propriate obligations (Rousseau, 1995). Long-standing practices, for example, create expectations about obligations that shape employee behavior over their careers.

Inside most large companies in the United States, the social/psychological contract for exempt (that is, professional and technical) employees has taken a relatively common form. Employers would buffer employees from the vagaries of the market, offering secure jobs and careers and stable growth in compensation associated with predictable promotions and retirement benefits. In return, employees offered acceptable levels of performance and commitment. Commitment took two forms: a willingness to stay with the company, turning away offers of jobs elsewhere, and an acceptance of and identification with the goals of the company.

The contract for nonexempt employees (who must volunteer to work extra hours and be specifically compensated for such work) was surely different. In unionized settings, most of the mutual obligations were set out in elaborate written contracts. The traditional social/psychological contract was probably limited to an expectation that the company would continue to offer long-term jobs (interrupted by periodic but temporary layoffs) and that employees would stay in them. Among progressive non-union employers, the contract may resemble that for white-collar workers; for less progressive employers, it looks more like a simple market exchange.

The changes in the way work is organized, including downsizings and restructurings, and the move toward nonstandard work seem to have broken the social/psychological contracts described above. When psychological contracts are violated, declines in employee morale are one consequence and others may include an increase in quit rates and declines in performance. The American Management Association found that 72 percent of its surveyed companies that had cut jobs reported an immediate and negative impact on morale, including an increase in absenteeism and disability claims.2 Employee attitudes also seem to suffer. A


Interestingly, all of these effects abated with time. One year later, only 36 percent of these firms reported that morale still suffered (American Management Association, 1996).

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