Psychological Contract: Work-Life Balance in Retail

Title: A contemporary analysis of the concept of work life balance and the effects of the psychological contract within the business. Geared towards retail.

A compiled list of the 6 main sources of information that could be used with justification as to why they are relevant and a paragraph on key theories/models, analysis tools that would be used in this dissertation. A total of around 600 words.

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With regard to the paper recently completed, this addendum represents some further thoughts and resources which would be required to expand the work into a wider study.

There are three themes which would need to be pursued in a more detailed examination of this topic.

The nature of the generic Psychological Contract.
The nature of the Psychological Contract in the Retail Sector, and its relationship with marketing.
The nature of HRM and SHRM (Strategic Human Resources Management) in the Retail Sector.

These themes would need to be explored across a range of material, beginning with secondary sources, and ideally extending into qualitative primary research involving HR professionals, and retail staff themselves.

The six main related secondary and primary sources.

Guest, D.E., and Conway, N., (2004), Employee Well-being and the Psychological Contract: A Report for the CIPD, Chartered Institute of Personnel and Development, London. This source is essential because it provides an insight into both the agreed definitions of the psychological contract within the HR profession, and the application of that model in their vocational practice.

Buchanan, D., and Huczynski, A., (2006), Organizational Behaviour: An Introductory Text, Prentice Hall/Financial Times, London. This source is essential as a precis of the relevant motivational theories, work of Herzberg, McGregor, Maslow, Adams, Vroom, Porter and Lawler.

Analysis of the implications of McGregor’s X and Y theories of reward/coercion, and Herzberg’s concept of extrinsic and intrinsic rewards, as set out in Brooks, I., (2003), Organisational Behaviour: Individuals, Groups and Organisation, 2nd Ed, FT-Prentice Hall, London, and Fincham, R., and Rhodes, P., (2005), Principles of Organisational Behaviour, 4th Edition, Oxford University Press, Oxford. Within the extrinsic and intrinsic reward model, extrinsic rewards may be thought of as those of material considerations and working conditions, whilst intrinsic rewards are more honorific and interpersonal.

Hofstede’s cultural dimensions index, as set out in Hofstede, G., (2003), Cultures and Organizations: Intercultural Cooperation and its Importance for Survival, Profile Business, London, and Gerte Hofstede Cultural Dimensions Website, INTERNET, available at [viewed 26.10.08], would need to be employed to assess the different motivational models and tolerances which are increasingly visible in a multi-cultural workforce, and a globalizing retail sector. This would have to take account of Hofestede’s ideas of power distance, collectivism/individuality, long or short-term orientation, masculinity/femininity, and uncertainty avoidance.

A comparative study of employee relationships between retail workers in Waitrose and the John Lewis partnership, and an other large retail group, i.e. Tesco’s, Woolworth or Argos. The rationale for this is that the John Lewis group is the only one to deploy an extensive profit sharing remuneration scheme with its employees.

Comparative primary study of attitudes between retail employees and customers of the John Lewis partnership, and another, non-profit sharing retail group in the UK. To be carried out through a combination of…

questionnaires comprising binary yes/no responses and written answers to set questions.
A small number of in-depth and semi-flexible individual interviews.

Key theoretical approaches here would be evolved around a balance of phenomenological and positivist research formats, to obtain qualitatively useful data, which could also support statistical models with a possible wider application. McGregor’s extrinsic/intrinsic scale model questionnaire could be employed to lend a positivist dimension to the attitudinal data produced.

This paper outlines some key themes in contemporary retailing HRM, focusing particularly on the significance of the psychological contract within the business, and the concept of work life balance. It argues that contemporary economic and trading conditions have tended to expose the way in which both issues are treated in the retail sector, and attributes this to continued trends for tertiary and part-time employment patterns. As Hooley et al. observe, ‘…Well developed marketing resources (assets and capabilities), when deployed in the marketplace, can lead to superior market performance. Satisfied and well motivated staff (a prime marketing asset), for example, can make a significant contribution to creating satisfied and loyal customers…’ (Hooley, p.21). At boardroom level however, contemporary pressures on costs may impinge upon staff CPD and retention.

In the first instance, it may be helpful to foreground the concept of the psychological contract itself. As Sonnetag observes, ‘There is relatively consistent empirical evidence for a positive relationship between specific aspects of individual well being and….performance.’ (Sonnetag, p.4110 ). One way in which this symbiosis between employee motivation and output can be achieved, is through a management style which exceeds the formal terms of the contractual obligation in terms of an equitable relationship. As Williams indicates. ‘..this interpersonal aspect to fairness reminds us that there is a social basis to the exchange relationship between employer and employee and we might expect this to be part of the psychological contract.’ (Williams,1998: p.183). The concept of the psychological contract rests on the idea that workplace relationships inevitably develop beyond those encapsulated in explicit frameworks, hierarchies, and job descriptions. It is therefore perfectly feasible for management to de-motivate staff – even though they are formally empowered to do so – by breaching ‘informal’ or psychologically accepted principles. As Guest and Conway point out, ‘…built on the three pillars of fairness, trust and delivery of the deal between organizations and employees, a positive psychological contract is the best guarantee of good performance outcomes.’ (Guest and Conway, 2003: p.vii).

There is much empirical evidence to suggest that retail employers are acting to redress percived inadequacies in this area. For example, as Murray reports, fast-food giant McDonald’s has acted to improve its image since the term ‘McJob’ entered the Oxford english Dictionary, denoting ‘…an unstimulating, low-paid job with few prospects…’ (Murray 2008: n.p.) Part of the response has been to initiate CPD programmes which combine flexible working arrangements with learning programmes to develop staff skills and accreditation. Other retail management and service sector managers also see this as the route to recruit and retain the best staff. As Jack Constantinides, vice-president HR and business partner for Monster for Europe West and Prague explains, ‘People are looking for more from their job than just a chunky pay package – including job satisfaction, career prospects, training, benefits and crucially work-life balance’. (Murray 2008: n.p.). This suggests that, where costs will allow, more mature businesses may see the creation of value as the route to business stability through intrinsic as well as extrinsic employee reward. However, contemporary trading conditions may militate against the expenditure of such on-costs, at least for the time being. As Taylor reports, ‘The disclosure last week that Marks and Spencer wants to reduce redundancy benefits for staff has sparked union fears that the retail group is preparing the way for large-scale job cuts.’ (Taylor 2008: n.p.). M&S are obviously not the only high-profile high street victims: As Kilgren and Braithwaite observe of the troubled Woolworth chain, ‘Up to a third of the 1,000 retail division staff at head office may lose their jobs… PwC, auditor to Woolworth’s, pointed to “material uncertainties which may cast significant doubt about the company’s ability to continue as a going concern”.’ (Kilgren and Braithwaite, 2008: n.p.).

When discussing the issue of work life balance amongst retail employees, it is arguably unhelpful to regard this couplet as representative of a homogeneous and undifferentiated employee group. In a sector strongly associated with casualized, part-time, and often female labour, it is important to recognize the way in which different social groups may derive a satisfactory relationship between their home and working lives. As Kirby observes, ‘At a time when female “returners” are set to become an increasingly significant element in the UK workforce, British retailing remains highly dependent on part-time female labour. At the same time, working conditions appear not to be as attractive as they might be. Pay remains low and career prospects and training opportunities are poor, especially for part-time employees…’ (Kirby 1993: p.205). It is at this point that the psychological contract and work-life balance are arguably drawn closer together, a point which may be reinforced by considering the motivational theories of Adams. As Huczyinski and Buchanan explain, ‘Adams proposed that we compare our rewards (pay, recognition) and contributions (time, effort, ideas) with the outputs and inputs of others. Equity thus exists when these rations are equal. Rewards can include a range of tangible and intangible factors…Inputs similarly relate to any factor that you believe you bring to the situation…’ (Huczyinski and Buchanan 2007: p.249). In other words, employers face a range of competing challenges when balancing employee satisfaction with business objectives.


Braithwaite, T., and Kilgren, L., ‘Woolies plans job cuts in bid to reduce its costs’, Financial Times, 18 September 2008, INTERNET, available at, [viewed 14.10.08], n.p.

Murray, S., ‘Staff want more than just their pay packet’, Financial Times, 8 July 2008, INTERNET, available at, [viewed 14.10.08], n.p.

Bromley, R.D.F., and Thomas, C.J., (ed), (1993), Retail Change: contemporary issues, UCL Press, London.

Guest, D.E., and Conway, N., (2004), Employee Well-being and the Psychological Contract: A Report for the CIPD, Chartered Institute of Personnel and Development, London.

Hooley, G., Saunders, J., & Piercy, N., (2004) Marketing Strategy and Competitive Positioning (3rd Edition) Prentice Hall, Essex

Kirby, D.A. ‘Working conditions and the trading week’, in Bromley, R.D.F., and Thomas, C.J., (ed), (1993), Retail Change: contemporary issues, UCL Press, London, pp.192-207.

Sonnetag, S., (ed), (2002), Psychological Management of Individual Performance, John Wiley and Sons, Chichester.

Stacey, K., and Rigby, E., ‘Retail supply chain begins to turn rusty’, Financial Times, 8 Oct 2008, INTERNET, available at [viewed 14.10.08], n.p.

Taylor, A., ‘Inquiries on how to shed staff soar’, Financial Times, 25 Aug 2008, INTERNET, available at [viewed 15.10.08], n.p.

Van der Lippe, T., and Peters, P., (2007), (eds), Competing Claims in Work and Family Life, Edward Elgar, Cheltenham.

Williams, R.S., (1998) Performance Management: Perspectives on Employee Performance, International Thomson Business Press, St.Ives.

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