574944 research-article2015 GOMXXX10.1177/1059601115574944Group & Organization ManagementSherman and Morley Article On the Formation of the Psychological Contract: A Schema Theory Perspective Group & Organization Management 2015, Vol 40(2) 160–192 © The Author(s) 2015 Reprints and permissions: sagepub.com/journalsPermissions.nav DOI: 10.1177/1059601115574944 gom.sagepub.com Ultan P Sherman1 and Michael J Morley2 Abstract While much is known about the consequences of the psychological contract, comparatively less is understood about how the contract is actually formed in the first instance We argue that a closer examination of the fundamental building blocks of the psychological contract will facilitate a better understanding of how it should be effectively managed Based on its cognitive underpinnings, we make the case for the development of a schema theory perspective on the contract formation process Specifically, we explore how previous employment experiences and both individual and organizational sources of contract-related information differentially influence the formation of the emerging psychological contract in the new firm Arising from this, we advance several linked propositions to direct future research in this area Finally, we discuss the methodological challenges facing researchers seeking to access employee–employer schemata and propose how some of these may be addressed Keywords psychological contract formation, review, schema theory, cognitive, methodology 1University 2University College Cork, Ireland of Limerick, Ireland Corresponding Author: Ultan P Sherman, School of Management and Marketing, University College Cork, Cork, Ireland Email: ultan.sherman@ucc.ie Sherman and Morley 161 The psychological contract represents a central, if sometimes contested, paradigm in the analysis and understanding of exchange relationships With its roots in the work of the psychiatrist Karl Menninger, who, in his 1958 book Theory of Psychoanalytic Technique, observed that an understanding in the form of an unwritten contract developed between the interaction of the therapist and patient during treatment, the term psychological work contract was subsequently used by Argyris (1960) to describe the relationship between employee and organization and the ensuing effect each party has on the other Building on this idea, Levinson, Price, Munden, Mandl, and Solley (1962) refer to the psychological work contract as “a series of mutual expectations of which the parties to the relationship may not themselves be even dimly aware but which nonetheless govern their relationship to each other” (p 21) Subsequent work by Schein (1965, 1980) also centers on these mutual expectations which operate “at all times between every member of an organization and the various managers and others in that organization” (Schein, 1980, p 22) Since the 1990s, the psychological contract has acquired construct status resulting in a wave of theoretical and empirical work and a critiquing and maturing of the concept (e.g., Coyle-Shapiro & Kessler, 1998; Cullinane & Dundon, 2006; De Vos, De Stobbeleir, & Meganck, 2009; Millward & Hopkins, 1998; Robinson, 1996; Schalk & Freese, 1997; Shore & Tetrick, 1994; Tomprou & Nikolaou, 2011; Turnley & Feldman, 2000) Despite widespread research conducted on the dynamics of the contract itself (Conway & Briner, 2005), there are significant gaps in our knowledge around that actual formation process of the contract, which has largely been ignored in the extant literature Indeed, relatively little is still known about how it is created A number of reasons may be advanced as to why the formation process merits further investigation First, a closer examination of how the psychological contract is constructed will facilitate an understanding of how it should be managed and developed Previous research suggests that at organizational entry, the new hire holds a rudimentary psychological contract that becomes more elaborate throughout their tenure with the organization (e.g., De Vos, Buyens, & Schalk, 2005; Rousseau, 2001; Shore & Tetrick, 1994) An assessment of this preliminary understanding of the exchange agreement can serve as a solid foundation to manage the relationship over time as it allows the employer to predict, in part at least, employee behavior throughout their stay in the organization Second, prior research has shown that a number of individual and organizational outcomes are associated with fulfillment (e.g., organizational citizenship; Turnley, Bolino, Lester, & Bloodgood, 2004) or breach and violation (e.g., knowledge guarding where individuals fail to combine and exchange their knowledge with others; Bal, Chiaburu, & Diaz, 2011) of the psychological contract The suggestion here 162 Group & Organization Management 40(2) is that by addressing the psychological contract in its formation stage, the employer can increase (or decrease) the likelihood of desired (or undesired) outcomes such as organizational commitment and perceived person–environment fit (Morley, 2007; Sturges & Guest, 2001) Those studies that have examined the initial stages of the psychological contract have provided insights relating to antecedents of the contract itself, newcomer socialization, and the employee’s understanding of the obligations of both parties Researchers have characterized the formation process as a period of information seeking (e.g., Rousseau, 1995; Thomas & Anderson, 1998) Both organizational and individual factors influence the creation of the psychological contract Although relatively few studies have investigated the influence of organizational factors in shaping the psychological contract, expressions of organizational policy (e.g., Rousseau, 1995), recruitment activities (e.g., Shore & Tetrick, 1994), and coworkers (e.g., Tomprou & Nikolaou, 2011) are examples of sources of work-related information that are likely to affect the formation process By contrast, the role that individual factors play in the process has received comparatively more attention in the literature A number of studies suggest that individual factors not only influence how work information is interpreted but also determine what the employee is seeking from the employer For example, “work values” predict information-seeking behaviors (e.g., De Vos et al., 2005), “conscientiousness” predicts a preference for a relational psychological contract (e.g., Raja, Johns, & Ntalianis, 2004), and “careerism” has been found to be associated with opportunities for development (Rousseau, 1990) and intention to leave (Hamilton & von Treuer, 2012) Studies such as these support the idea that individual predispositions influence how employees view their relationship with the employer as well as how they act within the framework of that relationship (Coyle-Shapiro & Kessler, 2000) Understanding how both parties “view” this relationship calls important attention to the conceptual lenses used to explore the psychological contract itself A number of competing frameworks have been advanced, each offering different insights on the contract’s dynamics Thus, social exchange theories have been proposed by a number of researchers as a useful exploratory tool (e.g., Coyle-Shapiro & Conway, 2004; Johnson & O’Leary-Kelly, 2003; Robinson, Kraatz, & Rousseau, 1994) These studies highlight how the relationship between the employee and employer influences which obligations are exchanged (and not exchanged) Indeed, the social/economic divide inherent in exchange theory has informed the relational/transactional divide often explored in psychological contract research (Shore, Tetrick, Lynch, & Barksdale, 2006) A number of researchers have used “sense-making” theory to help assess the psychological contract (e.g., Chaudhry, Wayne, & Schalk, Sherman and Morley 163 2009; De Vos & Freese, 2011; Morrison & Robinson, 1997) Again, these studies enrich our understanding of how employees interpret and respond to important episodes within the development of the psychological contract They also highlight the cognitive processing inherent in contract dynamics (Tomprou & Nikolaou, 2011) The other prominent cognitive framework put forward in the literature is “schema theory.” Arguably, schema theory is implied in Rousseau’s (1990) reconceptualization of the psychological contract, relocating it in the mind of the employee Schema theory is a potentially useful theoretical lens to assess the dynamics of the psychological contract as it highlights how information is used when two parties are forming an agreement Apart from Rousseau’s (2001) theoretical work, we have very little knowledge of how the psychological contract as schema functions (Taylor & Tekleab, 2004) As a result, we contend that there is a need for a deeper exploration of the cognitive underpinnings of the psychological contract To facilitate this exploration, we argue that schema theory represents an appropriate point of departure to open new potential lines of enquiry in the following three areas: The shaping role of pre-employment experiences on the content dimensions of the psychological contract; The extent to which information emanating from organizational processes and agents differentially shapes the formation of the psychological contract; and The value in accessing the individual’s schema in facilitating a better understanding of the psychological contract formation process From our perspective, the field would benefit from these lines of enquiry in two particular ways: First, it would contribute to our understanding of the specific terms of the psychological contract present during organizational entry (i.e., content dimensions) by identifying employee and employer obligations that have not received much attention in previous studies; second, it holds the prospect of offering further insights into how the psychological contract is likely to function and develop over time as the schema filters information as is required (Morrison & Robinson, 1997) Both of these areas have been identified by a number of researchers as underdeveloped areas within the literature (e.g., Conway & Briner, 2005; Coyle-Shapiro & Parzefall, 2008; Rousseau, 2001) We contend that schema theory as a theoretical framework can add breadth to our knowledge of the psychological contract formation process How previous employment experiences and sources of contract information shape the contract formation process can be better understood by considering psychological 164 Group & Organization Management 40(2) research on schemata The remainder of our article is structured around a discussion of the three potential contributions schema theory can make to understand the psychological contract formation process (listed above) A number of propositions are set down to help direct future research in this area Section 1: Pre-Employment Experiences and Psychological Contract Content A schema is a mental model of conceptually related “elements” which directs how new information is organized (Stein, 1992) Depending on the meaning or significance of this information, it is either assimilated into existing knowledge structures and the schema remains the same or the schema changes and is reconstructed Either way, the schema provides individuals with a knowledge base that serves as a guide for the interpretation of information, actions, and expectations, thereby simplifying the process by which people make sense of events and situations (Bartlett, 1932; Lord & Foti, 1986; Engle & Lord, 1997) Rousseau (2001) asserts that how people make sense of these lower base elements creates a higher level of meaning For example, the concept of “wedding” is a schema developed by experience The wedding schema organizes and gives meaning to certain wedding features such as rings (more appropriate than a bracelet for this occasion) and rice (confetti rather than food) In this example, the rings and rice are the elements present in the wedding schema Within the context of the psychological contract, the elements at the lower level of abstraction represent the content dimensions How these elements are interpreted reveals what the individual believes about the association between the employee and employer in terms of whether it is governed more by a transactional or relational exchange Therefore, it is important to explore these base elements at organizational entry given that they influence interpretations of the new psychological contract The content dimensions refer to the specific terms that constitute the perceived exchange relationship (Rousseau & Tijoriwala, 1998) They encompass an employee’s perception of the contributions he or she feels obligated to make to the organization and the inducements he or she believes the organization is obligated to provide in return For example, an employee may be willing to take on extra work but only in return for future promotion opportunities The content of the psychological contract has received considerable attention in the literature (e.g., Herriot, Manning, & Kidd, 1997; Robinson et al., 1994; Rousseau, 1990) However, relatively few of these studies explicitly address the content at organizational entry (e.g., De Vos et al., 2009; Robinson et al., 1994) We know however that the employee holds a rudimentary psychological contract in place at the beginning of their employment Sherman and Morley 165 which Anderson and Thomas (1996) describe as an “imperfect schema.” This schema serves an important function at organizational entry for the new employee, guiding them through the early stages of the socialization process It acts as a useful reference against which all future interactions with both the employer and the work group are assessed By its very nature, this anticipatory psychological contract is subjective, so the point at which it is first constructed depends entirely on the employee’s career history Herriot (1989) argues that an employee’s experience in previous organizations shapes their understanding of the new employment relationship With this in mind, the foundations of the anticipatory psychological contract of an experienced employee are likely to have been in construction for many years The inexperienced employee, on the contrary, will develop a schema largely based on information gleaned from their new organization given that they have little prior organizational experience on which to rely Thus, veteran employees tend to have more content dimensions in their psychological contract than novice employees (Rousseau, 2001), based on their level of work experience Veterans also have more accurate schemata than novices, and their anticipatory psychological contract will align more closely with organizational reality (Rousseau, 2001) Of course, not every employee will be motivated to perfect their pre-employment schema New recruits on temporary, short-term contracts will be very aware of the specific terms of their relationship with the employer given the clearly defined nature of their employment contract In these circumstances, the anticipatory psychological contract will be basic but unambiguous and will guide the newcomer’s interaction with the employer By categorizing new recruits into novices and veterans, Rousseau (1995, 2001) calls attention to the significance of experience as an antecedent of the psychological contract Indeed, it is the acquisition of new experiences that drives schema development The novice employee lacks work experience and has little or no history in a work environment Accordingly, their schema is basic and is more predisposed to be reconstructed Therefore, the information provided by the organization during the early stages of employment takes on great significance for the novice recruit (Bauer & Green, 1998) The veteran, however, has considerable work experience and significant history in a work environment For this reason, the structure of the schema and how it processes new information are different for these employees Expertise facilitates the inclusion of new information into old knowledge structures Veterans with substantial expertise regarding their employment relationship are likely to have well-developed psychological contracts containing many elements These schemata are often more difficult to change because ultimately their structure is sophisticated enough to assimilate new information 166 Group & Organization Management 40(2) Indeed, Dokko, Wilk, and Rothbard (2009) find that performance levels of veteran employees with prior related work experience deteriorated because of the rigidities of their existing schemata The suggestion here is that veterans can be too inflexible with new work practices Rousseau (2001) argues that veterans are less open to change than novices Novices however, have formed rudimentary schemata at organizational entry with fewer elements As such, novices are more open to change during this period, and their schemata are likely to become more similar to those already inside the organization (Morrison, 1993; Thomas & Anderson, 1998) This line of enquiry indicates that level of experience may play an important role in how the schema functions when the psychological contract is being created However, previous work experience is much more than just a measure of time (Dokko et al., 2009) Rousseau (2001) highlights how new recruits can differ markedly in terms of their work history Therefore, the “type” of experience a new employee has undergone is likely to influence perceptions of the new deal with the organization However, we still not know whether previous work experiences give rise to specific content dimensions of the psychological contract Evidence from the literature suggests this is likely to be the case The two most relevant types of experience examined in the psychological contract literature are arguably, “violation” and “fulfillment.” Violation refers to the belief that the other party has not upheld their side of the agreement Fulfillment refers to the belief that the other party has upheld their side of the agreement (Rousseau, 1995) The vast majority of this type of research takes the form of “in-role” studies (e.g., Cassar & Briner, 2011; Johnson & O’Leary-Kelly, 2003; Robinson & Rousseau, 1994) investigating both parties’ contributions to the exchange In contrast, we have a considerably weaker understanding of how previous experiences of psychological contract fulfillment or violation shape the new psychological contract The evidence is largely inconsistent Therefore, for the purposes of this article, it is useful to dichotomize psychological contract experience as “psychological contract violation” or “psychological contract fulfillment” (see Figure 1) Similarly, employees can voluntarily leave their employment (i.e., for a better opportunity in a new organization), or they can experience involuntary job loss through being made redundant Using these two categorization processes, we propose three distinct types of new recruits: (a) the laid-off employee (violation and involuntary), (b) the employee who left voluntarily as a result of psychological contract violation (violation and voluntary), and (c) the employee who left voluntarily but whose psychological contract was fulfilled (fulfillment and voluntary) It is likely that each of these employees would hold very different pre-employment schemata upon organizational entry By 167 Sherman and Morley Likelihood of symmetrical InformaƟon Human Resource Procedures Likelihood of asymmetrical InformaƟon Key Human Resource Manuals Human Resource Processes Supervisor/ Mentor Work Group OrganizaƟonal Agents Previous Psychological Contract ViolaƟon New Contract -Related InformaƟon Voluntary Exit Previous Psychological Contract Fulfilment New Psychological Contract Content Dimensions Job Embeddedness in Previous Role Links Sources of InformaƟon Involuntary Exit Fit Sacrifice Psychological Contract as Schema Figure 1. A schema-based framework for understanding the psychological contract formation process understanding their unique work experiences, we can make predictions about the content of their new psychological contract Psychological Contract Violation and Involuntary Job Loss A number of studies suggest that employees who experience job loss and downsizing revise their career expectations (e.g., Csoka, 1995; Shore & Tetrick, 1994) A recent study by Eilam-Shamir and Yaakobi (2014) finds that employees who had negative experiences (e.g., layoffs) in previous roles were more likely to hold transactional expectations of their future employer than those who had not experienced difficulties However, it is worth pointing out that this study speculates on the notional idea of a future employer In one of the few studies investigating the relationship between previous work experiences and the psychological contract with the current employer, Cavanaugh and Noe (1999) find no relationship between involuntary job loss and psychological contract content These two studies reflect the uncertainty in the field We are still unsure to what extent negative experiences in a previous role shape the content of the psychological contract with the new employer Schema theory would suggest that a negative experience in a 168 Group & Organization Management 40(2) previous role is likely to affect expectations of the employee in the new role Indeed, Eilam-Shamir and Yaakobi find that new employees who have recently been laid-off are less willing to enter into a broader relationship with future organizations Accordingly, we propose that this type of employee will be more tentative in their expectations of the new employer and what they will be willing to contribute in return Proposition P1a: New employees whose previous psychological contract experience is characterized by violation and involuntary job loss will report fewer content dimensions in the emerging psychological contract than their counterparts with no such experiences Guest (2004) argues that loyalty and job security are no longer staples of the contemporary employment relationship given the economic uncertainty of the past quarter century However, not every employee will experience downsizing in their career It is likely that an employee with a relatively settled work history will hold different expectations of a new employer in comparison with an employee with a turbulent career path Previous studies suggest that employees generalize from particular experiences in one organization to another (Andersson & Bateman, 1997) Specifically, the schema representing negative work experiences will influence perceptions of the new employment relationship Therefore, we argue that these employees will be less likely to expect job security in their new role and will feel under no obligation to remain loyal to the organization Proposition P1b: New employees whose previous psychological contract experience is characterized by violation and involuntary job loss will be less likely to report obligations relating to job security and loyalty in the emerging psychological contract than their counterparts with no such experiences Psychological Contract Violation and Voluntary Job Loss Of course, it would be impractical to address every reason behind an employee voluntarily exiting an organization for the purposes of this article Going back to the early work of March and Simon (1958), there are a multiplicity of reasons as to why employees voluntarily leave an organization, encapsulating perceived ease and desirability of movement, inducements, and extraorganizational alternatives perceived by the individual The motivation behind the move is likely to become the chief concern of the new psychological contract For example, an employee who leaves an organization as a result Sherman and Morley 169 of perceived lack of promotional opportunities in the organization is likely to pay particular attention to issues concerning advancement and career development in the new organization However, Pugh, Skarlicki, and Passell (2003) find that violation by one’s previous employer can lead to anxiety and cynicism that the new employer will also renege on the deal From a schema perspective, this finding suggests that experiences of violation become embedded in the schema and influence expectations of the new employment relationship, even with voluntary departures With this in mind, we build on the work of Pugh and his colleagues that mistrust of the new employer will lead to specific psychological contract content dimensions We propose that, in light of the low levels of trust, these employees are more likely to create a psychological contract with the employer where employee performance is highly contingent on employer contributions (Rousseau, 2000) Specifically, they will expect high pay in return for good performance However, they will also be willing to work above and beyond the agreed terms but only in exchange for development and advancement opportunities Proposition P1c: New employees whose previous psychological contract experience is characterized by violation and voluntary job loss will be more likely to report employer obligations relating to pay and development opportunities in exchange for employee obligations relating to performance and extra role behavior in the emerging psychological contract than their counterparts with no such experiences Psychological Contract Fulfillment and Voluntary Job Loss While research has demonstrated that psychological contract violation is typical in most exchange arrangements (e.g., Robinson & Rousseau, 1994), not every employee will experience psychological contract violation Some employee departures can be attributed to external factors such as family responsibilities, ill-health, and so on From a psychological contract perspective, therefore, the perception may be that the employer is fulfilling their side of the agreement, but due to factors external to the terms of the contract, the employee voluntarily leaves the organization Again, there are myriad reasons behind a voluntary exit For our purposes here, we focus on that aspect of the literature dealing with why people stay “Job embeddedness” is a relatively new concept in the management field and may offer a way forward to explain the research problem It refers to the extent to which employees are “connected” to an organization (Mitchell, Holtom, Lee, Sablynski, & Erez, 2001) These authors propose a tri-dimensional view of job embeddedness 178 Group & Organization Management 40(2) difficulties of the past They may revise what they expect from the employee and what they are willing to give in return (Cavanaugh & Noe, 1999) It follows that, in the role of employer, the supervisor’s psychological contract experiences with previous newcomers will influence the contract-related information they share with current new recruits Proposition P2d: A supervisor’s previous psychological contract experiences with new recruits will influence the content of contract-related information they share with the current new recruit Work group. Research on employee socialization points to the role of the work group in shaping a new recruit’s introduction into the organization (e.g., Feldman, 1976; Perrot et al., 2014) Extending this idea further, Ostroff and Kozlowski (1992) recommend that members of the work group should be trained to impart appropriate information to newcomers When there is general agreement across the psychological contracts of coworkers, a normative contract is said to exist (Nicholson & Johns, 1985; Rousseau, 1995) A normative contract refers to the beliefs concerning the terms of employment shared by a work group In this instance, information regarding the relationship between the organization and the work group would be communicated in a consistent way given the broad symmetry across the respective psychological contracts However, fulfillment or violation of each member’s psychological contract is likely to undermine the strength of the normative contract, giving rise to different types of emotions influencing the information-sharing process Indeed, Allen (1996) highlights how the work group’s relationship with the organization evokes different emotional reactions among its members In line with cognitive appraisal theory, Garcia-Prieto, Bellard, and Schneider (2003) assert that individual perceptions of the same event can give rise to different affective reactions It follows that perceptions of the relationship with the organization, the psychological contract, will arouse varying emotional reactions in each of the members of the work group When sharing contract-related information with newcomers, it is likely that colleagues’ affective experiences with the employer will influence this process For example, if one member of the work group perceived their psychological contract with the employer as fulfilled, then they more likely to present a positive picture of organizational life to the newcomer due to the positive emotions that fulfillment evokes However, what happens if a different colleague perceives their psychological contract as violated? Are they more likely to present a negative view of the employer? Psychological contract theory and schema theory suggest this is likely to be the case The newcomer is then confronted with two very different “stories” of the Sherman and Morley 179 employer The resulting dissonance will no doubt, create difficulties when forming their psychological contract The general point here is that members of a work group each have their own psychological contract with the employer Their experiences within this arrangement will arouse certain affective responses, which, in turn, will influence the contract-related information they are expected to pass on to the new recruit In an overall sense, the contract-related information shared with new recruits by members of the work group will be inconsistent as a result of their different psychological contract experiences Proposition P2e: The fulfillment or violation of each work group member’s psychological contract with the organization will influence the content of contract-related information they share with the new recruit Section 3: Accessing and Measuring the Schema Viewing the psychological contract as schema calls attention to its cognitive foundations and helps us to understand how new employees make sense of the employment relationship However, adopting this theoretical approach presents several methodological challenges to researchers In this last section, we discuss some of these challenges in light of the propositions set out in the sections above, and we offer some potential solutions to these methodological dilemmas To explore the propositions set forth in Section 1, researchers will be required to have access to the employees’ experiences in previous organizations In the majority of psychological contract studies, the employee’s “story” is rarely fully captured The content dimensions are presented to the participant, and they are then asked to respond to each obligation using rating scales (e.g., Bal, De Lange, Zacher, & Van der Heijden, 2013; De Vos et al., 2009) However, a number of scholars have questioned the merits of this approach (e.g., Freese & Schalk, 2008) as it may run counter to the dynamics of psychological contract theory By responding to set criteria, the participant is not given the opportunity to communicate their own unique experience of the employment relationship Indeed, no one list can function for every context and all people (Morandin & Bergami, 2014) As previously explained, a schema is idiosyncratic, highly unique, and is the product of past experience With this in mind, it is unlikely that the survey approach will elicit the particularities of each individual’s experience, instead outlining dimensions that only loosely reflect this experience Therefore, adopting different measurement techniques is necessary to tap into the nuances of the individual’s psychological contract story 180 Group & Organization Management 40(2) Eliciting the content dimensions from each party is a more methodologically appropriate technique as it captures the subjective nature of the psychological contract as schema (Herriot et al., 1997) It allows the participant to articulate their own understanding of the exchange agreement with the other party This approach is also likely to broaden the range of content dimensions assessed in a study As outlined in the introduction to this article, a number of the propositions set forth explicate specific obligations rarely examined in previous studies (e.g., network building, team engagement), and future studies exploring these domain areas may assist in building our knowledge of psychological contracts A number of psychological contract measures dominate the field (e.g., Rousseau, 2000), with the majority of researchers adopting or tweaking these tools to suit the needs of the study This, in part at least, limits the potential for new content dimensions being uncovered (Freese & Schalk, 2008) Therefore, we contend that eliciting content dimensions that more closely represent the specificities of the exchange relationship is an important step in psychological contract research Nonetheless, accessing and measuring schemata are difficult Rousseau (2001) highlights that a schema may not be entirely conscious to the individual and that the processing of new information occurs automatically Therefore, simply asking the individual to describe the content of the psychological contract in an interview, for instance, does not adhere to the definitional stipulations in place Similarly, Cossette and Audet (1992) highlight the potential subjectivity of the researcher in trying to capture the cognitive organization of the schema They argue that representations of schema often constitute the researcher’s interpretation of the participant’s understanding of a subjective experience How closely this resembles the true nature of the schema is, therefore, open to question A number of different methodologies attempting to tap into the subjective nature of the psychological contract have been used in previous studies The critical incident technique is an example of one such method advocated by researchers to elicit the content of the psychological contract (e.g., Nadin & Williams, 2012; Parzefall & Coyle-Shapiro, 2011) In this approach, the participants are asked to identify behaviors believed to be central to the employment relationship, thus illustrating their individual understanding of the exchange agreement Depending on the nature of their employment history, as well as their current work arrangement, an employee may be more or less likely to identify certain behaviors The rationale behind this approach is that a broader range of behaviors/obligations can be identified given the individuals’ different work experiences Much more work using this methodology is needed, however, to properly assess its value to psychological contract research Sherman and Morley 181 Similarly, we suggest that the repertory grid technique may be an alternative way of eliciting the content dimensions This approach attempts to quantitatively measure an individual’s understanding of the world (represented by “elements”) through identifying the “constructs” used in the process (Kelly, 1955) For the purposes of analyzing the psychological contract, the elements are the content dimensions, and each one will be uniquely understood by the participant For example, an employer obligation concerning development opportunities may be understood as “important” or “realistic” by a worker looking to increase their employability Of course, each participant will identify different elements and will use different constructs to make sense of their inherent meaning Therefore, its big advantage over other methodologies is that the data elicited are idiosyncratic and largely unbiased However, this approach requires the participant to be fully conscious of the schema held, which, as explained above, may not always be the case The general methodological argument here is that elicitation of schema elements is, in theory, more scientifically appropriate when trying to better understand the idiosyncratic nature of the psychological contract but is difficult to achieve from a practical standpoint How the dynamics of the psychological contract influence affective outcomes is also an underdeveloped area of research Many of the propositions put forward in the first section of our article require a method that successfully explores this relationship A number of researchers support the “diary method” as a suitable means of capturing affective reactions to psychological contract breach or fulfillment (e.g., Conway & Briner, 2002; Tomprou & Nikolaou, 2011) Indeed, Conway and Briner (2002) assert that this technique allows researchers to better comprehend the “lived” experience of the psychological contract This approach may help future researchers determine the different reactions to breach and fulfillment, which, in turn, will allow them to predict psychological contract expectations in new work arrangements Fulfillment and violation will evoke different affective reactions in different employees, depending on a range of variables An in-depth exploration of this relationship looks beyond the limited survey approach and again may tell us something more insightful about the dynamics of the psychological contract The propositions set forth in the second section above are designed to provoke more research into how sources of contract-related information shape the psychological contract As outlined, much of the research from the socialization and related fields point to a number of different sources that shape the early stages of the employment relationship (Bauer & Erdogan, 2010) However, how each source directly affects the formation of the psychological contract is unclear For example, a supervisor telling a new 182 Group & Organization Management 40(2) employee that weekend work is a rarity but a coworker telling him that it is a regular occurrence will be confusing to the newcomer Depending on their work experience, employees may pay more or less attention to a particular source of information Therefore, explicitly measuring which sources are referenced in the formation process and also the information transmitted by each source in terms of how symmetrical or asymmetrical it is should reveal new insights into how the contract is created In terms of the human resource process sources, it should be relatively feasible to trace certain pieces of information back to particular processes Exploring the source of an employer obligation relating to bonus pay with the participant will reveal how their schema processed new information at organizational entry In doing so, it will allow researchers to better understand the origin of specific content dimensions It will also enable the organization to get a better grasp of the effectiveness of their information channels during the early period of socialization Finally, with respect to organizational agent sources, as outlined above, it is crucial that any measure of previous psychological contract experiences must capture the “story” of these experiences Research indicates that employees overstate their own contributions to the psychological contract and underestimate the employer’s contributions (De Jong, Schalk, & De Cuyper, 2009) Perhaps employers fall victim to the same bias when assessing their exchange relationship with previous employees, thus influencing their relationship with new employees Again, this argument requires much more attention in future research By accessing the various agents’ schemata, we can better establish the likely content of messages shared with new recruits, therefore, better explaining how previous psychological contract experiences shape the information-sharing process A potential solution to the difficulties capturing and representing the psychological contract as schema may be to use “cognitive maps.” Cognitive maps provide important information concerning aspects of a broad terrain (Fiol & Huff, 1992) In the wider management field, they have been used to represent the mental models of decision making (Clarke & Mackaness, 2001; Morandin & Bergami, 2014), strategy formulation (Hodgkinson & Clarke, 2007), and leadership and organizational change (Ndofor, Priem, Rathburn, & Dhir, 2009), for example Within the context of the employment relationship, they can help explain each party’s mental model of the exchange relationship As a heuristic, we present a rudimentary map of the psychological contract as schema in Figure The map itself represents how the schema processes information at organizational entry in light of the reliability of the source and also how this information is interpreted against previous psychological contract experiences We selected “opportunities for promotion” as a unit of information 183 Sherman and Morley Ignore it No What is the source? OpportuniƟes for PromoƟon No Is the source credible? Is the informaƟon symmetrical with other sources? Yes Is this relevant to me? It’s the reason I leŌ my last job Yes Assimilated into schema Dimension of new Psychological Contract PercepƟon that employer will fulfil obligaƟon Key New Contract-related InformaƟon Figure 2. A cognitive map of the psychological contract as schema often signaled to employees As discussed already, certain employees would ignore this piece of information For example, an employee working on a 2-month contract would recognize that such information is not relevant to their work arrangement The schema of newly recruited staff on permanent contracts, however, would process this information differently Their diverse psychological contract histories and perceptions of the current relationship with the organization would determine how this unit of information is assimilated into the psychological contract It is worth highlighting that this figure aims to illustrate how just one piece of contract-related information may be filtered by the schema There is potentially unlimited information available to the new recruit at the beginning of employment Related to this is the notion that veteran employees who have worked for a number of organizations in their career will have highly complex schema structures when they join the organization There are methodological concerns about representing schemata as cognitive maps (Hodgkinson & Healey, 2008) First, Cossette and Audet (1992) warn of the danger of the researcher’s involvement in drawing up the map itself While the mapper draws the map, the elements within it must represent 184 Group & Organization Management 40(2) the thought process of the individual alone The success of this approach is, therefore, dependent on the participant articulating their thoughts Second, Fiol and Huff (1992) highlight that cognition can be represented in a variety of different ways and that a singular form of map prevents a deeper exploration of schematic thinking Cognitive maps, therefore, cannot be considered a perfect model of cognition It is better to view them as a visual aid in comprehending the researcher’s understanding of selective elements of an individual’s thoughts (Eden, 1992) These issues notwithstanding, the potential of such mapping in helping us to explore the cognitive underpinnings of the psychological contract does merit further investigation Conclusion We contend that schema theory has the potential to offer fresh insights into how the psychological contract is created and that its deployment as a theoretical lens will add breadth to what is an underdeveloped area within the literature In calling attention to the potential value of schema theory, we propose a research agenda to advance exploration of the psychological contract formation process This domain aspect of psychological contract research is underdeveloped, and we believe that a sharper focus on it offers the prospect of opening up new and potentially fruitful lines of enquiry Specifically, how positive or negative experiences in previous organizations or with previous employees influence expectations of the other party in the new organization is a key research issue Experience is the driving force of schema development, so it is a legitimate antecedent of the psychological contract If researchers can capture the unique experiences embedded in the schema, they will be in a position to provide new insights into the creation of the psychological contract In addition, a more robust examination of sources of contract-related information is integral to strengthening our grasp of the formation process Human resource process sources are perhaps more likely to signal clear and consistent information to the new recruit However, how useful and accurate this information is remains unclear Similarly, agent sources of information are liable to be influenced by individual biases, affective experiences, and their own psychological contract histories when sharing information with new employees How each source is used during the formation process is also uncertain This particular area of research has received very little attention in the literature, which is surprising given its prospective importance to the construction of the psychological contract Though challenging, the methodological difficulties in accessing schemata should not deter researchers from attempting to access the cognitive foundations of the psychological contract Exploring the intricacies of previous experiences and Sherman and Morley 185 the way in which this guides how new information is sought and interpreted is likely to reveal something new about the psychological contract The potential of cognitive maps to reflect how the schema operates in light of these layered experiences should be further explored Overall, there is a need for more research to be conducted on how the psychological contract is created (O’Leary-Kelly, Henderson, Anand, & Ashforth, 2014) Explaining the formation process requires further insight into the cognitive underpinnings of psychological contract dynamics Understanding how it functions as a schema may be an important step in this process Declaration of Conflicting Interests The author(s) declared no potential 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Behavior, 11, 19-25 192 Group & Organization Management 40(2) Turnley, W H., Bolino, M., Lester, S W., & Bloodgood, J M (2004) The effects of psychological contract breach on union commitment Journal of Occupational and Organizational Psychology, 77, 421-428 Author Biographies Ultan P Sherman is a lecturer in Organizational Behavior and Human Resource Management at the School of Management and Marketing,... moderating effect of emotion regulation Group & Organization Management, 36, 722-758 Bal, P M., De Lange, A H., Zacher, H., & Van der Heijden, B I J M (2013) A lifespan perspective on psychological contracts and their relations with organizational commitment European Journal of Work and Organizational Psychology, 22, 279- 292 186 Group & Organization Management 40(2) Bartlett, F C (1932) Remembering: A study... Campoy, E., Erdogan, B., & Liden, R C (2014) Organizational socialization tactics and newcomer adjustment: The moderating role of perceived organizational support Group & Organization Management, 39, 247-273 Pugh, S D., Skarlicki, D P., & Passell, B S (2003) After the fall: Layoff victims’ trust and cynicism in re-employment Journal of Occupational and Organizational Psychology, 76, 201-212 Purvis,... reactions to the group and the organization In M A West (Ed.), Handbook of work group psychology (pp 371-396) Chichester, UK: John Wiley Anderson, N., & Thomas, H D C (1996) Work group socialization In M A West (Ed.), Handbook of work group psychology (pp 423-450) Chichester, UK: John Wiley Andersson, L., & Bateman, T S (1997) Cynicism in the workplace: Some causes and effects Journal of Organizational... contract-related information they share with the current new recruit Work group. Research on employee socialization points to the role of the work group in shaping a new recruit’s introduction into the organization (e.g., Feldman, 1976; Perrot et al., 2014) Extending this idea further, Ostroff and Kozlowski (1 992) recommend that members of the work group should be trained to impart appropriate information to newcomers...170 Group & Organization Management 40(2) with each dimension explaining why employees choose to stay with an organization We will use this framework to assess the new psychological contract created by employees who voluntarily leave the organization even though their old psychological contract was being fulfilled Mitchell... broadly divides the factors that shape the psychological contract into two categories: (a) individual and (b) organizational 172 Group & Organization Management 40(2) The individual antecedents of the psychological contract have received comparatively more attention in the literature than organizational factors (e.g., De Vos et al., 2005; De Vos et al., 2009; Purvis & Cropley, 2003; Robinson et al.,... and emotions in teams Applied Psychology, 52, 413-440 188 Group & Organization Management 40(2) Grant, D (1999) HRM, rhetoric and the psychological contract: A case of “easier said than done.” International Journal of Human Resource Management, 10, 327-350 Guest, D E (1998) Is the psychological contract worth taking seriously? Journal of Organizational Behavior, 19, 665-672 Guest, D E (2004) The psychology... K E., Anand, V., & Ashforth, B E (2014) Psychological contracts in a nontraditional industry: Exploring the implications for psychological contract development Group & Organization Management, 39, 326-360 Ostroff, C., & Kozlowski, S W (1 992) Organizational socialization as a learning process: The role of information acquisition Personnel Psychology, 45, 849-874 Parzefall, M R., & Coyle-Shapiro, J A... the beginning of employment 174 Group & Organization Management 40(2) can be broadly sourced back to this unit For example, a new recruit who reads the employee handbook about the health and safety culture of the organization will also be able to see artifacts of this culture on the site tour (e.g., safety equipment, protective clothing worn by staff) In this example, the organization decides what the