The Role of Remediation in Mitigating the Negative Consequences of Psychological Contract Breach: A Qualitative Study in the Banking Sector

Abstract

ABSTRACT This study examined whether remediation (providing another inducement to compensate for an undelivered obligation in the psychological contract) was perceived as a useful way to deal with the consequences of a psychological contract breach in the context of organizational change. Data was collected by means of semi-structured face-to-face focus-group sessions and individual interviews in a restructuring organization in the Dutch banking sector. Fourteen focus groups and eight individual interviews were conducted with 30 non-managerial employees and 48 supervisors/professionals. The results bring the potential of offering compensating inducements to remedy psychological contract breach to the fore and highlight the role of other factors such as communication and the availability of job alternatives. Suggestions are provided for improving employee relations in situations of organizational change by taking the psychological contract into account. MAD statement This article sets out to Make A Difference (MAD) through describing views of employees of different hierarchical levels of a Dutch Bank on how to cope with expected organizational changes and less beneficial employment benefits in the future. The question of ‘how to change the deal while keeping the people’ by remediating breach of the psychological contract is addressed from different perspectives. When organizations are forced to implement changes, taking the mutual obligations in the psychological contract into account can avoid reactive, and unsuccessful management of change. A psychological contract breach can be remediated by providing other inducements for the mutual benefit of organization and employee. Since there are differences between employees in the meaning attached to obligations, an individual approach is necessary.