Psychological Contract Breach - Violation and Procedural - Distributive/interactional Justice

Introduction

This paper will discuss why sales manager, Jim Reed, failed to properly motivate top salesman, Fred Maiorino to continue and advance in his achievements at Schering-Plough. In doing so, it will examine Reed's role in promoting Fred's sense of psychological contract breach--and ultimately, violation--and Reed's contributions to the injustices done to Fred. It will explore the misuse of psychological appraisals and goal-setting and discuss Reed's counterproductive leadership style, leading to his ultimate de-motivation of Fred. This paper will then recommend alternative behaviors for Reed regarding the psychological contract, performance appraisal, goal-setting, and development of an effective leadership style, suggesting specific actions Reed should have taken to inspire Fred to remain a loyal and valued employee of the company.

Psychological Contract Breach/Violation and Procedural/Distributive/Interactional Justice

At the onset of their relationship, Jim Reed told Fred Maiorino, "You're one of the senior men here. I'll need your help." (Buller & Schuler, 2003, p. 242-243). This remark stuck with Fred because, for older workers, [p]rotecting self-concept seems to be one of the leading determinants" (Kanfer & Ackerman, 2004, p. 447). Many older workers "tend to prefer collaborative (versus competitive) tasks" (Kanfer & Ackerman, 2004, p. 441) since they often view social interactions as a means of "obtaining affective rewards (emotional satisfaction) and supporting one's identity" (Kanfer & Ackerman, 2004, p. 444). The difference of five-ten years between Fred's age, 59, and Jim Reed's age, "in his sixties" (Buller & Schuler, 2003, p. 233, 236) may have contributed to the difference of emphasis the two men placed on Reed's remark. Kanfer and Ackerman (2004) found that "...younger and older adults express and display less evidence of generativity (e.g., providing emotional support to others) than do middle-aged adults," and "midlife workers may respond more positively to managerial strategies that emphasize cooperation rather than competition" (p. 445). Reed possibly made the remark in an offhanded manner; whereas, Fred took it to heart, as shown in his ability to recall the comment years later. The case indicates that at no time did Reed ask Fred's advice regarding ways to train or motivate younger salespersons; nor did Reed solicit Fred's help to mentor new recruits. This is akin to asking for input from an operational-level worker and then ignoring it, which Humphreys (2003) described as "deflating," and as he observed, such neglect "misses the opportunity to garner the motivational benefits inherent in bottom-up empowerment" and "can cause an enormous decline in morale" (p. 96).

In Fred's eyes, Reed reneged on his psychological promise to let Fred help him by using his proven competencies as a senior salesman. As Robinson and Morrison (2000) observed, "... the relationship between perceived contract breach and violation will be stronger to the extent that the employee attributes the situation to reneging" (p. 532). To create a positive workplace environment where employees are motivated to do their best, leaders must be "role models for ethics, integrity, values and trust" (Pryor, Singleton, Taneja, & Humphreys, 2010, p. 298). Reed failed as such a role model in that he not only refused to engage Fred as a valued senior member of the sales team, but he devalued Fred in comparison with more novice salespersons.

"Agents may make promises that they have no intention of keeping, or they may renege on promises that they had originally intended to keep. One situation where the latter may occur is when the employee is not meeting performance expectations" (Robinson & Morrison, 2000, p. 529). Reed may have felt justified in reneging on his statement to Fred because of Fred's subsequent lack of performance. "Of course, it is conceivable that causality runs the other way: that employees reduce their performance in response to a perceived breach" (Robinson & Morrison, 2000, p. 541) As DelCampo (2007) observed, "Conscientiousness is negatively related to reports of psychological contract violation." (p. 48), which could partially account for Fred's decline. Reed initiated a downward spiral of events by giving Fred a reason to mistrust him, and he increased Fred's downhill speed and momentum by constant failure to communicate and motivate, as will be shown later.

Reed's initial deceit heightened Fred's state of vigilance, that is, "the extent to which the employee actively monitors how well the organization is meeting the terms of his or her psychological contract," which is "related to the amount of trust underlying the employee-organization relationship (Robinson & Morrison, 2000, p. 528, 531). "As a result of this heightened vigilance, employees will be more likely to perceive a breach of their psychological contract" (Robinson & Morrison, 2000, p. 530-531). DelCampo (2007) defined the psychological contract as "the unwritten agreement that exists between the employee and employer that contains a set of mutual expectations" (p. 44). Fred had devoted more than three decades of effort and achievement to Schering-Plough with the expectation of a comfortable retirement in old age, only to discover the company all too ready to prematurely label him as obsolete. Having been approached with the company's offer of early retirement, aware that the company had hired an excessive number of young salespersons to supposedly replace him and others like him, and being condemned as foolish by his district manager for not taking the early retirement plan, Fred no longer had confidence in the company's intention to uphold their psychological contract.

Fred's perception of this breach of contract intensified when he also perceived that he was "treated with little consideration or respect" (Robinson & Morrison, 2000, p. 532). Reed's subsequent behavior toward Fred--the performance evaluation, spying which resulted in the two-day suspension without pay, singling him out for especially difficult and punitive goal-setting--only served to increase Fred's vigilance and intensify his feelings of violation. As Zagenczyk, Gibney, Kiewitz, and Restubog (2009) found, "...the extent to which supervisors are supportive/not supportive weakens/strengthens the negative relationship between breach and POS" (p. 254); that is, Reed greatly undermined Fred's perception of organizational support.