An Investigation of Psychological Contract in Undergraduate Students

This study explores Chinese university students’ perception of psychological contract. Using questionnaires and a quantitative approach, the study indicates that money issues, rewarding work, delegation of authority and flexible working hours are of utmost importance to these students. The study participants will start their working lives in one or two years. Knowledge of their perceived psychological contract has implications for human resource management hoping to improve the relationship between employer and new hires.


Introduction
Since 2012, more and more Generation Y has entered the labor market in China. Generation Y, or, millennial, refers to people who are born between 1980 and 1990s. In China, they are known as the post-80s and post-90s generations. They bring with them unique characteristics to the workplace. Most of them are well educated, confident and independent (Li & Hou, 2012). They strive for success (Tian, et al., 2015). They are highly decisive because they think they know what works best for them (Wu, 2007). Some Generation Yers do not like to conform to authority and are not afraid to challenge top management (Tian, et al., 2015). Compared with employees of older generations, Gen Y has a higher rate of turnover and a lower rate of organizational commitment (Xu & Wang, 2015;Li, 2020;Tao & Feng, 2020). Linkedin conducted a survey among its 150,000 users in China about their attitudes towards their first job after graduation. Data shows that post-95s generations experience job-hopping more frequently compared with employees of older generations. On average, they stay for only seven months with an employer and then withdraw from the company (China Daily, August 29, 2018, http://www.china.org.cn/china/2018-08/29/content_60844702.htm). How to retain and manage Generation Y employees? Currently, this issue challenges human resource management (Wu, 2007;Tian, et al., 2012;Hu &Wang, 2020;Li, 2020;Tao & Feng, 2020).
One of the suggested answers to the question is to seek more understanding of the psychological contract of Generation Y (Tian et al., 2012;Hu &Wang, 2020;Li, 2020;Tao & Feng, 2020). By knowing what they value most in the workplace, human resource management can formulate a series of policies and mechanism to motivate, develop, and retain them, and to create a win-win situation between the organization and employees.
Psychological contract refers to mutual expectations between employers and employees: what employers expect from employees and vice versa (Robbins & Judge, 2017). For instance, employers are expected to provide higher salary, good working environment, and certain delegation of authority to employees. Employees are expected to generate high productivity, engage in organizational citizenship behavior, and project friendly demeanor in the workplace. Psychological contract is an unwritten contract. The interpretation of such contract is largely influenced by individual perception. One party's interpretation of the contract may not be consistent with that of another party (Parks & Schmedemann, 1994). Specifically, this research will focus on employees' perspective and explore their views of employer and employee obligations (Rousseau, 1989). To be specific, the third and fourth year university students will participate in the study. The decision to choose them is based on the following two reasons. First, in one or two years' time, most of them will graduate and start their working lives in the organization. Second, even if they are currently university students, a mental framework of the psychological contract has already formed considering their part-time work experience and the access to the social media report of the work and employer-employee relationship. Understanding these millennials' perceived psychological contract will inform human resource managers of how to better design the recruitment and selection tool before millennials are employed and how to motivate and manage them after they are employed.

Literature Review
Research on psychological contract is multi-faceted. Some research (Wang et al., 2021;Kultalahti &Viitala, 2015) focused on the identification of the factors that impact employees' psychological contract. One research (Wang et al., 2021) explores the psychological contract of 423 nursing assistants employed in 4 provincial tertiary A hospitals in Shanxi, China. Multivariate linear regression analysis showed that per capita monthly income of the family, compliance with training needs, years of employment, labor contract and social insurance were influencing factors of psychological contract perceived by nursing assistants. Kultalahti &Viitala (2015) state working millennials in western countries consider workplace learning and development, challenging work, social relations and leader behavior, and time-related factors to be important elements of their psychological contract.
Other researchers (Kotter, 1973;Herriot et al., 1997;Turnley & Feldman, 1999;Tian et al., 2015;Tao & Feng, 2020;Chen, 2021) explore the impact of demographic characteristics on employees' psychological contract. Herriot et al. (1997) suggest that demographic factors such as age, gender and educational background have an impact on individuals' psychological contract. However, other researchers (Koc et al., 2013;Datla & Dutta, 2016) hold different viewpoints. Based on the study involving 309 participants in Turkey, Koc et al. (2013) declare there is no significant gender difference in their perception of psychological contract.
In addition, the relationship between psychological contract and work-related issues have been explored. Chen (2021) conducts a research among 368 technicians in an IT company. It is noted that employees' psychological contract has a positive impact on their job involvement. If employees' psychological contract is breached, the level of employees' job involvement will decrease accordingly. Tian et al.(2015) investigate the relationship between psychological contract fulfillment (PCF) and relevant work behavior among 90 post-90s generation employees who have worked for one year in the organization. Result indicates that PCF has a positive effect on organization commitment and work acceptance, negative effects on turnover intentions, and insignificant effect on job performance. In a study of 232 medical staff in a hospital in China, Li & Li (2016) note that psychological contract breach is negatively related to employees' organizational commitment. Research also identified the relationship between psychological contract breach and turnover intention. Turnley & Feldman (1999) point out that psychological contract violation will result in four potential employee responses: decreased loyalty and increased exit, voice and neglect. Similarly, Li & Guo (2020) note the relationship of new hires' perceived psychological contract and their intention to resign.
Previous study on psychological contract has also been explored from the perspectives of participants with different educational level: MBA students (Rousseau, 1990), future employees just before graduation from the university (Michael, 2001), and final year university students (Markovic & Stoilkovska, 2015). This study attempts to extend the topic by exploring the perceptions of the third and fourth year university students. Knowing millennial's perceptions of their own and their future employer's obligations can provide some insight into the way human resource management effectively recruit, select and manage these future employees.
Guided by the contributions of previous studies on psychological contract, this study aims to address the following questions: 1. What elements of employer and employee obligations are valued by university students? 2. Does demographic characteristic influence perception of psychological contract?
3. What elements of employee obligations would be affected if there were perceived under-fulfillment of employer obligations?

Participants
Participants in the research were third or final year students at a university located in the southern part of China. Questionnaire was conducted among 280 students, of which 265 completed and returned the questionnaire. The response rate was 95%. 239 students' filled-in questionnaire were valid and showed 90% valid response rate.

Questionnaire
The questionnaire consists of two parts. The first part seeks demographic information concerning participants. The second part was questionnaire adapted from Rousseau (1990) and Michael (2001), and slightly modified. The analysis method of this study also replicated their research. Questions mainly include employer inducement ijbm.ccsenet.org International Journal of Business and Management Vol. 16, No. 9;2021 (employer obligations to employee) and employee contributions (employee obligations to employer).
Participants were asked to indicate the degree to which they agree or disagree with the statements concerning the reciprocal obligations. Five-point Likert scale is used, with 1 for "strongly disagree" and 5 for "strongly agree". Question such as "a job which you can make decisions by yourself" is in the category of employer inducement and question "work extra hours to get your job done" concerns the employee contribution.

Results
In total, 239 students participated in the research. 125 were female (52%) and the majority of participants were English or business majors. 93% of the participants had part-time work experience ranging from one to more than two years. Work experience is important because it plays a key role in participants' psychological contract formation. The profiles of the participants were depicted in Table 1. An independent sample t-test was run to test whether there is gender difference in students' perception of employer inducement to the employees. Table 2 presents the mean, standard deviations and p-values of the scores. A slight and significant gender difference exists in the majority of the items (p<.05) regarding employer obligations, except for the item "performance-based pay". The mean score for male participants were higher than that of females on most of the items except for "long-term job security" and "sufficient power and responsibility", two items highly rated by female students.  Table 3 displays the result of the independent sample t-test run to see whether there is gender difference in employee obligations perceived by participants. The mean, standard deviations and p-values of the scores were presented in the table. Data shows that male and female university students hold similar views of many elements of employees' obligations to the organization. However, there are marked gender differences in items "refusing to support employers' competitors", "being loyal to employer", and "being an active team player". The mean score for the male participants were slightly higher than that of female students on these three items. In order to identify what variables are necessary to understand association between the two sets of reciprocal obligations between employer and employee, a canonical correlation analysis method is used (Rousseau, 1990;Michael, 2001). Canonical correlation analysis is a multivariate method exploring the complex relationship in two sets of variables. It is frequently used in educational, psychological and business research. This study replicated the way Rousseau (1990) and Michael (2001) analyzed the data because it aims to identify the pattern of relation between the reciprocal obligations (Rousseau, 1990;Michael, 2001). Table 4 presents the association between reciprocal obligations perceived by male participants. The canonical dimension is statistically significant at .05 level. Canonical weight over 0.3 is significant. For the employer obligation variables, the canonical dimension is strongly influenced by "rewarding work", "jobs in which you can make decision by yourself", and "long-term job security". In return, participants will be "loyal to employers" and "willing to accept a transfer". The perceived employer violation of psychological contract will lead to a lack of employee obligations for "protecting confidential information about the company", "attending additional training courses" or "remaining with the company for at least 3 years". Canonical correlation analysis was then conducted to understand female participants' perception of the association between the two sets of reciprocal obligations between employer and employee. Table 5 presents the result of the analysis. The canonical dimension is statistically significant at .05 level. Canonical weight over 0.3 is significant. For the employer obligation variables, the canonical dimension is strongly influenced by "flexible working hours depending on personal need", "jobs in which you can make decision by yourself", and "training". In return, female participants will be "volunteering to do non-required task on the job" "abiding by organizational policies and norms", "remaining with the company for at least 3 years" and "attending additional training courses". The perceived employer violation of psychological contract will lead to a lack of employee obligations for "working extra hours", and "refusing to support employers' competitors".  Table 6 presents the result of the canonical correlation analysis of both male and female participants' perception of the association between two sets of reciprocal obligations between employer and employee. The canonical dimension is statistically significant at .05 level. Canonical weight over 0.3 is significant. For the employer obligation variables, the canonical dimension is strongly influenced by "rewarding work", "jobs in which decision-making by oneself", "sufficient power and responsibility", and "attractive pay and benefits package". For the employee obligation variables, the canonical dimension is comprised of "loyal to employer", "attending additional training courses", "volunteering to do non-required task on the job", "remaining with the company for at least 3 years", and "refusing to support employer's competitors". Statistical analysis showed that, if participants believe their employer could provide rewarding work and attractive pay and benefits, they will show their loyalty to their employer and refuse to support company's competitors. Meanwhile, if participants perceive there is restricted decision-making power in the job they do, they are likely to respond by not engaging in organizational citizenship behavior, reduced work effort, and workplace withdrawal.

Discussion
Results show male and female participants differ in their perception of employer inducement. This contradicts previous study (Datla & Dutta, 2016) stating there was no such difference in employees' perception of employer obligation. We suggest two reasons why this might be. First, individual's psychological contract is affected by a society's standard (Rousseau & Schalk, 2000) and national culture (Thomas, et al., 2003). People from different societies and cultures develop different interpretations of the nature of psychological contract. Second, it is due to the different experience of the participants in the research. Participants in this study were university students who had part-time work experience whereas full-time employees from IT industry were recruited in other scholars' research (Datla & Dutta, 2016). Difference in work experience will influence the way people perceive the employment relationship. Considering participants' perception of employee contribution, results indicate male and female participants hold similar views on many aspects. However, males ranked slightly higher than females in items such as "being loyal to employer", "refusing to support employer's competitors" and "being a good team player". The former two items relate to employee's organizational commitment. The finding is in line with some of the previous research (Aydin et al., 2011) about gender and organizational commitment: men tend to have stronger feeling of organizational commitment than women. The suggested explanation for the difference is that men have better salaries and organizational positions (Aydin et al., 2011) or that men are more likely to have commitment-enhancing jobs (Marsden et al., 1993). For another difference concerning "being an active team player", it also was consistent with other research (Cullinan, 2018) which shows that male and females have different perspectives on this issue.
Canonical correlation analysis of male's perceived reciprocal obligations indicates male participants value employer's obligation for rewarding work and delegation of authority while the analysis of female's perceived reciprocal obligations indicates they attach importance to employer's obligations for flexible working hours, delegation and training. Both male and female hold similar ideas about employee obligations. Correlation analysis of both male and female's perceived reciprocal obligations indicates research participants attach importance to both extrinsic and intrinsic factors in the workplace. They prefer highly-paid jobs. In addition, they also prefer taking challenging jobs. This is consistent with previous research (Kultalahti & Viitala, 2015;Li, 2020) about new hires and their expectation of the organization. Kultalahti & Viitala (2015) note that working millennials in the western countries prefers fair and competitive pay, flexible benefits, challenging work, and learning and development in the work. Meanwhile, correlation analysis of both male and female's perceived reciprocal obligations shows if participants perceive that relational psychological contract is under-fulfilled (e.g. restricted decision-making power in the job they do), they are likely to respond with less organizational citizenship behavior, reduced work effort, and withdrawal from the organization. This echoes a number of past research findings (Vantilborgh, et al., 2014;Xu & Wang, 2015;Li, 2020;Tao & Feng, 2020).

Conclusion
This study explores university students' perception of psychological contract. Results indicate that money issues, rewarding work, delegation of authority and flexible working hours are of utmost importance to both male and female students. In addition, their different ideas of psychological obligations have been presented. In particular, "rewarding work" tops the list in males' perception of employer obligations and "flexible working hours depending on personal needs" ranks first in females' perception of employer obligations. It is therefore suggested that human resource management should pay attention to the unique characteristics of psychological contract of Generation Y when formulating strategies regarding the management of these future employees.
Participants in this study are undergraduate students. In terms of their age, they are categorized as Generation Y. Their perception of the psychological contract is different from that of the employees of different generation group. As such, the generalizability of the research is limited. However, the result of this research can present human resource managers a picture about the millennials before they enter the workplace and some insight into the way human resource managers manage them after they are employed. For future research, semi-structured interview can be conducted to develop more understanding of university students' perception of the reciprocal relationship between employer and employee in the workplace.

Implication for Practice
Based on the above discussion, certain implications for human resource management practices are summarized as follows.
First, Generation Y has their unique psychological contract. Therefore, it is necessary to understand the elements that are critical and important to the psychological contract of this cohort. Results of this study show that money issues, rewarding work, delegation of authority and flexible working hours are of utmost importance to them. Thus, it is suggested that human resource management should take these factors into account when it comes to job design, compensation and benefits, and employee relation management.
Secondly, male and female participants hold different ideas about the importance of certain elements of reciprocal obligations. In particular, "rewarding work" tops the list in males' perception of employer obligations and "flexible working hours depending on personal needs" ranks first in females' perception of employer obligations. Being aware of these perceptual differences will assist human resource management in playing a good role, especially, in doing diversity management.
Thirdly, participants' perception of employer inducement fulfillment exerts impact on their organizational commitment (hereafter, OC). OC is positively related to productivity, job satisfaction, and organizational citizenship behavior (Tett & Meyer, 1993;Wang, 2013). Thus it is suggested managers conduct employee survey on a frequent basis to seek understanding of employees' perceived psychological contract and take appropriate measures to enhance employees' OC.
Fourthly, delegation of authority is another issue of concern to these prospective employees. This is understandable. For most Generation Yers, they are the only child in their family. Compared with employees in other generation category, Generation Yers enjoy much more freedom in many aspects of their life. They are more likely to expect their voices to be heard either in personal life or organizational life. They are highly decisive because they think they know what works best for them (Wu, 2007). They do not like to conform to authority. Some Generation Yers are not afraid to challenge top management (Tian, et al., 2015). On this note, it will be reasonable to assume that delegation of authority matters to them. Jokisaari & Vuori (2018) state that delegation has a positive relationship with new employees' work adjustment and job satisfaction. Job satisfaction, in turn, is negatively related to employees' turnover (Fasbender et al., 2019). Thus, delegation of authority to working millennials should be considered by human resource managers.