Impact of Flexible Working & Psychological Contracts on Organizations

This report investigates the concepts of flexible working and the psychological contract within an organization, drawing on relevant research and organizational practices. It explores labor flexibility, work-life balance, and the different types of psychological contracts (transactional and relational). The discussion section applies these concepts to the author's workplace, highlighting the benefits of flexible work arrangements and relational contracts on employee innovation and satisfaction. The report also addresses the importance of managing organizational change and employee resistance. Finally, the report recommends implementing Lewin's change model to successfully transition permanent employees to flexible work arrangements, emphasizing the need for effective communication, a clear vision, and employee involvement. The study concludes that readiness for change is crucial to avoid negative consequences and maximize the benefits of flexible working.

Leading and managing people
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Table of Contents
Introduction....................................................................................................................................2
First: Literature review.................................................................................................................2
1.1 First: Flexibility at the workplace..........................................................................................2
1.2 Psychological contract...........................................................................................................3
Second: Discussion.........................................................................................................................4
Third: Recommendations.............................................................................................................6
Conclusions.....................................................................................................................................7
References.......................................................................................................................................8

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Introduction
Contemporary organizations face the challenge of managing different types of employment
simultaneously. The last decade witnessed an increasing rate of temporary and flexible
employment by organizations because it acts as a means of buffering changing customer demand
for organizations products and services. Temporary work is related to flexibility in managing
work schedules that creates a room for work-life balance. Traditional psychological contracts
between employees and their workplace are built on the employees' perspectives to their
workplace (Chambel, 2014) (Whyman & Petrescu, 2014).
This report investigates the concepts related to flexible working and the psychological contract
with an application on my workplace. Also, recommendations to implement changes are
considered.
First: Literature review
1.1 First: Flexibility at the workplace
Labor flexibility refers to the employer ability to adjust the number of employees and schedule
their working hours. The demand for flexible workers has increased in recent decades. It copes
with the just in time strategies that yield business benefits represented in reduced wages cost,
shifting the risk of instability of hours and income to the employees (Peterson & Wiens-Tuers,
2014).
Temporary employment differs from standard employment in terms of job and work continuity
and legal benefits. Temporary employees are directly hired or hired from a temporary agency,
they could receive work for a fixed term or on call. They usually desire to become permanent to
feel job security and certainty.

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The work schedule of the part-time employees can include weekends and evening shifts that
provides flexibility to both the employer and the employee who can manage work-life balance
(Ede & Rantakeisu, 2015; Powell, 2013).
The term work-life balance was argued by Cooper and Rousseau (2000), as cited in Kebbe &
Ramsoomair (2017), it refers to the employee achievement of a balanced position that enables
him to achieve all aspects of life without conflicting his roles in home and at work. Fisher
(2001), as cited in Kebbe & Ramsoomair (2017), proposed four factors for work-life balance; the
family conflict that affects work, the work conflict that affects family, family to work
enhancement, and work to family enhancement.
1.2 Psychological contract
A psychological contract refers to an individual’s belief towards reciprocal terms and conditions
between him and the employer at the workplace. It discusses the employees' expectations of
receiving benefits in exchange for their efforts in the organization. The term "promise"
represents an important proportion of the contract that reflects confirmation of employees'
expectations by the organization. There are two types of psychological contracts that were
argued by the researchers; First, transactional psychological contracts that are based on
employees performance and the second, is the relational psychological contracts that are based
on the social exchange and relationships between parties (Ahmed, et al., 2016) (Hattori, 2018).
According to Guest (2005), as cited in Manuti (et al., 2016), the temporary staff generally
develops a transactional contract, while permanent staff usually develop a relational contract that
involves organizational commitment and higher job satisfaction.
Psychological contracts are unwritten expectations that should be met by the organization to
guarantee employee satisfaction and commitment to the workplace (Asiedu-Appiah, et al., 2016).

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Rousseau & Tijoriwala (1998), as cited in Anon. (2016), argued that psychological contract not
only implicit, but it could be extended to include explicit promises between the organization and
the employees. Organizational fulfillment of the psychological contract is highly related to
organizational commitment employee behaviors at work, like absenteeism, turnover and
performance level.
Organizations not only expect that the employees fulfill their required tasks, but also anticipate
high organizational commitment from their side that involves transactional contracts (Jabeen, et
al., 2015). Also, people are expected to positively respond to favorable treatment by their leaders
and peers. These traits are managed according to the employee perception of compliance with
relational psychological contract (Chambel, 2014; Kasekende, 2017).
Second: Discussion
At my workplace, temporary employees significantly contribute to organizational success. Being
a heavily dependent IT organization that works in software development, employees have a high
degree of flexibility to accomplish their required tasks from remotely without being obligated to
physically attend at the workplace. They are required to access the organization portal section
that was developed mainly for them to receive and deliver their work. Every employee of the
temporary staff has his unique work schedule that does not comply with the nine to five
mentality. They are able to set their own schedule or work out of a set timeframe. They can
achieve work-life balance and schedule work around their personal needs. The organization top
management set a fixed period of time on three days per week to give teams the chance to
collaborate and set priorities and the rest of the weekdays are set to be flextime. The temporary
staff represents 60% of the company workforce since five years ago. This means that temporary
employees could form transactional psychological contracts with the company. They were

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directly hired by the company and they are allowed to discuss any details with the customers,
receive their feedback and offer help to them.
The relational contract has affected the innovation behavior of the temporary staff who feel
relaxed out of workplace conflicts. The temporary employees can think out of the box being able
to work from their comfort zone. This argument was illustrated by Yuniawan (et al., 2018) study
on the impact of the relational contract and the innovation behavior in a similar context to my
workplace.
Despite the positive impact of work flexibility and relational psychological contract at my
workplace. It is argued by Chaubey & Bisht (2016) that organizations and the management staff
need to consider the implications of organizational change on the psychological contract and
working conditions. The management should be readied for managing resistance to change from
the employees' side and accommodate their expectations to effectively lead the change and do
not leave a negative impact on their psychological contract.
Also, Rozman, et al. (2017) argued that employees either temporary or permeant need to be
supported by the higher management. Positive changes for diverse people according to age,
gender or managerial level are likely to increase their work performance. This argument is
supported with evidence from my workplace - where my colleagues at the IT development
department who are mostly working on a temporary basis – are highly satisfied with their
working conditions and the management motivation to them. They are characterized by higher
innovation, efficiency and quality work.
Also, at my workplace the explicit promises between the management and the temporary
employees take place. The HRM department has set detailed guidelines for dealing with
temporary employees. Depending on previous practices of organizational behavior, the

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relationship between the temporary staff and the management was developed to take the shape of
explicit promises, including bounces and standard compensation for urgent work. This practice
complies with Wojtczuk-Turek & Turek (2015) assumptions of the importance of psychological
contract and organizational commitment and job satisfaction.
Third: Recommendations
My organization intends to transform an additional 15% of the permeant employees in who
represent 40% of the workforce to work on flex basis. They need to be readied for change to
avoid the negative consequences of their resistance to change. The company is recommended to
follow Lewin change model by following the model three steps of unfreeze, change and refreeze.
The model will be applied to my organization according to Sarayreh, et al. (2013), as follows:
 Unfreeze: In this stage, people need to get prepared for the change. The company should
convenience them with the benefits of flexible work.
 Change: Implementing change requires accepting behavior of the employees to ensure the
success of the change plan. A group of current permanent workers could act as change agents
to support the change objectives.
 Refreeze: In this stage, work will be normalized according to the new change plan. Changes in
the organizational culture will take place.
My organization is recommended to implement certain activities to make the change plan
successful, like conducting effective communication of the need for change, creating a vision
that describes the company orientation and to ensure the involvement of employees who will be
affected by the change (Chaubey & Bisht, 2016).

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Conclusions
The demand for flexible workers has increased in recent decades to copes with the just in time
strategies that yield business benefits. The temporary staff generally develops a transactional
contract, while permanent staff usually develop a relational one. At my workplace, The
temporary employees who represent 60% of the workforce, can think out of the box being able to
work from their comfort zone. The additional employees who will be transformed to work
flexibly need to be readied for change to avoid the negative consequences of their resistance to
change.

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References
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Anon., 2016. Optimism and psychological contract on life effectiveness and work effort in IT
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Chambel, M., 2014. Does the fulfillment of supervisor psychological contract make a difference?
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