How do fairness and psychological contract affect employee engagement, performance, and retention?

> Perceived fairness fosters trust and commitment, increasing engagement, while breaches of the psychological contract (unfulfilled promises) decrease engagement and motivation. > Fair treatment and a positive psychological contract lead to higher job satisfaction, motivation, and overall performance. > Conversely, unfairness and contract breaches can result in decreased productivity and quality of work. > Employees who feel fairly treated and whose expectations are met are more likely to stay with the organization. > Conversely, unfairness and broken promises increase turnover intentions and likelihood of leaving the company.

Fairness and psychological contracts shape the heart of an organization. When employees feel treated equitably and see transparent processes, their trust and engagement soar. Psychological contracts, those unwritten mutual understandings, ensure employees feel valued and expectations are clear. When these contracts are honored, it creates a bond that boosts both performance and loyalty. This synergy between fairness and psychological contracts cultivates a thriving workplace, where employees are genuinely motivated and committed, significantly reducing turnover.

Fairness is a perceived result associated with perceived inputs. In the end, perception is king. What one person views as fair, another will not.

"Fairness breeds trust, and trust fosters engagement." Fairness and a strong psychological contract significantly influence employee engagement, performance, and retention. When employees perceive fairness in treatment and clear, mutually agreed-upon expectations (psychological contracts), they are more likely to be engaged and perform well, feeling valued and motivated. This positive environment also enhances retention, as employees are less likely to leave when they feel respected and aligned with organizational goals.

> Employees who perceive fair treatment are more engaged, perform better, and are more likely to stay. > Unfair treatment can lead to decreased engagement, lower performance, and increased turnover. > Employees who feel their psychological contract (implicit agreements about what they will contribute and what the organization will provide) is fulfilled are more engaged, perform better, and are more likely to stay. > Breach of the psychological contract can lead to decreased engagement, lower performance, and increased turnover.

1. Psychological contracts encompass the mutual expectations between employees and employers. Employees might expect fair treatment, job security, career development opportunities, and a supportive work environment. In contrast, employers might expect loyalty, commitment, performance, and adherence to organizational norms and values. 2. Informal and Subjective: These contracts are inherently informal and subjective. They are shaped by personal experiences, organizational culture, leadership styles, and communication patterns within the organization. 3. They evolve over time with changes in employee and employer expectations and organizational context, influenced by factors like restructuring and leadership changes.

The psychological contract is indeed a crucial element in the employee-employer relationship, encompassing the unwritten and implicit expectations and obligations that extend beyond formal agreements. When employees feel that their psychological contract is honored, they experience a stronger sense of belonging, identity, and meaning at work. This fulfillment leads to higher engagement, productivity, and loyalty. When employees perceive that their psychological contract is breached, they are more likely to feel disengaged, unproductive, and prone to turnover. The psychological contract is informal and subjective, evolving over time, but it remains a key indicator of a healthy and committed work environment for both employers and employees.

a few things i think are key factors to enhance fairness at work: Consistency, transparency, active Listening, be an empathetic leader, avoid favouritism and be professional. Additionally, involve employees in decision-making and resource allocation, provide clear and timely feedback and recognition, explain the rationale and criteria behind decisions and policies, address and resolve conflicts and complaints promptly and fairly, and treat employees with dignity, courtesy, and care.

1. Clear Communication: Transparently outline expectations and regularly update employees on changes with clear rationales. 2. Consistency: Apply rules and procedures uniformly and base evaluations on objective criteria. 3. Involvement: Engage employees in decision-making through surveys and meetings. 4. Address Breaches: Swiftly and fairly address breaches, providing explanations and corrective actions. 5. Training: Train leaders on fairness principles and bias mitigation. 6. Fair Treatment: Ensure respectful, discrimination-free interactions. 7. Balanced Contracts: Balance economic compensation with long-term development and well-being. These steps enhance perceptions of fairness, boosting satisfaction and commitment.

Enhancing the psychological contract involves building trust through clear communication and a supportive work environment. Regularly update employees on goals and expectations, apply policies consistently, and base evaluations on objective criteria. Engage employees in decision-making to foster ownership, offer growth opportunities through training, and acknowledge contributions to boost morale. Address breaches swiftly, support work-life balance with flexible arrangements, and ensure a respectful, inclusive workplace. Use regular feedback to address concerns and train leaders in effective communication and empathy. These strategies enhance employee satisfaction, commitment, and overall organizational effectiveness.

The difficulties in measuring fairness arise from its subjective, multifaceted, and context-dependent nature. Studies highlight the need for adaptable, context-specific approaches and transparent decision-making processes to effectively measure and ensure fairness. Suggested studies to read are: Srivastava et al. (2019): “Mathematical Notions vs. Human Perception of Fairness” contrasts formal mathematical definitions of fairness with how people perceive fairness. The study underscores the importance of aligning mathematical models with human perceptions to ensure the effectiveness and acceptance of fairness measures. Corbett-Davies et al. (2023) "The Measure and Mismeasure of Fairness,” , Bird et al. (2020), Verma & Rubin (2018)

Upholding fairness in the workplace is crucial for maintaining a positive and productive environment. Organisations must act immediately when codes of conduct are not adhered to, immoral or unethical behaviour occurs, or a detrimental culture begins to establish itself. When employees observe misconduct being addressed promptly and effectively, it reinforces the importance of ethical behaviour and fosters trust in the organisation's commitment to its values. This deterrence of future misconduct shows that unethical behaviour will not be tolerated and that there are real consequences for those who engage in it.