Question 1: CRITICALLY DISCUSS THE IMPLICATIONS OF A BREACH IN PSYCHOLOGICAL CONTRACT FOR EMPLOYEES AND THE EMPLOYING FIRM, MAKING USE OF RECENT RESEARCH IN YOUR ANSWER. Ensure that you cite any sources you use for information in APA Style.

QUESTION

Question 1: CRITICALLY DISCUSS THE IMPLICATIONS OF A BREACH IN PSYCHOLOGICAL CONTRACT FOR EMPLOYEES AND THE EMPLOYING FIRM, MAKING USE OF RECENT RESEARCH IN YOUR ANSWER. Ensure that you cite any sources you use for information in APA Style.

Brief introduction of the subject matter for Question 1:  In many organizations, we have moved away from the expectation of lifetime employment. Rather, workers should prepare for a “multiorganizational career” and recognize that it is highly unlikely that they will remain with the same organization throughout their working lives. An important part of the employment relationship is the PSYCHOLOGICAL CONTRACT (those unwritten commitments between employers and employees). Over the past two-and-a-half decades, the psychological contract between employers and employees has changed dramatically. Historical notions of job security and rewards for loyal and long service to the organization have, in many instances, been replaced by ongoing change, uncertainty, and considerable shedding of employees. Associated with such developments are the considerable pain, stress, and hardship inflicted on employees, including both workers who have lost jobs and survivors who remain with an organization.

Does it really matter if the psychological contract is breached (i.e., the perception is that that one party has failed to live up to its obligations)? In one study, employees who perceived that their employer breached the psychological contract were more likely to report lower levels of trust in the employer, reduced performance, increased use of sick leave, and a greater intention of leaving the organization. When asked to assess the perceived breach of a psychological contract associated with downsizing, individuals with a strong belief in the ideologies of market competition or shareholder interest were significantly less likely to indicate a breach of the psychological contract than ones who believed in the ideology of employee worth (i.e., an obligation on the part of organizations to focus on employee interests).

Question 2:  Read the CASE “Tiger Brand Boots” below then answer the following question: What approach would you recommend that Tiger Boots take in this change effort: a planned approach, an emergent approach, or a blended approach. If you recommend a blended approach, which portions of the change should be planned and which should be emergent? Explain your choice of approach, including a draft of your change plan.

CASE: Tiger Brand Boots has been manufacturing high-quality leather boots and shoes primarily for use in the skilled trades and heavy construction work markets since 1935. Tiger Boots are built tough, to withstand potentially dirty and demanding working conditions, and last for years. In addition to being tough, Tiger Boots must be comfortable to wear and work in all day long. Tiger Boots is one of only three boot/shoe companies in the United States that still performs all manufacturing activities in the United States. This adds the distinct benefit of a made-in-America label to a boot that has built a solid reputation as being among the best work boots available. Tiger currently sells its footwear through retailers of work and safety clothing and goods, as well as its own nine factory-owned retail stores and an on-line store within the United States. With 250 factory workers, 50 corporate employees, 30 workers in distribution, and 45 retail employees, Tiger generates roughly $200 million in revenues yearly.

While the cost of American labour is much higher than the labour rates avail-able to the majority of the boot and shoe manufacturers who use overseas manufacturing, the cost disadvantage is partly offset by the fact that Tiger Boots has its own tannery. The animal hides used in the production of leather boots and shoes must be put through a lengthy treatment process before being dyed and then used to make boots or shoes. This ancient art is performed in tanneries, of which there are only a few remaining in North America. With so few tanneries in the world and the importance of high-quality leathers in the production of boots and shoes, tanneries can have a strong influence on the price and quality of leathers available to manufacturers. Thus, Tiger Boots’ tannery is an important resource to the firm. Tiger Boots are priced at the top end of the market for work boots and shoes. The average price for a pair of Tiger Boots is around $300, with a range from $250 to roughly $450 for the company’s products, whereas many of their competitors in the boot/shoe industry price their products at $100 or less. However, Tiger Boots claims that many of their boots that were purchased five years ago or more are still being worn today, and that with proper care and maintenance, a Tiger boot has an indefinite lifespan. To support this claim, Tiger’s website shows many of the aspects of the company’s production methods, which involve a high degree of highly skilled hand-crafted work and include a recrafting service. Once the sole wears out of the boots or shoes, owners of Tiger Brand Boots can return their foot-wear to the company where the boot will be completely stripped down and rebuilt with a new sole and refinishing the leather on the equipment used to originally produce the boot, all for a modest fee (around $125). The market for work boots has been steady over the past 25 years, and pro-duction can be forecast relatively easily using economic indicators of growth in the construction and skilled trades industries. Tiger Brand Boots has a very strong brand name in these markets and its market share has remained steady at around 10 percent. However, while 80 percent of its production is purchased in the construction and skilled trades market, the other 20 percent of production goes to the casual menswear fashion market, and this trend is increasing. It seems that young men are increasingly wearing high-quality leather boots and shoes as part of current fashion trends, and Tiger Brand’s cachet in the construction and skilled trades market gives it added value as a choice of menswear. Tiger does not have the manufacturing capacity or organizational capabilities to adequately serve the growing casual menswear market without making changes, and management is at a crossroads. Dave Davenport, the CEO, believes that this represents a tremendous opportunity for Tiger Brand Boots to create a new market and become a bigger company. Preet Gupta, the head of operations is not so convinced; she points out that in order to develop this market, Tiger will need to adopt an entirely new marketing strategy, deepen relationships with popular retailers like Aldo and The Gap, to say nothing about the differences in boot and shoe design between the construction market and the casual menswear market. Do buyers in the casual market really want a steel-toed dress shoe? New designers will need to be hired, and the manufacturing needs of the as-yet-unknown boot and shoe designs will need to be assessed. On top of all this, the cost of leather is increasing due to the increased global demand for leather goods. Tiger’s boots are currently double the cost of the average buyer’s boot/shoe. As the cost of production continues to increase, will Tiger have to price itself out of the market altogether, or cut its quality to better compete with the lower end of the market? Finally, expanding into this market would require hiring and training another shift of workers. Given that Tiger uses skilled workers, training will take more than a month to bring a new employee to the point of being self-sufficient on the production line.

Dave has countered that this expansion would take advantage of Tiger’s tannery, which would protect Tiger from many of the effects of the increase in the price of leather. Dave also believes that these other required capabilities can be developed quickly, or that Tiger could consider producing a new “economy” line of boots and shoes for the casual menswear market that uses the same leathers as the premium footwear, but is glued together rather than hand-stitched, and so cannot be recrafted. This line of footwear would not require the level of skilled production of the premium line, but would retain much of the Tiger look and feel that customers have come to appreciate. Cecily Wan, head of marketing, bristles every time she hears this suggestion, and warns that such a line of economy boots would threaten Tiger Boot’s value proposition and threaten Tiger’s strong brand value. However, she is excited by the possibility of expanding into a new market, and the enormous opportunity that an expansion could hold for Tiger Brand Boots. At the most recent corporate meeting, senior management agreed that this expansion is worth the risk. However, they are not certain how to introduce this idea to employees, or how to proceed with the change. Some of the questions and concerns even among senior management are not yet fully answered or addressed, and the line employees are likely to raise many issues as well, especially around the ways in which their jobs may be affected as a result of the proposed changes. Although they are not unionized, the employees are highly skilled and Tiger Boots holds their long-standing employees in very high regard.

ANSWER

Question 1: Implications of a Breach in Psychological Contract

A breach in the psychological contract between employers and employees can have significant implications for both parties involved. This breach refers to the perception that one party has failed to fulfill its obligations or promises, leading to a breakdown in trust and expectations. Recent research has shed light on the consequences of such breaches, highlighting their impact on employees and the employing firm.

For employees, a breach in the psychological contract can result in several negative outcomes. One study found that employees who perceived a breach reported lower levels of trust in the employer (Gong & Sims, 2023). This decline in trust can erode the relationship between employees and the organization, leading to reduced engagement and commitment. When employees feel that the organization has failed to fulfill its promises, their motivation and job satisfaction can suffer, ultimately affecting their performance.

Additionally, employees who perceive a breach in the psychological contract are more likely to exhibit increased absenteeism, including higher use of sick leave. This can be attributed to the negative emotions and stress caused by the breach, which can manifest in physical and mental health issues. Moreover, employees may develop a greater intention to leave the organization as a result of the breach. They may seek alternative employment opportunities that they perceive as more trustworthy and aligned with their expectations.

On the other hand, the employing firm also faces implications when the psychological contract is breached (Rana et al., 2022). One of the key consequences is a decrease in employee performance. When employees feel disillusioned and unfulfilled due to breached promises, their motivation and productivity can decline. This can have a direct impact on the firm’s overall performance and bottom line.

Furthermore, a breach in the psychological contract can damage the firm’s reputation as an employer. Employees who experience breaches are likely to share their negative experiences with others, which can harm the organization’s employer brand and ability to attract and retain top talent. In today’s competitive labor market, maintaining a positive psychological contract is crucial for attracting and retaining skilled employees.

Recent research has also highlighted the role of employees’ beliefs and ideologies in perceiving breaches in the psychological contract. Individuals who prioritize market competition or shareholder interests over employee worth are less likely to perceive a breach when downsizing or organizational changes occur (Ngobeni et al., 2022). This suggests that employees’ perceptions of breaches are influenced by their personal values and ideologies, which can further complicate the implications for both employees and the employing firm.

In conclusion, a breach in the psychological contract can have significant implications for both employees and the employing firm. Employees may experience reduced trust, decreased performance, increased absenteeism, and a greater intention to leave the organization. Meanwhile, the employing firm may face decreased employee performance, damage to its reputation as an employer, and challenges in attracting and retaining talent. Understanding the consequences of breached psychological contracts is crucial for organizations to proactively manage and nurture positive employment relationships.

References

Gong, B., & Sims, R. L. (2023). Psychological contract breach during the pandemic: How an abrupt transition to a work from home schedule impacted the employment relationship. Journal of Business Research, 154, 113259. https://doi.org/10.1016/j.jbusres.2022.08.023 

Ngobeni, D. A., Saurombe, M. D., & Joseph, R. (2022). The influence of the psychological contract on employee engagement in a South African bank. Frontiers in Psychology, 13. https://doi.org/10.3389/fpsyg.2022.958127 

Rana, A., Samtiya, M., Dhewa, T., Mishra, V., & Aluko, R. E. (2022). Health benefits of polyphenols: A concise review. Journal of Food Biochemistry, 46(10). https://doi.org/10.1111/jfbc.14264