Employees are often promised more in the job interview than is later delivered: Promotion opportunities, co-determination, freedom. This is not contractually agreed and things often turn out differently in everyday life. These psychological breaches of contract cause resentment and, in the worst case, lead to dismissal. In order to reduce employee turnover, companies have an interest in managing psychological breaches of contract. An international study involving the Fachhochschule Dortmund shows how.
"We were able to prove that a company's social commitment as part of its corporate social responsibility (CSR), i.e. the voluntary social, ecological and ethical standards in its business strategy, can act as a kind of insurance against the negative consequences of a psychological breach of contract," explains Prof. Dr. Sabrina Scheidler. She teaches at the Faculty of Business Studies at Fachhochschule Dortmund and conducts research into corporate sustainability management, among other things. Together with professors from France and the USA, she has published her study in the renowned "Journal of Management Studies" (Nov 2024).
Generating moral capital
In several waves of the survey, the researchers were able to empirically prove that CSR commitment generates moral capital. "Companies that get involved and contribute to society, for example by supporting local associations, environmental initiatives or volunteering, generate this moral capital and thus form a kind of 'account of good deeds'," explains Professor Scheidler. This can lead to employees evaluating a psychological breach of contract less negatively, as they do not assume that the company has 'bad intentions'. However, the researcher cautions: "Not every CSR commitment generates equal moral capital. It is crucial for companies to communicate transparently internally which values are behind their commitment and to live them authentically." Moreover, moral capital cannot prevent all negative reactions.
Nevertheless, the results underline the role of CSR not only as value-creating (e.g. reputation, awareness), but also as value-protecting. "Strengthening employees' trust in the company and promoting their loyalty is extremely important, particularly in view of the shortage of skilled workers," emphasizes Professor Scheidler.
With the study, the international team of researchers also provides empirical data for the first time that psychological breaches of contract lead to hypocritical positions towards the employer. This was to be expected, but has not yet been proven. "Situations in which employees perceive that their employer is not keeping important implicit promises cannot be completely avoided," says Professor Scheidler. "These are often based on unspoken personal expectations rather than concrete promises." It is therefore important for companies to counteract these ruptures in the job relationship.
Publication
The study "Giving the Benefit of the Doubt: Investigating the Insurance-Like Effect of CSR in Mitigating Negative Employee Reactions to Psychological Contract Breach" was published by Prof. Dr. Kenneth De Roeck, SKEMA Business School (France), Prof. Dr. Nicolas Raineri, ICN Business School (France), Prof. Dr. David A. Jones, University of Vermont (USA), and Prof. Dr. Sabrina Scheidler, Fachhochschule Dortmund (Germany), Journal of Management Studies, issue 61 from November 2024.