Analyzing HRM and Psychological Contracts within the Australian ADF

This report presents a case study analyzing the Workplace Remuneration Arrangement between the Australian Defence Force (ADF) and the Australian Government. It identifies key issues, including inadequate training, low wage increases, and insufficient employee well-being, which negatively impact psychological contracts and employee satisfaction. The report explores the role of Human Resource Management (HRM) in addressing these challenges, emphasizing the importance of effective training programs, fair compensation, and improved employee welfare. Applying Herzberg's Two-Factor Theory, the study distinguishes between hygiene factors (pay, policies, benefits, working conditions, interpersonal relations) and motivators, highlighting their impact on employee satisfaction and dissatisfaction. The report concludes by recommending specific HRM strategies to mitigate conflicts, enhance employee morale, and improve overall organizational performance within the ADF, focusing on performance management, rewards, training, and employee well-being initiatives.

Running head: PEOPLE, WORK, AND ENVIRONMENT
People, work, and Environment
Name of the Student:
Name of the University:
Author Note:

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Executive Summary
The case scenario is based on the Workplace Remuneration Arrangement between the
Australian Defense Force and Australian Government. The members of Australian Defense
Force have been facing major issues with the improper training process, low rise of the wages,
and lack of proper employee well-being. In fact, it is also notable that the members do not
receive the proper training and development session for their defense programs. After identifying
the motivational and hygiene factors, it can be implied that the human resource management
requires concentrating on some of the specific implications. Developing the effective training
session, providing the proper rewards and recognition to the members, and improving the
employee wellbeing would be beneficial enough to generate satisfaction among the ADF
members.

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Table of Contents
Introduction......................................................................................................................................2
Case Background.............................................................................................................................2
Role of HR Management.................................................................................................................3
Herzberg’s Two-Factor Theory.......................................................................................................5
Implication for the Human Resource Management.........................................................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................12

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Introduction
The relationship between the organisational performance and human resource
management is appeared to the statistically weak. However, according to Rousseau (2001),
human resource is the integral part of the business that deals with the performance parameter of
the associates. Some of the significant issues are identified while linking the relationship
between the organisational performance and human resource management (Guest, 2004). The
human resource department requires maintaining the responsibilities of recruiting, motivating,
and managing the entire work environment in a significant way. It has been observed that the
HRM practices even have the strategic linking with the psychological contract. The major focus
of the efficient human resource management is to motivate the workforce to retain them for a
longer time (Guest, 1998). However, the inappropriate human resource practices can accordingly
lead towards the failure of the people management. The study concentrates on the evaluation of
psychological contract within ADF (Australian Defense Force). The ADF members claim that
their pay rise is minimal and they do not receive the deserving treatment from the Australian
Government. It creates the psychological contracts between the members of Australian Defense
Force and Australian Government. The study would focus on some of the specific suggestions on
the human resource management in terms of performance and rewards, training and career
management, and employee wellbeing. The further study would develop the bets human resource
practices in mitigating the conflicts emerged within ADF.
Case Background
The case scenario is based on the Workplace Remuneration Arrangement between the
Australian Defense Force and Australian Government. The human resource management pays

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attention towards the wages of the associated workers. The associated ADF members claimed
that their wages increased almost 4.5% over 3 years (Aihw.gov.au., 2014). This low rise of the
wages has been affecting the psychological contracts between the Australian Government and
ADF (Army.gov.au, 2017). It has been observed that there is there is the psychological based
conflicts emerged that was shifted from the relational value. The areas of the career development
and the long-term job security are the major factors to increase customer loyalty (Grimmer &
Oddy, 2007). The case study highlights some of the significant issues faced by the associated
members due to the improper HRM practices. Undermining the psychological contracts is the
major reason for the rise of lower wages. This lower wages are considerably breaching the rules
and obligations of the Australian Government (Rousseau, 2001). Such unintended consequences
in the Australian Defense Force Pay Deal are affecting the long-term commitment of the
soldiers. The members of Australian Defense Force have been facing major issues with the
improper training process, low rise of the wages, and lack of proper employee well-being
(Army.gov.au, 2017). In fact, it is also notable that the members do not receive the proper
training and development session for their defense programs. The ADF members claim that their
pay rise is minimal and they do not receive the deserving treatment from the Australian
Government. It creates the psychological contracts between the members of Australian Defense
Force and Australian Government. The study would thus focus on some of the specific
implication for the future improvement of the Human Resource Management.
Role of HR Management
The efficient HR management plays the significant role in increasing the performance
parameter of the employees. The development and success of the employees help the
organisation to accomplish the business goals. On the other hand, the effective performance of

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the employees depends on the extent to which the organisation is maintaining the fairness to
influence loyalty programs. The members associated with the Australian Defense Force
exclaimed that they do not receive the proper treatment from the association (O’Donnell and
Shields, 2002). It is necessary for the human resource department to explain the performance
rating scale to understand the employees in different levels. It is to be indicated that the human
resource management is the integral part of an organisation. Starting from the recruitment and
section process, the human resource management of an organisation requires taking care of the
entire data of the organisation, management of the people, and retaining the employees with
proper motivation. The HR set the reasonable deadlines for completing the strategic activities
undertaken by the management (O’Donnell & Shields 2002). The human resource management
requires concentrating on maintaining the effective interpersonal relationships with the
employees. The members associated with the Australian Defense Force exclaimed that they do
not receive the proper treatment from the association.
It is the major responsibility of the human resource management to manage the training
process of every associate, executive, managers and the involved members. It is necessary for the
human resource department to explain the performance rating scale to understand the employees
in different levels. This performance monitoring process is quite helpful in understanding some
of the specific areas of improvement (Dunt, 2009). The lack of proper motivation creates the
considerable impact on the psychological mindset of the employees. When the employees
receive the proper motivation from the organisation, it creates the positive impact on the
associated employees. Similarly, when the employees fail to receive those motivational factors,
such as proper training, appropriate wages, and rewards, their performance can be degraded. It is
essential for the human resource management to keep the record of the proper performance and

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activities of the associated employees (O’Donnell and Shields, 2002). It is even essential to
receive the proper feedback from the employees to understand the major areas of concerns
(Grimmer & Oddy, 2007). The human resource management requires developing such
environment that can satisfy their concerns and improve the willingness to work. In fact, the
human resource management requires focusing on the internal business strategies and the
environmental benefits for the associated employees. Some of the specific motivational factors
are needed to be taken into consideration for leading the employees towards job satisfaction
(Guest, 1998). The further study would provide the major concerns related to the employees
satisfaction. The role of the human resource management has the clear link with the motivation
theories. Herzberg’s Two-Factor theory provides the insightful ideas of the necessary factors
that the human resource management needs to be concerned about to retain the employees. The
following section of the study would discuss these factors associated with the motivation theory
of Herzberg.
Herzberg’s Two-Factor Theory
Frederick Herzberg, the behavioural scientist observed the needs of several important
segments that create the impact on employees’ minds. The Two-Factor theory is also noted as
motivation-hygiene theory that results the satisfaction or dissatisfaction of the associated staffs.
The case scenario defines that the members of Australian Defense Force have been facing major
issues with the improper training process, low rise of the wages, and lack of proper employee
well-being (Defence.gov.au, 2017). According to this theory, it is notable that some of the
specific job factors result in satisfaction or dissatisfaction of the associated employees. The ‘two-
factor’ theory describes two major factors, such as motivators and hygiene factors. The elements
associated with these factors are discussed further:

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A. Hygiene Factors
According to Herzberg, there are some factors, which are necessarily needed to be
implemented within the environment. These factors do not often lead to the satisfaction, but the
absence of these factors may dissatisfy the employees. The factors do not even stay for a longer
period and these are reasonable in a job. According to Guest (2004), these factors are generally
describing the exact workplace and the environment. The hygiene factors usually symbolize the
necessary psychological needs of the associated employees (Mentalhealthcommission.gov.au.,
2017). The case study also follows the issue with the psychological contracts of the ADF
members due to the absence of several essential factors. The following hygiene factors are
needed to be taken into account.
Pay: The salary structure or the pay structure is the major factor for every organisation.
The employees usually look for the effective pay structure when they are associated with the
organisational activities. As per the scenario, the members of Australian Defense Force
experience their pay rise in every 3years cycle in which they only receive the hike to 4.5% of the
amount (O’Donnell and Shields, 2002). This amount is much less for influencing their
motivational aspects. The structure of this amount is needed to be equal and competitive to the
organisations belong to the same domain (Dobre, 2013). Australian government thus requires
paying attention to such monetary factor that create the influencing impact on the employee
satisfaction.
Administrative and Company Policies: The rigid policies of the company often lead to
dissatisfaction. The maintenance of the fairness and appropriate rules and regulations is
necessary for every organisation. The flexible working hours, vacations, and appropriate dress

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codes are some of the considerable components associated with this segment. The case scenario
reflects that the ADF members usually face issues with the improper maintenance of fair
treatment and effective policies (Rousseau, 2001). The administrative department fails to
manage the significant traits that are influencing the minds of employees. Hence, the Australian
Government requires make some of the considerable modifications for improving administrative
laws for the members of Australian Defense Force.
Fringe Benefits: In an organisations, the employees look for some of the motivating
benefits offered by the organisations. In usual cases, the employees seek the proper medical or
health care plans, benefits or facilities for their family members, and the employee health
programmes. The members associated with the Defense Force need such facilities for their
families since they are often involved with life risk situation (Whelan, 2016). Their claims for
the medical facilities are quite justified. The medical benefits are necessary for leading them
towards satisfaction.
Physical Working Conditions: The safe working conditions, maintenance of the hygienic
level and cleanliness are the basic requirements for every employee working under an
organisation. The members of Australian Defense Force are concerned about the equipment used
for their activities. The equipments are needed to be properly checked and updated for the
betterment of the work functions. Moreover, upgrading the equipments would also be helpful for
the safety parameters of the ADF members (Williamson, O’Donnell and Shingles, 2015). The
issues with such improper maintenance of these equipments are creating the negative influence
on the minds of the associated staffs.

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Interpersonal Relations: The maintenance of the effective interpersonal relationship with
the employees is another considerable factor for the employee satisfaction. The human resource
management requires concentrating on maintaining the effective interpersonal relationships with
the employees. The members associated with the Australian Defense Force exclaimed that they
do not receive the proper treatment from the association (O’Donnell and Shields, 2002). It is
necessary for the human resource department to explain the performance rating scale to
understand the employees in different levels. This performance monitoring process is quite
helpful in understanding some of the specific areas of improvement. The human resource
management has the power of controlling such situations by improving the behavioral aspects
within the association. The peers, superiors, and associates require concentrating on the well
behaviour with the employees for generating trust and retaining them for a long run.
Job Security: The major satisfaction of the employees is facilitated with the assurance of
the secure job environment. Once the employees feel secure within the organisation and about
the job, it becomes the greater satisfactory element (Dobre, 2013). The human resource
management thus requires paying attention towards such security for the associated staffs.
B. Motivational Factors
According to the theory developed by Herzberg, it is notable that the hygiene factors are
completely different to the motivational aspects. It has been observed that the HRM practices
even have the strategic linking with the psychological contract. The human resource
management requires developing such environment that can satisfy their concerns and improve
the willingness to work. In fact, the human resource management requires focusing on the
internal business strategies and the environmental benefits for the associated employees. The

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PEOPLE, WORK, AND ENVIRONMENT
major focus of the efficient human resource management is to motivate the workforce to retain
them for a longer time. The hygiene factors are thus not considered as the motivators for the
employees. The elements associated with the motivational factors are discussed further:
Rewards and Recognition: The efforts of the employees are needed to be appreciated by
the top management. The accomplishments of the employees are needed to be rewarded and
recognized (O’Donnell and Shields, 2002). In fact, the members associated with the Australian
Defense Force expect to be rewarded for their enormous efforts. The human resource
management require concentrating on such aspects.
Growth and Promotional Opportunities: The employees look for the advancements and
sense of achievement for the input they provide to accomplish the goals. The results would
ensure their satisfaction and loyalty towards their jobs. In fact, in case of ADF members, the
scenario is quite same. It is necessary for the human resource department to explain the
performance rating scale to understand the employees in different levels (Williamson, O’Donnell
and Shingles, 2015). This performance monitoring process is quite helpful in understanding
some of the specific areas of improvement. They seek for the proper recognition from the
Australian Government for their efforts provided to the defensive activities for the country.
Hence, the human resource management requires focusing on this requirement.
Responsibility: The employees always need to hold themselves responsible enough for
the work (O’Donnell and Shields, 2002). If the employees receive the ownership of the work,
they become more motivated and fond of their job activities (Williamson, O’Donnell and
Shingles, 2015). The human resource management requires developing such environment that

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can satisfy their concerns and improve the willingness to work. Accordingly, the ADF members
would generate the sense of satisfaction within their workplace.
Implication for the Human Resource Management
The above discussion focuses on the necessary factors that serve as the motivational
aspects for the employees. The case study reflects the improper management of these factors that
create the negative influence on employees’ satisfaction level. The human resource management
is the integral part of an organisation. It has been observed that the HRM practices even have the
strategic linking with the psychological contract. The major focus of the efficient human
resource management is to motivate the workforce to retain them for a longer time. Starting from
the recruitment and section process, the human resource management of an organisation requires
taking care of the entire data of the organisation, management of the people, and retaining the
employees with proper motivation. The HR set the reasonable deadlines for completing the
strategic activities undertaken by the management In order to accomplish this concern, the HRM
needs to concentrate on following implications:
 It is necessary for the human resource management or the Australian government to pay
attention towards the proper training and development purposes. The effective training
and development for the ADF members would be fruitful for the improvement of
performance. Moreover, the members would receive the chance to develop their skills
against the defensive activities. It is one considerable factor of motivation.
 Appreciating the employees or the associates for their fruitful contribution is necessary
for the human resource management. The Australian Government needs to consider the
sacrifices and the potentiality of the defense force while protecting the country. Hence,

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the rewards and recognition is one of the most helpful elements that can motivate them
to be more willing to complete their tasks.
 Maintenance of the employee wellbeing is necessary for the Government of Australia to
retain the members for a longer period. When the employees receive enough benefits
from the association and their pay scale would be higher, it would work as the
motivational factor to sustain for a long-term. Hence, improvement of the employee
wellbeing would be beneficial for the performance parameter of Australian Defense
Force.
Conclusion
The case study focuses on the specific issues related to the improper human resource
management within ADF. The ADF members claim that their pay rise is minimal and they do
not receive the deserving treatment from the Australian Government. It creates the psychological
contracts between the members of Australian Defense Force and Australian Government. The
human resource management requires developing such environment that can satisfy their
concerns and improve the willingness to work. In fact, the human resource management requires
focusing on the internal business strategies and the environmental benefits for the associated
employees. After identifying the motivational and hygiene factors, it can be implied that the
human resource management requires concentrating on some of the specific implications.
Developing the effective training session, providing the proper rewards and recognition to the
members, and improving the employee wellbeing would be beneficial enough to generate
satisfaction among the ADF members.

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Reference
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<http://www.defence.gov.au/pathwaytochange/docs/120410%20Pathway%20to
%20Change%20-%20Evolving%20Defence%20Culture%20-%20web%20version.pdf>
[Accessed 8 Oct. 2017].
Dunt D, (2009)., Review of Mental Health Care in the ADF and Transition through Discharge.
http://www.defence.gov.au/health/DMH/Review.htm accessed 5 October 2009
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