The Signalling Effect of HRM on Psychological Contracts of Employees

What are the drivers of high performing organizations? During the last decade, the contribution of HRM to organizational performance has dominated HRM research and practice. Employees and their rela-tionship with the organization take central stage in this perspective since HRM aims to contribute to organizational performance while optimizing the relationship between employees and the organiza-tion. However, HRM research has failed to empirically establish this relationship. This study fills this important void in HRM research by empirically investigating the relevance of HRM for the employee-organization relationship. In doing so, this study ‘bridges ’ two streams of HRM research: organizational level research on HRM and performance and individual level research on employee work perceptions and behavi-oral performance. We focus our attention on the concept of the psychological contract. The psychological contract is defined as: “an individual’s belief, shaped by the organization, regarding reciprocal obligations”. The psychological contract connects organizational level and individual level perspectives because of its focus on the exchange relationship between organization and the individual. Based on a sample of 49 organizations with 2099 individual respon-dents we investigated the signalling value of HRM for employees’ assessment of the degree of violation of their psychological contracts, using a multi-level analytical technique. The findings indicate that there is a significant relationship between HRM, organizational design factors and the degree of perceived psychological contract violation. These findings provide us with one of the first empirical indications on how HRM leads to effectiveness. ERIM The Erasmus Research Institute of Management (ERIM) is the Research School (Onderzoekschool) in the field of management of the Erasmus University Rotterdam. The founding participants of ERIM are RSM Erasmus University and the Erasmus School of Economics. ERIM was founded in 1999 and is officially accredited by the Royal Netherland