Managing the Psychological Contract During a Psychological Recession

Abstract

The aim of this study was to investigate the impact of Human Resource Management (HRM) practices on the psychological contracts of employees who have been negatively impacted by the widespread psychological recession. The prevalent economic recession has made it difficult for organisations to uphold their psychological contracts to employees, thereby contributing to a psychological recession - which is defined as an emotional state in which employees feel extremely vulnerable to economic hardship. The target population consisted of all permanent support staff working at an organisation that had recently experienced a large-scale retrenchment exercise (n=52). A self-administered questionnaire was distributed amongst employees. The results, based on proven hypotheses, were summarised and depicted in a theoretical model. Inferential statistics suggest that the harsh effects and negative impact of the psychological recession may contribute to employees engaging in destructive work behaviour. A multiple regression analysis further emphasised the importance of HRM practices in maintaining a positive state of the psychological contract. Organisations have to respond to the psychological recession by carefully managing the employment relationship, and re-evaluating the effectiveness of their HRM actions and practices, in order to maintain the commitment and loyalty of their employees.

DOI: 10.5901/mjss.2014.v5n9p283