PSYCHOLOGICAL CONTRACT BREACH AND JOB RELATED OUTCOMES

Abstract

Purpose – The purpose of this study is to examine the consequences of relational and transactional psychological contract breach on turnover intention with the mediating variables job satisfaction and affective commitment in the employees working in the banking sector of Pakistan.Design/methodology/approach – Questionnaire were distributed to the employee working in the 
banking sector of Karachi. Total 268 sample size were used in this thesis. SEM has been used with the help of Smart-PLS to check the relationship between the variables. Convergent and discriminant validity have been evaluated. Boot strapping has been used to test the direct and mediating effects.Findings – The findings of the study showed that relational psychological contract breach has a 
significant and positive impact on the turnover intention while the transactional psychological contract breach has insignificant impact on the turnover intention. Transactional psychological contract breach has a significant and negative impact on both job satisfaction and affective commitment. Relational psychological contract breach has a significant and negative impact on both job satisfaction and affective commitment. Job satisfaction was found to mediate the relationship between both relational and transactional psychological contract and turnover intention while affective commitment was found to mediate the transactional psychological contract breach and turnover intention but not relational psychological contract breach and turnover intention.Practical implications – The finding provides some practical implication for the organization. During the hiring process itself, organizations should not make any unrealistic promises. The organization Rules, Policies and Procedures should be grounded on equality and fairness. Organization should make sure that the performance reviews are conducted on the regular basis. Iforganization had fail to make any promise or expectation they made to the employee, then they should communicate clearly and give some explanation why the certain expectation couldn’t meet.
Originality/value – The finding provides new insights into the aspects effecting employee turnover intention. Previous study presenting turnover models mostly used job satisfaction, leadership and organizational commitment, either correlationally or independently, but there is less focus on the psychological contract breach impact on turnover intention. This research contributes to current studies on psychological contract and will assist for further studies. This study finding will also help the organization and manager in reducing turnover intention of the employee