Changing the deal while keeping the people

Academy of Management Executive

Volumn 10, Issue 1, 1996, Pages 50-58

  Rousseau, Denise M ^a  

^a CARNEGIE MELLON UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0003094298     PISSN: 10795545     EISSN: None     Source Type: Journal    
DOI: 10.5465/ame.1996.9603293198     Document Type: Article

References (11)

1. This article is adapted from D.M. Rousseau, Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements (Sage, 1995).
2. An earlier version was presented at the International Consortium for Executive Development Research; Lausanne, Switzerland, June 1994.
3. The willingness to be flexible in a well-founded relationship has been referred to as the "zone of acceptance." Herbert A. Simon [Administrative Behavior, 3rd edition, (New York, NY: Macmillan, 1976)] used this term to refer to the range of duties and responsibilities in a job that employees believe to be under the discretion of their employer. So for example, whether a secretary sends a letter first class or by overnight delivery matters little to that person since both can be thought of as part of mailing correspondence. This zone of acceptance is quite elastic, being broad and open in more relational forms of employment or narrow and rigid in more transactional ones (Rousseau, 1995).
4. The distinction between systematic and automatic information processing is detailed by H. Sims and D. Gioia in The Thinking Organization (San Francisco, CA: Jossey-Bass, 1987).
5. D.T. Kearns and D.A. Nadler, Prophets in the Dark: How Xerox Re-Invented Itself and Beat Back the Japanese (New York, NY: Harper, 1992).
6. D. Kahneman, J. Knetsch and R.H. Thaler. "Fairness and the Assumptions of Economics," Journal of Business, 59, 1986, S285-S300.
7. The slow adoption and in many cases frustrating failures of the quality of work life (QWL) movement in the United States can be attributed to a lack of any understood legitimated reasons for change in the contract. Quality of work life programs (e.g., Rushton project as described in P.S. Goodman, Assessing Organizational Change (New York, NY: Wiley, 1979)) were introduced to address declining productivity. However, there is ample evidence that the threat of foreign competition - in particular from Japan - was not perceived by many managers and employees in large companies such as General Motors and IBM. QWL efforts in the late 1970s were frequently disbanded. A turning point in organizational change efforts came with the total quality movement of the 1980s in which the popular use of benchmarking made it more likely that organization members would look at their firm's competition for information on the firm's relative health and look to other firms even in unrelated industries for best practices and innovations. In investigating the history of organizational development and change, a contracts framework suggests that it is important to ask how the change process was legitimated and whether externally anchored reasons were offered (as in the case of changing one's business from house painting to mowing lawns or from defense contractor to consumer products).
8. Kearns and Nadler, Assessing Organizational Change op.cit., 236.
9. Described in both the 1992 GE Annual Report to Shareholders and in Robert Slater's, Get Better or Get Beaten: 31 Leadership Secrets from GE's Jack Welch (Burr Ridge, IL: Irwin, 1994), this famous statement specifies the four scenarios for GE employees depending on whether they meet commitments and share GE values.
10. "Navy women bringing new era on carriers," New York Times, February 21, 1994.
11. New psychological contracts increasingly take the form of "balanced contracts" in which both employee and employer (and often also customer and supplier) each have performance terms to live up to and high investments in the relationship and in each other (Rousseau, 1995).