dependent Variable: Employee Commitment.

Hypothesis	Relationship	Significance (p<0.01)	Result	Explanation
H₁: Transactional psychological contract has significant impact on employee commitment.	Positive	Not Significant (0.076)	Rejected	The p value is 0.076 which is more than 0.05, indicates that Transactional Psychological Contract of employee is not significant with the employee commitment.
H₂: Relational psychological contract has significant impact on employee commitment.	Positive	Significant (0.000)	Accepted	The p value is 0.000 which is less than 0.05, indicates that Relational Psychological Contract of employee is significant with the employee commitment.
H₃: Balanced psychological contract has significant impact on employee commitment.	Positive	Significant (0.000)	Accepted	The p value is 0.000 which is less than 0.05, indicates that Balanced Psychological Contract of employee is significant with the employee commitment.
H₄: Transitional psychological contract has significant impact on employee commitment.	Positive	Not Significant (0.207)	Rejected	The p value is 0.207 which is more than 0.05, indicates that Transitional; Psychological Contract of employee is not significant with the employee commitment.