Contract breach as a trigger for adjustment to the psychological contract during the first year of employment

This research investigated how much and in what direction newcomer psychological contracts changed during the first year of employment and the extent to which change was a function of a psychological contract breach. These issues were investigated using a sample of 88 organizational newcomers with diverse job duties/titles, prior experience, and age levels. Newcomers were surveyed at three points in time during the first year of employment, including employee perceptions of both employee and employer obligations. Consistent with equity theory, results revealed employees perceived more balanced than imbalanced employment relationships upon organizational entry as well as after 1 year of employment. A failure of the employer to fulfil commitments was associated with perceived imbalance in the employment relationship and a significant decrease in perceived employer obligations, suggesting breach is perceived as a trigger for an adjustment to the psychological contract rather than a signal of an injustice. Implications of these findings for research and theory on psychological contracts and breach in the employment relationship are discussed. Practitioner points Newcomers' and employees with 1 year of organizational tenure are more likely to report a balance than an imbalance between employer and employee obligations, reflecting the mutuality of perceived obligations in employment relationships. When employees perceive their employer has failed to fulfil obligations, employees are likely to alter their subsequent perceptions of employer obligations downwardly. Based on the way employees adjusted their perceptions of obligations following a breach in their psychological contract, this study provides evidence for newcomers to perceive a breach as a trigger to adjust perceptions concerning employer obligations.