Case Study Two: The Development of the Psychological Contract Scott Walker had graduated six weeks ago and his concerted efforts to ensure he wasn’t one of those graduates left on the shelf at the end of the summer had paid off. He had attended every careers fair and every employer presentation that had been held at his university, made a nuisance of himself at the careers centre, read every corporate website and all the promotional material he could and applied for innumerable graduate development programmes. After having conducted several telephone interviews and attending four assessment centers, Scott had chosen to accept the offer from Montague Co. over the two other jobs he had been offered. Not only did Scott want and need a job, he wanted the right job. Montague Co. was a relatively small, recently-established subsidiary of a larger US corporation seeking to gain a foothold in the UK consultancy market and already had a handful of important clients, mainly the subsidiaries of other US multinationals courtesy of its parent company, since it was established two years ago. In each year since it had grown and having taken on graduates on an ad hoc basis previously, Scott was to be among its first cohort of graduates on its graduate development programme.
The main reason that Scott had chosen Montague was that he considered the firm to represent the best match between himself, the type of work he wanted to be doing, the type of company he wanted to work for and the type of career he wanted to establish. Montague’s website and its recruitment material had made great play of how dynamic, innovative and ambitious the firm was and, particularly important to Scott, the fact that it considered itself to be both an ‘employee-focused employer’ and a ‘socially-responsible’ company in how it conducted its own business, the advice it provides to its clients and the types of clients it sought to work with. For these reasons, in accepting a position with Montague Scott had accepted a marginally lower salary than he had been offered at the two larger consultancies who had offered him a position. Scott had also been swayed by the interview panel and company representatives he had met at the assessment centre who had placed greater emphasis on the company only recruiting the ‘best of the best’. On this basis, like anyone Scott had been flattered to have been selected. In response to Scott’s own question, the interview panel had told him that 10 graduates were being recruited on to the graduate scheme and that he would be given plenty of developmental opportunities through the structured training programme itself, international secondments and informal development opportunities through coaching, mentoring and support from his line manager. When Scott had arrived at the offices however he was among only three graduates for the opening induction. When he asked about this he was told that he was one of the ‘lucky ones’. The other new recruit that Scott had talked to in the induction had told him that he was simply ‘glad to have got a job’ following so many knock-backs.
Since the formal induction this morning, Scott had been sat at his desk with little to do. His line manager, Dave, had spent most of that time talking to a colleague about a new client the firm that Montague had begun to work with, a firm that had recently been in the news for its association with water pollution off the west coast of Africa. Scott had overheard Dave saying that ‘beggars can’t be choosers’ and that ‘we need all the business we can get at the moment’. At 2.30, Dave had left Scott with the instructions to ‘look busy’ as he popped out of the office on personal business and to tell anyone who asked that he was at a meeting because the company really frowns on ‘people’s personal stuff getting in the way of work’. Scott had begun to wonder if he had made the right decision and his mind was not particularly put to rest when one of his new colleagues told him that he was lucky that Dave even spoke to him given that he wasn’t really a ‘people person’. QUESTIONS 1. What different ‘agents’ can you identify that might influence Scott in the development of his psychological contract at Montague?
2. What potential ‘breaches’ of the psychological contract can you identify that might lead Scott to reappraise his acceptance of a job at Montague?
3. What are the implications of this scenario for HRM at Montague?

The purpose of this case is to highlight, in simple terms and from the perspective of a new recruit, the processes by which the psychological contract begins to be established between an employer and employee before and during (very) early employment. It is written to seek to encourage students to reflect on their expectations – and how these expectations are formed - of their current employment, employment they have previously held or the types of employment they hope to gain in future.
1. What different ‘agents’ can you identify that might influence Scott in the development of his psychological contract at Montague?

Chapter Two discusses the problems associated with multiple agency in the psychological contract and the mixed and potentially contradictory messages, signals and cues that employees might be exposed to both before and during employment in a particular organisation. Students might identify the following sources of influence:
· Website and recruitment material
· HR policies and practices, such as the graduate scheme itself (which are imbued with meaning, some of which might be intended or might be attributed by the individual)
· Interview panel and company representatives during the selection process
· Other new recruits, whether with positive or negative perceptions or expectations of employment
· Those conducting induction
· Line manager
· Media reporting of the company and its activities
· Colleagues and peers 2. What potential ‘breaches’ of the psychological contract can you identify that might lead Scott to reappraise his acceptance of a job at Montague? The potential sources of breach in the psychological contract are outlined in the box below: Promise/expectation Potential source of breach
The nature of graduate development programme, particularly its claim to only recruit ‘the best of the best’
· Low intake
· Lack of promised structure
· Apparent low ‘quality’ of other recruit(s)
Success and dynamism of company Poor current performance
Claims of corporate social responsibility Work with dubious clients
Promise of line manager support and development (through mentoring and coaching)
Line manager ‘ignoring’ Scott
Line manager not, apparently, being a ‘people person’ which does not bode well for future support
Claims of being ‘employee-focused’ Reported ‘regime’ of tight worker control and disregard for ‘work-life’ balance issues. 3. What are the implications of this scenario for HRM at Montague? This question should generate discussion about both the implications for the company in this case and, more importantly, for organisations more widely. Key issues are a range of potential employee relations problems such as labour turnover, lack of commitment, poor performance through lowered effort and motivation, unproductive working relationships and low levels of engagement. Employee attitudes are likely to be strongly affected in respect of the three areas of the psychological contract identified by Guest and Conway (1999) – Trust, fairness and delivery on the deal. The implication that Montague is lower-paying than its rivals and that some of the claims made in the recruitment literature are its key selling points, these problems can lead to lowered reputation among potential employees and can affect its branding both as a company and an employer. Students might be encouraged to reflect on how they might have experienced broken promises in their own employment and how this affected both their attitude and subsequent behaviour.