The relationship between Employer and Employee
Posted on May 05, 2024 by Martin Hahn, One of Thousands of Career Coaches on Noomii.
This article discusses the changing nature of careers
During the first two decades of the 21st century, a host of environmental factors have dramatically transformed employment relationships and upended longstanding approaches to career management for workers throughout the world. These changes which are economic, global, political, technological, and cultural, have profound effects on the world of work and career.
Accompanying these changes is a level of uncertainty that can play havoc with people’s careers and lives. Intense competition in all industries has been fueled by increased international business activity and an uncertain world economy. This fierce competition has produced numerous mergers and acquisitions, internal reorganizations, a restructuring of jobs, and the pursuit of outsourcing as a means to contain costs. In addition, the push to a globalized and integrated business world, rapid advancements in technology, an increasingly diverse workforce, and greater work–life demands all make career management a more tenuous activity.
Changes in the Nature of Work, Employment Relationships, and Psychological
Contracts
Perhaps the most significant change in social structures that has occurred over the past quarter-century is the rapid decline in job security felt by workers in the United States and around the industrialized world. In this contemporary work environment, a consistently high level of job insecurity and job loss has become the “new normal.”
The desire of modern organizations to remain flexible as a way to enhance competitiveness through increased cost-cutting and flexibility has produced changes in the psychological contract between employers and employees. When applied in the context of an employment relationship, a psychological contract is an implicit, unwritten understanding that specifies the contributions an employee is expected to make to the organization and the rewards the employee believes the organization will provide in exchange for his or her contributions. A transactional contract is usually shorter-term and involves performance-based pay, lower levels of commitment by both parties, and an allowance for easy exit from the implicit agreement. Instead
of exchanging performance and loyalty for job security, employees are expected to be flexible in accepting new work assignments and be willing to develop new skills in response to the organization’s needs. In return, the organization does not offer promises of future employment but rather “employability” (with the current employer or some other organization) by providing opportunities for continued professional growth and development.
The movement toward transactional psychological contracts can have negative effects on a number of employee work outcomes. Statistics collected by the U.S. government and independent research point to the presence of job insecurity and job loss over the past three decades. These statistics include incidents of mass job loss, the numbers of jobs individuals hold in a work career, the degrees of unemployment and underemployment, the level of long-term unemployment, and the low degree of employment participation.
Further, changes in employment patterns and the near death of the relational psychological contract have ushered in new terminology reflective of the temporary and uncertain nature of jobs and careers. These new terms include gig employment, precarious work, independent contract work, temporary service personnel, permatemps, freelancers, and on- demand workers.
It is estimated that between the years 2005 and 2015, employees engaged in these “alternative work arrangements” in the U.S. grew by approximately 9.5 million, moving from about 10 percent of the total workforce to nearly 16 percent. Further, this increase in the number of employees in alternative work arrangements accounted for all of the net job growth in the U.S. economy from 2005 through 2015.
