Employee perceptions of organisational change on the psychological contract

M.Phil. (Human Resource Management)Abstract: Corporate mergers and acquisitions are a common source of company growth, but many fail and do not achieve the projected financial results. People-related issues constitute the primary reason for such failures. These issues may result from the negative impact that changes often have on the psychological contract. As people are critical to the success of change efforts, an investigation was warranted into the perceived impact on the psychological contract during periods of change. The unit of study for this case study was a pharmaceutical company. The researcher used a qualitative research approach in order to gain a deeper understanding of the participants’ experiences. Semi-structured interviews (based on an interview schedule) were conducted with 12 purposively selected participants. The interviews were all recorded. Content analysis was conducted to capture the richness of themes derived from the participants’ narratives. The analysis involved both transcribing and interpreting the data. The findings of the study indicated that the pressures of the external environment and the organisation neglecting the human side of change led to the psychological contract being impacted. This led to reduced organisational citizenship behaviours, which was evidently displayed through reduced commitment and low engagement. On the other hand, the organisation was offering less career opportunities, job security and less job opportunities but expected employees to put in more effort through time, flexibility and expertise. It was evident that organisational change produced changes in the psychological contract, employee attitudes and behaviours. A perceived breach in the fulfilment of obligations could be directly linked to staff turnover. Work role and employee expectations underpinned the psychological contract. Thus, a violation of these expectations resulted in dissatisfaction and turnover, or intention to leave