Exploring the relationship between psychological contracts and organizational change: a process model and case study evidence

The article sets out a process describing the links between the breach of psychological contracts and the resistance to strategic and organizational change. When organizations fail to respect employee interests, the low-trust relationships and levels of cynicism that invariably result severely constrain the potential for effective strategic change. Employee perceptions of breach of their psychological contracts over issues such as pay, communications and development were associated with lower levels of job satisfaction and organizational commitment. Lack of job security was a major influence on the quality of trust relations in the organizations and also became an important factor in influencing employee cynicism. The case study draws on data from a study of a Scottish industrial textiles firm. For practitioners, the principal lesson to be learned is that the frequent introduction of programmes of change, far from signalling to employees an image of an innovative management team, can produce the opposite reaction where managers are viewed as incompetent and disrespectful of employees' talents and intellects.