A
psychological contract is an unsaid, unwritten contract that refers to the
mutual expectations that exist between the employer and employee (Rousseau,
1989). The Psychological Contracts play an essential role in understating
employee behavior as well as the employee-employer relationship.

According
to Rousseau (1989), there are essentially two types of psychological contracts.
A transactional psychological contract is based on the exchange of extrinsic
factors and its short-termed (De Cuyper & De Witte, 2006).  Employees who base their contract on
transactional terms may expect monetary rewards and financial gains in exchange
for their services and efforts (Bellou, 2009). However, on the other hand,
employees whose psychological contract is relational in nature seek reward
based on status, recognition, job security and promotion (Bellou, 2009). This
is because a relational psychological contract is established on more than just
tangible transactions and involve intrinsic factors (Rousseau, 1990).

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

The
development of a psychological contract initiates on the basis of the potential
employees subjective point of view and the belief that there will be
reciprocity once hiring is complete (Hess & Jepsen, 2009). Rousseau (1989),
one of the first to define the nature of a psychological contract, its
development, evolvement, maintenance, and violation, noted that during the
initial development of a psychological contract, the organization offers
consideration to the employee on the basis of the promise that the employee
would reciprocate. These promises and consideration are both implicit and subjective,
and the employee normally assumes that the contract is made in good faith, fair
dealing, and trust. In turn, the organization expects that an employee to fulfill
a set of responsibilities and role in the company through the use of their
skills and abilities. This initial exchange of promise and consideration paves
the way for the relationship between the employee and the organization to
develop.

During
the course of the psychological contract, it is possible that the employee and
the organization may perceive the obligations or expectations differently. Such
incongruence between the expectations of the employer-employee may lead to the violation
of the psychological contract (Bellou, 2013). Psychological Contract Breach is
defined as the perception of the employee that the organization they are
affiliated with has failed to meet the obligations and promises offer to them
during the initial stage (Gakovic & Tetrick, 2003). In the employee’s view
any action that goes against their expectation holds the potential to create a
contract breach (Rousseau, 1989).

The
breaching of such contacts is associated with multiple significant work place
outcomes such as, decrease in organizational commitment, citizenship behavior
and worker
engagement, and an increase in demotivation, intent to leave and absenteeism (Bellou,
2013; Rayton & Yalabik, 2014). As established by research there is also a
significant negative effect on an employee’s well-being as well as their job
satisfaction, however the nature and impact of this relationship is still open
to further research and debate (“The Psychological Contract”, 2017).

1.1. Job Satisfaction

Job
satisfaction is the degree to which job needs are fulfilled and how much of
this fulfillment is perceived by an employee (Porter, 1962).  It is “a positive (or negative) evaluative
judgment one makes about one’s job or job situation” (Weiss, 2002, p.175). It
is essentially a combination of both what an employee feels about his/her job
and what s/he thinks about the various aspects of his/her job (Colquitt, LePine
& Wesson, 2015).

Being
one the most desirable outcome of workplace behavior, Job Satisfaction is one of
the most extensively studied job attitude found to be prevalent in the
literature (Judge & Church, 2000). Several work motivation theories such
as Maslow’s (1943) Hierarchy of Needs, Bandura’s (1977) Social Learning Theory
and Hackman and Oldham’s (1976) Job Characteristics Model have sought to
explain job satisfaction.

However,
the theory of  Job Satisfaction that has
gained most prominence and acceptance was proposed by Locke (1976), who defined
job satisfaction as “a pleasurable or positive emotional state resulting from
the appraisal of one’s job or job experiences” (Locke, 1975, p.1304). According
to Bernstein and Nash (2008), job satisfaction consists of cognitive, emotional
and behavior components. The cognitive component of job satisfaction refers
to thoughts and beliefs regarding the extent to which the job is considered to
be challenging or rewarding. The emotional component pertains to feelings of
excitement, happiness, sadness, anger or boredom that are affiliated to the
job. The behavioral component consists of actions performed by individuals
related to their work such as working overtime, being absent, coming late, etc.
(Bernstein & Nash, 2008).

Job
satisfaction has become a central focus of organizational behavior owing to its
significant association with important work factors such as job performance,
job withdrawal behaviors, organizational commitment, turnover, and absenteeism
(Johns, 1997; Judge, Thoreson, Bono, & Patton, 2001; Kazi, & Zadeh,
2011; Medina, 2012). It is important to study what factors shape job
satisfaction as it is an important element that enables organizations to gain a
strategic advantage over its competitors. Human capital is often regarded as
the most valuable asset of an organization as it
cannot be copied by rival companies. It is the workforce that sets apart
successful organizations, and such success can only be achieved if the
employees are satisfied with their work and organization (Grant, Fried &
Juillerat, 2010).

1.2. Relationship
between Psychological Contract Breach and Job Satisfaction

The
negative impact of PCB on job satisfaction is well-documented in the literature
(Robinson & Rousseau, 1994; Coyle-Shapiro and Kessler, 2000; Gakovic and
Tetrick, 2003; Taylor and Tekleab, 2004; Rigotti, 2009). It has been
illustrated that PCB results in decreased job satisfaction for a variety of
reasons, including “unmet expectations, loss of trust, loss of inducements,
feelings of inequity and impediments to goal progression” (Conway& Briner,
2005, p. 71).

Cavanaugh
and Noe (1999) focused on the evolution of the Psychological Contract and found
supporting evidence that the Psychological Contract mediates the relationship
between work experiences and work outcomes such as satisfaction and intention
to leave. Research
also shows that employees’ perceptions of psychological contract breach have
significant effect on not only their behavior but their attitudes towards their
job as well (Kuang-Man, 2013). Furthermore, Chaubey and Bist (2016) after
conducting a descriptive research study also found that job satisfaction is
affected by the Psychological Contract.

The
findings of a study by Rayton and Yalabik (2014) also revealed a significant
relationship between Psychological Contract and job satisfaction and similar
other researches also support such findings and have identified the
Psychological Contract as an antecedent of job satisfaction (Tekleab, Takeuchi
and Taylor 2005; Zhao et al. 2007; Bal, De Lange, Jansen, & Van Der Velde,
2008).

Despite
gaining a firm-footing in the body of literature, the relationship between
Psychological Contract Breach and Job Satisfaction, is still open to further
scrutiny and debate. Taken as a whole, evidence points toward the existence of
a significant relationship between PCB and Job Satisfaction and this study aims
to further the research by focusing the role of occupational stress, one of the
major health hazards of the modern workplace, as mediator and exploring how it
may facilitate or impact the relationship between PCB and job satisfaction.

1.3.Occupational Stress as a Mediator

Occupational
stress is a major, recognized problem that occurs within the workplace and
often adversely affects employees (Oginska-Bulik, 2006). According to Jahanzeb
(2010), due to increasing technological changes, mass retrenchment, information
overload, and demand for greater productivity, fierce competition and uncertain
future, the workplace has become a source of extreme stress. To remain in
stride with the dynamic and ever-changing nature of today’s organizations,
employees in the work place spend most of their time striving to meet their job
obligations hence ignoring the “stressors” that have adverse effects on their
domestic, social and personal life. As a result, the demands of the work place
may prove to be harmful to the employee’s both mental and physical health
(Long, 2015).

A
general review of the literature present reveals that Psychological Contract
Breach is believed to have a negative impact on overall employee behavior and
health (Kuang-Man, 2013). For instance, Jong, Clinton, Rigotti and
Bernhard-Oettel (2015), conducted a research that demonstrated an inverse
relationship between breached obligations and employee well-being. Another
study by Bocchino, Hartman, and Foley (2003), concluded that individuals with
higher levels of perceived psychological contract violations reported higher
stress symptoms than those with lower levels of perceived psychological
contract violations.

Similarly, Gakovic and
Tetrick (2003) investigated the role of psychological contract breach in
employees’ experience of emotional exhaustion and found that psychological
contract breach contributes to employee experience of job strain and feelings
of stress. Reiman and Guzy (2017) also sought to elaborate on the effects of
psychological contract breach (PCB) on mental and physical health of the
employee and called for further study to further establish the role of
Psychological Contract Breach as a psychosocial, workplace stressor.

With regard to job
satisfaction, a study conducted by Burke (1976) revealed that there is a
significant relationship between occupational stress index and job satisfaction
index, that is; the greater the amount of stress, the lower the level of job
satisfaction. Similarly, meta-analysis of 485 studies by Faragher, Cass &
Cooper (2005) provided evidence of a strong association of an employee’s job
satisfaction with their mental and physical health, and that job
dissatisfaction was strongly related to feelings of burnout, depression and
anxiety. A recent research by Annamalai and Kamalanabhan (2016) also found a
negative association between job satisfaction and occupational stress.

As a whole, the effect of
occupational stress on job satisfaction has also been well-documented across
different contexts and professions and findings of multiple studies have come
to the same conclusion: occupational stress has a strong, negative impact on an
employee’s job satisfaction (Ahsan, Abdullah, Gun Fie & Shah Alam, 2008;
Trivellas, Reklitisa & Platis, 2013; Yaacob & Long, 2015).