Doing More with Less? Employee Reactions to Psychological Contract Breach via Target Similarity or Spillover during Public Sector Organizational Change
| Date | 01 October 2014 |
| Author | Jean Hartley,Rob B. Briner,Neil Conway,Tina Kiefer |
| DOI | http://doi.org/10.1111/1467-8551.12041 |
| Published date | 01 October 2014 |
Doing More with Less? Employee
Reactions to Psychological Contract
Breach via Target Similarity or
Spillover during Public Sector
Organizational Change
Neil Conway, Tina Kiefer,1Jean Hartley2and Rob B. Briner3
Royal Holloway, University of London, Egham TW20 0EX, UK, 1Warwick Business School, University of
Warwick, Coventry CV4 7AL, UK, 2Open University Business School, Walton Hall, Milton Keynes MK7
6AA, UK, and 3School of Management, University of Bath, Bath BA2 7AY, UK
Corresponding author email: neil.conway@rhul.ac.uk
Many countries are facing the twin pressures of austerity and recession following the
2007–2008 global financial crisis. This paper uses the UK public sector and a major
national announcement of budget cuts signalling extensive organizational cutbacks as
its setting. We examine (a) whether organizational changes following the national
announcement affect public sector employees’ psychological contract breach, (b) whether
employee reactions to psychological contract breach are consistent with the target
similarity model and vary across foci, namely the organization, co-workers and public
service users, and (c) whether some of these relationships are moderated by job insecurity
or public sector commitment. We collected longitudinal survey data before and after the
announcement of budget cuts, using a sample of 340 employees from a range of public
organizations and locations. Results largely confirm the hypotheses. Increases in organi-
zational change predicted psychological contract breach, which in turn predicted
decreases in contributions towards the organization; however, contributions towards
co-workers and public service users were unaffected, which can be explained with a
target similarity, rather than a spillover, model. Furthermore, the relationship between
breach and employee behaviours directed toward the public was moderated by job
insecurity and public sector commitment.
Introduction
The concept of the psychological contract has a
long history in organizational behaviour, having
been introduced by Argyris and Levinson over 50
years ago (Argyris, 1960; Levinson et al., 1962).
More recently, Rousseau’s (1989) major re-
conceptualization of the psychological contract
contributed to its current status as a key frame-
work for understanding the employment relation-
ship in both academic and practitioner literatures.
A major reason for the increasing interest in the
psychological contract at that time was its per-
ceived value in explaining employees’ responses to
the significant changes to employment relation-
ships caused by increased global competition and
consequent organizational changes such as cost-
cutting initiatives (e.g. redundancies) and restruc-
turing (e.g. Herriot, Manning and Kidd, 1997;
Noer, 1993). Such organizational changes were
viewed as a breach of promises made by organi-
zations to employees, causing employees to feel
violated, question their commitment and experi-
ence reductions in motivation and morale
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British Journal of Management, Vol. 25, 737–754 (2014)
DOI: 10.1111/1467-8551.12041
© 2014 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
(Herriot, Manning and Kidd, 1997). This account
of major organizational change destabilizing
employment relationships was examined in
both private and public sectors (Coyle-Shapiro
and Kessler, 2003; Guest and Conway, 2001;
Kessler and Coyle-Shapiro, 1998). This reason-
ing, although frequently reiterated, was never
actually tested empirically using rigorous designs,
such as longitudinal surveys of change interven-
tions. Furthermore, the main focus of previous
research has been on the effects of psychological
contract breach on employee contributions
towards the organization rather than towards
other targets such as co-workers or customers/
public service users. This paper principally
addresses these gaps by providing a more precise
analysis of whom employees target when they per-
ceive psychological contract breach following
organizational change and by examining modera-
tors of their reactions, using a longitudinal design
with data collected before and after a national
announcement of substantial budget reductions.
The setting for this investigation of the psycho-
logical contract is the UK public sector, which has
undergone extensive and substantial organiza-
tional changes due to both the recession and the
incoming government’s 2010 austerity measures
for public service organizations. It is predicted
that UK public organizations will continue to
undergo organizational change as swingeing
spending cuts of, on average, 25% over 4 years are
implemented (Office for Budget Responsibility,
2010). Organizations in the public, private and
voluntary sectors in many countries around the
world are again facing considerable pressures,
emanating from the recent (2007–2008) global
financial crisis, which has led to austerity for a
number of societies, linked with recession, and
thereby affecting most sectors of employment
(Crotty, 2009; Dolton and Makepeace, 2011).
The purpose of the present paper is to consider
how employees react to psychological contract
breach following organizational change, by exam-
ining whether and the extent to which employee
reactions vary across targets and whether
employee reactions are moderated by salient con-
textual features. More specifically, we aim to
examine (a) whether organizational changes fol-
lowing the announced austerity cuts do create
employee psychological contract breach for
public sector employees; (b) whether the effects of
psychological contract breach vary across targets,
namely the organization, co-workers and public
service users (in the form of employee service
delivery behaviour); and (c) whether certain rela-
tionships are moderated by the salient contextual
features of job insecurity and public sector com-
mitment. In doing so we make three major
contributions.
First, our principal contribution is to respond
to recent calls to examine distinctions between the
targets of employee contributions when consider-
ing social exchange relationships and to explore
whether behaviour in one social exchange rela-
tionship can have consequences for other social
exchange relationships (Bordia et al., 2010;
Lavelle, Rupp and Brockner, 2007). We draw on
the target similarity model (Lavelle, Rupp and
Brockner, 2007) and predict that employee
responses to psychological contract breach by the
organization will differ across foci such that
employees will mainly retaliate against the organi-
zation, less so against public service users and
not at all against co-workers. We compare con-
tributions targeted towards the organization
(organizational commitment and organizational
citizenship behaviour towards the organization,
OCBO),1towards co-workers (organizational
citizenship behaviour towards individuals, i.e.
helping behaviours, OCBI) (Dalal et al., 2009)
and towards service users. In our setting service
users are the public (organizational citizenship
behaviour toward the customer, in this case public
service user, OCBP), given that service quality has
been portrayed as important in public sector
organizational change (Ashburner, Ferlie and
Fitzgerald, 1996; Ferlie, Hartley and Martin,
2003; Jas and Skelcher, 2005; Martin, 2003).
Employee contributions towards organizations,
co-workers and public service users are likely to
be vital during cost-cutting organizational change
when organizations turn to their employees to ‘go
the extra mile’ to cover for lost resources and to
1The term ‘organizational citizenship behaviour’ refers to
a large body of research on extra-role or citizenship
behaviours at work. However, citizenship has different
denotations and connotations in the public management
field (where citizens are members of a democratic
society). In order to eliminate confusion over the term
‘citizen’ among readers from those different areas of lit-
erature, we refer to ‘citizen of a society’ as ‘members of
the public’. We use the widely known and accepted term
‘organizational citizenship behaviours (OCBs)’ to
describe extra-role behaviours (e.g. Dalal et al., 2009),
with varying targets.
738 N. Conway et al.
© 2014 British Academy of Management.
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