A Systems Thinking Perspective on Employees’ Psychological Contracts in Organizations

Abstract

The purpose of this study is to evaluate the measures managers can take to curtail psychological contract breach in order to ascertain exchanges in the manager subordinate relationship. We used system thinking approach and drew a CLD (casual loop diagram), followed by a stock-&-flow map. For the validation of the CLD, interviews were conducted, targeting individuals (executives) from private sector universities. Interview results were later reported to strengthen the CLD results. Results show that managers are more likely to coach their subordinates, promoting workforce competency to deliver tasks and contextual performance. Consequently, reneging prospects, psychological contract breaches and violations are significantly lowered. Furthermore, a trusting relationship amid exchange partners causes them to attribute breaches to involuntary reneging, which encourages them to compromise, consequently allowing socio-emotional exchanges that are conducive to organizational performance in terms of organizational productivity. It can be possible to enhance the employees’ motivation and job performance, if psychological contract breach is avoided by the managers that will aid in improving employees’ performance and ultimately organizational performance. Promoting Interpersonal trust among managers and employees, and removing informal communications’ barriers can enhance organizational performance. Therefore, this paper will help in bringing awareness amid organizational leaders.