Contents Page: NZJER, 2009, 34(2)
Name

Title

Page
Number

Rupert Tipples

Editor’s Foreword: Fifty Years of
Psychological Contract Research – from the
Touchy/Feely to the Concrete Personal Deal

1-3

Branka Krivokapic-Skoko,
Grant O’Neill and David
DowellAssessing the Contents of the PsychologicalContracts: A Cross - Sectional Survey of the
Academics at an Australian University

4-28

Carol Gill

How Unions Impact on the State of thePsychological Contract to Facilitate theadoption of New Work Practices (NWP)

29-43

Christiaan McComb

Bronwyn Watson, Paul
Spoonley and Eljon
Fitzgerald
Janet Sayers
Branka Krivokapic-Skoko,
Grant O’Neill and David
DowellJean Martin, Andrew J.
Martin, and Beth Tootell

Grace Miller

Erling Rasmussen & Colin
Ross

How Does Psychological Contract Explain
the Efficacy of Coaching?

44-60

Managing Diversity: A Twenty-First
Century Agenda

61-76

Flat Whites: How and why people work in
cafés

77-86

Research Note: Undertaking Cross-Cultural
Research into Psychological Contracts

Research Note: Retention Factors for New
Zealand Graduate Customs Officers

87-94

95-107

Research Note: Popcorn, Pickets, and Brassbands: Young Workers’ Organising in the
Cinema Industry 2003-2006

108-116Chronicle: February–June, 2009

117-127

New Zealand Journal of Employment Relations 34(2):1-3

Editor’s Foreword: Fifty Years of Psychological Contract
Research – from the Touchy/Feely to the Concrete Personal
Deal
Rupert Tipples, Lincoln University
My research career has been coloured by psychological contracts since being introduced
to them in my first post university job as a Research Officer for the British Agricultural
Training Board in 1977. The concept had not been readily accepted with one Australianindustrial relations academic telling me it was “…too touchy/feely…” after a seminar I
had given about it at Griffith University in 1994, but now after nearly fifty years since
first being described by Argyris (1960), one may suggest that it has ‘arrived’ with an
exponential growth in research and publication, particularly since the publication of thefirst of Denise Rousseau’s articles back in 1988, twenty years ago. The development ofthat research has been charted previously (Tipples and Verry, 2007) and at September
2009 Google Scholar listed 9,360 references on ‘psychological contract’.
In the thirty years prior to Rousseau’s first paper, little empirical research on theconstruct had been published. One notable piece published by John Kotter in 1973 was
not even cited by Rousseau (Kotter, 1973). However, it had highlighted the need toachieve matches in expectations between the parties to a psychological contract as a wayof improving job satisfaction, job longevity and work productivity. It is that research that
profoundly influenced my personnel management teaching when I commenced at thethen Lincoln College in early 1978. My aim was to teach students to achieve balanced
expectations between prospective employers and employees when setting up new
employment relationships to maximise productivity and job satisfaction, and minimise
labour turnover. That policy was based on what later became called a policy of ‘Realistic
Recruitment’ (Tipples, 1996). It seemed intuitively right to me with my limited
management experience and I did not concern myself to find other supporting research
for this position. That research was convincingly provided by Bauer et al. in a meta
analysis in 2007, and subsequently reinforced by Wellin’s management consultancy
driven book of the same year Managing the Psychological contract – Using the Personal
Deal to Increase Business Performance (2007). These both supported the ‘Contracting’approach laid out on realistic recruitment lines previously (Tipples, 1996).
The research initiated by Rousseau and colleagues had a strong quantitative emphasis andhas often been preoccupied with what might be described in general terms as contract
violations and breaches, and their effects and implications. The research reported in thepapers of this issue emanate from different streams. First, Krivokapic-Skoko, O’Neill
and Dowell take the analysis of academics’ psychological contracts from an Australianbusiness school study (O’Neill et al., 2007; Tipples et al., 2007) to a deeper level withboth factor and cluster analysis. They unpack the critical elements of the content of theiracademics psychological contracts, which suggest which dimensions academic managers
should be concentrating on. The quantitative methods are used to improve ourunderstanding of the critical components of such academics’ psychological contracts.

1New Zealand Journal of Employment Relations 34(2):1-3
In contrast, Gill’s paper is more of a high level literature review, which draws together
empirical research on psychological contracts, trust, unions and how they all impact on
New Work Practices (NWP), with a view to developing a research agenda. Unlike theprevious paper which focused on the individual views of academics and their
expectations, this one considers how collective activity through trade unions impacts
upon employees psychological contracts, trust and its effects on NWP. Because so much
psychological contract research has an individualised view of the employment
relationship, the role of trade unions in setting employee expectations has been a
relatively minor stream of psychological contract research to this point.
The third paper by McComb breaks new ground again with a case study of coachingactivities in a large Australasian company in the development of senior managers. There
has been little empirical research into any form of coaching and McComb uses a
psychological contract framework to help explain why coaching is often not as
efficacious as might be expected. The research suggests some tactics managers need toconsider in order to make an extensive coaching investment deliver better returns thanhas been the case hitherto.
The following paper by Watson, Spoonley and Fitzgerald, which does not use an explicit
psychological contract framework, links back to the second paper by Gill in that it seeks
to explore the growing need for diversity management in light of the increasing mobility
and migration of the global workforce. The resultant diversity presents many challenges
for managers, not least in the different work expectations of different ethnic groups andtheir different approaches to individual and collective activities. How their energies canbe best used in high performance work practices becomes and issue too, which Gill has
already opened to a psychological contract approach.
The fifth article is a piece of exploratory research by Sayers on the role of cafés in society
and how people work in them, not just as employees but clients who use them as work
spaces for different activities. This paper is not only one of the most stimulating andprovocative exploratory pieces of research that this editor has read, but it also promises
great insights into phenomena which most would never have considered, but which havegrowing importance in today’s café culture.
These five papers are accompanied by three research notes. The first is a review of crosscultural research into psychological contracts by Krivikapic-Skoko, O’Neill, Dowell andKleinschafer. It leads to a “…call for expressions of interest from academics who would
like to be involved in conducting psychological contract research at their university andbecome part of a large cross-national research project (Krivokapic-Skoko et al., thisissue, p. 92). The second suffers from what Lorsch (1979) has described as “…theacademic Tower of Babel…”, in which researchers investigate similar problems and yet
describe their key constructs in widely different terms. Martin, Martin and Tootell’s
research note concerning the retention of New Zealand customs officers through a studyof their ‘…employment value proposition attributes’ suffers from this problem. While it
could well have benefitted from being framed in psychological contract terms, it
nonetheless concludes that some of the key factors in retention are similar to those2New Zealand Journal of Employment Relations 34(2):1-3
affecting the business academics described earlier. Both groups, academics and customs
officers still retain a strong career orientation even if their managers do their best to
frustrate it.
The final research note has no explicit psychological contract content, but it does raise
important issues for future employment relations research in New Zealand. Millar shows
how union organisation is still possible with the young who have no previous knowledgeof trade unions if they are helped by inept management and favourable circumstances.
This note provides much needed encouragement to union organizers. Many of theirpotential clients have no previous knowledge of trade unions and may have been born
since the Employment Contracts Act 1991, which permitted employers to offer only theminimum statutory terms for pay and conditions.

August, 2009

REFERENCES
Argyris, Chris (1960) Understanding Organizational Behavior, The Dorsey Press:
Homewood, Ill.
Bauer, T.N., Bodner, T., Erdogan, B., Truxillo, D.M. & Tucker, J.S. (2007) ‘ Newcomer
adjustment during organizational socialization: A meta-analytic review ofantecedents, outcomes and methods’, Journal of Applied Psychology, 92 (3), pp.
707-721.
Kotter, John (1973) ‘The psychological contract: Managing the joining-up process’,
California Management Review, 15 (3), 91-99.
Lorsch, J.W. (1979) ‘On making behavioural science more useful’, Harvard Business
Review, March – April, pp. 171-180.
O’Neill, G., Krivokapic-Skoko, B. & Foundling, M. (2007) ‘Exploring psychologicalcontracts established by academcsat an Australian University: Focus Group
Analysis’. Faculty of Business Working Paper Series, Charles Sturt University,
Working Paper No. 03/07.
Tipples, Rupert (1996) ‘Contracting: The key to Employment Relations’, International
Employment Relations Review, December 1996, Vol. 2, No. 2, pp 19-41.
Tipples, R., Krivokapic-Skoko, B, & O’Neill, G (2007) ‘University academics’
psychological contracts in Australia and New Zealand’. New Zealand Journal of
Employment Relations, 32 (2), pp. 32-52.
Tipples, Rupert and Verry, John (2007) ‘How to manage staff with individual contracts?
Some experiences with academic psychological contracts in New Zealand’, pp.
105-116 in Basu, P.K., O’Neill, G. and Travaglione, A. (eds.) Engagement andChange: Exploring Management, Economic and Finance implications of a
Globalising Environment. Australian Academic Press: Brisbane, Australia.

3New Zealand Journal of Employment Relations 34(2):4-28

Assessing the Contents of the Psychological Contracts: A
Cross - Sectional Survey of the Academics at an Australian
University
BRANKA KRIVOKAPIC-SKOKO, GRANT O’NEILL and DAVIDDOWELL*
Abstract
This paper addresses the content of psychological contracts within academia andprovides some empirical evidence from an Australian University. Using exploratory
factor analysis of the data collected from the cross-sectional survey this researchclassified the academics’ obligations to the University as meeting academic
expectations, commitment; and ‘above and beyond’. With regard to the University’s
obligations as perceived by the academics the research identified the following eightunderlying factors: fair treatment in promotion; staff development and support; goodmanagement and leadership; academic life; fairness and equity; appropriate
remuneration; rewarding performance; and, good workplace relations. The initialcluster analysis allowed for some unpacking of the effects of such characteristics asgender, age, position level, union membership, and length of employment upon thecontent of the psychological contract. What emerged from the analysis is that each ofthese dimensions is an important factor with regard to psychological contract content
and effects. It is critical for the University and the academics to be sensitive topossible differences in expectations, since unrealised expectations may result in demotivation, decreased commitment, increased turnover, and loss of trust in theorganisation. These contracts motivate employees to fulfil commitments made to
employers when they are confident that employers will reciprocate and fulfil their sideof the contracts.

Introduction
Australian universities have become increasingly commercial as organisations, andare increasingly competitive with each other in their pursuit of funds and students.
Australian academics now work within universities that have been characterised asincreasingly managerialist (Marginson and Considine, 2000), universities wheretraditional academic freedoms and autonomy have declined, and performance
expectations have sharply increased (Winter and Sarros, 2000). Ongoing change has
become the norm, and we have seen the practice and language of business come todominate the practice and language of university leaders and managers (Curtis andMatthewman, 2005). In many universities, staff/student ratios have reached newhighs, and value conflict between principles and practices associated withmanagerialism and commercialisation and those traditionally associated with acommitment to teaching, learning and scholarship has become a widely recognised
problem (Winter and Sarros, 2000; Marginson and Considine, 2000; Jarvis, 2001).
*

Dr Branka Krivokapic-Skoko, Associate Professor Grant O’Neill and Dr David Dowell are with theFaculty of Business, Charles Sturt University, Bathurst, NSW, Australia.

4New Zealand Journal of Employment Relations 34(2):4-28
Further complicating the landscape is the fact that the long-established Australian
universities1 with their stronger financial and research resources appear to be better
positioned to operate and prosper in this context, while others, such as the universitythat was the site of our empirical research2, face more complex and challenging
futures.
It is in this context of ongoing change in university practices, structures and processes
that our research into the content of the psychological contracts of academics from anAustralian university business faculty has been undertaken. We hold that thepsychological contract is a relevant and powerful construct to explain, and evenmanage, contemporary academic workplace relations, especially in times ofconsiderable workplace change. We argue that understanding the formation andcontent of academics’ psychological contracts is crucial to understanding andmanaging the work performance of academics.Further, we argue that understanding
and effectively managing the psychological contracts that academic employees
develop can assist universities to meet their performance goals. The remainder of thispaper is divided into two sections: the first briefly addresses some key features of thepsychological contract, and discusses past empirical research conducted on
psychological contracts within academia; and, the second presents the results of ourempirical research.

Psychological Contracts within Academia
Numerous researchers agree that the psychological contract plays an important role inunderstanding the contemporary employment relationship (see, for example: Wellin,
2007; de Vos, Buyens and Schalk, 2005). In essence, the concept of the psychologicalcontact encapsulates aspects of the employment relationship which far exceed thoseaddressed in formal contractual agreements3. There are, broadly speaking, two mainconceptualisations of the psychological contract. The first is based on the idea that
there are two parties in the employment relationship who have mutual obligations toeach other: the organisation and the employee (Herriot, Manning and Kidd, 1997).
These mutual obligations may have been explicitly communicated through formal
contracts, or they may be implied through the explicit or implicit expectations oforganisations and employees. The second conceptualisation focuses upon thepsychological contract as it is formulated in the mind of the employee only. Thisapproach gives emphasis to:
Individual beliefs, shaped by the organisation, regarding the terms of an
exchange between individuals and their organisation. A key feature of thepsychological contract is that the individual voluntarily assents to make andaccept certain promises as he or she understands them (Rousseau, 1995: 9-10).
The psychological contract encompasses employee’s subjective interpretations of
their employment deal. For example, the employee may believe that the organisation
has made certain commitments, such as providing job security, high pay, promotion,and training in exchange for the employee’s hard work and loyalty (Rousseau, 1990).
Since the 1990s most researchers of psychological contracts have adopted the second
conceptualisation, thereby emphasising the importance of the individual employee’s

5New Zealand Journal of Employment Relations 34(2):4-28
sense of obligations (Turnley and Feldman, 1999; Robinson, 1996; Morrison andRobinson, 1997; Robinson, Kraatz and Rousseau, 1994). Our study also aligns withthis second conceptualisation, and more specifically Rousseau’s individual-based
definition that focuses on what each individual (in our case an academic) expects
from the organisation and what they hold to be the organisation’s expectations ofthem.
Beyond consideration of who is actually party to a psychological contract, thedifficulties of accurately defining these contracts arise from the fact that they are a
subjective and idiosyncratic phenomenon. To begin with, the perceptual andindividual nature of psychological contracts makes them distinct from formal written
contracts. Further, these contracts are subjective and grounded in the social andcultural contexts where employers and employees believe they have reciprocal
obligations and presumably share a common understanding of the nature of theseobligations. However, the understanding of the expectations and mutual obligations
may not be consistent because the two parties have different and changing perceptionsof the other and their expectations.
Employee perceptions, while diverse, are considered to be influenced by whether theemployee desires a transactional or a relational employment exchange with theiremployer (Rousseau, 1990). Transactional contracts are based on the achievement of
extrinsic benefits such as pay for performance, whereas relational contracts are basedon the intrinsic rewards of employment such as developing relationships, fulfilment of
personal goals and a higher degree of personal involvement (Rousseau, 1990). Adding
to the diversity in perceptions are the outcomes each individual hopes to achieve as aresult of employment. The perceptual and individual nature of psychologicalcontracts is further illustrated by the quantity of elements psychological contracts
incorporate. In general, these elements include the responsibilities the employee isprepared to accept and the responsibilities that the employee perceives that theemployer is obligated to provide in return.
There is an increasing body of the research which shows how the psychologicalcontract can impact on the behaviour and performance of employees (de Vos et al.,
2003; Conway and Briner, 2005). The psychological contract has the potential toenhance organisation performance, to facilitate engagement of employees, andemployee alignment with organisational decisions and planned organisational changes(Wellin, 2007). It has even been argued that perceived obligations within thepsychological contract are frequently more important to job-related attitudes andbehaviour than are the formal and explicit elements of contractual agreements(Thomson and Bunderson, 2003). Studies have indicated that violation of employee’s
elements of psychological contracts may influence work outcomes, including job
satisfaction, participation in development activities, and intention to remain with thecurrent employer (Cavanaugh and Noe, 1999; Freese and Schalk, 1996; Dabos andRousseau, 2004).
As a result of the complex nature of psychological contracts, a diverse range ofcontract elements have been addressed and measured in the literature (Thomas andAnderson, 1998; Kickul and Lester, 2001; Guest and Conway, 2002; Thompson and
Bunderson, 2003). A comprehensive review of the various elements listed in theliterature (Krivokapic-Skoko, Ivers and O’Neill, 2006) sought to differentiate the6New Zealand Journal of Employment Relations 34(2):4-28
contractual elements into varied sub groups. Employee responsibilities can be
categorised into four groups: (a) organisational citizenship behaviour; (b) basic
obligations; (c) work environment; and (d) loyalty. These four categories specified the
behaviours and responsibilities that employees were prepared to be accountable for in
return for the employer upholding what their employees believe to be their
obligations. Employers’ responsibilities can be classified into six categories: (a)payment/ benefits; (b) management; (c) work environment; (d) fairness; (e)empowerment; and, (f) personal needs. These six categories covered the payments
and benefits that employers were obligated to provide to their employees, the way inwhich the organisation was managed, and again the day-to-day work environment
within the organisation. Further, employees considered that employers were obligatedto ensure that that employees were empowered, treated fairly, and that theiremployee’s personal needs were addressed.
While empirical research on psychological contracts has developed significantly
during the past decade (Coyle-Shapiro and Conway, 2005; Freese and Schalk, 1996;
Cavanaugh and Noe, 1999; Turnley and Feldman, 1999; DelCampo, 2007; Nadin and
Cassell, 2007; O’Donohue, Donohue, and Grimmer, 2007a), empirical research on
psychological contracts within academia has been very limited. It is represented by
the studies of Dabos and Rousseau (2004), Newton (2002), Tipples and KrivokapicSkoko (1996, 1997), Tipples and Jones (1998) and more recent Australian based focus
group research discussed in O’Neill, Krivokapic-Skoko and Foundling (2007) andTipples, Krivokapic-Skoko and O’Neill, (2007). Research on the psychologicalcontracts established by scientists/knowledge workers (O’Donohue, Sheehan, Hecker
and Holland, 2007b) can be also understood as addressing the subject area ofacademia.
Dabos and Rousseau’s (2004) survey based research among academics employed by aresearch-focused School of bioscience in Latin America identified how mutuality andreciprocity between employees and employers can develop and result in very
beneficial outcomes for both sides of the employment relationship. This mutual
understanding of the obligations resulted in positive outcomes for both researchers(career advancement and promotion) and the employers (increased research
productivity). Very interestingly, there was convergence in perceptions of employees
and employers with regard to psychological contracts. Newton (2002) used theconcept of psychological contracts to discuss collegiality, professional accountability,
reciprocity and mutual trust at a UK college of higher education. Based on the indepth empirical research, the author argued that a lack of reward and recognition for
academic work, as perceived by the staff members, can be also explained by nottaking into account the existence of the psychological contracts.
The empirical research undertaken at Lincoln University, New Zealand, by Tipples
and Krivokapic-Skoko (1996; 1997), indicated that the academics’ psychologicalcontracts were in a very poor state. Apart from qualitative interviews and the use of
documentary sources, the authors conducted a questionnaire survey of academic
colleagues and used an alternative research method based on critical incidents to
explore the staff members’ beliefs and expectations about their relations with the
University. The empirical research pointed at the Work Environment as the major
component of the psychological contract established by the academics. Generally, theacademics were not satisfied with the extent to which the University had met what

7

New Zealand Journal of Employment Relations 34(2):4-28
were perceived as its promised obligations. That dissatisfaction was consequently
associated with a low level of job satisfaction. Apart from low Job Satisfaction, theacademics identified Career Development, Payment, Long Term Job Security andPromotion as common areas for violation of the psychological contract. Support withpersonal problems was also an area where academics stated they felt they were owed
by the university. More specifically, the University respondents noted matters relating
to Promotions, Research Support, and Management Support, where issues ofConfidentiality and Honesty were singled out. Many academics thought that theuniversity was losing direction through poor management and communication, which
was contributing to a loss of trust within the organisation. Administrative issues werethe major concern, followed by the greater demands on academic staff with decreased
resources and rewards. Another theme which was also apparent, as a result of
violation, was the increase of auditing type arrangements, and the development of a‘them/us’ antagonistic culture, which relates to an increased administrative workload
and intensified relations with the bureaucracy at the University. The initial researchundertaken at Lincoln University, New Zealand, by Tipples and Krivokapic-Skoko(1996; 1997) was based on Rousseau’s conceptualisation of the psychologicalcontract. The follow up research involving the same empirical site (Tipples and Jones,
1998) was based on critical incident approach as advocated by Herriot et al (1997).
The results indicated that the academics’ obligations to the University centred aroundthe issues of Hours (to work the hours contracted), Work (to do a good job in terms of
quality and quantity) and Loyalty (staying with the University, putting the interests of
the University first). Obligations of the University centred around Fairness, Consult(consulting and communicating), Recognition, Environment (provision of safe andfriendly environment) and Job Security.
The focus group research conducted with business school academics at an Australian
university (O’Neill et al, 2007; Tipples et al, 2007) provided some insights into theformation, content and effects of Australian academics’ psychological contracts. Like
Tipples and Krivokapic-Skoko (1996; 1997), they identified the existence ofconsiderable disappointment and dissatisfaction with perceived breach of promises,
however, morale and job satisfaction did not appear to be as low as was the case at
Lincoln University. O’Neill et al (2007) and Tipples et al (2007) argued that theacademics’ commitments to students, society, academic discipline, and the university(understood as an important institution within civil society fostering social good) had
powerful effects on their psychological contracts. The academics very strongly
indicated that they had a professional responsibility and spoke to a significant socialrole which effectively extended beyond the boundaries of the psychological contracts
they established with the university. In the face of what most perceived to be anenvironment of work intensification that was marked by increasing demands for
quality research outcomes and teaching excellence, shifting rules and expectations
regarding promotion, and increasing administrative burden, these commitments weredeemed to have strongly mediated psychological contract ‘violations’.
Similarly, the findings by O’ Donohue et al (2007b) indicated that scientists andknowledge workers were more concerned with ideological/societal concepts(scientific contributions and knowledge accumulation within the organisation) within
their work than with the transactional or relational psychological contracts establishedwith their organisation. The need for the knowledge workers to contribute to‘knowledge’ was to the fore, and there was general agreement that the organisation

8

New Zealand Journal of Employment Relations 34(2):4-28
would reciprocate appropriately. Thus, continuous contribution to knowledge, publicaccess to knowledge, and the furthering of Australia’s knowledge base are vitally
important to these professionals, thereby forming core elements of their psychologicalcontracts.
While referring to the general literature on the psychological contracts Conway andBriner (2005) argued that there were relatively few studies specifically designed toassess the contents of the psychological contract. The research discussed below
represents an attempt to address this ‘knowledge gap’ by exploring the contents of thepsychological contacts established by academics. It is our objective to unpack thecontents of the ‘deal’ between academics and their University by exploring the resultsof research completed using a set of multi-item measures and exploratory factor
analysis. The discussion also extends the limited literature on psychological contracts
in academia.

Research Design: Sample, Measurements and Methods
In reviewing the conceptual development and empirical assessment of the concept of
the psychological contract Conway and Briner (2005) indicated that most researchers
assessing the content of the contract used self report questionnaires. For instance, 70%of the empirical studies reviewed by Conway and Briner (2005; 89) were based on the
cross-sectional questionnaire survey, 20% were based on the longitudinalquestionnaire surveys and only 10% were based on qualitative data from interviews.
Empirical assessment of psychological contracts as done by Kickul and Liao-Troth(2003), Rousseau (1990), Freese and Schalk (1996), Cavanaugh and Noe (1999),
Janssens, Sels and Van den Barnde (2003) was based on the survey questionnaires.
Most commonly, a five or seven point Likert scale has been used extensively toindicate the degree to which employees agree with particular elements ofpsychological contracts, such as the degree to which their employers had fulfilled or
failed to fulfil perceived promises. The ‘list of promises and obligations’ as outlinedin the seminal work by Rousseau (1990) were mainly used as the psychologicalcontract measures and completed from an employees’ perspective.
SampleFollowing this most common approach to empirical assessment of psychologicalcontracts – the use of quantitative analyses and the cross-sectional survey - thisresearch was based on the survey questionnaire distributed to the full time academics
employed by a University business faculty. Using a variation of the Total Design
Method (Dillman, 1978), a total of 117 questionnaires were mailed out (using postal
mail), and of these 60 questionnaires were completed and returned (51% responserate). Initially, all respondents were contacted via email to make them aware of theresearch and to ask for their assistance. Next, a questionnaire and a cover letter weresent to each of the respondents, which yielded 41 responses. This was followed with areminder letter (gaining another nine responses) and finally a second questionnaire
and another letter, netting the final ten responses. Most of the surveys were completed
in full, meaning few (2) were discarded due to respondent error.

9New Zealand Journal of Employment Relations 34(2):4-28
Item Selection
The items used in the questionnaire came from two sources. Existing psychologicalcontract literature provided some items and other measurement items were based on
the focus group analysis of psychological contracts by O’Neill et al (2007). The
existing items were adopted from Janssens et al (2003) and de Vos et al (2003), butwere altered to reflect the university context of the research. The focus groups
analysis of the academics’ psychological contracts (O’Neill et al 2007) provided anumber of insights, which were used to develop items included in the questionnaire
for this research. In total, 31 items were included to measure perceived university
obligations (summarised in Table 1), while 13 were included to measure theobligations of the individual academic to the university (summarised in Table 2). In
accordance with previous research (Kickul and Liao-Troth, 2003; Janssens, et al,
2003; Rousseau, 1990) five point Likert scales were used. This allowed the
respondents to agree or disagree to varying levels with statements about themselves or
the university. The survey was designed to identify what academics bring to theirwork that is not explicitly stated in the employment contract, and what they believe
the University has promised them in return. As with the approach taken by
Westwood, Sparrow and Leung (2001) this study first assessed the promises andcommitments employees (academics) perceived their organisation (the University)
has made to them, followed by an assessment of the obligations which employees(academics) perceive they themselves have to the organisation. To examine
academics obligations towards the university and the obligations that academics
perceive they have to the university a factor analysis and cluster analysis has beenused to develop understanding.
Factor Analysis
Once the data were collected, factor analysis was used to investigate the two key
variables (1) academics’ obligations to the University and (2) academics’ perceptionof the University’s obligations to them. Principle components analysis was utilised
due to its ability to identify a parsimonious set of factors (Hair, Black, Babib,
Anderson and Tatham, 2006, Malhotra, Hall, Shaw and Oppenheim, 2002) and its
suitability for exploratory research (Malhotra et al, 2002). A Varimax rotation wasused to ensure the factors were easy to interpret through the simplest structure (Hair etal, 2006, Aaker, Kumar, Day and Lawley, 2006). The first factor analysis revealed
eight factors that related to the academics’ perceptions of University’s obligations tothem and in the second factor analysis three factors were found relating to theacademics’ obligations to the University.
The findings from the factor analysis are included in Table 1 (University’s obligations
to the academics) and Table 2 (academics’ obligations to the University). The numberof factors was decided by including eigenvalues of above one. In the universities
obligations to the academics eight eigenvalues were above one and in the academics
obligations three eigenvalues were above one. The variance explained was also
acceptable (74% and 58%) further indicating that the factor solutions are eight andthree. As can be seen in the tables, there are some instances of cross loading,however, all factors are reliable. Each factor has a Cronbachs alpha of 0.60 or above(Appendix 1) which is acceptable for exploratory research of this nature (Hair et al,2006). Further supporting the factor solutions, each factor had a KMO above 0.60 and

10New Zealand Journal of Employment Relations 34(2):4-28
each factor had a significant Barlett’s test of Sphericity, and there were correlations ofabove 0.3 for each item included, thus exceeding Hair et al’s (2004) levels of
acceptability.
The first factor analysis completed analysed academics perceived obligations of theuniversity. The eight factors are: ‘fair treatment in promotion’; ‘staff development andsupport’; ‘good management and leadership’; ‘academic life’; ‘fairness and equity’;‘appropriate remuneration’; ‘rewarding performance’; and, ‘good workplace
relations’. The eight factors all present face validity and give an impression of what
obligations are important to academics. The first factor, ‘fair treatment in promotion’,incorporates items that were associated with treatment by management in relation topromotion. In many respects an extension of this first factor is the second factor, ‘staff
development and support’. Here the key themes were support for staff in terms ofpromotion and career development as well as the creation of an environment
conducive to employee development. The third factor, ‘good management andleadership’, is concerned with effective leadership and management, including the
reduction of bureaucratic ‘red tape’. The fourth factor, ‘academic life’, contains manyof the elements synonymous with working in an academic environment. The items
within ‘fairness and equity’ relate to the expectation that university management will
act ethically and will be fair with regard to managing change. The sixth factor,‘appropriate remuneration’, is about salary and expectations of some comparability
between public and private sector remuneration. The seventh factor, ‘rewarding
performance’, relates to recognition of performance in diverse ways, while the eighth
factor, ‘good workplace relations’, includes items surrounding workplace flexibility
and even union membership.
The second factor analysis contains the items relating to academics perceived
obligations to the university. Three factors were identified: ‘meets academic
expectations’; ‘commitment’; and, ‘above and beyond’. The first factor,’ meetacademic expectations’, relates to academics meeting typical expectations with regard
to teaching, research, and associated administration. The second factor,‘commitment’, relates to the commitments academics make to the university,
including, for example, a commitment to stay employed by the university for several
years, commitment to travel for work, and commitment to collegial practice. The third
factor, ‘above and beyond’, is not concerned with completing ‘normal’ assigned tasks,
but completion of tasks beyond the typical job description, including commitment toquality teaching and student development in the face of competing demands on time.

11New Zealand Journal of Employment Relations 34(2):4-28

Factor Items

Factor Loading
Factor3:
2: Good
Factor
1: Factor
Factor 4:
Fair
Staff
management
Academic
treatment in development andlife
promotionand support leadership

Provide clear and consistent requirements forpromotion
Treat you fairly and equitably with regards topromotion
Be fair and equitable in its treatment of
academics
Provide opportunities for career development
Support ongoing professional development
Provide opportunities promotion
Provide remuneration that is comparable to otheruniversities
Provide a safe and comfortable work
environment
Ensure that staff act collegially
Provide good management
Provide good leadership
Minimise the impact of red tape
Provide security of ongoing employment
Allow you autonomy to act as a professional
academic
Maintain academic freedom
Respect the demands of family/personal
relationships
Communicate important information to you

Factor 5:
Factor
6: Factor
7:
Fairness
Appropriate Rewarding
andremuneration performance
equityFactor 8:
Good
workplace
relations

0.85
0.82
0.74
0.76
0.73
0.69
0.61
0.52

0.60
0.51
0.76
0.75
0.72
0.68
0.66
0.62
0.62
0.56

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New Zealand Journal of Employment Relations 34(2):4-28

Acknowledge the long hours you devote to work
Act ethicallyManage the pace of change so that it does notadversely affect you
Provide remuneration that is similar to theprivate sector

Factor Items

0.83
0.79
0.57

0.84
Factor Loading
Factor1:
Fairtreatment inpromotion

Provide remuneration that is similar to the public
sectorRecognise your non-university experience
Reward excellence in teaching through thepromotion system
Reward excellence in research through thepromotion system
Reward excellence in admin/management
through the promotion system
Be honest in its communications with you
Offer flexibility regarding working from home
Respect the role of academic unions in theworkplace

Factor2:
Staffdevelopment
and support

Factor3:
Good
Factor 4:
management
Academicandlife
leadership

Factor 5:
Factor
6: Factor
7:
Fairness
Appropriate Rewarding
andremuneration performance
equityFactor 8:
Good
workplace
relations

0.81
0.56
0.79
0.62
0.53

0.56
0.86
0.62

Table 1: University’s Obligations Factor Scores

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New Zealand Journal of Employment Relations 34(2):4-28
Factor Items

Factor Loading
Factor
Factor1:
3:
Factor
2:
Meets
Above
academic
Commitment
andexpectations
beyond
0.74
0.65
0.40
0.62
0.58
0.58
0.57
0.45

Comply with University rules and regulations
Act ethically at work
Advance your discipline
Publish scholarly research
Work effectively and efficiently
Stay employed by the University for the next 2
0.77
years
Travel for work
0.73
Act collegially
0.61Work long hours to complete tasks
0.52
Complete tasks that are not strictly part of your job
Complete tasks that are asked of you
Provide teaching quality
0.52
Enhance student development
0.58
Note: Mean scores for academics’ obligations factors are listed in Appendix 3.

0.51
0.78
0.66
0.61
0.59

Table 2: Academics’ Obligations Factor Scores

Cluster Analysis
While the factor analysis yielded interesting results, these are limited as the academics’
characteristics (for example, sex, tenure and length of employment) were a major
influence on their preferences, thereby limiting the results. Hence, to overcome thislimitation, cluster analysis was used to further examine the factors and the individuals
associated with them. Cluster analysis allows us to see which groups of respondents
value certain factors which we identified in the factor analysis (Hair et al 2006). Cluster
analysis is suited to descriptive research where understanding of the sample is sought(Hair et al 2006). In the case of this research, we will be able to see groups of people
within the sample and their preferences for the factors identified earlier.
A hierarchical clustering method was used, as understanding of a few, rather than many,clusters is sought. That noted, the size and single industry nature of the sample mean that
this would likely be the case anyway. Wards method was adopted as it is well suited tothis type of exploratory analysis and also minimises the number of clusters identified(Hair et al 2006). Further, somewhat even clusters sizes are expected, which is anotherreason to use Wards method (Hair et al 2006). The Squared Euclidian Distance was usedin the two cluster procedures that were run as it is normally used in conjunction withWards method and because similarity was sought (Hair et al 2006). A number oftechniques were used to establish validity. Multinomial logit models, ANOVA andfurther clustering methods were all used to establish that clusters were significantly
different. In the case of ANOVA and multinomial logit modelling, the sample size
inhibits any real insight from this analysis. These were still performed with some positive
results. When ANOVA was used with the categorical variables utilised to profile the14New Zealand Journal of Employment Relations 34(2):4-28
cluster solutions, the findings indicated that some (not all) of the demographic variables
were different across clusters in both procedures. The logit modelling was more
successful, as it was found that several of the demographic variables were significantly
different from cluster to cluster. K-means clustering was also used to confirm thehierarchical clustering results. Again, limited support was found indicating that a fourcluster solution for both procedures is a reasonable conclusion. Finally, a two step cluster
procedure was used to confirm the hierarchical findings, and this indicated a similarclustering solution thereby deeming that the findings were appropriate. None of thevalidity findings are certain; however, this is an exploratory study. That noted, thecombination of methods used to examine validity provide enough evidence to suggest thefindings are worth reporting.
Multiple cluster procedures were run, as there are two different perceptions being
examined. The first cluster procedure was for the academics’ perceptions of the
University’s obligations and the second was for the academics’ obligations to the
University. To identify the correct number of clusters in the University’s obligations to
the academics procedure three to seven solutions were examined, and for the academics’
obligations to the university three to five cluster solutions were examined. In both cases,
the agglomeration schedule, dendrogram and frequencies were used to determine thenumber of clusters to be examined. The agglomeration schedule indicated that between
three and four clusters was appropriate for both cluster procedures. The dendrogram also
indicated that four clusters was the most suitable solution, as did the frequencies. Using
four cluster solutions, the factors, and the demographic information collected in thesurvey, the following insights into the clusters were developed (note: the clusters are
profiled according to the factors and the demographic details collected).
The first cluster procedure was conducted on the factors related to academics’ perceptionsof the University’s obligations to them, and Figure 1 outlines the four clusters withfactors scores.
Figure 1: University’s Obligations Clusters with Factor Scores

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New Zealand Journal of Employment Relations 34(2):4-28

Cluster 1: Satisfied
The respondents in this cluster scored highest on fair treatment in promotion, staff
development support, reward for performance, and workplace relations. This was,however, the smallest group representing only 10% of the sample. Strongly concernedwith teaching and research, and ignoring administration and management, they reflect
what many would see as traditional University employment preferences. They also have,on average, been employed at their current institution for longer (12.7 years) than any of
the other clusters. Their average age was 47 and they had also spent on average 7.25 years
at another university. The group was also predominantly male, to a much greater extent
than any of the other clusters, and they were employed in more senior positions.
Interestingly, members of this group were less frequently union members. In summary,this cohort exhibited a high level of faith in the University’s systems and indicated belief
that the University will fulfil its obligations.

Cluster 2: Lifestyle
The respondents in this cluster were most concerned with academic lifestyle, placing
greater emphasis on this issue than any of the other groups. While the group did exhibit
interest in fair remuneration, they displayed the lowest interest in reward for performanceand performance based promotion. The largest cluster, with 38% of the sample, they also
appear somewhat disinterested in the quality of management and leadership provided. In
contrast, they highly valued, more than any of the other groups, collegial workplace
relations. In terms of demographics, the group had the second longest length of service attheir current institution (11.6 years), however, they had spent less time at otheruniversities than any of the other group. They more often originated from the public
sector, and more often migrated from another faculty within their current University, thanthose in the other clusters. Further, the group was less concerned with the traditional
teaching and research role and more concerned with management, administration andprofessional development. They have been, on average, at their current academic staff
level for around six years. They were also the oldest group, had the highest number offemales, and the lowest level of completed doctorates.
Cluster 3: Complacent
Those in the ‘complacent’ cluster had the lowest interest in all of the areas that theclusters were assessed on. Academics in this cluster were, on average, the second oldest
and this was second largest group (32% of the sample). The group expressed the least
interest in academic life, workplace equity and concern for appropriate remuneration.
Limited interested was indicated in relation to reward for performance, goodmanagement/leadership, staff development, and fair treatment in promotion. This group ischaracterised by having the lowest academic level positions and they have spent the mostamount of time at their current position level. Their primary role at the University more
frequently includes administration or management than the other groups. On average,
they have spent around 10 years at their current university and over six years at theirprevious university. While expressing very little interest in workplace conditions andpromotions, this group had the largest number of union members. Finally, this was themost ethnically diverse group.

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New Zealand Journal of Employment Relations 34(2):4-28

Cluster 4: Ambitious
The academics in this cluster are very eager to receive appropriate remuneration andrewards for their performance. They also expressed high concern for equitable treatment
but placed relatively little importance on the quality leadership and management or good
workplace relations. They place a moderate amount of value on academic life and fairtreatment in promotion. The youngest of all four cohorts, members of this cluster have theshortest length of service with their current institution, as well as the shortest amount oftime at their current position level. Interestingly, on average they have the longest service
with previous universities and have the highest levels of education on average. Those inthis cluster were also more likely to be students before they joined their current
institution. In general, they are a younger more career minded cohort than any of theothers. They also saw themselves as having greater career mobility.
The second cluster procedure was conducted using the factors relating to the academics’
perceptions of their obligations to the University. This also generated four clusters asshown in Figure 2.

Figure 2: Academics’ Obligations Clusters with Factor Scores

Cluster 1: Low commitment
As a cohort, this was the smallest group accounting for 20% of the sample. This groupexpressed the least interest in issues associated with commitment to their work and the
University. While they have the second highest interest in meeting University

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New Zealand Journal of Employment Relations 34(2):4-28
expectations, they expressed very little interest in going ‘above and beyond’ standard
University expectations. In terms of demographics, the group had by far the largest union
membership, were the oldest, had the highest proportion of males, had spent the mosttime at other universities, and had been at their current academic level for the longest
period. This cluster expressed strong interest in teaching and research.
Cluster 2: Above and Beyond
This cluster was the second largest group, containing 25% of the sample. This groupexpressed the highest level of interest in working ‘above and beyond’ standard University
expectations. This group was the youngest of the four clusters, had the lowest level ofunion membership, and the least number of years of service with their current University
and other universities. Given their limited employment duration, it is not surprising thatthey have the shortest period at their current level. As the youngest cluster, generational
differences associated with lower concern regarding security of tenure, relative comfort
with career movement and mobility, and lower commitment to employers seem to be in
play.
Cluster 3: Expectations and Commitment
Cluster three accounted for 22% of the overall sample. This group had the highest level ofinterest in meeting ‘academic expectations’ and expressed the highest level of‘commitment’. They also indicated a strong interest in going ‘above and beyond’ basic
expectations. On average, this group held the highest academic positions and had been
employed by the University for one year more than the other groups. They also possessed
the highest education levels and lowest number of incomplete postgraduate degrees.
Cluster 4: Commitment Only
The final cluster in this procedure is the largest, with 27% the sample. The only factor
that had a positive weighting for this cluster was ‘commitment’. The group had the lowest
level of interest in working ‘above and beyond’ and in meeting ‘academic expectations’.
The demographics of this group differed to each of the other clusters, having the highest
percentage of females and the highest level of incomplete postgraduate degrees. On
average, they were second highest cluster in terms of academic positions, had been
employed by the University second longest, and had the second longest period of
employment with their previous institution.

Implications for Management
Having completed two cluster analysis procedures, we now move to briefly address somemanagement issues and implications that emerge from consideration of our cluster
analysis findings. For while Wellin (2007) has noted that research and discussion ofeffective management of psychological contracts has been very limited, as noted earlier,extensive empirical research has pointed to the powerful effects of psychologicalcontracts on employee engagement, commitment, motivation, and responses to change(see, for example: Conway and Briner, 2005; Dabos and Rousseau, 2004; Thomson and
Bunderson, 2003; and Wellin, 2007). It is widely accepted that the maintenance of
positive psychological contract can help facilitate the achievement of positive morale, a18

New Zealand Journal of Employment Relations 34(2):4-28
favourable organisational culture, and employee support for planned organisationalchange.
Research into the negative impact of breaches of the psychological contract has made theimplications of dishonesty, and failure to deliver on perceived commitments, abundantly
clear (see, for example: Conway and Briner, 2005; and, Wellin, 2007). Disappointment,
dissatisfaction, and disaffection are just some of the negative consequences of poor
management of the psychological contract, and such feelings will negatively impact
academic commitment and performance. Performance appraisal meetings, anddiscussions around work and career planning, are good examples of sites of opportunity
for managers where they can carefully address expectations, and even reciprocity, withstaff. There are, of course, risks where managers seek to make the implicit explicit andthen fail to deliver on perceived obligations and promises. Indeed, failure to deliver on
explicit promises may create a more intense negative response from academics than
failure to deliver on an implicit ‘perceived’ promise. That noted, as leadership research
has shown (see: Avolio, Walumbwa and Weber, 2009), managers must take care not to
reduce their approach to ‘managing’ staff, and their psychological contracts, to the‘transactional’ performance management practices but seek to inspire staff to pursue
goals that align with their beliefs, commitments and sense of obligation.
Focusing specifically on the university context, there are opportunities for university
managers to influence the development of academics’ psychological contracts. However,given that so much of the psychological contract is implicit, understanding the content is
not a simple matter of managers reflecting upon what academics expect and are willing to
do. Further, as our research has shown, there is very considerable variation in the content
of the psychological contracts of business school academics. As such, careful research
into the content of academics’ psychological contracts is warranted. Such research can beof very considerable benefit to university management as it can provide powerful insights
in to factors affecting employment relations and university performance. Managers canthen act in a more informed manner to help develop and maintain organisationallyfavourable psychological contracts. They can have some influence on the development of
psychological contract content so that academics’ expectations of the university might
better align with what the university can deliver to them. The obligations that academics
perceive that they have to the university might also be influenced by managers.
In seeking to influence academics’ psychological contracts honesty and openness aroundexpectations, working conditions, and career development opportunities are crucially
important, and this honesty and openness should be evident from the recruitment phase(Lester and Kickul, 2001). Negotiation and consultation are critically important if change
is to be realised in the content of psychological contracts. Imposition of change willencounter resistance, and often result in problematic workplace relations and behaviour,where academics perceive that the psychological contract has been breached. The work ofTurnley and Feldman (1998) provides insight into how university managers might
mitigate against the reactions to psychological contract violations by carefully andhonestly explaining the reasons for change. Indeed, it can be expected that academics willreact less negatively to changes in psychological contracts when they attribute the change
to “legitimate, external events’ outside management’s control” (Turnley and Feldman,
1998: 81). As Turnley and Feldman (1998) also noted building cohesive relationships
among employees and supervisors is important in order to buffer the negative
consequences of psychological contract violations. Rousseau (1995) and Morrison and

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New Zealand Journal of Employment Relations 34(2):4-28
Robinson (1997) pointed to the benefits of ‘open-book’ management where sharing
information allows employees to understand the reasons for change and also recognise
their contribution and significance to the work of the organisation.
Our cluster analysis signposted the complexities associated with managing and leading
academics. It also highlighted the need for university managers to recognise thevariability in the content of the psychological contracts that are formed by academics. The
research pointed to the existence of quite divergent expectations, interests, motivations
and levels of commitment to the university. Sensitivity to such variations, and tailoring ofmanagement initiatives and messages, is therefore important if the university is to achieve
its goals. The academics in our sample will, for example, respond variably to teaching,research and administrative goals and performance objectives. They will also respondvariably to different leadership and management styles, and to the pace and extent of
workplace change they encounter. Managing ongoing change in the university requires
careful re-negotiation of the content of psychological contracts, especially when
expectations of academics change and/or when what the university is providing to staff
changes. Managers must also be sensitive to the cumulative effects that interactions with,and between, staff have upon the state of psychological contracts. They impact
academics’ commitment and performance.
Clearly, the psychological contract can be leveraged to enhance university performance.
Knowing what different academic staff perceive to be their obligations to the university,and the university’s obligations to them, means that managers can carefully select andmotivate academics most likely to support and champion particular initiatives aroundresearch, teaching, or administration. Understanding academics’ differences will provevaluable. For example, the ‘satisfied’ cluster might quickly become dissatisfied if they
perceive poor management and leadership, and/or few professional development
opportunities and poor treatment in relation to promotion. Similarly, academics within the‘complacent’ cluster might lose their complacency, becoming more motivated andfocused through effective management and leadership, or even angry and oppositional ifthey find their efforts in management and administration are somehow thwarted. Those in
the cluster who value the traditional academic ‘lifestyle’, placing a premium upon
autonomy, academic freedom, collegiality, and workplace flexibility, will respondnegatively to many of the changes commonly associated with the creeping managerialismthat is evident across the university sector. Clearly, this poses a real management
challenge, as academics in this ‘lifestyle’ cluster place limited value on transactional
performance rewards. Obviously, management can quickly alienate those in the‘ambitious’ cluster by blocking career opportunities or not recognising and rewarding
their efforts.
The second cluster procedure, which analysed the obligations that academics felt towards
the university, provided insight into different management challenges. Key insights relate
to how university managers can best harness the obligations and commitments that theacademics feel to assist them in facilitating the realisation of faculty and university goals
and objectives. Those in the ‘low commitment’ pose a considerable challenge tomanagers wanting to achieve more or realise considerable change. Being the most themost highly unionised academics, and those in their current positions for the longest
period, they demand carefully tailored management if they are to move beyond meeting
standard workplace expectations. The ‘above and beyond cluster’ are willing to do morein the workplace and might be usefully be mobilised by managers as champions for20

New Zealand Journal of Employment Relations 34(2):4-28
particular goals, initiatives and change. Given the relative strength of their commitment tothe university and meeting performance targets, the academics in third cluster,‘expectations and commitment’, can be called upon to do more with the least risk
resistance, loss of motivation and commitment. Understanding their perceived obligations
allows managers the opportunity to harness their commitment and efforts, even in the faceof considerable change. These academics, and their values, attitudes and beliefs, could
serve as exemplars, and they could be mobilised to support the realisation of desiredchange in workplace culture. The ‘commitment only’ cluster are an especially challenging
group to manage as their expressed commitment to the university seems outweighed bylow levels of interest in working ‘above and beyond’ or even meeting ‘academic
expectations’. This cluster demands further analysis as they constitute the largest group ofacademics and seem to treat their work as ‘just a job’. Motivating academics around sucha ‘limited commitment’ is an especially challenging management exercise.

Concluding Comments
Building upon the empirical evidence gathered from the cross-sectional survey, this paper
has revealed the content and key elements of the psychological contracts formed byacademics within an Australian university business faculty. The exploratory factor
analysis identified eight factors in relation to the University’s obligations to its employees
and three underlying factors which explain individual academic’s obligations to the
University. In terms of expectations of the university, the following were identified as the
key issues: ‘fair treatment in promotion’; ‘staff development and support’; ‘good
management and leadership’; ‘academic life’; ‘fairness and equity’; ‘appropriate
remuneration’; ‘rewarding performance’; and, ‘good workplace relations’. This partiallyreinforces the findings of some earlier empirical research on psychological contracts
within academia (Tipples and Krivokapic-Skoko, 1997; Tipples and Jones, 1998) that
identified the importance of leadership and management, fairness and equity (particularly
when it comes to promotion), and provision of opportunities for career development. The
three underlying factors explaining academics’ obligations to the University that wereidentified were: meets ‘academic expectations’; ‘commitment’; and, going ‘above andbeyond’.
In addition to re-enforcing the importance of quite ‘generalised’ expectations alreadyidentified in the literature on psychological contracts, including the provision of goodmanagement, an appropriate work environment, and opportunities for career development(see, for example: Rousseau, 1990), our survey findings pointed to the perceived
importance of maintaining academic freedom and allowing academics to act as
professionals. Many of the academics we surveyed expected the University to reward
excellence in teaching through the promotion system, offer flexibility through working
from home, and provide support for research. Many strongly indicated that they haveobligations beyond meeting basic academic expectations. The survey pointed to theacademics’ strong personal commitments to quality teaching and enhancing student
development, both of which are seen as being part of their obligation to the University.
These latter insights demonstrate that it would be limiting to attempt to understand thecontent of the psychological contract in narrow work performance terms.
This was the first empirical study to use cluster analysis to further examine the factors
scores of perceived employer and employee obligations within a university context, and it

21

New Zealand Journal of Employment Relations 34(2):4-28
proved useful as a means of deepening understanding of academics’ psychologicalcontracts, variation among them, and their possible workplace effects. The analysis
identified four clusters in relation to what academics perceive that the university is
obliged to provide to them. These were: the ‘satisfied’ academics; the academics mostconcerned with maintenance of the academic ‘lifestyle’; the ‘complacent’ academics; and,the ‘ambitious’ academics. The cluster analysis also produced four clusters in relation towhat the academics perceived obligations to the university. These were labelled ‘low
commitment’, ‘above and beyond’, ‘expectations and commitment’, and ‘commitment
only’.
We noted that prior research and the finding from this study indicate that university
managers can and should act to maintain positive academic psychological contracts. We
argued that universities will benefit where managers are able to deliver on academics
varied expectations. Further, we believe that the insights that analysis of psychologicalcontracts provide can allow managers to better manage and harness staff motivation,commitments, and personal interests to deliver on desired university outcomes. By
knowing the content of psychological contracts, knowing academics’ perceived
expectations and obligations, university managers can better understand, predict andmanage how academics will respond to various work pressures, demands, incentives andchange.
Clearly, the weaknesses of the questionnaire survey do impact the validity andgeneralisability of the findings. The survey was based on respondents from a single
organisation and used self-reporting questionnaires to assess variables which were framedin terms of promises and obligations. As the data was collected at a single point in time
the research was not able to provide insights into the development of the contracts overtime. Further, the sample consisted of academics only, and the sample size is small.
Sample size limited some of the analysis as, for example, logit regression and ANOVA
require larger samples to be fully effective. Therefore, caution must be used ingeneralizing the results of this study and comparing across different empirical settings.
Other limitations of this study result from the conceptual framework used to evaluate thepsychological contract. As Cullinane and Dundon (2006: 116) pointed out, under
Rouseaau’s approach “organisations are deemed to be something of an anthromorphic
identity for employees, with employers holding no psychological contract of their own”.
Since this research followed Rousseau’s conceptualisation of the psychological contracts
it included only academics’ subjective interpretations and evaluation of their‘employment deal’ with the university. Further research could usefully include theperspective of the employer, the university, in order to provide further insight into mutual
and reciprocal obligations. However, bringing the employer’s perspective into thepsychological contract would be challenging, not least because of the difficulty ofidentifying and articulating the university perspective.

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Thomas, H.D.C. and Anderson, N. (1998). Changes in Newcomers’ PsychologicalContracts During Organizational Socialization: A Study of Recruits Entering the British
Army. Journal of Organizational Behaviour. 19: 745 – 767.
Thompson, J.A. and Bunderson, J.S. (2003). Violations of Principle: Ideological
Currency in the Psychological Contract. Academy of Management Review. 28(4): 571 –586.
Tipples, R.S. and Jones, P. (1998). Extra Contractual Relations – the Substance ofAcademics’ Psychological Contracts in New Zealand, in Harbridge, R., Gadd, C. andCrawford, A. (eds.) Current Research in Industrial Relations – Proceedings of the 12th.
AIRRANZ Conference, Victoria University of Wellington, 3-5 February, pp.377-385.
Tipples, R. and Krivokapic-Skoko, B. (1996). Performance Management and Its
Influence on Academics’ Employment Relationships and Careers: Lincoln University’
1990. Proceedings of the Seventh Conference on ‘Labour, Employment and Work in New
Zealand, Victoria University of Wellington. pp.232-240.
Tipples, R.S., and Krivokapic-Skoko, B. (1997). New Zealand Academics andPerformance Management. International Journal of Employment Studies. 5(2): 103 – 116.
Tipples, R.S. and Verry, J. (2006). How to Manage Staff with Individual contracts? Some
Experiences with Psychological Contracts Since the Employment Contracts Act 1991 in
New Zealand. Paper presented at the 3rd International Conference on Contemporary
Business, organised by Faculty of Commerce, Charles Sturt University: Leura, Blue
Mountains, NSW, Australia

25

New Zealand Journal of Employment Relations 34(2):4-28
Tipples, R., Krivokapic-Skoko, B., and O’Neill, G. (2007). University Academics’
Psychological Contracts in Australia and New Zealand. New Zealand Journal of
Employment Relations. 32(2): 32 – 52.
Turnley, W.H. and Feldman, D. (1999). The Impact of Psychological Contract Violation
on Exit, Voice, Loyalty and Neglect. Human Relations. 52: 895 – 922.
Wellin, M. (2007). Managing the Psychological Contract : Using the Personal Deal to
Increase Business Performance. Aldershot, England; Burlington, Vt: Gower.
Westwood, R., Sparrow, P. and Leung, A. (2001). Challenges to the PsychologicalContract in Hong Kong. International Journal of Human Resource Management. 12: 621– 665
Winter, R.P. and Sarros, J.C. (2002). Corporate Reforms to Australian Universities:
Views from the Academic Heartland. Journal of Institutional Research. 11(2): 92 – 104.

Appendix 1: Factor Reliability Scores

Factor

Cronbach
score

alpha

University Obligations
Fair treatment in promotion

0.89

Staff development and support

0.83

Good management and leadership

0.74

Academic life

0.66

Fairness and equity

0.80

Appropriate remuneration

0.72

Rewarding performance

0.75

Good workplace relations

0.68

Individual Obligations
Meet academic expectations

0.74

Commitment

0.60

Above and beyond

0.69

26

New Zealand Journal of Employment Relations 34(2):4-28
Appendix 2: Mean Scores for University’s Obligations Factors
Satisfied

LifestyleComplacent Ambitious

Fair treatment in promotion

1.77

-.35

-.18

.09

Staff development and support

.99

.46

-.49

-.73

Good management and leadership

.62

.02

.06

-.52

Academic life

-.25

.51

-.70

.31

Fairness and equity

.29

.10

-.55

.66

Appropriate remuneration

-.13

-.12

-.44

1.17

Rewarding performance

.73

-.39

-.07

.61

Good workplace relations

-.49

.50

-.43

-.05

Appendix 3: Mean Scores for Academics’ Obligations Factors
Above
and
beyondExpectations
Commitment
andOnlyCommitment

.34

-.58

1.28

-.75

-1.15
-.62

-.29
.93

.85
.36

.44
-.70

Low
commitment

Meet academic
expectations
Commitment
Above and beyond

Notes
1

Notably the universities known as the Group of Eight: Australian National University;
University of Adelaide; University of Melbourne; Monash University; University ofSydney; University of New South Wales; University of Queensland; and University ofWestern Australia.

2

Academics employed within the business faculty of a multi-campus Australian
university were the subjects of the study. Just two decades old, the university was createdthrough amalgamation of a number of pre-existing ‘colleges of advanced education’
where the key focus was on ‘teaching’ and academic research was accorded relatively
little importance or emphasis. The university, however, accords ever-increasing
importance to the generation of quality research outcomes. The university has strong
internal, distance and international operations and student enrolments exceed 30,000.
3This paper does not provide a detailed history of psychological contract research, nordoes it engage in discussion of the origin of the construct. For such information, thereader is advised to consult abbreviated histories of the construct such as those completed
by Tipples and Verry (2006) and Tipples, Krivokapic-Skoko and O’Neill (2007). The

27

New Zealand Journal of Employment Relations 34(2):4-28

origins and early development of the psychological contract construct are also effectively
outlined in Roehling (1997), while a more detailed review of contemporary psychologicalcontract research can be found in Conway and Briner (2005) or in Taylor and Teklab(2004).

28

New Zealand Journal of Employment Relations 34(2):29-43

How Unions Impact on the State of the Psychological Contract
to Facilitate the adoption of New Work Practices (NWP)
CAROL GILL*

Abstract
This article draws together empirical research in the psychological contract, trust, unions
and NWP literatures to draw conclusions on the way in which unions impact on NWP.
It finds that strong unions that have a co-operative relationship with management preventand heal breaches in the psychological contract and facilitate a virtuous trust cycle that is
important to the implementation of NWP. This has significant implications for theory
and practice, particularly in anti-union institutional contexts that are focused on union
avoidance, suppression and substitution.
Key Words: Psychological Contract, Unions, Trust, High Performance Work Practices

Introduction
Traditional work practices (TWP), sometimes referred to as Taylorism and Fordism (theapplication of Taylorism to mass production manufacturing), achieve cost reduction
through mechanistic work design that reduces individual jobs to a set of simple tasks
managed through supervisory control. New work practices (NWP) practices, sometimes
referred to as High Performance, Involvement and Commitment Work Practices, achieve
quality, innovation and flexibility through committed employees who are consideredassets, paid high wages and given voice, or the opportunity to have their say and exert
some influence (Boxall and Purcell, 2008). NWP have been defined as the synergistic
application of practices that enhance employee skills and increase their involvement(Gephart and Van Buren, 1996; Wright and Snell, 1998).
Whilst a link between NWP and organisation performance has been established there islittle research on why the association exists (Guest, 1998; Luthans and Sommer, 2005).
Guest (1998; 2004; 2007) proposes that the construct of the psychological contract,defined as “the perception of both parties to the employment relationship, organisationand individual, of the reciprocal promises and obligations implied in that relationship”(Guest and Conway, 2002: 22), may a useful contemporary framework for examining this‘black box’. It is hypothesised that NWP are linked to organisation performance throughintermediate employee outcomes such as knowledge, skills, abilities, motivation andengagement, or the intellectual and emotional attachment that an employee has to his or*

Dr. Carol Gill is Organisational Leadership – Programme Director and Senior Fellow – University of
Melbourne. Melbourne Business School, Victoria, Australia. c.gill@mbs.edu

29New Zealand Journal of Employment Relations 34(2):29-43
her work and the organisation (Heger, 2007) that are difficult to achieve because theyrequire employee trust (Appelbaum and Batt, 1995).
It has been proposed that a union presence, when coupled with co-operative industrial
relations that allow management to be responsive to union voice, can facilitate theeffective adoption of NWP. In particular, there is evidence that unions can encourage
management to relinquish self interest and short-term financial outcomes in favour of along-term, organisation-wide perspective; prevent lay-offs and quitting, which provide astable workforce suited to reciprocal investment by management and employees; andobtain employee trust, commitment and co-operation (Gill, 2009).
In the absence of any theory on how unions impact on NWP that would form afoundation for empirical research, this paper reviews the disparate literature and extant
research on unions, psychological contract, trust and NWP to explore the relationshipbetween them and draw conclusions that will inform future research and practice. To dothis I will firstly consider how NWP change the contract between management andemployees before demonstrating how this new contract requires employee trust.
Secondly, I will consider how NWP breach the new contract and how trust can mitigate
contract breaches. Thirdly, I will demonstrate how unions impact on contract breaches.
Finally, I will consider the implications of this review for research and practice.
The scope of this paper has been limited to countries with low context cultures because
industrial relations varies based on the institutional context (Jackson and Schuler, 1995).
Low context cultures have a transactional ‘win lose’ approach that puts business before
relationships which is in contrast to high context cultures that place great importance on
trust, relationships and long term commitment and engage in relational business
transactions (McCarter, Fawcett, and Magnan, 2005; Ueltschy, Ueltschy and Fachninelli,2007). I draw on literature and research conducted in what has been termed the ‘Anglo’countries of Australia, New Zealand, UK and the USA (House et al., 2004).

Review
NWP change the contract with employees
NWP break down hierarchical relationships between management and employees
through: the removal of status distinctions; sharing information; profit sharing;empowerment and team work. Practices such as self-managed teams, decentralisationand information sharing, force greater reliance on a commitment based psychologicalcontract (Guest, 2004). This new contract is ‘relational’ with an intrinsic and socioemotional focus, which reduces social distance and requires organisational citizenshipbehaviour. This contract exceeds transactional and economic based agreements between
the employer and employee based on specified job content (Rousseau, 1990; Tipples,
1996). In this ‘new deal’ contract, employees identify more closely with theorganisation’s goals; feel closer to management; and exhibit an individualistic rather thancollectivist orientation to work (D’Art and Turner, 2006). These contracts are also more

30

New Zealand Journal of Employment Relations 34(2):29-43
likely to be open ended, subjective and intuitive (Rousseau, 1990; Rousseau and Parks,
1992) with Tipples (1996) proposing that because the psychological contract is so
dynamic it can only be examined as a snap shot.
NWP require employee trust
TWP are based on the premise of low trust of employees and high trust of managers.
This leads to a high control model of work where managers do the thinking and directing
and employees obey instructions (Fox, 1974). Whilst TWP inhibit the development oftrust they are also able to mitigate the consequences of a low trust environment throughcontrol mechanisms (Strickland, 1958). In NWP, trust takes the place of supervisory
control because direct observation of employees is impractical (Mayer, Davis andSchoorman, 1995). Trust is defined as the “willingness of a party to be vulnerable to theactions of another party based on the expectation that the other will perform a particularaction important to the trustor, irrespective of the ability to monitor or control that otherparty” (Mayer et al., 1995: 712), which is based on the assumption that the other party
has the ability, benevolence and integrity to deliver on the action.
Management will be more likely to implement NWP if they trust employees withinformation and power that was once their managerial prerogative and employees will be
more likely to use their discretionary effort to benefit the organisation if they trust
management to fulfill their obligations, including the provision of job security even when
NWP introduce efficiencies that may make some positions redundant. It is proposed thatNWP challenge the job security specified in traditional contracts when they use‘employability’, acquired through extensive training and development, as a substitute(Herriot, Manning and Kidd, 1997).
Without trust in management, employees may respond to NWP with restrictive work
practices and exit behaviour. Resistance from surviving employees is exaggerated
because organisations implementing NWP rely more on employees because of theircritical importance to business processes and relationships and the lack of available‘slack’ in resources (Ramirez, Guy and Beale, 2007). Ironically, workforce stability also
makes management more likely to implement NWP because their investment inworkforce skills and information sharing will not be wasted by this key resource walking
out the door and being made available to competitors. In addition to this, team work is a
key component of NWP and continuity of employment is required to provide stable teammembership (Clarke and Payne, 1997; Osterman, 2000). Secondly, it has been argued
that the ‘new deal’ contract may disadvantage employees who are required to take on
management responsibility. This results in work intensification, poor work/life balance,stress and the elimination of hierarchical career paths which undermines employee trust.
In response, employees may retaliate by reducing work quality; increasing absenteeism;
declining to go an extra mile; and increasing resignations (Boxall and Purcell, 2008).

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New Zealand Journal of Employment Relations 34(2):29-43
NWP can violate the new psychological contract
Major psychological contract violations or minor ones, termed breaches, can undermine
the effective adoption of NWP because they destroy trust between managers andemployees. Adams’ (1965) equity theory predicts that employees will adjust their work
inputs or effort to match lowered outputs or rewards as a consequence of a contract
breach (Boxall and Purcell, 2008). Empirical evidence supports this proposition, findingthat violation of the psychological contract leads to reduction in discretionary behaviour,
including lower levels of: perceived obligations to the employer, citizenship behaviour,
civic virtue, engagement in prescribed job roles, commitment, satisfaction, intention tojoin and remain in the organisation and unspecified spontaneous behaviours that facilitateorganisational effectiveness (Robinson, Kraatz and Rousseau, 1994; Robinson andRousseau, 1994; Robinson and Morrison, 1995; Robinson, 1996; Tipples and Jones,
1999). In addition to this, employees may undermine or delay the adoption of NWP or
return to their traditional behaviours. This latter option is most likely because it is easierfor employees to adjust their perceived obligations in response to a contract breach thanleave the organisation (Robinson et al, 1994). For example, Boxall and Purcell (2008)
cite the case of Renco in UK consumer electronics sector. This Japanese-owned
company introduced shop floor participation and cooperative industrial relations to a
Greenfield site. After 18 months, these practices failed and attitude survey data, collected
before and after the change, demonstrated that employees revised their effort in a quid
pro quo.
There is evidence that the transition to NWP may increase the likelihood of
misunderstanding between employers and employees, resulting in a real or perceived
contract violation that may have a negative impact on employee performance and future
trust which underpins the psychological contract. Management may violate thepsychological contract and destroy employee trust in management if practices such as
self-managed teams improve organisational efficiency and result in the elimination ofjobs. Downsizing has been shown to reduce commitment in surviving employees, withresearch indicating that it can leave them unmotivated, uncommitted, risk adverse andresistant to change (Ryan and Macky, 1998; Littler, Dunford, Bramble and Hede, 1998).
Research has found that although employees may initially decide to cooperate in the
adoption of NWP, they may respond with resistance or apathy if management violates thepsychological contract through lay-offs (Godard, 2004).
NWP also replace the organisational hierarchy with self-managed teams, status
reductions and information sharing, resulting in the loss of promotion opportunities.
NWP replace a traditional psychological contract, based on the exchange of pay linked tojob analysis (or seniority) and long-term job security in return for hard work and loyalty,
with a new contract based on pay for performance and flexibility in return for
employability based on the acquisition of skills (Rousseau, 1990; Sims, 1994; Robinson,
1996; Herriot et al., 1997).

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New Zealand Journal of Employment Relations 34(2):29-43
Contract breaches may also occur because of poor alignment of behaviours between the
Human Resource Management function and line management, and within line
management ranks, who in a decentralised organisation, negotiate psychologicalcontracts directly with employees on an individual and idiosyncratic basis (Guest, 2004).
NWP decentralise decision making and consequently line managers and the HR function
may send different messages regarding expectations and obligations (Herriot et al., 1997).
For example, the HR department may set policy on work and family leave which is
implemented in practice by line managers based on available local resources, producing
inconsistent application of the policy throughout the organisation and a gap between
rhetoric and reality.
If the psychological contract is violated, trust plays a significant role in the managementof the breach. Robinson (1996) proposes that prior trust has an impact on the recognition
and interpretation of, and reaction to, perceived breaches with trust being an antecedent,
consequent and mitigating factor in contract breaches. Because the psychologicalcontract is subjective and tacit, rather than explicit, employee perceptions define a breachand play an important role in interpreting contract breaches. Robinson’s research
indicates that employees and employers with high initial trust may use selective attention
to overlook or forget actual breaches. Specifically, employees with low trust were more
likely to blame their employers for a perceived breach. Consequently, employers whoearn the trust of employees early in their relationship are more likely to retain employee
trust despite psychological contract breaches. Boxall and Purcell (2008) propose that
employees may accept explanations from credible or trustworthy management for abreach. Guest (2007) argues that management plays a significant role in eliciting or
destroying trust and destroy trust when a gap between what management promises anddelivers emerges.
Unions prevent and mitigate contract breaches
It has been argued that a union presence may facilitate the introduction of productive
work practices (Freeman and Medoff, 1984). It is proposed that unions make a uniquecontribution through independent collective employee voice (Addison, 2005; Ramirez, etal., 2007). Union voice is qualitatively different to employee voice provided by NWP
because management sponsored voice is direct and incorporated into the management
chain and consequently prohibits individual employees from challenging managerial
authority (Freeman and Medoff, 1984). It is independent and allows employees toprovide genuine input without fear of reprisals (McLoughlin and Gourlay, 1992). Union
voice also provides management with important information from the front line that mayotherwise have been hidden by employees for fear that management may ‘shoot themessenger’. Empirical research evidence indicates that management sponsored voice is
not a substitute for independent union voice and that a union presence is associated withmore voice mechanisms including management sponsored voice (Benson, 2000; Haynes,
Boxall and Macky, 2005; Kessler and Purcell, 1995; Lloyd, 2001; Machin and Wood,
2005; Millward, Stevens, Smart and Hawes, 1992; Ramirez et al., 2007; Sisson, 1997).
Research has also shown that all voice mechanisms are more effective in union33

New Zealand Journal of Employment Relations 34(2):29-43
organisations (Kessler and Purcell, 1995; Sisson, 1997; Frohlich and Pekruhl, 1996;
Lloyd, 2001).
Union voice makes a valuable contribution because union leaders, unlike appointed
managers, are independent because they are elected to represent the interests of
employees and their career paths are not tied to the organisation. This independence
allows them to challenge the logic of management proposals based on a long-term andorganisation-wide perspective. This improves organisation decision making processes
through different perspectives that result in better quality decisions that are more likely tobe accepted by employees and subsequently improve the speed of implementation (Voos,
1987; Freeman and Rogers, 1999; Rubinstein, 2001; Addison, 2005). Union leaders canchallenge decisions that are not in the best interest of their membership and can ensurethat employees share in the economic success of their organisations (Rubinstein, 2001)
which also maintains the integrity of the psychological contract. In particular, unions canuse sanctions and/or the threat of sanctions, such as strikes, go slows and stop works, toensure that management keeps its promises, closing the gap between management
rhetoric and reality and preventing psychological contract violations. In particular, union
voice promotes workforce stability with empirical research finding that the collective
voice of unionism leads to lower probabilities of quitting, longer job tenure and a lower
lay-off rate, which reduces the costs of training and recruitment and increases
productivity (Freeman and Medoff, 1984; Miller and Mulvey, 1993; Delery, Gupta,
Shaw, Jenkins and Ganster, 2000; Osterman, 2000; Addison, 2005; Ramirez et al., 2007).
Employees believe unions will protect their employment security and are more preparedto participate in employee involvement programmes when they feel the union will protect
their jobs (Levine and Tyson, 1990 as cited in Godard and Delaney, 2001; Black andLynch, 2001).
There is substantial empirical support for the positive impact that unions have on theimplementation of NWP. Whilst some research has found that NWP, such as
participation programs and merit pay, are less likely in unionised plants (Lincoln andKalleberg, 1990; Wood, 1996), the majority of research points to the positive relationshipbetween unions and NWP. In particular, collective bargaining did not decrease labour
productivity (Moreton, 1999), a union presence did not affect the positive impact of NWP
on productivity gains (Black and Lynch, 2001; Wood and Fenton-O’Creevy, 2005).
Specifically, research has found that many NWP are more likely in unionisedorganisations including employee share schemes (Gregg and Machin, 1988), shareownership and wider arrangements for employee participation (Marginson, 1992), direct
forms of participation (Pil and MacDuffie, 1996), Quality Circles (Armstrong,
Marginson, Edwards and Purcell, 1998), participation schemes (Freeman and Rogers,
1999), staff attitude surveys, job rotation, quality circles and organisation consultative
committees (Black and Lynch, 2001), and employee involvement (Wood and FentonO’Creevy, 2005).
Gill (2009) concludes from a review of empirical research that the strength of unions andthe quality of the relationship between unions and management affects the ability ofunions to create employee trust in management. Specifically, Bryson (2001) found that34

New Zealand Journal of Employment Relations 34(2):29-43
strong and effective unions that were supported by management had higher or similarlevels of trust in management to non union organisations. He also found that when
unions were weak, ineffective or faced management opposition, employees were lesstrusting of management than when no union was present. However, Bryson, Charlwood,and Forth (2006) found that managers were more likely to respond to direct voice thancollective voice, particularly when unions were weak; leading to the paradox thatmanagement is more likely to support weak unions even though they are less effective
than strong unions.

Conclusion
In conclusion, the transition to NWP changes the nature of the psychological contract.
TWP depend on transactional contracts characterised by supervisory control whilst NWP
have relational contracts that depend on employee commitment to use their discretionary
behaviour in service of the organisation. In the latter case, violation of the psychologicalcontract can have a significant impact if employees reduce their positive discretionary
behaviour on which NWP depend. Paradoxically, violation of the psychological contract
in organisations that have adopted NWP is more likely, both during the transition to
NWP and after their implementation. This is because, despite unitary promises of ‘win
win’ outcomes, NWP can disadvantage employees through work intensification anddownsizing due to new efficiencies. This can result in restrictive work practices and/or
exit behaviour which have a negative impact on the effective adoption of NWP.
Trust is at the heart of the ‘new’ psychological contract and is required for the effective
adoption of NWP. Employers who trust employees will be more likely to devolve thepower required to implement practices such as decentralisation, self-managed teams andinformation sharing. Employees who trust management will be less threatened by, andmore committed to, NWP. When there is trust, employees are more willing to enter intoa ‘new’ relational contract. Trust is also important to the management of thepsychological contract which, because of its fluid and idiosyncratic nature, may result incontract breaches. In addition to this, employee perceptions define contract breaches andhigh initial trust results in selective attention that may lead employees to overlook actual
breaches. Managers are important to creating and destroying trust and can work against
their organisation’s best interests by pursuing short-term outcomes which violate thepsychological contract and destroy trust.
Strong unions that have a co-operative, rather than adversarial relationship withmanagement can facilitate the successful adoption of NWP by preventing and mitigating
contract breaches. A strong union collective voice, when coupled with a co-operative
relationship between unions and management, maintains the integrity of thepsychological contract by closing the gap between management rhetoric and reality
which facilitates employee trust in management. Through the development of trust,
unions also mitigate the contract breaches that NWP create. In particular, higher levels oftrust ‘soften the blow’ of contract breaches by managing employee perceptions.
Employees who trust management will be less likely to perceive a breach and are more

35

New Zealand Journal of Employment Relations 34(2):29-43
likely to forgive and forget breaches they perceive, with implications for future behaviour
and trust.
Unions also increase employment security which means employees will be more likely tosupport the adoption of NWP knowing that they can improve work processes without
losing their jobs and management will be more likely to devolve power to a stable
workforce. This facilitates a virtuous cycle that increases trust and commitment between
management and employees which is required for the ongoing success of NWP. This
trust and commitment ensures that employees do not engage in ‘quit’ behaviours,
including psychological and actual absence from their work. They also are less likely toresign from the organisation and take their newly acquired human capital with them,leaving a significant hole in an organisation that has become dependent on them.

Implications for Research and PracticeThis article brings together empirical research in the psychological contract, trust, unionand NWP literatures to draw conclusions on the way in which unions impact on NWP
with significant implications for research and practice.
From a theoretical perspective, this article contributes to the body of knowledge inseveral ways. It adds insight into how unions impact on NWP and how NWP impact onorganisational performance which is acknowledged as a substantial gap in the literature.
It opens up several avenues for future empirical research to test the relationships between
unions, NWP, trust and the psychological contract. The relationship between NWP andtrust could be explored by testing whether high levels of trust between management andemployees facilitate the effective adoption of NWP and examining the relationshipbetween trust and the psychological contract in organisations with NWP.
The
relationship between unions and NWP could be tested by examining whetherorganisations with a strong union presence coupled with co-operative industrial relations
are more likely to effectively adopt NWP than no union organisations or organisations
with a union presence that is weak and/or coupled with adversarial industrial relations. In
addition to this, how unions facilitate the adoption of NWP could be examined. In
particular, given evidence of the relationship between unions and workforce stability andbetween workforce stability and NWP, it would be valuable to examine whetherorganisations with a strong union presence coupled with a cooperative relationshipbetween unions and management have fewer perceived psychological contract breaches
and higher levels of trust between management and employees. The Workforce
Employee Relations Survey (WERS) provides longitudinal and multi source datacollected in the United Kingdom and presents an opportunity to find answers to thesequestions. However, union research is heavily impacted by the institutional context, andthere is a dearth of workplace data in Australia and New Zealand. This paper presents a
rationale for investment in data collection in Australasia that could be used for researchwhich could make a contribution to improved workplace productivity.

36

New Zealand Journal of Employment Relations 34(2):29-43
This article also has many implications for government, management and union policy
and practice. Evidence of union decline is substantive in the United Kingdom, Australia
and New Zealand since the 1970s (OECD, 2009). There is also recent evidence fromBritain to indicate that the quality of the relationship between unions and management ispoor, with low trust between management and union representatives (Kersley et al.,2006). Whilst Kochan, Katz and McKersie (1986) have cited demographic causes ofunion decline an anti-union attitude has also been observed. It has been proposed that,
despite contrary evidence, management and government have considered unions a threat
to workplace flexibility, timely response and productivity and have responded with union
avoidance, suppression and substitution (Chen, 2007; Kochan et al., 1986). There is also
a notion that unions are obsolete with some commentators noting that the increasing
popularity of NWP is coupled with union decline and proposing that NWP are a
substitute for unions (Kochan, 1980;Verma and Kochan, 1985; Kochan et al., 1986;
Keenoy, 1991; Turnbull, 1992; Jacoby, 1997; Kaufman, 1997).
Contrary to recent evidence of the Australasian belief that unions are a threat toproductivity there is anecdotal evidence that the suppression of unions may be
ideologically driven. In 2006, the Australian government introduced anti-union‘WorkChoices’ legislation proposing that this would create jobs and improve productivity
despite evidence from New Zealand indicating that similar laws introduced in the
Employment Contract Act from 1991-1999 were coupled with a substantial drop in
OECD productivity rankings (Ogden, 2007). This supports Guest’s (2004) proposition
that NWP have been accompanied by growth in American-influenced individualism
rather than collective representation.
Given the arguments presented in this paper evidence of union decline, substitution andsuppression should be cause for concern given the effective role that unions can play inthe adoption of productive work practices. It also makes a strong case for the
dissemination of research in practitioner forums. However, much remains to be done to
explore the relationship between unions and productivity and inform unions, government
and management so that they can implement evidence based policy and practice.

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New Zealand Journal of Employment Relations 34(2):44-60

How Does Psychological Contract Explain the Efficacy of
Coaching?
CHRISTIAAN MCCOMB*
Abstract
There is little in workplace coaching literature to explain its efficacy. Psychological contract
is a construct which could explain it, but it is yet to be introduced to the body of knowledge.
This paper examines the data collected from an exploratory case study to explain theperceived lack of results reported by participants of a workplace coaching program. Using
psychological contract theory as a frame of reference, it explains the lack of results as afunction of expectation mismatches identified in the case. It is inferred that certain conditions
might need to exist for coaching to be effective as a workplace intervention.

Introduction
The workplace coaching body of knowledge contains little qualitatively oriented research todescribe and explain coaching. The case study research described in this case was an attempt
to correct some of these deficiencies. Although one of the conclusions of the Xyz case study
was that coaching was effective as an organisational development tool, the findings of the
Xyz case study report suggest that there were conflicting reports made by participants
concerning coaching’s efficacy. Most notably, Xyz management do not consider coaching asa strategic lever for the organisation despite evidence that it resulted in a number of positive
strategic outcomes including: increased retention; expedited development of individual
leaders; successful transition of coachee’s into more challenging roles; and in some cases
dramatically improved role performance of leaders. Psychological contract theory is used asa frame for explaining the differences in perceived and/or actual results reported by theseparticipants. It is hypothesised that these differences can be explained by the ‘unworkability’of psychological contract expectations held by various coaching participants. Specificinstances of the case are described to illustrate this. The paper begins with a review of therelevant literatures to contextualise this study i.e. coaching and psychological contract, andthen the case is described. There is a brief outline of the methodology, before the researchquestion is explored. Using an inferential approach, the paper concludes by conceptualisingthe ‘conditions of a workable coaching psychological contract as a base for further research.

Workplace Coaching
Coaching is defined as a tailored form of one-to-one learning, which is focused on solutions
and outcomes, and is suitable for non-clinical populations in that it is focused on optimising
human functioning rather than remedial issues (Sussman and Finnegan, 1998; Grant, 2001b;
Ellinger and Keller, 2003; Linely and Harrington, 2005; Plamer and Whybrow, 2005). This is
not to say that coaching does not involve remedial work, but that the remediation is specificto the workplace, and to those without significant psychological dysfunction.

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New Zealand Journal of Employment Relations 34(2):44-60
As an academic discipline, workplace coaching is an undeveloped area lacking in empiricalresearch (Ellinger and Keller, 2003; Grant and Cavanagh, 2004). A recent literature review
reveals that there is little research about coaching in a management context, i.e. little toexplain or validate the claimed efficacy of coaching, frameworks for evaluating coachingoutcomes, or understanding of the mediating factors that determine its efficacy. Specifically,
the notion of psychological contract and how it applies to the workplace is one which has yet
to be introduced or explored in coaching research.

Psychological Contract
Psychological contract has been understood as an approach to organisational effectiveness(Schein, 1980) resulting in increased job satisfaction, productivity, reduced staff turnover(Kotter 1973; Sturges, Conway, Guest and Liefooghe, 2005). It also may explain the natureof the employment relationship (Shore and Tetrick 1994), worker commitment (Janssens,
Sels and Van Den Brande. 2003), organisational citizenship behaviour (Hui, Lee andRousseau, 2004), employee performance (Tekleab and Taylor, 2003) and absenteeism(Deery, Iverson and Walsh, 2006). Specifically, the term psychological contract is used todescribe a set of individual beliefs or set of assumptions about promises voluntarily given
and accepted in the context of a voluntary exchange relationship between two or moreparties, for example between an employee and an employer (Rousseau, 1995). Associatedwith the promises each party makes to another are mutual obligations and expectations, anddepending on each party’s beliefs about these promises, a psychological contract is subject tovariations in expectations about that contract i.e. matches and mismatches (Kotter, 1973),
which may affect the potential for each party’s expectations being met. When parties areclear about the beliefs and assumptions underlying each other’s promises, then it is more
likely the expectations will be met. Where one party has failed to fulfill its promises or
obligations, a psychological contract breach is said to have occurred (Robinson and Rousseau1994).

Methodology
The case study described in this research was developed as part an exploratory research
project investigating the purposes of workplace coaching. For the purposes of this paper, thedata from the case are examined in relation to psychological contract theory. To ensure
triangulation of data, it was collected from multiple sources primarily consisting of in-depth
interviews with various coaching participants, i.e. the coach, coachees, coachees’ supervisors
and the general manager of human resources. Documents included personal notes made by
the participants, policy documents supplied by the organisation and assessment tools suppliedby the coach to facilitate behavioural analysis and 360 degree feedback. The primary unit ofanalysis consisted of three closely knit units consisting of the coach, a coachee, the coachee’s
supervisor. In total, there were three of these units which participated in the research.
This paper examines the data from the case in order to answer the question: canpsychological contract explain the efficacy of coaching? Using psychological contract theory

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New Zealand Journal of Employment Relations 34(2):44-60
as a frame of reference and adopting an inductive approach, the data was scanned forevidence of situations which might infer that psychological contract expectations wereoperating. From an analysis of this evidence, conclusions are made regarding the inherent‘workability’ of these expectations. On the basis of these conclusions, the ‘conditions ofworkability’ are conceptualised as parameters for guiding the formation of ‘workable’
coaching psychological contracts.

Case Overview
The organisation explored in this case study research was a large publicly listed
manufacturing organisation with over 200 operational sites in Australia and New Zealand,
more than 30,000 customers, and 7,400 employees. It manufactures a wide range of products,
the majority of which are used in the construction, manufacturing, housing, mining andagricultural industries. The organisation values people, and recognises that they are a
distinguishing feature of successful business. It is committed to attracting, maintaining andbuilding a skilled and motivated workforce. The primary developmental tools that it uses are
based on approaches that are more traditional. Xyz utilises graduate schemes, cadetships,
apprenticeships, and traineeships throughout its businesses, across a variety of disciplines,
including Finance, Marketing, Engineering and Office Administration. The use of workplacecoaching though has been reserved for the development of its senior managers, who holdpositions at regional, state, and national levels. There are a number of protocols that it uses tostructure the coaching, which may provide some insight into its expectations regarding
coaching. The protocols are quoted directly from documents obtained from the organisation:
1. Coaching will be used… as part of a development plan to achieve a clearly defined
behavioural change, and/or to further develop effective leadership behaviours.
Coaching will also be used to support the effective orientation of individuals into newroles with clearly defined behaviours to be developed as part of this orientation.
2. Coaching will be used with participants who are ‘solid’ or high performers with thepotential to be even more valuable to Xyz. Coaching will not be used for those withsignificant performance issues.
3. Xyz recognises that coaching is most likely to be successful in achieving the desired
behavioural change or development when the following conditions are met:•••

There is a clear business benefit from the desired behaviour change so that thecoaching is closely linked with business goals
The participant wants to participate in coaching and there is alignment between
the desired coaching outcome and the participant’s personal and professional
goals
There is strong sponsorship by the manager and a preparedness to actively support
behavioural change

46New Zealand Journal of Employment Relations 34(2):44-60•

The participant is placed in a ‘stretch’ position so that coaching becomes moremeaningful and focused. A ‘stretch’ position may be a new role, a particularbusiness challenge or recent feedback which has created a readiness for change.

Can psychological contract explain coaching’s efficacy?
In the earlier review of psychological contract, it was suggested that psychological contract isa potential antecedent of organisational effectiveness, where measures of organisational
effectiveness included job satisfaction, productivity, and reduced staff turnover. The
coaching literature also suggests that coaching shares some of these same measures oforganisational effectiveness (in addition to others) as a measure of its efficacy. For instance,coaching’s success can be measured at an individual behavioural level, whereby the leader
being coached makes tangible changes in behaviour.
Behavioural Measures of Coaching’s EffectivenessBehavioural measures may include:-

Relationship behaviour (Wasylyshyn, Gronsky and Haas, 2006; McKelley andRochlen, 2007) which incorporates elements such as improvements incommunication, trust between organisational members, and attitudes.

-

Self-regulatory behaviour (Grant and Palmer, 2002; Gyllensten and Palmer, 2005);
Blattner, 2005) which has been linked with increased tolerance to stress, and areduction in self-limiting and critical behaviour. Self-regulated coachees set specificrather than vague goals, solicit ideas for improvement from supervisors (Smither,
London, Flautt, Vargas and Kucine, 2003), engage in help-seeking behaviour(McKelley and Rochlen 2007), and are more flexible (Jones and Spooner, 2006;
Jones, Rafferty and Griffin, 2006).

-

Change Behaviour (Tobias, 1996; Kilburg, 1997; Smither et al. 2003) which
describes those pro-change behaviours adopted by leaders receiving coaching. They
may include, humility, acting on feedback, accountability, creativity and flexibility,
and ownership.

Changes in behaviour were definitely expected by the organisation as evidenced by thecoaching protocols outlined in the case description. In particular, it was focused on changing‘de-railed’ behaviour, as it was believed that changes in this behaviour would yield bigchanges in leader effectiveness. The coaching also focused on developing leader ‘relationshipbehaviours’ such as communication and social engagement skills. However, changes in the
behavioural measures of effectiveness were considered antecedents to the resultant measuresdescribed next.

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New Zealand Journal of Employment Relations 34(2):44-60‘Resultant’ Measures of Coaching’s Efficacy
As well as behavioural measures of coaching’s success, there are also a number of measures
which may be used to evaluate coaching’s success at a ‘resultant’ level. These are probably
more relevant to the case. At an individual level, resultant measures include:-

Individual Performance (Witherspoon and White, 1996; Maurer, Solamon andTroxtel, 1998; Bartlett, 2007) which could incorporate sales performance (Rich,
1998), generic non-role specific behaviours (Orenstein, 2002), enhancement ofspecific leadership behaviours (Peterson, 1993; Diedrich, 1996), improvements in‘interview performance’ (Maurer et al. 1998), and goal attainment (Bowles andPicano, 2006). Individual performance discrepancies are identified using 360 degree
feedback. Coachees then attempt to eliminate feedback rating discrepancies, i.e. thedifference between self-ratings and those of feedback raters (Wohlers and London,
1989; Luthans and Peterson, 2003).

-

Individual Relationships which refers to improvement in the quality of relationships
between coachees and their colleagues (Kilburg, 1997), customer relationships(Doyle and Roth, 1992) and personal relationships (Blattner, 2005). The ‘honest’nature of the contact that occurs between coachees and their colleagues, and theincreased support that coachees often receive (Blattner, 2005; Ket De Vries, 2005)
could explain this improvement-

Individual Well-Being which includes increases in mental health status (Grant andPalmer, 2002; Butterworth, Linden, McClay and Leo, 2006), decreased anxiety andstress (Foster and Lendl, 1996; Bowles and Picano 2006), physical health status(Butterworth et al. 2006), life satisfaction and quality of life (Bowles, Cunningham,
De La Rosa and Picano, 2006), work satisfaction (Nocks, 2007), and hope (Green,
Oades and Grant, 2006).

In addition, at a group level, resultant measures of organisational effectiveness include: team
self-management, quality of member relationships, member satisfaction, task performance(Wageman, 2001), team player behaviour (Sue-Chan and Latham , 2004) and teamperformance (Hackman and Wageman, 2005). At an organisational or strategic level,measures include sales revenue (Ellinger and Keller, 2003), unit-level production quality andproductivity (Olivero, Bane and Kopelman, 1997; Bowles and Picano 2006), customer
satisfaction, work satisfaction and morale (Nocks 2007), organisational commitment andretention (Luthans and Peterson, 2003; Nocks 2007), and a reduction in operating costs(Witherspoon and White ,1996).
In the case, we see some of these same measures being utilised – in particular, individual
performance, quality of individual relationships and strategic measures such as retention.
However, there was little evidence that group or other organisational level measures werebeing utilised.

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New Zealand Journal of Employment Relations 34(2):44-60
As suggested in the earlier review of psychological contract, it is an antecedent oforganisational effectiveness. The review of coaching literature also suggests that coaching is
an antecedent of organisational effectiveness. Hence, it is proposed that psychologicalcontract could explain coaching’s efficacy, because coaching and psychological contract
share organisational effectiveness as a dependent variable. This next section delineates this
proposition through an examination of the case data.

How does psychological contract explain coaching’s efficacy?
As suggested in the initial review of psychological contract, each party in a psychologicalcontract makes a promise to one another, which form the terms of the contract. It is thebeliefs about these promises (or variations in them) held by the parties which explain
expectation matches and mismatches (Kotter, 1973) and ultimately affect the potential foreach party’s expectations being met. When parties are clear about the beliefs andassumptions underlying each other’s promises, then it is more likely the expectations will be
met. The following analysis of the case describes instances in the case where psychologicalcontract expectation mismatches were evident and the negative implications of these forcoaching’s success. In general terms, it is suggested that the formation of a psychologicalcontract based on mismatched expectations results in ‘unworkable’ coaching psychologicalcontracts. This may explain the apparent lack or the perceived variation of results reported
and observed in the case. Unworkable psychological contracts were evident in the following
instances of the case, where:
1. Expectations held by one party were unable to be fulfilled by another;
2. Expectations held by one party were perceived as unlikely to be fulfilled by the other;
3. Expectations held by one party resulted in a perception of adverse consequences forthe other party;
4. Expectations held by one party were not clear to the other party;
5. Expectations of one party were in conflict with the expectations of the other party;
6. Expectations of parties were based on different conceptualisations of an outcome.
Expectations held by one party which are unable to be fulfilled by another
This first instance of the case suggests that expectations held by one party may not be able tobe fulfilled by the other. This occurred because initial expectations of the organisation weresignificantly exceeded and resulted in a substantial adjustment in expectations, such that theamended contract became unrealisable. Because the expectations were unable to be fulfilled,there was then an increased probability of a breach of contract and a subsequent withdraw
from the contract.
One of the first interviews conducted in the case study was with the General Manager of
Human Resources (GM). The GM explained the factors that led to Xyz implementing
coaching as a strategic program for organisational effectiveness. The organisation had heard
positive claims about coaching and decided to ‘experiment’ by engaging a coach to facilitate
the development of one leader. According to both the GM and the coach, the outcome of this49

New Zealand Journal of Employment Relations 34(2):44-60
intervention was the leader’s ‘transformation’. The coach in particular cited this as evidenceof the effectiveness of his interventions, suggesting that not only did he prevent the leader
from resigning, but that the leader went on to “make the organisation a lot of money”. So, on
this basis and with high expectations, a companywide program was implemented as a
strategic approach to improving organisational effectiveness. However, after three years or
so, the organisation concluded that the subsequent results of the coaching (42 leaders) were
not commensurate with expectations, and the program was withdrawn as a strategic lever.
The GM says “there is still a little bit going on, but it is not a strategic lever that we areintentionally using at this stage”.
The initial results of the coaching significantly exceeded expectations, and these results
formed the basis of revised expectations held by the organisation. The problem was that theserevised expectations were based on unrealistic benchmarks, which were unlikely to be typicalor achievable for coaching on an ongoing basis. Because the adjusted expectations were
unachievable, a perceived breach of contract was inevitable. Further, any evidence of
expectations being partially fulfilled was discounted by the organisation despite ‘hardevidence’ that strategic results had been obtained (as suggested in the case overview). It is
more desirable that more modest expectations be developed based on multiple sources ofevidence rather than one off experiences. In addition, more modest expectations should be set
in cases where generalisable evidence is not available to justify higher expectations.

Expectations held by one party are perceived as unlikely to be fulfilled.
The case also suggests that at any time during the coaching process, a party may deem an
expectation unrealisable because that party perceives that a breach of contract is probable at afuture point in time. This may result in the withdrawl of contract.
A number of coachees at Xyz communicated an expectation that the coaching process be‘credible’. In particular, this was illustrated in the experience of one coachee who received‘adverse’ results from a 360 degree feedback program. The feedback identified somepersonal weaknesses that were affecting his leadership performance. Although he knew thatthe objective of the coaching was to benefit him and that he needed to self-reflect, it wasdifficult for him to acknowledge and accept the 360-degree feedback. But, rather thanresisting the feedback, he said that he did eventually accept it because of the ‘credibility’ ofthe process due to a number of factors i.e. the coach was external to the organisation, was askilled facilitator, and maintained coachee confidentiality. The coach confirms this, citing
confidentiality as a factor in developing coachee motivation to change. He says that somecoachees are generally very cautious about announcing the sorts of changes they are going
through, and that some are reluctant to let others know that they are being coached. The
coach indicated that he was supportive of the coachee’s desire for confidentiality because he
was conscious that it was a key to gaining coachee motivation to change.
The coachees had a high expectation for credible coaching practice and these formed thebasis of their psychological contract. The fulfilment of these expectations was a condition for
their on-going co-operation with the coach. Given the coachees high sensitivity to these50

New Zealand Journal of Employment Relations 34(2):44-60
expectations, any perception that a breach of contract was likely to occur (even if it hadn’t
actually occurred yet) might also have resulted in that leader withdrawing from the contract.
This suggests the need for the coach to ensure that he/she is seen to be fulfilling the contract
as well as actually fulfilling it. A coach should actively manage participant perceptions
throughout the coaching process.

Expectations held by one party result in a perception of adverse consequences for the otherparty.
Analysis of the case suggests that expectations held by one party (i.e. the organisation) which
result in a perception of adverse consequences for the other party (i.e. the coachee) will leadto a contract withdrawal. In the case specifically, it resulted in a failure to solicit the cooperation of a leader targeted for coaching.
Some of the leaders (who were selected to participate in coaching) believed that they had
been selected as a ‘punishment’ for poor performance. However, this was not the intent of
the GM who tried to frame coaching as a reward i.e. “Coaching will be used withparticipants who are ‘solid’ or high performers with the potential to be even more valuable
to Xyz. Coaching will not be used for those with significant performance issues”. The GM
did expect that the coaching would focus on overcoming the leader inadequacies, and thateach targeted leader would have to accept that there was a need for them to improve. She also
acknowledged that this may be difficult for them to accept, and thought that a difficulty withacceptance may explain the lack of results. There is evidence to suggest that theseperceptions were corrected only after the goals of coaching and its processes were explained.
The coaching literature suggests a number of reasons that coaching may be viewed as apunishment by coachees. For instance, the literature explains that a coachee may viewcoaching as a punishment if an organisation uses it as a non-strategic reactive tool, rather
than as a strategic pro-active strategy (Allenbaugh, 1983; Krazmien and Berger, 1997).
However, it is unlikely that this applies to the Xzy case, as they appeared to initially be using
coaching pro-actively. A second explanation in the literature is that a coachee may perceive
coaching as a punishment because of the assumption that if they need training, then they
mustn’t be adequate for the task of performing their job (Krazmien and Berger, 1997). This isa perception that they do not want others in the organisation to form about them. In thecontext of senior leadership this makes sense, as they are used to actively managing
perceptions of peers, superiors and sub-ordinates as a means of creating an impression ofcompetence. So, it is likely that coaching was viewed as a threat to their ability to control theimpression management process; a threat to their reputation as a competent leader; andultimately would diminish their influence. However, once the leaders met with the coach,their perception that the consequences of coaching would be adverse were moderated, and on
this basis they agreed to participate in the coaching process.
In regards to psychological contract, this suggests that when expectations held by one party
result in a perception of adverse consequences for the other party, it may lead to a contract
withdrawal or a failure to solicit the co-operation of a leader targeted for coaching. This has

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New Zealand Journal of Employment Relations 34(2):44-60
the potential to de-rail the coaching process even before it has begun, and in a broader
context explains coaching’s effectiveness. Organisations can overcome these perceptions
through a program of impression management which might include adopting a pro-active
strategic use of coaching rather than using it reactively; and by implementing an education
program about the coaching construct and its intention. This strategy would increase thelikelihood that participant expectations are aligned with ‘reality’.

Expectations held by one party are not clear to the other party
The case data suggests that when expectations held by one party are not clear or areambiguous, then the potential for a perceived breach to occur is increased. This is illustrated
in the case of one coachee (who was not interviewed during the research, but whose story
was conveyed by the GM).
The GM told the story of one coachee who was receiving coaching but not making tangible
gains in leadership effectiveness. The GM indicated that the coaching did build on his
existing strengths e.g cognitive abilities such as conceptualisation and analytical skills.
However, whilst this was considered a ‘welcome improvement’, the GM suggested that thismade him better at what he was already good at, but did not satisfy her expectation that his
weaknesses would also be overcome. She felt that a more substantial improvement could bemade if the leader’s weakness was remediated, i.e. his ability to structure his own work,
design it for others and delegate it to sub-ordinates. As evidence, the GM recalls thatwhenever she would have conversations with the leader about his coaching experience, hewould indicate how much he enjoyed the coaching, but did not show any awareness that heneeded to change or obvious intention that he was going to change. The GM indicated that
more “tension” around the coaching experience was needed for him.
There seems to be a lack of understanding between the two parties as to the expectations
which form the basis of their psychological contracts. For the coachee, the case suggests that
he was not clear about the organisation’s expectation that he make tangible changes inbehaviour, i.e. overcome his weaknesses. Another possibility is that there was not enough“tension” around the coaching experience for him. Being made more aware of the
expectations would possibly create this tension and might stimulate change motivation.
However, it was difficult for the GM to intervene directly and at the same time be seen to be
fulfilling the expectations of other parties that the coaching be a self-directed process. She
did not want to be seen to interfere. If it is as the GM says, that there is more tension needed,
and it is also because the expectations have not been made clear, then the latter could explain
the efficacy of the coaching intervention. In addition, greater tension could be created simply
by making the expectations clearer in the first place - if not directly, then indirectly throughthe coach. In the first instance, a more collaborative approach to the formation of
psychological contract, whereby parties are able to share their expectations, explain theirreasons, and agree to shared meanings would be appropriate.

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Expectations of one party were in conflict with the expectations of the other party
Similarly, when expectations of one party are in conflict with another, the nature of the joint
expectations may be unclear. Hence, it is difficult for a third party to fulfil them. This may
explain the behaviour of a coachee who is not ‘seemingly’ fulfilling their obligations as per
the contract.
The coach and the organisation had an understanding that the coachees must take thecoaching seriously and be seen to do so, but the coachees did not always fulfil thisexpectation in the first instance. The coach explains that one coachee in particular was nottaking the coaching seriously as evidenced by the fact that she was not investing anappropriate amount of effort into the intervention and change process. This prompted thecoach to withdraw, he says
if someone [a coachee] is…disregarding the investment that Xyz is putting into them,
I will be the first to pick it up and I will pull back. I have done that with a couple ofpeople, I have just withdrawn.
Having said this, the coach was adamant that the coachee be allowed to self-determine thechoice and pace of changes that they made, rather than impose an agenda:
You can’t impose that [the organisational agenda]. That is why it is a totally
ridiculous notion, and I see that some coaches say, ‘well where are you up to?’ and I
say, well, where the candidate wants to be up to.
This is also consistent with the assertion of the GM that there needs to be coachee awarenessof the need to change, but for them to also feel they are valued and appreciated by theorganisation. She indicates that this is a delicate balance.
Employee development is complicated by the fact that it is a voluntary engagement for thecoachee i.e. you can’t force someone to change, as it is considered a largely self-directed
process (Grant, 2001a; Clegg, Rhodes, Kornberger and Stilin, 2005; Schnell, 2005;
McComb, Lewer and Burgess, 2007). This was the coaches’ philosophy also, and wasevidenced in his insistence that coachee direct this change. However, the coaches’ approachdirectly conflicted by the expectation of the organisation that he expedite the change process.
This conflict could explain the coachee’s behaviour and lack of effort toward the change
process. Although the organisation wanted the change, the coachee had the right to determine
the pace of the change and was behaving consistent with this expectation. It could be argued
that the terms of a psychological contract between the organisation, the coachee, and thecoach must reflect the understanding that change is required by the organisation, and whilst
the coachee needs to self-direct the process, it must result in tangible change in a timely
fashion as per the organisation’s agenda. The expectation could be expressed as, ‘you arevalued as an employee and we appreciate that you are voluntarily entering into this coachingprocess. We respect that this is a somewhat self-directed process. However, before you agree
to be coached, we want you to understand our agenda and the fact that we are expecting a
return on investment. Our agenda is that you acknowledge the need and potential for personal53

New Zealand Journal of Employment Relations 34(2):44-60
change, and therefore make changes to improve your leadership effectiveness in an expedited
fashion’. If the coach had understood this expectation, he may have modified his own, which
would have in turn helped the coachee to moderate hers. There would then be an alignmentof expectations.

Expectations are based on different conceptualisations of an outcome
A final example from the case suggests that expectations must be based on similar
conceptualisations of an outcome, which is reflected in the measures each party uses toassess whether terms of contract are being fulfilled. Different conceptualisations may resultin one party ‘detecting’ the fulfilment of expectations, whereas another may not, resulting ina perceived breach.
The organisation clearly expected changes in behaviour as a pre-requisite for performance
improvement. This was conceptualised in terms of overcoming weaknesses in behaviour asreflected in their measures of role performance, i.e. leadership behavioural profile. This
profile was used as the basis for a 360-degree feedback questionnaire which acted as a tool toassess symptomatic behavioural deficiencies. The coach implemented this 360 degree
feedback tool. The coach also used another needs based behavioural tool (a causal
assessment tool), which identified a different set of ‘causal’ set of weaknesses which might
explain the performance based measures. The theory was that if these weaknesses were
overcome, it might improve role performance. Discussions with the coach about his coachingapproach did not focus as much on the measures of role performance, but on those ofunderlying behavioural issues.
The case suggests that the coach and organisation were unintentionally using different
measures to determine contract fulfilment based on their conceptualisation of the outcomes
they were expecting. Whilst both the coach and organisation were expecting increases in role
performance as a baseline measure for assessing the fulfilment of expectations, the measures
being used emphasised different aspects of role performance. For example, the coach wasusing increases in discretionary effort and motivation as an indicator of increased
performance; whereas, the organisation was primarily using changes in leader weaknesses asa measure. The problem is that increases in motivation and discretionary effort tended to
improve role performance incrementally in their positive effect on coachee strengths; butbehavioural change i.e. overcoming leader weakness was thought to result in more significant
increases in leader performance. Whilst the organisation was interested in increases indiscretionary effort, they were more interested in signs that weaknesses had been overcome.
In addition, there may have been different understandings of what constituted weakness. The
organisation’s understanding of weakness was based on the competency-based measure ofrole performance, whereas the coaches’ seemed to be based on needs-based behaviouralsurvey, which he used to tailor the coaching approach for each coachee. The approach
seemed more focused on addressing stress reactions which might manifest in undesirable
leader behaviour, rather than focusing on developing strategies to address role performance
behaviour directly. The success of his approach relied on the stress reactions being a

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predictor of poor role performance. Based on the reports of the organisation, it appears thatthe link between stress reactions and role performance may not have been significant.
Discrepancies existed between the organisation and coach in terms of the measures they wereusing to determine whether contract expectations were fulfilled. This resulted in theorganisation concluding that no significant change in performance had occurred for coachees.
As far as they were concerned, a breach of contract had occurred. The coaching program wastherefore withdrawn as a strategic lever. This suggests that conceptualisations of expected
outcomes must be aligned, such that the benchmarks/measures used to assess the extent ofcontract fulfilment are agreed upon.

Conditions for ‘Workability’
From this discussion, we see that coaching psychological contract expectations can explain
the apparent lack of results evidenced in the case. It is the mismatch of participant
expectations which formed the basis of their psychological contracts that explains thisphenomenon. An examination of the case suggests that mismatched expectations areevidenced as:
1. Expectations held by one party were unable to be fulfilled by another;
2. Expectations held by one party were perceived as unlikely to be fulfilled by the other;
3. Expectations held by one party resulted in a perception of adverse consequences forthe other party;
4. Expectations held by one party were not clear to the other party;
5. Expectations of one party were in conflict with the expectations of the other party;
6. Expectations of parties were based on different conceptualisations of an outcome.
The formation of a coaching psychological contract based on these kinds of expectations canresult in perceived breaches of contract and this can explain coaching’s efficacy in the caseand perhaps beyond. From this, it could be infered that certain conditions must be met inorder for coaching psychological contract expectations to be workable and therefore able tobe successfully fulfilled. These conditions include:-

Realisability – expectations held by one party must be able to be fulfilled by theother and/or must be perceived as likely to be fulfilled by the other party. Implication:
expectations to be developed based on multiple sources of evidence (not one off
experiences), or modest expectations to be set in cases where evidence is notavailable to justify higher expectations. In regards to highly esteemed expectations
held by other parties to the psychological contract, there is a need for the coach inparticular to engage in impression management, so that he/she is seen to be fulfillingthe contract as well as actually fulfilling it.

-

Mutual Benefit – expectations held by one party must not result in a perception ofadverse consequences for the other party. Implication: organisation should adopt a
pro-active strategic use of a coaching program rather than using it reactively. They

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should also engage in impression management through education about the coaching
construct and its intention to ensure participant expectations are aligned with thereality-

Alignment – psychological contract must be based on aligned expectations such that
expectations held by one party must be clear to the other party; must not conflictdirectly with the expectations of the other party; and must be based on sharedconceptualisations of an expected outcome. Implication: expectations underlying acoaching psychological contract must be collaboratively developed and where
possible articulated.

The Caveat of Flexibility
The Xyz case suggests that achieving a match in expectations is difficult in the early stagesof the coaching process, and may only be achieved iteratively. It is therefore appropriate thatcoaching psychological contracts be viewed as a ‘work in progress’ rather than as static. Thismeans that expectations may need to be evaluated, adjusted and refined as mismatches are
discovered. Hence, the process of forming coaching psychological contracts must be flexible,
in that the opportunity to make these changes must be given to participants to improve thelikelihood of coaching’s success in the workplace. We see this in the case, where theorganisation could have adjusted its initial expectations to align with what was realisable
rather than an ideal. We also see this with one of the coachees mentioned earlier who was not‘taking the coaching seriously’. In this instance, after the coach ‘withdrew’, she was given an
opportunity by the coach to adjust both her expectations and behaviour to align with thecoach and organisation’s expectation that she ‘take it seriously’, and make the changes
needed to perform her role effectively. Consequently, her coaching was a success because in
the end she made a successful transition into a very challenging role i.e. from a technical role
to one of senior leadership, and decided to remain with the organisation despite previously
having considered resigning. But without flexibility, it would not have been successful. This
is not to say that the expectations themselves should be flexible, but rather an
acknowledgement that psychological contracts are not an exact science and may develop as
situational constraints require. Without flexibility, a successful coaching program would
require contracts that are ‘perfect’ from inception. But as the case suggests, this is notrealistic. So, a final condition for workability that might be inferred is flexibility.

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Managing Diversity: A Twenty-First Century Agenda
BRONWYN WATSON*, PAUL SPOONLEY** and ELJON FITZGERALD***

Abstract
Workplace and workforce diversity has become an important issue, partly because of amanagement literature which has become more aware of such concerns, and partly
because of the contemporary international and domestic mobility of the labour force.
This article explores the contribution of equal opportunity, diversity management andhigh-performance work systems approaches to diversity and identifies their strengths
and limitations.

Introduction
The second half of the twenty-first century has dramatically increased the flow of labour
internationally, with implications for domestic labour supply and management. In a
country such as New Zealand, this has resulted in one in five New Zealand residents
being overseas-born, putting the country ahead of Canada and just behind Australia. In
the city of Auckland, immigrants comprised between 37% and 41% of the population
by 2006, qualifying the city for the epithet of a “super-diverse” city (more than 25% of
its residents are immigrants). Added to this has been the urban migration of Māori andtheir growing demographic and economic presence, along with that of the New
Zealand-born descendents of immigrants. The indigenous, ethnic and immigrant
diversity of the workforce is particularly important for the workplace, given the
demographic profile of non-Pakeha ethnic groups and their proportion of the working
age population. The significance of this domestic cultural diversity in the labour force,
underscored by global influences and requirements, has recently prompted us to focus
on the question of how well New Zealand firms and managers have responded todiversity, cultural as well as other forms of diversity. What follows is an exploration ofthis question.

*

Bronwyn Watson is Research Manager for the LMD
Paul Spoonley is the Programme Leader***
Eljon Fitzgerald is a Principal Investigator as well as leading Te Hoe Nuku Roa.
**

The authors are members of the Labour Market Dynamics Research Programme(http://lmd.massey.ac.nz/) at Massey University, and would like to acknowledge the Foundation for
Research, Science and Technology for their funding support.

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Diversity Management“Diversity management” is a broad strand of organisational management literature thatwas developed as a means of helping organisations respond to the growing diversity
apparent in contemporary labour markets. From the 1980s, discussions of diversity
management focused on managing heterogeneity in the workforce in relation to
demands for “affirmative action” and “equal employment opportunities” which wereintended to increase numbers of workers from “minority” groups.1 Diversity was seen
“in terms of factors such as race and ethnic origin, gender, age, sexual orientation andpolitical and religious belief” (Tatli, Özbilgin, Worman and Mulholland, 2005: 2).
Diversity management was defined as: “voluntary organisational actions … designed tocreate greater inclusion of employees from various backgrounds into formal andinformal organisational structures through deliberate policies and programs” (MorBarak, 2005: 208). However, with the rapid globalisation of labour markets, this strandof literature has evolved to incorporate management of a much wider range of diversity
issues. As Kreitz (2008: 106) points out: “Twenty-first century organisations are livingwith and being challenged by diversity of three levels – an increasingly diverse
workforce, a multicultural customer base, and a growing challenge for market sharefrom international competitors”.
As well as cost-effective inclusion and the management of diverse workforces at the
local level, globalisation means companies must manage workforce diversity acrossnational boundaries. Moreover, cosmopolitan city and global markets mean there is now
a greater diversity of client and customer groups. The importance for businesses tomanage such diversities in order to achieve improved profit margins and competitiveedge hardly needs to be stated. At the same time, in the interests of justice and equity,inherent in any diversity management approach, must be a concern for the employmentoutcomes of groups who, historically, have been systematically excluded and oppressed(Prasad, Pringle and Konrad, 2006).
The second strand of literature relevant to labour market issues and diversity is thatwhich examines the impact of changes in workplace organisation from Taylorist
principles and practices of low-discretion production systems, typically found in
twentieth century factory settings, to high-performance work systems (HPWS) in which
workers are expected to have a more significant involvement in work decisions. Thisapproach looks at issues of skills training, power-sharing, work place innovation that
continually develops high quality goods and services, and the need to develop goodquality jobs that value and use the skills of all workers (e.g., see Appelbaum, Bailey,
Berg and Kalleberg, 2000; Capelli and Neumark, 2001; Godard, 2001, 2004;
Cornelissen, Haslam and Balmer, 2007; and Macky and Boxall, 2007, 2008).
What follows is a discussion of the development of diversity management approaches
by organisations, followed by an examination of the literature concerning highinvolvement work systems. This includes some of the more recent suggestions for
implementing nation-wide systems to train workers and employers in flexible skills.
These are programmes that encourage ongoing skills training to meet changing market
needs, and that value and use the skills of workers by providing good quality jobs.
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Equal Employment Opportunities
Laws demanding that employers provide “equal employment opportunities” (EEO)
through “affirmative action” (AA) or “positive discrimination” to members of minority
or previously disadvantaged groups were established in the United States (US) in the
1960s. To avoid litigation for non-compliance of the anti-discrimination laws, firms
employed managers with specialist knowledge of the EEO/AA2 regulations to create
compliance programmes (Kelly and Dobbin, 1998). Following the US, New Zealandestablished similarly regulatory acts (e.g. the Equal Pay Act 1972, the short-lived Equal
Employment and Pay Equity Act 1990, the Human Rights Acts 1993 and 2000).
Australia and the United Kingdom (UK) were among other nations to follow the US
example. The aim was to provide a “level playing field” for all in the labour market.
The concepts of EEO/AA, designed to enforce the employment of more members ofminority and disadvantaged groups, contributed to the employment of a more widely
diverse labour force (Thomas, 1990).
However, by the late 1990s, EEO/AA laws were under attack as being too regulatory
and prescriptive. According to Sinclair (2006), the shift from EEO/AA to diversity
management was, in part, the result of businesses lobbying for a reduction inbureaucratic surveillance and compliance costs. Kelly and Dobbin (1998) believe that asgovernments withdrew support for enforcing EEO/AA measures, the desire of EEO
managers to safeguard their positions contributed to the emergence of the concept ofdiversity management. Many have continued to argue the necessity of measures thatcreated employment opportunities for previously excluded groups and for drawing
attention to employment inequities (Thomas, 1990; Karsten, 2006; Litvin, 2006). For
example, Thomas (1990, 2006), the founding father of diversity management (Karsten,2006), argues that affirmative action is still necessary for minority groups to gain accessto employment but that it does not provide systems for managing their future labour
market progress and potential for their employers. In Thomas’ view, establishing asystem of “diversity management capability” ensures that everyone has the opportunity
to perform to their potential at all levels (2006: 61). This, in turn, offers greater
potential to businesses. In the words of Thomas (1990: 109), “We have to learn tomanage diversity, to move beyond affirmative action, not repudiate it”.
Proponents of diversity management claim that there are several important differences
between EEO/AA and diversity management (Digh, 1998; Prasad et al, 2006; Thomas,
1990, 2006). One is that EEO/AA seeks to assimilate workers into the workforce,
expecting those of diverse social groups to slot seamlessly into existing social andcultural workplace systems. Diversity management, on the other hand, claims tointegrate a wider range of groups by creating systems that allow their various social andcultural contributions to be valued (Digh, 1998). Another difference lies in diversity
management’s focus on achieving systematic retention of employees from diverse socialgroups (Prasad et al, 2006), rather than simply on their recruitment. However, the majordifference is that while EEO/AA is typically a state imposed, legally driven initiative,
diversity management is a voluntary, corporate initiative “with no legal force behind it”(Prasad et al, 2006: 2).
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The reality is that in the twenty-first century global economy, with its extended andmobile market and labour systems, examinations of EEO/AA and even the original
concept of diversity management must move beyond how they might be co-opted tomost profitably manage the employment of those from a range of social and ethnic
groups. Diversity itself has evolved to reflect not only a locally diverse workforce but
also an internationally diverse workforce, a diverse multicultural customer base, bothnationally and internationally, and diverse international competitors. Moreover, newways of organising and continually upskilling the labour force are needed to satisfy thegrowing demands for rapidly changing, higher “quality, innovation andinternationalisation” systems (Janssens and Steyaert, 2003: 4). Businesses, andemployer and worker organisations, need to manage and work collaboratively within
the multi-layered nature of contemporary diversity to solve complex problems and tocreate a competitive edge in the lucrative international marketplace where diversity
itself is an accepted dimension. At the same time, globalisation notwithstanding, it isimportant for theories of diversity management to consider the culturally, socially andgeographically contingent nature of diversity (Prasad et al, 2006).

Diversity Dividends
Persuading businesses to adopt a more responsive approach to diversity has been largely
through promoting diversity management as a business imperative for maximising
economic bottom-line, or “competitive advantage” (Mor Barak, 2005: 210). The
business case for diversity management “converts diversity into an economic good”(Sinclair, 2006: 512). It has led to a considerable literature on the “Business Case forDiversity Management” by business management and human resource management
professionals: a Google search produced 383,000 results in 0.24 seconds. Karsten(2006) cites a study that shows links between a diversity programme and improved sales
and productivity. However, critics such as O’Leary and Weathington (2006: 290) pointout that the business case approach for diversity management is “severely limited”.
They suggest the literature tends to show that the stated benefits do not always occur,are not quantifiable and that rather than empowering members of disadvantaged
minority groups, their employment as tokenism may lead to further marginalisation.
They question what happens to “ideas of justice, equity, and basic employee
responsibilities and rights … if the business case does not support the need fordiversity” (O’Leary and Weathington, 2006: 290). And, indeed, several examples of
empirical research present the complexity of diversity consequences. For example, thereis the possibility of firms finding that, while diversity may lead to greater innovation, it
may coincide with higher staff turnover among upper management (Kochan et al, 2003).
Furthermore, there is a possibility of resistance, backlash and conflict (Karsten, 2006),
plus the loss of group cohesiveness and increased staff turnover, while those employed“to help gain access to a particular market or market segment may come to feeldevalued and exploited” (Slater, Weigand and Zwirlein, 2008: 204).
Nevertheless, some proponents of the economic benefits of this approach, particularly inAustralia, seek to build their case through promoting the concept of “diversity
64New Zealand Journal of Employment Relations 34(2):61-76
dividends” to describe the returns for businesses of implementing a diversity
management approach. For example, O’Flynn et al (2001: 37) declare: “It is time forCEOs to wake up: investing in diversity management today can produce diversity
dividends tomorrow”. The diversity dividend is defined in business terms as “a productof effective diversity management” (Lau et al, 2001a: 45) or “productive diversity …
the business advantages that emerge from the employment of many different people”(Lau et al, 2001b: 6). Collins (2002: 3) states: “One of the four pillars of Australianmulticulturalism is that of productive diversity” (original emphasis). In Collins’ view,use of “innovative ways that the cultural diversity of the workforce can be tapped tobusiness competitive advantage” (2002: 3) is demonstrated in an “economic gain, or adiversity dividend” (2002: 3, original emphasis) for Australian firms.
Unlike Collins, O’Flynn et al (2001) refrain from naming economic profit when theylist the dividends to be gained from effective diversity management:
Firms that effectively manage diversity harness the diversity of their workforce
and reap the ‘diversity dividend’. They attract and retain the best staff, andbenefit from the multiple perspectives that a diverse workforce brings to every
facet of operations: from product development and marketing to managing
international operations (O’Flynn et al, 2001: 35).
Lau et al (2001a) also omit economic gain in their list of eight diversity dividends,
citing: enhanced creativity and innovation; advanced communication; reduced
workplace conflict; lower absenteeism and turnover; expanded global opportunities;
superior teamwork skills; improved business-to-business relations; and quality customer
service (Lau et al, 2001a: 45).3 To this list of dividends, Karsten (2006: 101) adds:“boosting profits … [and] improved employee morale, satisfaction and commitment to
the organisation’s goals”.
In Britain, Adams (2006) demands a further diversity dividend. Adams calls for firms tobe judged and rewarded on their provision of fair EEO/AA opportunities. She claims
that firms incurring increased costs in training and commitment through providing equal
opportunities employment may be disadvantaged when tendering for work in public
services. Therefore, in Adams’ view, when tenders for public works are underconsideration, AA should be provided to firms who provide AA to employees. Arguingfor a diversity dividend in the form of recognition of such a commitment to equity,
Adams states:[We] would like to be able to say that a commitment to diversity … is good forbusiness. It’s hard to claim that under the current situation where good
employers can feasibly lose business to those without any real commitment tofair treatment of their people. Competitors can sometimes be cheaper as a direct
result of them not providing decent terms and conditions and not driving theequality agenda (Adams, 2006).
Conversely, Nicholas and Sammartino (n.d, 2001) warn Australian businesses of thenegative consequences of failing to provide effective diversity management. They state65New Zealand Journal of Employment Relations 34(2):61-76
that while “managing diversity makes good business sense” (Nicholas and Sammartino,
2001: 2), diversity dividends come only through “actively” managing diversity. Failure
to do so leads to the loss of diversity dividends through human resource costs “whenlow job satisfaction causes high absenteeism and turnover and poor productivity”(Nicholas and Sammartino, 2001: 2). As an example of diversity dividends lost throughthe failure by firms to implement active diversity management programmes, Nicholas
and Sammartino (n.d.: 8) estimate a $7 billion cost for Australians through absenteeism
in 1995. Similarly, in the US, Hubbard (2004: 15) claims that employee dissatisfaction
from ineffective diversity management leads to “disastrous” bottom-line losses incurredfrom high staff turnover. He includes a cost of one and a half times the salary of theemployee merely to hire a new worker, plus further costs of “at least 90 percent of thedeparting employee” (Hubbard, 2004: 15) through lost productivity, including periodsof absenteeism, during the period the employee works out notice, formal and informal
training of new staff, “learning curve costs” (Hubbard, 2004: 15) and the possible lossof customers who follow the previous employee and new customer network building.
In UK research from the Chartered Institute of Personnel and Development (CIPD),
members do not tend to use the concept “diversity dividends”, although Worman (CIPD
Podcast, 2007) admits that even while advocating good diversity management, they
understand that firms investing in diversity need to “add a dividend” from it. But CIPD
members do suggest how diversity may be actively managed (see e.g. CIPD, 2003; Tatli
et al, 2005; Worman, Bland and Chase, 2005; CIPD, 2007; CIPD Podcast, 2007).
Worman, for example, adds that it is important to move from an attitude that diversity is“a problem, we have to comply, we have to have a compensation model for those whoaren’t normal” (CIPD Podcast, 2007) to thinking of how “difference is good for us …
how we can leverage from that” (CIPD Podcast, 2007). According to the CIPD (2007),
the way to both manage and gain from diversity is by demonstrating that diversity isvalued within workplaces. This, they argue, is an important step towards developing “anengaged workforce”. They define employee engagement as:... a combination of commitment to the organisation and its values plus awillingness to help out colleagues (organisational citizenship). It goes beyond
job satisfaction and is not simply motivation. Engagement is something theemployee has to offer: it cannot be ‘required’ as part of the employment contract(CIPD, 2007: 1).
Firms with an engaged workforce were found by CIPD to have 40% lower recruitment
expenditure than organisations that do not. Moreover, they had reduced costs fromlabour turnover, absenteeism and discrimination lawsuits (CIPD, 2007). Diversity
management that provides conditions under which employees desire to work more
effectively provides a series of diversity dividends.

High-Performance Work Systems
Closely linked to the CIPD ideas, literature from industrial relations and strategic
human resource management studies also analyses the impacts of more fully engaging
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workers. However, the focus shifts from diversity management and employee
engagement to the establishment of high-involvement, high-performance work systems(HPWS) (e.g., see Appelbaum et al, 2000; Capelli and Neumark, 2001; Godard, 2001,
2004; Cornelissen et al, 2007; and Macky and Boxall, 2007, 2008). Discussions of
HPWS include a variety of definitions. Macky and Boxall describe the dominant
definition as:... changes in work organisation towards greater employee involvement, seen asnecessary to compete more effectively on quality, creativity and flexibility,
lead[ing] logically to improvements in skill formation … and an appropriate mixof incentives … at the heart [of which] is a process of building higher levels of
employee involvement in decision-making, on the job and/or off it (2008: 39).
While not using the term “diversity dividends”, proponents write of the benefits they
believe an HPWS approach brings to employers. However, among HPWS writers arethose who also examine the approach’s potential for improving outcomes for employees
beyond basic “feel good” sentiments, a concern that tends to be absent from some of thediversity management literature, especially in the business case sector. Macky and
Boxall point out that writers, including Appelbaum et al (2000), claim that theintensification of work involved in HPWS leads to benefits for both workers andemployers: improved worker satisfaction and commitment bring subsequent bottom-line
benefits for employers. Others are more sceptical of the benefits. Capelli and Neumark(2001), for example, believe that employer benefits may be impacted negatively by
HPWS. In their view, there is “little effect of high-performance work practices on
overall labor efficiency” (Capelli and Neumark, 2001: 373) because HPWS involves thetransference of power to employees, leading to demands for higher “employeecompensation”. Godard (2001, 2004) is among others who suggest that it is workers
who may be affected negatively by HPWS. Greater responsibility for decision-making
by employees and increased performance goals may lead to more stress. As Godard
states:[A]lthough team-based work and information sharing had positive effects, teamautonomy and responsibility for a good or service – both associated with thehigh-performance model – had negative effects for employees (2001: 776).
Blackwood (2008) also suggests that higher involvement and greater commitment by
employees through improved opportunities for employee decision-making may lead toincreased employee stress, possible job-burnout and increased employee sensitivity totreatment by management and to outsider views of the group.
As in the diversity management approach described above, Macky and Boxall (2008)
find that the key to success in HPWS is largely dependent on the managerial approach
adopted. The authors argue that the approach adopted is directly linked to whether
HPWS impacts positively or negatively on employees. Negative outcomes for
employees are more likely where managers are seen to combine work intensification
with organisational gains. In such circumstances, employees may feel pressured to work
longer hours or take work home, for example, leading to employee alienation from workthrough work-life imbalance (de Bruin and Dupuis, 2004). Cornelissen et al (2007: 7)
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note that poor management leads to a chain of poor outcomes: “employee
disengagement, customer dissatisfaction and general organizational atrophy”. Positive
outcomes, though, are more likely where managers of HPWS “foster and reward
employee involvement” (Macky and Boxall, 2008: 52). The dividend here is employee
engagement, created through developing a sense of well-being. As Macky and Boxall(2008: 52) state: “Workplace reform which enables employees to work smarter throughgreater empowerment, but without undue pressure to work harder, is likely to enhance
employee well-being.”
Further, Macky and Boxall (2008) point to a shift in focus apparent in more recent
research: the link between engaging/involving employees and the dividend of improved
productivity. This is also a key element in the diversity management approach and has
led to a demand for better skills training for both employees and management. As
Mayhew and Neely (2006) claim, the impact of employee training is closely intertwinedwith management skills. There is recognition that higher productivity needs a flexible
workforce where employees are more highly trained in a wide range of transferable
skills. Flexible, skilled employees are more likely to become engaged or involved intheir work if their skills, including tacit skills, are recognised, valued and utilised ingood quality jobs. Flexible, skilled managers are more likely to provide good quality
jobs and more fully recognise, value and utilise their employees’ skills. Flexibly skilledworkers plus flexibly skilled managers are together more likely to lead to multiple
dividends in long-term development, innovation and cost-effectiveness for businesses,
while simultaneously improving the country’s economy.
HPWS and diversity management share a number of concerns in common: management
responsiveness and innovation, worker upskilling and engagement, and productivity
gains. But there are also important differences. Diversity management positions
management and worker diversity inside the firm, and supplier/consumer diversity
externally, as the key issue. HPWS, as its name suggests, is concerned more generallywith any factor that improves performance. Diversity is only one issue and, in the caseof some contributors, barely gets named much less directly addressed. We would argue
that both approaches have something to offer the challenges presented by diversity andthe task is to combine the two approaches in order to better address societal andorganisational diversity.

Limitations
Reflecting doubts expressed by some diversity management theorists (e.g. see O’Learyand Weathington, 2006; Prasad et al, 2006; Sinclair, 2006), and still focused on the needfor higher quality jobs, Mayhew and Neely (2006) are concerned by a tendency forpolicy makers and businesses to focus on improved productivity that does not lookbeyond immediate bottom-line gains for businesses. They argue that “good productivity
performance is a means to an end … a route towards achieving a more internationallycompetitive economy” (Mayhew and Neely, 2006: 455). But, in their view, there is aneed to ensure that what is sought is long-term productivity from increased production
68New Zealand Journal of Employment Relations 34(2):61-76
quality rather than merely short-term productivity from increased production efficiency.
Otherwise, they suggest, “significant proportions of … workers will be confined to lowrewarding jobs and possibly to jobs of high work intensity and low discretion”(Mayhew and Neely, 2006: 455). Such jobs, according to diversity management
advocates (e.g. Lau et al, 2001a; Nicholas and Sammartino, 2001; Worman et al, 2005;
CIPD, 2007), do not reap diversity dividends as they are not conducive to thedevelopment of either an engaged workforce or the ongoing innovation of goods andservices. Moreover, the low job satisfaction leads to increased absenteeism and highemployee turnover (Sammartino, O’Flynn and Nicholas, 2003).
In a similar vein, Bryson and O’Neil (2008) argue for a shift from the current
instrumental view of human capability that prioritises economic over social goals. In
their view, by becoming “capability enhancing institutions … through the provision ofgood quality jobs and work environments” (Bryson and O’Neil, 2008: 44), businesses
will be more effective in achieving the instrumental outcome of enhancing theirproductivity and competitiveness.
Production goals of flexible production of goods or services of high quality andcompetitive cost are achieved through the organisation of work which mobilises
the tacit knowledge of direct workers [as opposed to outsourcing work to cut
costs]…. The optimal competitive route … which optimises the development of
human capability … is through actively organising work and employment
relations which produce good quality jobs (Bryson and O’Neil, 2008: 43).
Instead, what the authors found is that while employers/managers rely on workers’ tacitskills, and accept the dividends they provide, there is little formal recognition of thoseskills. This was evident in the few opportunities for workers to use their discretion atwork – where it was sought, it was likely to be used to justify or reinforce management
decision-making rather than being the means of providing a greater employee role indecision-making. Critics of diversity management theory, Jones, Pringle and Shepherd(2000), express similar concerns over the co-opting of Māori cultural values, skills andresources by employers to provide a competitive edge rather than to improve
employment quality for Māori. Buchanan (2008) suggests that to address thesechallenges there needs to be analysis of “workplace data, not just training data; a focus
on workforce development, not just training; [and an emphasis on the] importance ofpartnership arrangements, not just training provision” (original emphasis).
A final problem related to diversity management, employee engagement, HPWS anddiversity dividends generally, is that of unrealistic employer expectations. Keep (2008)
raises the issue in relation to expectations by employers that employees should arrive on
the job fully trained. This is an expectation that particularly disadvantages members ofminority groups as employers from the dominant group are more likely to relate to andunderstand the skills brought by members of their own group (Sinclair, 2006). Keep
points out that while skills training needs to move towards developing more flexible
workers with transferable skills, in a labour market that values innovation, employees
will always need ongoing training to meet new skills requirements. As the New Zealand
Skills Strategy 2008 Discussion Paper states,
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Many skills are informally acquired in work through experience and learningfrom others and many of the benefits of formal skills can only be fully realised ifthey are able to be applied at work (New Zealand Government et al, 2008: 12).
One answer, according to Keep (2008), is to create a “three-legged” policy which aims
at creating more highly trained workers who move into a labour market that offers
higher quality jobs which attempt to improve the usage of the workers’ skills. This is
more likely to happen, Keep (2008) suggests, when governments support employers to
improve their workplaces as learning environments and to create an environment which
encourages the development of improved workplace innovation, work organisation andjob design.

Conclusion
Workforce and workplace diversity constitutes one of the major management challengesof these decades. We have identified some of the possibilities and limitations of thediversity management and HWPS approaches. We want to end by indicating some ofour remaining concerns as a contribution to an evolving diversity management agenda.
The first is the focus on gaining market advantage and maximum productivity fromdiversity. An example is discussed by Jones et al, (2000). They point out that diversity
theory, because it emanates from the US, tends to have an individualised concept ofidentity, leaving no room for particular collective identities or claims. This means thatin New Zealand, for instance, there are times when “Māori cultural values matter only
to the extent that they add value to the organisation” (Jones et al, 2000: 369). For thisreason, a diversity management approach by managers may lead to a situation where
employers treat Māori culture as a commodity “rather than as a cultural resource that
Māori people themselves as Tangata Whenua have a right to create in their workplaces”(Jones et al, 2000: 369).
Further, theories that view diversity as “a set of attributes that reside in some people andnot in others … leav[ing] dominant groups fundamentally unchanged and relations ofdomination intact” (Ely, 1995: 162) are unhelpful. As Ely notes, all too often diversity
has meant anyone who is not a white, heterosexual male: “Only people of color have arace; only women have a gender; only gay, lesbian, and bisexual people have a sexual
identity” (Ely, 1995: 162). The growing complexity of diversity throughout the labour
market requires an even more complex view of organisational diversity than visible
differences such as ethnicity, gender and age among employees. For businesses tomaximise the potential of their workforce, it is necessary to understand and respond tothe background, skills, understanding and motivations of workers at all levels. As
Brazzel (2003: 76) points out, “difference is not only about culture and perception, butalso about resource distribution and claims to privilege”. Therefore, an examination ofdiversity in organisations should consider not only employee groups but also managers
and employers. Thomas underlines this point when he writes:70

New Zealand Journal of Employment Relations 34(2):61-76
White males … hold most of the decision-making posts in our economy … and I
certainly don’t mean to suggest that white males somehow stand outside
diversity. White males are as odd and as normal as anyone else (Thomas, 1990:
109).
There are also factors external to the organisation, which play a critical role. An obvious
and central consideration in the New Zealand context arises from the much more central
economic role that Māori now play in New Zealand’s institutions, including the labour
market. A Māori cultural renaissance since the 1970s has been accompanied by new
economic development ambitions, leading to Māori taking a much more important
position in the New Zealand economy (see NZIER, 2007). A key dimension in these
new expectations revolves around notions of ownership, perhaps best represented in thecontext of the present discussion as stakeholder considerations. In introducing notionsof ownership and stakeholder-ship, we want to argue that diversity management should
address issues of worker pride and loyalty for a product, service or organisation that
result from an increased sense of ownership. While this applies to many workplaces, wesuggest that it is particularly critical for a Māori workforce in contemporary New
Zealand. A product, service or other output which is to be consumed by a populationthat has specific (iwi, hapu) or broad connections (as Māori) to those who produce it,
draws on ethnic-specific stakeholder connections. In the knowledge that their work
efforts will be of interest to, or benefit those with whom they have an ethnic affiliation,connection or relationship, these Māori workers, if managed appropriately, will be moreproductive. Diversity management provides an opportunity to consider and capture suchconnections.
Our concern is to widen the concept of diversity in the workforce and what it means tomanage diversity. There needs to be a shift from a focus on some employees and groupsof employees as problems, as some sort of anthropological “others”, in isolation fromthe wider culture of the firm. It also requires an examination of the previously
unquestioned tasks and “privileged” experiences of managers “whose own racial or
gender markers [have been] invisible” (Sinclair, 2006: 527) alongside those of highly
visible minorities whose experiences have been systematically ignored or “routinely
silenced” (Sinclair, 2006: 527). Establishing patterns of reflexive analysis among
employees and management enables issues of power to be aired and resolved, althoughsuch an approach presents some considerable challenges. As Slater et al, (2008) note,
diversity will only be successful where it is embraced at all levels within a firm, not justas an ideal imposed by HR. They argue that to achieve the benefits of diversity, senior
management need to ensure that a “commitment to diversity is a deeply engrained value
in the organization’s culture, one which produces the appropriate norms for constructive
and productive behaviour by all employees” (Slater et al, 2008: 7).

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Slater, S. F., Weigand, R. A. and Zwirlein, T. J. (2008). The business case forcommitment to diversity. Business Horizons. 51 (3): 201-209. Retrieved 25/07/2008.
http://www.sciencedirect.com/science
Tatli, A., Özbilgin, M., Worman, D. and Mulholland, G. (CIPD, 2005). Managing
Diversity – Measuring Success. Chartered Institute of Personnel and Development(CIPD). March 2005. Retrieved 23/05/2008. www.cipd.co.uk
Thomas, R. R. (1990). From affirmative action to affirming diversity. Harvard Business
Review. 68 (3): 107-117.
Thomas, R. R. (2006). Building on the promise of diversity: How we can move to thenext level in our workplaces, our communities and our society. New York: AMACOM.
Worman, D., Bland, A. and Chase, P. (CIPD, 2005). Managing Diversity: People makethe difference at work, but everyone is different. CIPD March 2005. Retrieved
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Notes

1

OECD (2008, Chapter 3) discusses labour market discrimination on the grounds of“gender and ethnicity” (Prasad et al, 2006: 2) note that there is a wider range of groups
whose employment options have been marginalised. They include “non-whites, women,
religious and ethnic minorities, individuals with physical disabilities, older employees,
gays, lesbians and transgendered people”. Those with mental and intellectual disabilities
should also be included. Contextually, some of these groups may not always form aminority. Moreover, Pringle and Scowcroft (1996: 32), whose research of diversity
management in New Zealand includes gender and ethnicity only, suggest that it isconsidered neither appropriate nor polite to use the term “minority group” to refer toethnic groups in New Zealand. Nevertheless, “minority groups” is used here as referring
to all groups historically and systematically marginalised and discriminated against in
the labour market.
2

For a discussion of the subtle legal differences in meanings and workforce
implications of the concepts EEO and AA in the US, UK, Canada, New Zealand andAustralia, see Prasad et al, (2006: 5). Here, the terms are used interchangeably torepresent the regulatory, as opposed to the more voluntary, environment of diversity
management.
3Interestingly, Lau et al (2001b: 6) present the same list of diversity dividends, but in adifferent order. “Expanded global opportunities” takes precedence while “lower
absenteeism and turnover” is moved to the bottom of the list.

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Flat Whites: How and why people work in cafés
JANET SAYERS*
Introduction
This research note reports on recent research examining people working in cafés in
Auckland, with a view to exploring how and why people use cafés to facilitate workand their productivity. Cafés are recognised as an important component of retail
districts and cities more generally (Florida, 2004; Hospers & van Dalm, 2005; Jacobs,
1969), but they are rarely taken seriously as workplaces in literature about work. The
role of cafés to innovative cities is referred to in this literature with Hospers, forexample commenting in relation to Vienna that:
The most important background to Vienna’s creativity around and after 1900
was the ‘café factor’: the countless Kaffeehäuser open from early in themorning to late at night, served as the meeting place of the local creativeminds. In this inspiring environment a number of ‘new combinations’ emerged
while drinking a cup of Weiner mélange, or the local beer” (2003: 151).
In the United Kingdom, ethnographic work on cafés and cities stresses the importanceof cafés in facilitating everyday communicative practice (Laurier, Whyte, & Buckner,
2001). There has also been relevant work on ‘café culture’ in the location of thepresent study, Auckland, New Zealand (Austin & Whitehead, 1998; Latham, 2000,
2003; Liberty, 1998).
There have also been a number of studies about employees working in cafés, andseveral of these studies are classics in the employment relations literature (Crang,
1994; Goffman, 1959; Whyte, 1949). But on the subject of customers working incafés, there is very little research, although there is a developing literature about the‘mobile’ worker, using technology to facilitate work in cars, planes, hotels, trains,
cybercafés and so on (e.g.Wakeford, 1999). The most directly relevant study to ours
has been conducted in the United Kingdom by Felstead, Jewson and Walters (2005a,
2005b) who examined professional and managerial workers working ‘on the move’from mobile workplaces like trains, working at home, and working in ‘collective’
offices in the United Kingdom. Somewhat surprisingly, their research found cafés tobe rather insignificant as places of work (Felstead et al., 2005a), finding that in cafés“it may be difficult [for workers] to make expansive and long-term claims for space”(p. 151). On the other hand, geographers in the UK have shown that cafés are central
to the lives of city dwellers and to the conduct of commerce (Laurier, 2008; Laurier &Philo, 2006a). Cafés, in their view, are key places in the development of modernity
and to commerce conducted in productive cities, and their approach underscores thevalue in understanding micro-everyday practices of work in order to capture the* Dr. Janet Sayers is Senior Lecturer in the Department of Management (Albany) at Massey
University. j.g.sayers@massey.ac.nz

77New Zealand Journal of Employment Relations 34(2):77-86
resilience and inventiveness with which mobile workers create places in which towork, as well as the nuances of organisations’ continuous influence over subjectively
incorporated self-control strategies and tactics that come into play when people areworking away from the formal workplace.
An examination of the literature shows that the present study needs to be cognisant oftheoretical developments in social geography, geographical writing about thehistorical development of cities (and towns), as well as the growing literature on themobile worker. Our reflections on the disparate literature, our observations andinterviews, led us to Pred (1984) as providing a useful framework within which tounderstand our findings. Pred wrote a very influential article advancing a theoreticalfoundation for “a different type of place-centred or regional geography” which “rests
upon an integration of time-geography and the emerging theory of structuration” (p.
279). Pred’s paper is directly concerned with understanding places that emerge where“time-space activities and power relations ceaselessly become one another” in theland-, or city-scape.
The overall purpose of this research is to answer the exploratory research question,
how and why do people work in cafés? This research is exploratory as no research
currently exists that can frame a large study and so the present project aims tocontribute to the framing of a more focused research project to be conducted in 2010.

MethodWe first conducted eight preliminary interviews with academic colleagues, all ofwhom use cafés on a regular basis. Our interviews confirmed to us that academics use
cafés to facilitate certain types of work, but that individuals have a range ofpreferences and reasons for using cafés. For example, one respondent, Fredrick wovecafés into his daily routine primarily in order to read, to write and to facilitate hiscreativity. For another respondent, Rose, cafés were somewhere she could meet otherresearchers involved in the large external research grants she managed. She saw cafés
as providing environments where networking and team building could take place, andshe could provide hospitality. A third respondent, Graeme, mainly used cafés to meetwith post-graduate students. Mainly, Graeme chose cafés because of their locality,and he enjoyed the informality that cafés enabled in his relationships with students.
He felt students were more confident and articulate when meeting on the ‘neutral’ground of the café. Another common academic use of cafés was as a place to conduct
interviews and collect research information. Cafés provide the neutral and hospitable
territory conducive to interviewing, as long as noise and privacy issues could bemanaged appropriately.

After collecting these initial interviews, we broadened our sample by interviewing a
range of people who we found working in cafés. We incorporated four separate
interviews with café owners to provide context for their views on customers who
worked in their businesses, and gained their permission to approach people working
in cafés and request an interview. Interviews were based on a semi-structured
interview schedule, derived from literature, observation and preliminary interviews,
and was aimed at eliciting peoples’ perceptions of how and why they use cafés.

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Overall, we interviewed twenty four people, seven of these in two focus groups (thegroups being work groups who regularly met together in cafés). The respondents were
all from the wider Auckland region, mainly on the North Shore and in the Rodney
District. Several of the interviewees had more than one occupation and they camefrom a variety of professional and managerial occupations. All interviews wereconducted in a café environment, over a cup of coffee, which the interviewer
purchased for the interviewee.
The semi-structured interview consisted of a series of mainly open-ended questions
aimed at finding out how and why interviewees use cafés for work. From theseinterviews we then constructed scenarios explaining how and why each subject
worked in cafés. We then read and reread each scenario and identified key concepts
and themes. We then generated a list of ten reasons how and why people use cafés,
based on our analysis of the scenarios, and the literature.

How and why people work in cafés
Our thematic analysis derived ten major themes. From this list of themes wegenerated an acronym FLAT WHITES to explain why people use cafés for work.
These letters stand for F(Formality/Informality), L(Leisure), A(Aesthetic), T(Time),
W(Work-station), H(Hospitality), I(Innovate), T(Transaction), E(Escape), S(Social).
Other synonyms for meanings ascribed under these ten headings are given below inbrackets:
1.
2.
3.
4.
5.

Formality/informality (power, hierarchy, control)
Leisure (treat, reward, pleasure, non-work time, respite)
Aesthetic (marketing, branding, self-identity, status)
Transactions (relationship, networking, affiliation, horizontal communication)Work stations (place of work, convenience, temporary work place,technology, table size, table distance, chair comfort
6. Hospitality (food and drink, inside/outside boundaries, welcome, belonging,
rituals around food)
7. Innovate (creativity, idea work, entrepreneurialism, inspiration, synthesis)
8. Time (flexibility, time compression, work intensification, personal time
management)
9. Escape (from surveillance, from interruptions, sanctuary, reflection, aloneness)
10. Social (togetherness, sociality, buzz; social opportunity; serendipitous
encounters,)
Each theme is now briefly discussed.
Formality/Informality
Cafés are characterised by ‘democratised space’, where customers tend to be treatedthe same no matter their social status. Consequently, in cafés there appears to be arelaxation of the normal formal rules of hierarchy, control and power in organisations.
However, hierarchy is by no means abandoned, and theorising how cafés are used forwork purposes needs to appreciate the ongoing influence of management and79

New Zealand Journal of Employment Relations 34(2):77-86
organisation in these settings. As several seminal work studies have shown, selfsurveillance is the new norm, and subjectivities need to be understood in relation to
power (Du Gay, 1996; Knights & Willmott, 1989; Sewell & Wilkinson, 1992). Cafés
are used instrumentally in a variety of ways to enable certain tasks to be conducted
more fluidly and efficiently (e.g. interviews) with subordinates and clients more
‘comfortable and relaxed’. Cafés also enable the relaxation of hierarchy necessary forteam-building and other ‘culture building’ activities. In this sense then, cafés are used
to mobilise forms of management discourse. However, cafés do provide a place inwhich rules are relaxed, and a different kind of relationship can be forged in the more
ambiguous private/ public/ work space. The informality enabled by a café can also bemobilised in ‘projects of the self’ (Du Gay, 1996) enabling the building of personalsocial capital.
LeisureAlong with other researchers that have noted the complex ways that people aremanaging the interface between work and leisure, or work and non-work, our study
shows that cafés are a place where workers combine work and non-work activities fora number of purposes. These primarily involve integrating pleasurable social activities
with the less-pleasurable activities of work, or at least with accentuating work’spleasant social aspects. Café meetings can occur to enable time-efficiencies (meet fora coffee to catch up and talk work with colleagues that are also friends), for pleasure(a ‘treat’), or as a reward for task completion. Cafés are also simply used as a place of
respite for mobile workers who need somewhere to grab something to eat, freshen up,
and use the bathroom facilities (see Laurier, 2002 for further examples of this).
Aesthetic
Throughout the social sciences, there has been an ongoing interest in the ways thatpeople manage their self and professional identities through managing aesthetic
factors, from Goffman (1959) to the ‘aesthetic labour’ conducted by hospitality
workers (Nickson, Warhurst, & Dutton, 2005; Nickson, Warhurst, & Watt, 2000),
through to the self-branding and marketing strategies of workers (Lair, Sullivan, &Cheney, 2005). Workers use cafés to symbolically represent and communicate aspectsof themselves that they wish to project to others. Choice of café was conducted very
carefully to selectively show aspects of personas, and respondents were articulate
about why they chose cafés based on a host of aesthetic factors including style, age
profile of the area or café, type of service and so on. Café aesthetic factors wereselected to match self-concepts such as status, design preferences, creativity, tolerance
for service, and so on. These practices of aestheticisation in relation to place are still
poorly understood, although Adkins and Lury (1999) have demonstrated that practices
of aestheticisation need to be understood within the contexts of the regimes in which
they are articulated.
Transactions
The term transactions relates to workers using cafés as places to meet others in order
to conduct business transactions, involving relationship building, networking, andorganisational building (an organisation being two or more people engaged inpurposeful activity (as defined in Cheney, 1991). In general, we see these80

New Zealand Journal of Employment Relations 34(2):77-86
transactional activities as being characterised by horizontal communication aimed atincreasing opportunity, and primarily designed to accrue social capital andopportunities to the individual and their economic interests. These activities arecommon because in contemporary life, organisations have become less loyal toworkers, individuals are expected to be self-sufficient and self-directed, and work has
become more casualised (Pink, 2001). Consequently, workers are increasingly acting
as entrepreneurs-of-the self (Kirchoff, 1994). Following Gartner (1989), and agreeingthat an entrepreneur is anyone who creates an organisation, cafés are important sites
for organisations to ‘happen’ and entrepreneurial activity to take place.
Work-stations
Cafés are often referred to, along with other places between home and work, as ‘third
places’ (Liberty, 1998; Oldenburg, 1989). Certainly, people use cafés as work-stations
for convenience reasons (close to work, a place to use the facilities) and they choose
cafés according to the type of task they wish to carry out, and convenience factors
around where that work is located. Although Felstead et al (2005a) found that mobile
workers in the United Kingdom did not use cafés a great deal (because workers could
not claim the functional space), we found that individuals do create and maintain afunctional space to conduct work. As Laurier has shown, even something as mundane
as table arrangement has certain rules around them that enable functional use (Laurier
et al., 2001). Although the use of mobile technology was not strong in our study(cafés were primarily sites of embodied communication), café work-stations were also
used for digital communication. Cell phone use is ubiquitous in cafés, and laptops are
regularly used for such tasks as sales presentations, finding information, and evenkeeping children amused with a DVD so parent/s can work.
Hospitality
Hospitality is crucial to why people use cafés for work purposes. Food and drink havea significant but under-understood role to play in organisational life. Food and drink
are central to all aspects of culture, and in organisational hospitality rituals of
welcoming and belonging. Our study shows organisational agents performing
hospitality work for organisations in their appropriation and use of cafés. In various
ways, strangers and ‘others’ are welcomed into the inside of the organisation throughthe sharing of food and drink, even though these rituals often do not take place
anywhere near the physical premises of a business. Our research suggests that theseboundaries of outside and inside are marked thoughtfully and carefully byorganisational agents. By engaging in this important ritual outside the organisation, incafés, the good-will such practices accumulate possibly resides more in the individual
agent, as does the relationships enabled through the hospitality rituals. Regarding thecost of hospitality, many of our informants were paying for their use of cafés for work
purposes. For the self-employed, this could be claimed as a business expense, and it
was sometimes claimable as legitimate business expenses by professional andmanagerial workers. Overall, however, it appeared that the cost of organisational
hospitality was being shouldered by individual workers. We could find no research
specifically on the cost of organisational hospitality to workers.

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Innovate
The ways that cafés enable innovation and creativity are one of the most intriguingthemes to emerge from our study. Although not all respondents specifically identified
creativity as a factor for why they frequented cafés, several did, and our observations
and reading confirm that cafés provide an environment where innovation ‘happens’.
Why this should be the case is a question for further investigation, but various
explanations suggested include the soothing quality of the babble of voices in a caféthat ‘quiet’ the mind, to the historical-social contexts of cafés’ nexus as arenas forpolitical and social discourse (as discussed in Haine, 1996; Laurier & Philo, 2006a).
Cafés seem to be an important site for ‘idea work’ to be done. This ‘idea work’ is asituated practice; the café as a place seems to be essential in the production ofsynthesis and presumably this is because of the social interactions which are a
primary condition for creative process (Hospers, 2003). The ‘napkin note’ as a recordof ideas, epitomises the how and where of creative conversations and ideas.

Time
People use cafés to manage their time more effectively, and more pleasantly. Workers
often feel that they can “get more done” in a café away from the distractions of work.
Cafés offer an alternative workplace where, although social aspects are clearly
evident, people seem to be able to focus, or at least feel that they achieve more in thetime available. As managed timing has been a key aspect of control in the workplace,self-management of time is related to a sense of escape from the workplace also. The
ways that employees manage their individual time and place orientations are crucial to
the way people use cafés. This theme is probably the most central aspect of ourinvestigation, and prompts the need to explore this aspect of the use of cafés, andunderline the need for power relations to be integrated into any tendency to overstate
the appropriation of space for personal reasons when action is circumscribed byeconomic and material conditions. So consequently Pred’s (1984) paper is useful
because it may enable an incorporation of structuration into conceptualisation of fluid
work-places that may be appropriated and ‘consumed’ by workers.
EscapeIn a related theme to ‘time’ we propose that cafés are also places of ‘escape’. Thisescape generally is from traditional workplaces (or home) to the café as a haven ofsome sort. People escape from constant interruptions from others and the demands ofthe computer, especially emails and the attendant administrative demands thatemanate from it. But it is important not just to see the café as a place of escape in anegative sense of being from these demands to a non-work sphere. The café was seen
as place to ‘remove oneself too’, more of a secluded space, almost like a ‘sacred’
space for thoughtful reflection, to re-energise, to re-find one’s equilibrium. The otherescape is from organisational surveillance, although as with the group of teachers in
scenario three above, self-surveillance practices remain strong even when the agent/s
are not visible.

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Social
A social experience in a café is highly variable, but there are at least three types ofsocial interaction we wish to briefly mention here. First, there is the experience ofworking alone in a café, which is still social. This experience has been articulated by
Shapira and Navon (1991) who discuss how a café is both a public and private spaceand how this enables the experience of being alone, but together with others. Second,
there is the experience of working in groups. Creating and maintaining friendshipnetworks that extend beyond one’s production-derived relationship, is an important
aspect of meeting in cafés. Finally, there is the often unrecognised issue ofserendipity, the chance encounter, and the opportunity of the café for the expressionof tolerance, which along with diversity is identified by Jacobs as a precondition ofcreative economies. Frequenting a café, like other ‘third place’ activities, provides
opportunity. Outside of the ‘safe’ and cocooned haven of the home, work, or even thecar, is the opportunity for encountering ‘others’ in a variety of ways. Conversations
with strangers (as discussed in Laurier & Philo, 2006b) can start up, and friendships,
acquaintances and connections can be made outside of one’s usual work networks.
Serendipitous encounters are central to social and organisational functioning, and yetvery little research is written about them (one exception that is close to what we mean
here is Dixon’s (1997) account of hallway conversations, although these are still
within organisational walls.

Discussion and Conclusions
From our research, a picture of the Auckland café scene is emerging which echoes thesignificance accorded cafés in other parts of the world such as Scotland (Scott, 2006),
Israel (Shapira & Navon, 1991), and the United States (Rosenbaum, Ward, Walker, &Ostrom, 2007). Cafés have become a vital part of public city life in Auckland, and no
doubt in other cities and towns in New Zealand, although the growth of cafés has beenregionally specific, showing patterns of exclusion and inclusion depending on local
socio-economic and other circumstances. As well as a place to meet friends, family
and colleagues, cafés provide a ‘third place’ (Liberty, 1998) between work and homethat are marked by their ambiguity (being neither private nor public space), andproviding opportunities for encounters with people who are neither family and friends
nor colleagues from work. Café location is important to the ways that many people
navigate cities, and clearly cafés have a crucial role for workers who are both mobile
and more office or home based, as places for resting and working.
In our discussion of themes we have drawn on previous literature and provided an
overview of our research on how and why people work in cafés. What this discussion
shows is that ‘third places’ such as cafés, coffee-houses and other similar hospitality
establishments have a role to play in organisational and entrepreneurial activity that is
not well-recognised. In order to understand the use of cafés, we need to better
understand how and why people create a situated work ‘place’, and how the everyday
practices conducted there-in contribute to economic life and organisational
functioning. We have now presented this research at several conferences and gained
valuable peer review. We will pursue this research by focusing on one particularprofession, academics, a ‘creative class’ (Jacobs, 1969), in order to come to a better
understanding of the relationships between place, time and work in one specific83New Zealand Journal of Employment Relations 34(2):77-86
occupation. We will also develop a stronger focus on the use of technology to discuss
the integration of ‘virtual’ experiences into work (Cascio, 2000), although we remain
centrally interested in embodied social experience and material practices.

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Research Note: Undertaking Cross-Cultural Research into
Psychological Contracts

BRANKA KRIVOKAPIC-SKOKO, DAVID DOWELL, GRANT O’NEILLAND JODIE KLEINSCHAFER1Introduction
This research note provides a brief overview of recent literature on cross-cultural research into
psychological contracts and identifies several opportunities for future research in this area.
The discussion initially focuses upon empirical research that explores how culture may
influence psychological contracts, and then moves to address some key methodological issues
that need to be considered when undertaking cross-cultural research.

A Brief Overview of the Literature on Cross-Cultural Research &Psychological Contracts
Rousseau and Schalk (2000) noted the importance of examining both the similarities anddifferences in psychological contracts across cultures. They argued that in order to properly
understand psychological contracts, in a globalised context, “multinational research teams
were needed to uncover both generalisable and society specific-phenomena” (p.283).
Numerous cross-cultural studies of psychological contracts have subsequently been
completed, and these have addressed various aspects of psychological contracts developed indifferent geographic locations.
In keeping with the need for research into psychological contracts in different cultures thatwas espoused by Rousseau and Schalk (2000), a number of studies have examined
psychological contracts in non-western countries including Taiwan (Silverthorne, 2004),
China / Hong Kong (Westwood, 2001; Lo and Ayree, 2003; India (Shah, 2000), Singapore(Ang, Tan and Ng, 2000), Japan (Morishima, 2000), Vietnam (Truong and Quang, 2007), and
the Philippines (Restubog, 2006). Some of these studies conclude that cultural characteristics
influence the development, content and effects of psychological contracts. For example, in
their discussion of psychological contracts of managers in Hong Kong, Westwood et al.
(2001) reported that “the structure of the contract and some key elements of the reciprocal
exchange are indeed shaped by the cultural context” (p.649). Similarly, in a study ofVietnamese employees and their HR managers, Truong and Quang (2007) found evidence ofcommonalities and differences in psychological contracts based on cultural comparisons. The
need to understand these differences is at the heart of cross-cultural psychological contract
research.

1

Dr Branka Krivokapic-Skoko, Dr David Dowell, Associate Professor Grant O’Neill and Jodie Kleinschafer are
employed by the Faculty of Business, Charles Sturt University, Australia.

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New Zealand Journal of Employment Relations 34(2):87-94
In discussions of psychological contracts across cultures, a variety of cultural dimensions
have been mentioned, and sometimes examined, however, the cultural issue most frequently
addressed has been the difference between collectivist (non western) and individualist(western) cultures (Restubog and Bordia, 2006; Restubog, Bordia and Tang, 2007; Gelade,2008). Using this broad cultural difference as a foundation, studies have explored variationsin psychological contracts in terms of their formation, breach, and the way that employees
respond to breach. For example, in contrast to more individualistic western societies,
Westwood et al. (2001) found that there was significant uniformity in the content of contracts
among Hong Kong employee’s, most notably in terms of perceived obligations towards theiremployers. Further, Restubog and Bordia (2006) found that employees in the Phillipines
were more likely to perceive breach in contract when relational obligations in the contract
were not met as opposed to transactional obligations. As such, there is clearly some empiricalevidence that supports the idea that culture influences the psychological contract and its
effects.
However, despite the argument put forth by Rousseau and Schalk (2000) and the evidence
provided by researchers such as Westwood et al. (2001), some have questioned the influenceof, and need to examine, culture in relation to psychological contracts. In exploring
psychological contracts cross-nationally, Lo and Ayree (2003) collected data from Hong
Kong Chinese employees and compared them to existing findings based on US samples.
They reported similarities in the breach process across the two cultures, and therefore argued
in favour of the generalisability of the extant understanding of the psychological contract
breach process. When Chiang and Birtch (2007) looked at the transferrability of management
practices across cultures, they found that “although culture may impinge on reward
preferences,… its influence may be diminishing or giving way to a range of other contextual
forces” (p.1293). Further, Thomas et al (2003) argued that “individual sources of variation,such as idiosyncratic experiences and personality will also affect individual’s value
orientations, creating variation within socio-cultural groups” (p.455).
While there may be some contestation regarding culture’s influence on psychologicalcontracts, it may be that this is largely due to the comparisons between the people within thesamples taken across the cultures. Indeed, it seems that without direct comparison between
countries within studies, it is difficult to accurately assess the similarities and differences
between the aspects of psychological contracts. Indeed, as Rousseau and Schalk (2001)
suggested, “by focusing on a country-by-country basis, it is possible to exaggerate apparent
differences between societies and miss their similarities (p. 299). Implicit in Rousseau andSchalk’s (2001) statement is the notion that researchers need to directly compare employees
across cultures to determine that there are significant differences in their psychologicalcontracts. In particular, there is a need for a systematic examination of psychologicalcontracts across cultures in terms of their formation, maintenance, breach and response tobreach (Thomas et al., 2003). Ideally, this would be an examination of matched pairs of
employees and employers in the same organisations across a variety of countries, i.e. “people
who are as similar as possible in all aspects of their lives except for their nationality”(Hofstede and Bond, 1988, p.9).
Given the recognised differences in western and non-western cultures (Hofstede and Bond,
1988; Rousseau and Schalk, 2000) and the implicit and perceptual nature of psychologicalcontract contracts, the management of psychological contracts become all the more complex
and difficult across cultures. For this reason there is a need for research about psychologicalcontracts across cultures which can inform managers transitioning into organisations, ormanagement roles, especially in non-western cultures. Although the need was recognised at88

New Zealand Journal of Employment Relations 34(2):87-94
the turn of the century (Rousseau and Schalk, 2000), research that directly compares
psychological contracts in western and non-western cultures (using the same instrument, inthe same time frame) is relatively limited (Thomas et al., 2003; Restubog and Bordia, 2006;
Street, 2009). Clearly, this is problematic as “generic and western-based assumptions about
the operation of psychological contracts can be misleading” (Westwood et al., 2001 p.645).
Hence, the continuing need for cross cultural psychological contract research.
There has been limited empirical comparison of psychological contracts across cultures. Lee
et al. (2000) used groups of university students in Hong Kong and the USA to simulate workgroups and examined the difference in the formation of psychological contracts in thosegroups, in terms of expectations. Though the study was limited in its applicability, they foundsupport for the proposition that the transactional/relational dimensions of the psychologicalcontract do differ across the two cultures. Kickul et al. (2004) also compared employees inHong Kong and the USA in terms of the importance of obligations, the frequency of breach,and attitudes and behaviour following a perceived breach in the contract. They found overallthat the Hong Kong Chinese employee’s perceived the violation of psychological contracts
more often than their American counterparts (Kickul et al., 2004, p.249). This is one of the
few studies that has empirically assessed the differences between samples of employees fromeach culture within the same study.
Additionally, a number of authors have produced conceptual papers hypothesising some of
the anticipated differences/similarities across cultures based on the individualist /collectivist
dimension of culture. For example, Thomas et al. (2003) put forward a series of propositions
about cultural profiles (i.e. collectivist versus individualist) and their influence on
psychological contract formation, violation and response to violation. They proposed thatcollectivist cultures will commonly produce relational contracts and individualist cultures willcommonly produce transactional contracts. It is also proposed that these aspects of culture
influence the perception of violation and the reaction to violation. Using the same
individualist/collectivist dimension of culture, Street (2009) addressed the examination of theeffects of different cultures on commitment, through the mediating variable of thepsychological contract. In short, Street (2009) suggested that the characteristics of culture areantecedents of psychological contracts. Based on a comparison of the extant literature about
psychological contracts in US and Japanese firms, Street (2009) proposed that employees
from collectivist societies will form psychological contracts that are relational in nature, while
individualist cultures will form psychological contracts that are transactional in nature.
Further, he suggested that the nature of these psychological contracts will influence theaffective, normative and continuance commitment of employees in the firm, and, therefore,
the firm’s ability to manage their employees/human capital/human assets.
Essentially, these studies used alternate theoretical bases (eg cognition and motivation)(Thomas et al., 2003) or commitment (Street, 2009), and combined them in their discussion of
psychological contacts. Kickul et al. (2004), discussed above, also combined their
examination of psychological contracts with an examination of commitment. Such studies(Thomas et al., 2003; Kickul et al., 2004; Street, 2009) point to the usefulness of exploring therole of psychological contracts in relation to other established aspects of the employment
relationship such as trust, satisfaction and commitment. For example, Street (2009) suggested
that the management of psychological contracts is one way that firms can enhance employee
commitment, and culture has been found to influence both commitment (Gelade, Dobson and
Auer, 2008) and psychological contracts (Westwood, 2001). Further, Chiang and Birtch(2007) found that “sources of commitment were culturally conditioned and that their effects
are predictable from Hofstede’s value dimensions” (p.599). Hence, an understanding of the89New Zealand Journal of Employment Relations 34(2):87-94
relationship between culture and commitment, and the relationship between commitment andpsychological contracts, may facilitate improved understanding of the impact culture on
psychological contracts. However, as Street (2009) points out “the impact of …changes in
employee perceptions of the psychological contract, and consequently employee commitment,
has not been examined empirically” (p.444). Thus, among other things, research is needed toestablish the link between these three concepts: psychological contracts, culture andcommitment.
In summary, the weight of evidence and argument in the literature suggests an ongoing needfor empirical investigation into cultural differences and similarities and their effects upon
psychological contracts. However, there are few available cross cultural comparisons of theformation, maintenance and breach of psychological contracts (Rousseau and Schalk, 2000;
Street, 2009). Nor is there a clear understanding of the interplay between culture,
psychological contracts and other recognised aspects of employment relationships such ascommitment (Chiang and Birtch, 2007; Gelade, Dobson and Auer, 2008; Street, 2009).
Further, the focus of much of the research that has been done in this area has concentrated on
the employee’s perspective of the psychological contract, research has rarely examined theemployer’s persepective nor the congruence between employee / employer reports of thesame relationship (with the exception of Tipples and Krivokapic-Skoko, 1997; Truong andQuang, 2007). Finally, research has primarily focused on the most commonly examineddifferentiator in culture - individualism/collectivism (Shavitt et al., 2006).

Methodological Issues
Having established the need to examine psychological contracts cross-culturally, it isimportant to recognise the methodological implications of conducting such research and thepossibilities for making a methodological contribution while conducting this research. As
Maheswaran and Shavitt (2000, p.59) comment, “the lack of frameworks that are robust
across cultures has severely limited the development of theory-based empirical work”. Twoof the issues that these authors argue are limiting the development of cross cultural research
are: the choice to conduct etic or emic research; and, the need for equivalent measures thatcan be used to accurately compare cultures. As Hofstede and Bond (1988) illustrated, studies
developed from a western perspective can fail to capture factors that are important in nonwestern cultures. Hence, it is important to carefully consider the forms of measurement thatare employed, as comparisons may be hindered by methodological weakness.
Past researchers in psychology have recognised two broad ways of investigating different
cultures: etic and emic approaches (Berry, 1989). The difference between these two forms ofresearch is the perspective the researcher takes. When using an etic approach, the researcher
is observing the culture from an outside perspective, whereas when using an emic approach,the researcher observes the system from within (Berry, 1989). More specifically, an emic
approach favours within culture investigation as it is held that each culture is different andlargely inductive culture-specific research should be the focus (Maheswaran and Shavitt,2000). In other words, the system is to be discovered rather than imposed (Berry, 1989). In
contrast, the etic approach favours generalisations focussing on issues which are common
across cultures (Maheswaran and Shavitt, 2000). Within the etic approach common
constructs can be examined across cultures, giving insight into differences.

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These two forms of research do not form a dichotomy, nor should one be considered superior
to the other (Berry, 1989). The choice of perspective should be governed by the problem
being examined (Maheswaran and Shavitt, 2000), for instance the desire to measure thegeneralisability of existing knowledge suggests an etic approach. However, it is often argued
that researchers should include both emic and etic components in their research, as a synthesisof etic and emic approaches helps to alleviate the shortcomings of both approaches (Helfrich,
1999; Malhotra et al., 1996). Further, by combining approaches behaviour can be seen as a
product of the individual, the task and the culture, thereby giving a broader view than a more
singular etic or emic approaches (Helfrich, 1999).
An examination of the existing research into psychological contracts reveals that researchers
have commonly taken an etic approach. This is in keeping with the sentiment that research
can only begin by being etic, and is evident in the following quote “it will be useful toascertain the generalizability of findings in the extant literature [western] to an Easterncultural context” (Lo and Aryee 2003, p.1006). It is also evident in the espoused need toconsider psychological contracts in a “globalised economy” (Rousseau and Schalk, 2000),
and in the fact that studies exploring psychological contracts in non-western cultures begin byusing western culture as the basis for their examination (eg Westwood, 2001; Lo and Aryee,
2003; and Kickul, et al 2004). Nonetheless, some studies have, to some extent, combined an
etic and emic approach. This is evident when researchers from different cultural contexts
collaborate, as is the case in the studies by Truong and Quang (2007), and in the use ofqualitative research in such studies. Further evidence of an emic perspective is provided in
the studies by Restubog and Bordia (2006) who demonstrate a detailed knowledge of the nonwestern culture they are examining and one particular characteristic of that culture, familism
in organisations. However, even here the emic aspect of these studies is often limited.
As Rousseau and Schalk (2000) suggested, research is needed to unravel the similarities anddifferences in psychological contracts across cultures. Arguably, in order to achieve this aim
a combination of both etic and emic approaches are required. The emic approach is needed todevelop a sufficient understanding of the nature of psychological contracts in the countries ofinterest. Given the implicit and perceptual nature of the psychological contract construct, an
inside knowledge of the respective cultures will be necessary to accurately characterise thefactors of importance in each culture. However, in order to gain an overall view ofpsychological contracts, across western and non-western cultures, an etic perspective will also
be necessary. Therefore, as noted by Berry (1989) and Helfrich (1999), in order to achieve amore accurate, and comprehensive, understanding of psychological contracts across cultures,
future studies should include both emic and etic components in their research.
In addition to the approach of the research, it is also important to ensure that the measures
being used in the research are equivalent across cultures and can therefore be compared(Malhotra et al 1996; Maheswaran and Shavitt, 2000). This is one of the problems inherent
with comparing existing studies of psychological contracts. Clearly, there are advantages tocomparing two cultures based on the same research instrument. As Kumar (2000) suggests, if
equivalence is ignored in cross-cultural research, indicators of reliability and validity may be
influenced by the cross-cultural nature of the sample. As alluded to above, the developmentof instruments is where the emic approach to research will be important and where measuresof equivalence need to be carefully considered.
The notion of equivalence should be considered by all researchers conducting a cross-cultural
study (Malhotra et al 1996; Maheswaran and Shavitt, 2000). There are numerous forms ofequivalence discussed throughout cross-cultural research literature. Equivalence broadly deals
91New Zealand Journal of Employment Relations 34(2):87-94
with the nature of the constructs being measured and if they mean the same thing to different
cultures (Malhotra et al 1996). Equivalence for concepts, constructs, items and scales are allargued to be imperative for cross-cultural research (Maheswaran and Shavitt, 2000). Without
attention from researchers to these areas of equivalence, findings may be influenced in a
detrimental manner (Malhotra et al 1996). Further, if equivalence is ignored in cross-culturalresearch indicators of reliability and validity may be influenced by the cross-cultural nature of
the sample (Kumar, 2000). It is perhaps these issues which have resulted to some confusionin cross-cultural studies in the past.

Concluding Comments and Future Research
There are theoretical, applied and even methodological reasons for conducting cross culturalresearch into psychological contracts. Theoretical research is needed to establish thedifferences and similarities in psychological contracts between western and non-westerncultures. This includes identifying the generalisability of current theories and, whereappropriate, the development of new theories that incorporate additional understanding of theinfluence of culture and subsequent differences in psychological contracts that may be
uncovered. From an applied perspective, enhanced understanding of the psychologicalcontract will be of considerable benefit for employers and managers who need to successfully
manage employment relationships in non-western contexts. The fact that favourable
psychological contracts have been linked to highly desirable outcomes, such as employee
commitment and trust in an organisation, highlights the potential benefit of cross-cultural
psychological contract research. Finally, a rigorous examination of psychological contracts
across cultures, utilising etic and emic research approaches, would contribute to anunderstanding of how to successfully conduct cross-cultural research and may result inmeasures that could be employed in subsequent studies.
In response to some of the research needs identified in this research note, the authors have set
out to develop a cross-cultural empirical comparison of the psychological contracts
established by academics. To that end, they would like to take this opportunity to put out acall for expressions of interest from academics who would like to be involved in conducting
psychological contract research at their University and become part of a large cross-national
research project. As currently conceived, the proposed study will build on earlier research
examining psychological contracts among ‘business school’ academic staff in Australia, (seeKrivokapic-Skoko, O’Neill and Dowell published in this issue). It will see the administrationof an online survey based on a modified version of the questionnaire used in the previous
research. The modifications will be culture specific (Malhotra et al 1996) and will be
influenced by considerations such as language, equivalence of measures and meaning, andsampling specifications. Similar to the original research, the desired sampling frame isacademic staff from similar university faculties in each of the chosen nations/‘cultures’. To
ensure that both emic and equivalence issues are addressed in the research, focus groups will
be arranged in each nation.
Once the qualitative findings are integrated, and the quantitative data collection is complete, anumber of forms of analysis are considered suitable for the cross-cultural context. Factor
analysis, scalar equivalence testing and differences in estimates of covariance are three waysof usefully examining different cultures (Maheswaran and Shavitt, 2000; Malhotra et al1996). For example, factor analysis can be performed for each culture and the findings can be
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compared be analysing different factor structures. By using scalar variance for exploratory
factor analysis and multi-group analysis for the confirmatory factor analysis it is possible toestablish if each of the cultural groups are different. Once the differences are establishedbased on key variables, those variables can be used to conduct a cluster analysis. The cluster
analysis can differentiate the groups by degree based on their responses to the key variables.
The resultant cluster solution can provide a profile of each of the groups and give an
indication of the similarities and differences evident across each.

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Research Note: Retention Factors for New Zealand Graduate
Customs Officers
JEAN MARTIN∗, ANDREW J. MARTIN∗∗, and BETH TOOTELL***

Abstract
This case study explored what employment value proposition attributes could contribute to
the retention of Customs officers who graduated from the New Zealand Customs Service
Trainee Induction Programme between July 2005 and July 2008. The findings suggest six
attributes of remuneration, nature of work, career development, leadership quality, people
and organisation as employment value proposition attributes could contribute to the retentionof this employee group. In an organisation that has to make considerable investment inrecruitment and induction an understanding of the core employment value proposition
attributes that could contribute to the retention of Customs officers is a business imperative.
[Key words: Retention factors, employment value proposition]

Introduction
One of the major people challenges, for many organisations, is employee retention. This isespecially so for organisations such as Customs, Police and Fire Services where because of
the specialist nature of the work carried out by frontline employees, significant investment inrecruitment and specialised training has to be made before these employees can be deployed
into the frontline workforce. To achieve a return on this investment, employee retention is
critical. Within this context an understanding of the specific employment related attributes
that could motivate and encourage employee commitment and retention becomes a business
imperative. The concept of employment or employee value proposition has emerged fromdifferent aspects of the attributes of employee motivation and satisfaction theories (Herzberg,
Mausner & Snyderman, 1959; Herzberg, 1966; Maslow; 1943), which Heger (2007)
described as “the value or benefit an employee perceives by serving as a member of theorganisation” (p. 121).

Context
The New Zealand Customs Service offers a career structure that commences with frontline
Customs officer roles and moves through the ranks of Senior Customs officer, AssistantChief Customs’ officer to Chief Customs’ officer. Specialist roles in areas such Intelligenceand Risk and Response are recruited almost exclusively from the ranks of frontline Customs
officers. In July 2005, to address the issue of inconsistent recruitment practices, high turnover
generally and variable training of new recruits Customs significantly changed the way inwhich they recruit and train new Customs officers. The new methodology centralised all
aspects of Customs officer recruitment, introduced an assessment based selection process∗

Jean Martin is a Masters student at Massey University, Palmerston North.
**Dr Andy Martin is a senior lecturer in the Management Department at Massey University, Palmerston North.
*** Beth Tootell is a lecturer in the Management Department at Massey University, Palmerston North*

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which is run three to four times a year, and established a rigorous residential based induction
training programme. To July 2008 a total of 232 new Customs officers have been recruitment
and inducted through this process. Each recruitment round brings in between 20 to 25 newrecruits.
Analysis of turnover generally for frontline officers show that turnover is highest in the 2-5
year service band (57%) and in the up to 40 years of age band (49%). The majority of officers
recruited through the new process fall into these categories in terms of age group and justover or approaching two years of service. Turnover for new officers was initially very low
however in the past year it has increased to 16.8% and continues to increase. Anecdotal
evidence from exit interview forms identified that the two main reasons given for leaving
were the low level of remuneration and the lack of career progression opportunities. The
issue of dissatisfaction, relating to the low level of remuneration for frontline staff, also
emerged in the 2007 and the 2008 staff engagement surveys. The New Zealand Customs
Service has a predominantly ageing workforce with 52% of staff in the 40 years and above
age band and an increasing number of long serving officers retiring or reducing to part-timehours. For Customs to continue to build operational capability retention of frontline officers,
especially those in the younger age bands, is critical.
In organisations such as border protection and Police agencies, where there is a significant
lead time and in-house initial and ongoing investment required to ensure that officers are
fully competent to carry out the legislative requirements of their role, minimising unplanned
attrition is critical. Rosenberg (2007) reported that the United States Customs Agency is“plagued with retention and morale problems” (p. 1) and that the Agency told a Senate
hearing that the common drivers of attrition for Customs officers were:
•
•
•
•
•

High pressure to conduct inspections quickly
Inadequate compensation
Insufficient resources to carry out job responsibilities
Lack of career advancement
Lack of recognition for the work that they do.

A similar finding was made by Yearwood (2003) in his study of uniformed Police officers
that identified that the low level of remuneration, lack of career advancement and lack ofrecognition for the nature of the work that they do, were the main contributors to attrition offrontline officers. An Australian Community and Public Sector Union publication (seeWorkers on line, 2004) claimed that inadequate pay was one of the top drivers of attrition
amongst Customs officers in Australia.
Ticehurst and Veal (2000) outline many of the personal attribute and environmental risk andprotective factors that are likely to contribute to employee turnover. They identify selfesteem, gender, age, housing tenure, education, social status, life satisfaction and marital
status as significant personal characteristics influencing employee turnover. They also
identify salary, social interactions, organisational size, job uncertainty, type of industry, job
level and involvement in decisions as significant work characteristics influencing employee
turnover. The literature regarding job turnover is significant in both its scope and size. A key
finding worth noting for this current research is that job dissatisfaction is an antecedent toforming the intention to quit. Incongruence between perceived and actual job prospects, it ishypothesized, may lead to job dissatisfaction, and therefore increased turnover (Harter,
Schmidt, & Hayes 2002). A comprehensive study into labour turnover in New Zealand96

New Zealand Journal of Employment Relations 34(2):95-107(Boxall, Macky, Rasmussen 2003), suggested that while motivation of job change ismultidimensional, employees hold strong expectations regarding promotion pay and security
that effect their retention decisions.
Robbins, Millet, Cacioppe, and Waters-Marsh (1998) state that job satisfaction can be
identified as an individual's general attitude towards their job. This definition is developed by
Ivancevich, Olekalns, and Matteson (2000) who state that job satisfaction results from anindividual's perception of their job and the degree to which there is a good fit between theindividual and the organisation. An employee's assessment of how satisfied or dissatisfied
they are with their job is a complex summation of a number of discrete job elements. As
suggested by Firth, Mellor and Moore (2003) these elements may have both extrinsic andintrinsic sources. For example, these might include external attributes or aspects such as pay,promotion opportunities, and relationships with supervisors and co-workers. It also includes
further factors of the work environment such as the supervisor's style; employment policies
and procedures; work group affiliation; working conditions; and fringe benefits. As well, an
individual’s sense of self-worth and ability to cope with change are often cited as intrinsic or
personal factors influencing job satisfaction (Firth et al., 2003). A customs employee who has
started out as an ambitious, happy motivated employee excited about their new job, who isdriven to succeed and do their best, if they believe that there may not be the job prospects orpromising career path that they had hoped would come to fruition, this may lead to the factthat they become disillusioned about their future with the company, or even let down andbored by their position, and soon feel that it is time to move on. As Nicholson (2003, p. 26)
notes, the effect of these 'broken promises' at work is to transform a person's positive energy
into negative.
The aim of this current study was to examine what core employment value proposition
attributes could contribute to retention of Customs officers recruited through the Trainee
Induction Programme over the past three years. The definition of employment value
proposition attributes adopted for this current research study is described by Heger (2007), as“the value or benefit an employee perceives by serving as a member of the organisation” (p.
121). The Corporate Leadership Council (2006) description of employment value propositionis given “as a set of attributes that the labour market and employees perceive as the value
they gain through employment in an organization” (p. 30). For the purposes of this current
study ‘attribute’ is defined as an aspect of the employment relationship that an employee
values.

MethodThis case study utilised focus groups and semi-structured interviews as the qualitative datacollection method. The case study is an example of a methodology which focuses onunderstanding the dynamics present within a single setting (Hussey & Hussey, 1997). The
rationale for the selection of a case study methodology using qualitative methods (Yin, 2003),
for this current research project, was the nature of the insights, the knowledge sought and theresearch objective (Ghauri, Gronhaug & Kristianslund, 1995). Archer (1988) argues that byusing qualitative methods one can pay detailed attention to micro-level aspects that are barely
accessible to quantitative methods. Further he contends that qualitative methods permit
access to the ‘real stuff’ of human interaction. Given that the research question, posed for thiscurrent study, focused especially on the interaction with the variables within the Customs

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New Zealand Journal of Employment Relations 34(2):95-107
environment, adoption of qualitative methods was considered as more likely to generate therequired rich data.
Data Collection
The total target population available for sample selection was the 193 officers recruited andgraduated between July 2005 and July 2008 and who were currently employed by the New
Zealand Customs Service. The majority (95%) were based in the main centres of Auckland,
Wellington and Christchurch and worked in two operational groups of either Airports orTrade and Marine. The distribution of graduate officers was Auckland 83%, Wellington 7%.
Christchurch 5%. The remaining 5% of graduate officers were spread across the ports of
Tauranga, Napier, Nelson and Dunedin. Based on the small numbers and spread of locations
the remaining 5% were not included in the sample selection process.
In this current research project a random sample size of thirty-five officers were selected on
the criteria of intake group (which also identified length of service), then by location, workgroup and finally rostered for duty on the day and times that focus groups would be held.
Table 1 provides an overview of the demographics of the sample selected. Table 2 shows thelocation and numbers involved in the six focus group semi structured interviews. The
questions were:
1.
2.
3.
4.

In your work environment what attributes are most important for you to have?
What is beneficial for you (if anything) about being employed by Customs?
What is not so beneficial (if anything) for you about being employed by Customs?
What needs to be happening (if anything) for you to consider Customs as a long-term
career?

Table 1

Focus Group Participant Demographics
NUMBER OF PARTICIPANTS

GENDER
Males
FemalesAGE BAND
Under 25 years
25 - 30 years
30 – 35 years
35 – 40 years
YEARS OF SERVICE BAND
< 1 year1 – 2 years
2 – 5 years

Table 2

21
14
11
11
9
4
2
24
9

Focus Groups by Location and Participant Numbers

LOCATION
Auckland International Airport
Auckland Trade and Marine
Wellington Combined
Christchurch Combined
TOTALSNUMBER OF GROUPS
2
2
1
1
6

TOTAL NO. OF PARTICIPANTS
10
11
8
6
35

98

New Zealand Journal of Employment Relations 34(2):95-107
Data Analysis
Data collected from each focus group session was analysed and coded immediately on
conclusion of each session. This was done through identifying and collating, from the data
captured, any patterns of repetitive words, phrases or comments in the responses to eachquestion and entering a code for a specific attribute against each (Yin, 2003). The codes usedwere identified from the type of repetitive data that was emerging and reference was also
made to the attribute names used in the Corporate Leadership Council (2006) and the Heger(2007) studies.
It is recognized that the extent of generalization from the research is limited, but this isconcordant with the nature of qualitative and case study research, which seeks to form aunique interpretation of events that is transferable to other contexts rather than produces
generalizations. The credibility and dependability of the research was enhanced bytriangulating the data involving relevant Customs documentation and literature (Maylor &Blackmon, 2005; Stake, 2008; Yin, 2003). The reporting of the descriptive responses in thecase study report attempts to convey the holistic understanding and meaning of thephenomena under study (Merriam, 1998). Ethical issues considered were, confidentiality ofparticipants contributions and identities, (e.g., audio tapes and interview transcripts), data
storage, use of data, minimization of harm, and informed consent.

Results and Discussion
There was a high degree of consistency amongst participants and between the groups studied.
Six employment value proposition attribute themes emerged from the data, remuneration, thenature of work, career development, leadership quality, people, and organisation.
Remuneration
From the literature reviewed remuneration for Customs officers is an issue not only for
Customs officers in New Zealand but also in the Australian Customs Service (Workers online, 2004) and in the United States (Rosenberg, 2007). The finding in this current study of
remuneration as an employment value proposition attribute was not unexpected. This was
also the case for the level of pay and pay parity with other border agencies. For a variety ofhistorical reasons pay rates for frontline Customs officers, at the time that the first five focus
groups were held, was well below the public sector medium. In each of the first four focus
groups the first response to the first question on what attributes are important for them waspay parity, this would come up again in response to what is not so beneficial about being
employed by Customs and yet again in identifying what needs to be happening for them toconsider Customs as a long term career. From the high level of emotion and importance
expressed on the pay parity issue it was clearly evident that remuneration in terms of
Herzberg, Mausner and Snyderman’s (1959) theory is a “hygiene” factor and in terms of
Maslow’s (1943) theory clearly linked to not meeting esteem and self actualisation needs:••

We should be paid what we’re worth.
We do important work for New Zealand.

When the fourth focus group was held this was less evident as at that time ratification of a
new Collective Employment Agreement and remuneration framework had commenced. As aresult a number of participants commented that they were waiting to see “what I get out of it.”99

New Zealand Journal of Employment Relations 34(2):95-107
However, just over a week later when the sixth and last focus group was held, in comparison
to the other five groups, no emotion was expressed on the level of pay. The comment “pay’s
okay now” describes the view of the group. What did emerge in a different form was the pay
parity with another sector. “For the important work we do we should be paid in line withcommercial sector organisations.”
In terms of Equity theory (Adams, 1965), this finding suggests that expectations of being
fairly rewarded, compared to their perception of the level and value of their contribution, is
not being fulfilled. The risk indicated in terms of Equity theory is that unless pay level andpay parity is rectified employee commitment could be affected with a consequential impact
on intention to stay in Customs. The construct of Expectancy theory (Porter & Lawler, 1968),
is also indicated in the current study’s findings through the theme of not feeling valued
because of the pay parity issue and also in wanting recognition for “when we have vacancies
we cover for them it’s a lot of extra work we don’t get recognition for.” This suggests thatfrom the participants’ viewpoint, effort and performance is present but the expectancy that
this will lead to an outcome of value for them, is not being delivered. The potential combined
implication of all of the above propositions is that whilst a new remuneration framework has
since been implemented the indications are that remuneration is a core employment value
proposition attribute that could contribute to the retention of this group of employees. As
such considerable attention needs to be focussed on this attribute. However, in doing so noteshould be taken of Herzberg’s (1966), contention, that based on the results of his studies
eliminating the cause of dissatisfaction would not result in a state of satisfaction, but would
instead, result in a neutral state. The findings in Melbourne’s (2007) study indicated that the
majority of employees leave organisations for reasons other than money should also be noted.

Nature of Work
Melbourne (2007) proposes that once an individual is employed by an organisation, the single
most important factor in achieving satisfaction and value from their role is the nature of thework that the individual performs. In this current study the nature and variety of the work
performed was seen as one of the attractions and benefits of working for Customs. A highlevel of pride was evidenced in the work that they do, that is: “What we do is important andprotects New Zealand”.
However, of concern is the level of dissatisfaction expressed where participants had
experienced long periods on repetitive type of work, for example, “I spent six month doing
passports in a booth – boring and repetitive - almost put me off working here.” Also, ofconcern is where officers have been required to rotate to another type of work either before
they considered they were ready or at short notice:••

Don’t make people shift if they don’t want to, give them an option.
I got three days notice I was rotating, I wasn’t ready to move yet.

Herzberg (1966) noted the importance of the nature of work in contributing to employee
satisfying experiences and for an employee to be truly motivated he contends that they needto have the opportunity for achievement, recognition, stimulation, responsibility andadvancement. Matching these contentions against the finding of this current study it isobvious that this is an area of importance and value to participants and as a consequence
could influence their commitment to stay or leave the organisation. To positively influencecommitment and retention insights from employee engagement studies and consideration of100

New Zealand Journal of Employment Relations 34(2):95-107
intergenerational workplace factors assist. Stairs (2005) asserts that job design is a factor ingaining rational commitment and meaningful work and leadership culture in gaining
emotional commitment and that both forms of commitment need to be present to enhance
employee retention. Taking into account the importance of job design and meaningful work
the other important and relevant factor for Customs to consider is the age band within which
the majority of graduate Customs officer fall and the predominantly older age band of people
in roles that can influence the way in which work is carried out. This is often referred to as
the generation X and Y factor (Flynn, 1996; Su, 2007; Zemke, Raines & Filipczak, 2000). Su(2007) contends that workers in the younger generation learn from practical experience, takeresponsibility for their learning, and like to be engaged in energetic activities. Customs needs
to ensure that the nature of work for this group of employees enables them to have variety,action and offers learning opportunities:•… at the airport every day is different with new things to learn - I like that.

Career Development and Leadership Quality
Career development and leadership quality were found to be closely linked for many with aclear theme that access to career development opportunities such as training and secondments
are dependant on either the relationship with their manager and/or the level of interest that
their manager has in enabling them to access these types of opportunities:••

If you don’t have a good CCO then you’re stuffed.
My new boss is great I have a plan now and I know what I need to do to progress.

Opportunities for career development was seen by the majority of participants as animportant attribute for them, it was also frequently mentioned as one of the main attraction
factors to joining Customs and considered by most to be a definite benefit of working in the
Customs Service. The comment of “Customs is a career not just a job” was frequently
articulated by participants. Alongside these comments was the consistently recurring theme
that they viewed their managers as “gate keepers of getting on training courses and being
able to go on other opportunities, such as secondments.”
The ability and the role of the leader to determine and influence access to training anddevelopment opportunities is obviously an important aspect that the organisation needs toaddress, particularly as exit interviews, from Customs officers who were recruited throughthe Trainee Induction Programme and have since resigned, cited lack of career progression
opportunities as one of the reasons for leaving:••

I couldn’t see any opportunities for me here.
I felt blocked to progress to a specialist role.

Furlong (2008), argues that one of the reasons that employees leave an organisation is thelack of career progression available to them but all too often this can be prevented with strong
leadership providing a sense of support and direction over internal career management. The
indication for Customs is that there needs to be a stronger focus on increasing leadershipbehaviour that provides a more consistent approach to ensuring equitable access to training
and development opportunities. This would align with the findings of this current study andthe leadership expectations articulated by participants that they want:•More mentoring, more access to training opportunities and more career advice.
101New Zealand Journal of Employment Relations 34(2):95-107
Gupta-Sunderji (2004) lends support to the need to have a more consistent leadershipapproach to supporting access to training and development opportunities with her contention
that leaders have the ability to impact positively or negatively on an employee's access toopportunities and on their sense of achievement. Mason (2008) takes this further in that she
proposes that leaders have a crucial role to play in both formal and informal learning and inencouraging the generation of new ideas and that this is particularly important for younger
employees.
Leadership quality was indicated as important with significantly no groups indicating that thiswas a benefit and four groups indicating that positive and supportive leadership needs to behappening for them. The majority of participants were very articulate in describing what theywanted and what they expected from people in leadership roles:••

Good management is supportive managers who are role models, inspiring, positive,
innovative, caring – leading by example.
My Chief leads by example he is positive and helpful, no favouritism and gives me
constructive feedback.

In describing the behaviours that they experienced and did not want there was a high level of
emotion:•••… need managers that stick to what they say they will do.
We get treated like children.
Old school mentality, never gives recognition for good work so never know if done okayor not.

Sheahan (2006) warns that all workers, but especially the younger generation are demanding
a new kind of opportunity and a new kind of leadership style. Implementing strategies toensure people in leadership positions respond proactively and positively to the challenge ofproviding quality leadership and career development opportunities that deliver on theemployment value position attributes, is imperative in contributing to retention of graduate
Customs officers.
People and Organisation
The attributes of people and organisation were both identified as important, beneficial andvalued aspects of employment at Customs. Whilst the overall results for both these attributes
did not indicate that anything needs to happen, Bentley (2007) and Stairs (2005) both argue
that when it comes to retention positive relationships with colleagues and with theorganisation are even more critical than direct manager relationships. Given that the researchfindings indicate more needs to be done in terms of leadership quality then ensuring that a
clear focus is kept on continuing to develop and gain leverage from the attributes of people
and organisation is vital.
All groups were strongly supportive of the Trainee Induction Programme as a way of new
Customs officers joining the Service, but there were mixed views on whether the programme
was “too long, could do study while on the job,” or conversely “cohort programme great
way to join the Service – people met on the course still friends.”

102

New Zealand Journal of Employment Relations 34(2):95-107
Contrary to this was a recurring theme from a number of participants that there needs to be amore realistic picture of the role given at recruitment. The issues relating to this theme arecaptured by the comment that the “reality is more routine than glamorous.” It would be
beneficial for Customs to further investigate this theme especially as it has implications forthe psychological contract (Bellou, 2007; Wilson, 2006) and for the expectations of the rolethat are likely to be formed during the recruitment and early stages of employment with
Customs. This is supported by Melbourne (2008) who contends that the retention intentionsof employees is formed at recruitment and validated, or not, in the early stages of theemployment relationship.
Participants considered that feeling valued by the organisation was important to them. They
identified the Safe, Fit and Well Programme run by Customs and the Comptroller’s approachof “being aware of his people at the lower level” as an indication to them that they werevalued by the organisation.
The attribute findings from this current study are consistent and two other employment value
proposition studies (Corporate Leadership Council, 2006; Heger, 2007) (see Figure 1).
Figure 1

Employment Value Proposition – Comparison of Attribute Findings
between Three Studies

EMPLOYMENTVALUEPROPOSITIONATTRIBUTEREMUNERATION
NATUREOF
WORK
CAREERDEVELOPMENTLEADERSHIPQUALITYPEOPLE

CURRENT STUDY(2008)CORPORATELEADERSHIPCOUNCIL STUDY(2006)
Attraction Attribute

HEGER STUDY(2007)

Attraction &Retention Attribute
Attraction&
Retention Attribute
Retention Attribute

Retention Attribute

Retention Attribute

Attraction & Retention
Attribute
Retention Attribute

Retention Attribute

Retention Attribute

Retention Attribute

Retention Attribute

Retention Attribute

Conclusions
The findings of this current study suggest six themes relating to employment value
proposition attributes of remuneration, nature of work, career development, leadership
quality, people, and organisation. These attributes were indicated as important and of mostbenefit and value to Customs officers recruited through the Trainee Induction Programme.
Significant concentration needs to be given to improving the first four attributes at the sametime as ensuring that attention is kept on the last two attributes of people and organisation. A
visual model of the components identified from the research that underpins the six
employment value proposition attributes identified for this group of officers is presented in
Figure 2.

103New Zealand Journal of Employment Relations 34(2):95-107
The findings of this current research study may be transferable to other groups of Customs
officers as employment value proposition attributes and may also form the basis for further
investigation of training and retention initiatives particularly in other uniformed law
enforcement service organisations. Consideration be given as to how Customs can ensure thatprospective and new recruits have a clear picture and understanding of the overall nature of
Customs work so that they fully understand that such work can be routine as well asinteresting and action orientated.

Figure 2

New Zealand Customs Service – Employment Value Proposition Graduate
Customs Officers

REMUNERATI
ON

•
•
•

Pay parity
Pay level
Recognition

NATURE OFWORKORGANISATION
•
•
•

•
•
•

Pride in Customs
reputation and role
Valuing
employees
Safe Fit & Well
Programme

VariedInteresting
Actionorientated

GRADUATE
CUSTOMS
OFFICERPEOPLE•••CAREERDEVELOPMENT

Network from
Induction
Programme
Great people
Great teamwork•••

LEADERSHIPQUALITY•••

A career not just a job
Access to training
Access to careeradvice, development
and progression
opportunities

Inspiring, positive,
Professional,
consistent and fair
Support for careerdevelopment
Values different viewsin the workplace

Components that make up the employment value
proposition attributes for graduate Customs officers

104New Zealand Journal of Employment Relations 34(2):95-107
Regardless of the dramatic downturn in the global economy and the likely flow on effect to
the New Zealand employment market, for organisations such a Customs and other uniformed
law enforcement agencies, where considerable investment has to be made before employees
can be operational, the need to retain competent employees will remain. The model
developed through this current research study maybe a useful base to investigate employment
value proposition attributes for officers within other uniformed law enforcement services.
With an ageing workforce the challenge ahead for the New Zealand Customs Service is how
to lead, develop and retain a generation of people that it may not understand but can ill afford
to ignore (Sheahan, 2006). Creating and delivering a compelling employment value
proposition for each of its key employee groups is critical if the organisation is to retain new
officers, gain a return on investment and build technical capability for the future.
Retention and leadership will be fundamental components in meeting this challenge. For
Customs with the majority of current leaders in an older generation, and the majority ofnewer Customs officers in a younger generation, the contention of Sirias, Karp andBrotherton (2007) that effective leadership of intergenerational teams lies in adopting a salad
bowl approach, where each generation is valued for the strengths they bring rather than amelting pot approach, where all are expected to meld together, needs to be further explored.

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107

New Zealand Journal of Employment Relations 34(2):108-116

Research Note: Popcorn, Pickets, and Brass-bands:
Young Workers’ Organising in the Cinema Industry 20032006
GRACE MILLAR*
Abstract
Since the Employment Contracts Act in 1991, the New Zealand union movement has
become significantly smaller and less powerful. The service and retail sectors, where
many workers get their first jobs, often have no union tradition. How to organise
young workers and how to rebuild unionism in the service industries are two of themost important questions facing the New Zealand union movement.
Movie theatres were one of the many service-based workplaces that were deunionised in the period after 1991. In April 2002, Reading Cinemas opened a new
movie theatre in Wellington. In November 2003, workers were paid at the New
Zealand minimum wage rates of $8.50 for over 18 year olds and $6.80 for under 18
year olds, and there were no union members at Reading cinemas. Over the next few
months, 95% of Reading workers joined the union, and a year later, these workers
took industrial action, voted 100% for a strike, and won a collective agreement.
This article will undertake a qualitative analysis of the unionisation at Reading andthe dispute that followed and to explore what this workplace can add to ourunderstanding of young workers in unions.

Introduction
On Friday 17 September 2004, 50 people, including a brass band, gathered outside
Reading Cinemas, while the workers gave away free popcorn. A year earlier, there
had been no union members at Reading Cinemas and three months later, workers had
won their collective agreement. This article will examine the history of Unite Union at
Reading Cinemas, and what can be learned from a qualitative analysis of thatexperience.
This article will discuss three particular aspects of unionisation at Reading cinemas.
Firstly, it will look at union membership. At Reading 95% of workers joined theunion; this interest will be examined in the context of data that says that young
workers are less likely to be members of a union than older workers.
Secondly, it will explore what can be learned about the service sector from theunionising experience at Reading Cinemas. The retail and service sectors have underfive percent union density in New Zealand and is generally seen as hard to organise*

Grace Millar was the organiser at Reading from 2003-2006. This article was first given as a paper atLabour Traditions: The Tenth National Australian Labour History Conference, Melbourne, 2007108

New Zealand Journal of Employment Relations 34(2):108-116(Blackwood, Feinberg-Danieli & Lafferty, 2006). The service sector is discussed as awhole, despite the many different patterns of work within this sector. This article willargue that, if disaggregated, the service sector has advantages for organising, as well
as challenges.
Thirdly, it will examine the role that traditional union tools can play in raising union
consciousness among workers who have joined a union for the first time. Traditional
union forms of organising such as meetings, newsletters, pickets and strikes were vitalto unionising Reading Cinemas. The union needed to use every tool available to it;
often these were part of the traditional union tool-kit, but to be effective they needed
to be applied in a way that took into account the specifics of the workers and theworkplace.

Industrial Environment
The 1991 Employment Contracts Act changed the New Zealand industrial
environment, from one of the most regulated in the Western world to one of the least(Harbridge 1993). Prior to 1991, awards had set out minimum wages and conditions
for each industry, but under the Employment Contracts there was no longer any
protection for overtime, breaks, and other basic conditions. Many service workplaces
were completely de-unionised in the 1990s. Union density in New Zealand decreased
from 43% in 1991 and to 21.4 % in 2003. In 2003, density in the service industry
union was just 5.1% (May, Walsh and Otto, 2004).
Employers in movie theatres, like most service employers, took advantage of the
deregulated labour laws to drive down wages and conditions. The 1989 front-ofhouse award covered cinemas and set out a higher rate for cashiers, an allowance forserving food and drinks, and a different rate for cleaning. Under individual
bargaining, these conditions soon ended and a ‘cinema attendant’ became a minimumwage job that did all these tasks. The change in terms and conditions of employment
was even more marked for projectionists as under the award, projectionist had been a
trade with an apprenticeship system. The 1990 projectionist award includes specificprovisions such as a wash basin in the projectionist box and the provision of a warm
coat for projectionists as well as a shift payment, service allowance, overtime,
weekend rates, call-back rates, and late working rates. Changes in technology led to ade-skilling of the projectionist trade, which combined with the changes to
employment legislation enabled employers to drastically reduce conditions over lessthan a decade. By 2003, some cinemas were paying projectionists as little as $1 anhour above the minimum wage (Organising Notes, Hoyts Cinema File, Unite Union)
Reading Cinemas Courtenay Central opened in 2002, so Reading workers had neverbeen covered by an award. The young workers who were employed at Reading
would have still been at primary school (or younger) when the Employment Contracts
Act came in, so they had no experience of unions or memories of awards. When Unite
began organising at Reading in late 2003, the pay rates (and minimum wage rates)
were $8.50 for over 18 year-olds, and $6.80 for under 18 year-olds.1

109New Zealand Journal of Employment Relations 34(2):108-116

Union Membership
Unite first approached workers at Reading Cinemas in December 2003 after learningthat Reading management had removed workers’ paid ten-minute breaks. Unite took
advantage of the rights of access provided under the Employment Relations Act tointroduce the union to workers one-on-one in work time. During the first weekend,
Unite was recruiting at Reading, 59 workers joined the union (about 80% of thosetalked to).2 In late 2003, there were about 90 workers at Reading and within a month
95% of them had joined Unite. The staff-turnover at Reading was very high, but union
density remained at 95% as new workers continued to join the union.
This extremely high union density among workers at Reading cinemas is interestingin the context of on-going debates about union density among young workers. Only
one or two of the workers at Reading had belonged to a union before. The workforce
was very young; almost all workers were under 22.3 Despite having minimal
experience of unions, most Reading workers joined the union the first time they were
offered the opportunity.
It is impossible to generalise from one work-place about ‘young-workers’ or ‘service
workers’. However, in-depth analysis of individual sites provides qualitative material
that can add useful depth to analysis based on quantitative data. This article will
discuss the enthusiasm for union organising among workers at Reading in the context
of the Haynes, Vowells, and Boxall (2005), which compares the attitudes of older andyounger workers towards unions.
A key idea discussed by Haynes et al (2005) is the representation gap among young
workers. While union density is lower among young workers than older workers,
more young workers say that they would join a union if asked than older workers.
This section of the workforce, who are not currently members of the union, is called
the ‘representation gap’. This gap is larger among young workers than older workers.
50.3% of workers aged 29 or under in workplaces without a union say that they would
join a union, as opposed to 25.3% of workers over 30 (Haynes et al, 2005: 102). Theinterest among young workers joining the union clearly demonstrates that there was a‘representation gap’ at Reading. One worker, when asked if she had any questions
said: “What took you so long?” The experience at Reading demonstrates that thisrepresentation gap is real and at least some of the workers who express that theywould join a union given the opportunity do join.
In-depth examination of the unionisation at Reading cinemas can do more than justconfirm that such a gap exists; it can also add texture to our understanding of existingmodels. Many Reading workers would not necessarily have answered the survey ofHaynes et al, 2005, by saying that they would join a union. Some Reading workers
did not even know what a union was when the Unite organiser first visited.4
However, even the workers with almost no knowledge of unions joined at the end of aten minute conversation with an organiser. This shows that, in order to understandwhy people join unions, we should not just examine unions and attitudes towards
unions, but we must also look at employers and attitudes towards employers. At
Reading, management had just taken the ten minute breaks away from workers, andworkers wanted those breaks back. Under these circumstances, even workers who
might have been hostile to unions in general were ready to join a union to solve this110

New Zealand Journal of Employment Relations 34(2):108-116
particular problem. While the representation gap is an important tool to analyse theworkplace, workers’ pre-existing attitudes towards unions is a limited way of looking
at whether, and why, a worker might join a union. This is particularly true among
young workers who have less experience of work, or of unions, than older workers.
Although some researchers argue that individualistic attitudes are one reason for the
low-level of unionisation amongst young workers, there is still little empiricalevidence for this assertion.5 (Haynes et al, 2005). For example, Haynes et al, 2005 did
not find support for this in their research of young workers’ attitudes towards workand unions. Moreover, as Reading is a workplace where the entire non-management
workplace is under 30, it cannot be used to compare the attitudes of young workers
with older workers. However, the pattern of unionisation at Reading does not support
the argument that late modernity and neo-liberal economic policy have destroyed
young people’s capacity to, and interest in, working collectively. That some of themechanisms for working collectively, like unions, have been considerably weakened
does not mean the advantages of working collectively have been eliminated.
A generational-based analysis puts too much emphasis on ideology and ignores thematerial reality of young workers in their first jobs. Reading did not pursue
individual bargaining but paid the minimum wage to all cinema workers, and would
not consider any individual increases. Before joining the union, some workers had
tried to get pay increases at Reading. In one case, the local manager supported theclaim for an individual worker under the age of 18 to be paid the adult rate, because of
his level of work, but the company would not allow this increase. The company’s
attitude towards wages was underscored when management visited duringnegotiations and told workers that it was Reading’s policy never to pay more than thelegal minimum wage to its cinema workers in any of the countries in which it
operated. Even if young workers at Reading had believed in an individualistic
ideology, and individual bargaining, the reality of working in a low-paid job in theservice industry would challenge those ideas. Individual bargaining had got Reading
workers nothing above the legal minimums, and management had made it clear that itnever would. In these circumstances, the only options open to workers were to leaveor to work collectively. While Reading did have very high turn-over, workers wereprepared to try working collectively before they left. Whatever effect neo-liberalindividualism has had on young workers, it has not stopped them recognising thereality of their working situation. Young workers are as capable as any other workers
of understanding that they have no individual bargaining power.

Service Workers
Research in New Zealand, and elsewhere, has consistently pointed out lower levels oforganisation among service workers than other industries (Blackwood et al, 2006).
There are many different explanations for this lower level of union density, including
the history of the industry and the high level of turn-over, but one important
explanation has always been the organisation of work. Service industries tend to bemade up of workplaces with smaller numbers of workers per site, where work is parttime and rosters are controlled by management, all of which presents challenges forunion organisation, particularly when it comes to communication. However, it isimportant to disaggregate the service industries. While Reading, like most cinemas,
111New Zealand Journal of Employment Relations 34(2):108-116
shares some of the patterns of work with other service sector workplaces, cinemas
have several structural opportunities that unions can take advantage of. At Reading,the advantages included specific shifts where large numbers of workers were rosteredon, the pattern of work within shifts, freedom of movement during shifts and thesocial nature of the workplace.
Although most of the workers at Reading are part-time and management controls theroster, the problems this creates for unions is mitigated by the specific busy periods ata cinema, particularly weekends and school holidays. Almost all cinema workers will
be required to work over a weekend, and on a Friday or Saturday night there might be
as much as forty percent of the workforce rostered on. This means that it is easier tocommunicate with the majority of workers at one time than it would be in an industry
where the pattern of work was more evenly spread through the week.
Unite was able to take advantage of the periods within a weekend where large
numbers of workers were rostered on because cinema work has quiet periods each
evening. Other service workplaces, like fast-food outlets, are more likely to beconsistently busy for a three or four hour period on their busy nights. This constantdemand makes it hard to organise as it is difficult to talk to workers. While unions
have rights of access, if a workplace is very busy, or under-staffed, when one worker
stops work to talk to a union organiser this puts stress on all the other workers, whichmakes it extremely difficult to talk to workers about the union. Movie theatres tend toschedule ‘sessions’ of movies. These periods will be very busy, with most of thecinemas having a movie going out and another movie going in, but in between thesetimes, at around five o’clock or around seven o’clock in the evening, the cinema ismuch quieter. These quieter periods, which are usually used to restock the candy bar,and for workers to take their meal breaks, make it easy for union organisers to talk tomembers one-on-one without putting stress on other workers. This means that incinemas, unions are able to fully take advantage of their rights of access and have afull opportunity to use the one to one recruitment technique.
As well as having breaks between busy periods, which are well suited to union
organising, cinemas workers tend to have some freedom of movement around thecinema complex during work hours. There are different work areas within a cinema
complex, and while some are others allow freedom of movement. This freedom of
movement means that workers do not feel like they are under the eye of management
when they talk to a union organiser. In addition, senior management at Reading
tended to work a standard Monday to Friday work week, and so would not be at work
during the busier parts of the work week, when the union organiser was most likely toapproach the site. The person running an individual area of the workplace, such as
the candy bar, usually did not have a management role. As well as removing thefeeling that management may be watching them talk to the union, this made it easy forworkers to talk to each other about unions. At Reading, one worker came from the
candy bar to talk to the union organiser, after being told to “go join the union” by the
person running the candy bar that night.
The final opportunity cinemas offer for union organisation is the nature of thebusiness. Cinemas are social workplaces; workers in cinemas tend to socialise
together, and build networks between themselves. At Reading, when the negotiations
broke down, the union was able to utilise these friendship networks to ensure that112

New Zealand Journal of Employment Relations 34(2):108-116
every member knew what was happening with the negotiations. Delegates created a‘relationship map’ of different relationships within the cinema and used friendshipgroups to communicate with members.6 Strong friendship networks provide a basefor solidarity, which is particularly important in a greenfield organising site.
The experience of organising at Reading cinemas shows that not all service
workplaces are the same. Some service workplaces, like cinemas, have realadvantages in the way the work is done, which unions can take use when organising,as well as challenges that the union will have to work around. In greenfield
workplaces, unions match their organising techniques to the specific nature of work at
a particular workplace. When studying the service industry, it is important todisaggregate the many the workplaces where service work is done, and see that while
they have many differences, they also have many similarities.

Traditions
Reading cinemas had structural advantages when it came to building a union, butthese structural advantages did not create a union in the workplace; neither did the 59
workers who had signed union membership forms in the first weekend. When looking
at young workers and unions, it is not enough to look at why young people join aunion, but we must also examine how young workers become unionists, that is, howworkers come to act collectively. This section will examine the role of union
traditions in building a culture of collectivity at Reading. Unions can sometimes beseen as too tradition-bound (Fryer, 1985: 75). Union traditions, however far they
have ossified, must have a practical purpose. At some time in their history, before
traditions were traditions, they were just ways of organising. By examining the pathof workers at Reading, from joining the union to taking industrial action, we can see
the usefulness of union traditions, particularly if they are viewed as tools, not set instone.
Union meetings were one of the most important ways of building a union culture.
Union meetings involve acting collectively because workers attended the meeting
together and talked together. The first union meetings at Reading were held over
Valentine’s Day weekend 2004 at an off-site meeting room. The act of walking out of
the workplace on a busy Saturday night and, seeing managers take their positions,helped build union consciousness among the workers. For workers with little union
experience, traditional union practices that might seem obvious and routine underother circumstances are the first piece of collective action they take. Over the courseof the negotiations, there were more union meetings at Reading and each helped build
the union culture.
Thus, the example of greenfield workplaces illustrates that trade union traditions canbe applied to newly formed work sites. At Reading, the company refused to do payroll deductions of union fees and as this was before the Employment Relations
Amendment Act of 2004 came into place, there was no obligation for employers todeduct money for union fees. Therefore, the organiser and delegates collected union
fees month-by-month in cash from the majority of workers. New Zealand’s union
access provisions require union organisers to tell the employer the reason they are
entering the workplace. When planning collective action, at Reading the union

113

New Zealand Journal of Employment Relations 34(2):108-116
organiser could enter the workplace to collect the union fees, and then also discuss
action with the members. However, because so many workers had no union
experience, the advantages of collecting union fees in cash were not limited to justflying under the boss’ radar. Collecting union fees in person helped make the union
real to members, something they were definitely part of, not just a line of deduction
on their pay-slip.
Negotiations for a collective agreement began on 4 May 2004. Union members
rejected two offers from management, and on 24 August 2004, Reading indicated thatthey believed bargaining was at an end.7 From the union’s point of view, the twooutstanding issues were service-pay and youth rates. The break-down of bargaining
meant that the unionisation of the workplace had to take another step, and workers
had to take collective action. At 8pm on a Friday night, shortly after the offer was
rejected, every worker put on a sticker that said ‘I’m Union’. This was a simple step,
but escalating action is an important tool for unions, and is particularly important inworkplaces that do not have a history of industrial action. The organising committee
then had to decide the next step. The union’s aim was to do as much economic
damage to the company with as little to cost to workers as possible, but the union
faced considerable challenges. At Reading, the number of hours management
rostered depended on the number of people attending movies, so any action that
decreased attendance at the cinema would lead to a decrease in hours for union
members and reduce their income even if they were not on strike. The organisingcommittee decided to target the candy bar, not the ticket box. The profit in a cinema
comes from the candy bar, and other sales of food (Hubbard, 2005).
On 17 September 2004, Unite held a picket outside Reading cinema whereby
members asked cinema goers to boycott the candy-bar in solidarity. Union members
gave away free popcorn to people who stopped at the stall and signed the petition orwore a sticker. The initial picket was well attended by workers, other unionists, andeven the Brass Razoo Solidarity Band. This picket attracted considerable media
attention and Patricia Hetherington, one of the delegates, was interviewed live on
Holmes. These pickets continued for the duration of the school holidays, which was
the following two weeks and collected almost 2,000 signatures. During this time, halfof Reading members attended one or more picket; this would not be considered highfor sites with a history of unionisation, but showed how far workers were prepared togo, having joined the union less than a year before. The picket is a traditional formof union action. The success of the popcorn pickets rested in a traditional form ofaction, but in a way that fitted the specific needs of the union at that time.
The popcorn pickets put pressure on management who then agreed to return tobargaining. Union members decided to continue escalating their industrial action andvoted unanimously for strike action. Due to the pattern of business within cinemas, athree-hour strike on a Friday or Saturday night would do considerable economic
damage to the company at a relatively small cost to workers. This continued thepattern of using traditional union tools, escalating action, and being flexible in orderto do most damage to the company at the least cost to workers. The strike vote put
the union in a strong position to resume negotiations with the company.
Negotiations finally recommenced on Friday 29 October 2004 with both theAustralian manager and the local manager present. This was the first time that the114

New Zealand Journal of Employment Relations 34(2):108-116
parties had discussed wage rates across the table. Reading management made it clearthat they were aware of the strike plans, and wanted to avoid that possibility. After
negotiations, a settlement was reached that met the union bottom line. The pay scalefor over-18 year olds would start at $9.20 and increase in steps up to $9.90 after 15months. The Collective Employment Agreement between Unite Union and Reading
Cinemas Limited was signed on 12 November 2004 with the conditions that theunder-18 year olds would be paid at ‘training rates’ for the first 260 hours they
worked, but after that they would be go onto the adult scale. This agreement lasted for
18 months and any minimum wage increases within that time were passed on to theReading rates (by the time the agreement expired, minimum wage increases had
pushed the top rate up to $11.15). This offer was ratified by a clear majority ofReading workers, and just under a year after the first Reading worker had joined
Unite, Reading workers gained a collective agreement.

Conclusion
Why people join a union, and how workers start thinking and acting collectively, arethe two most important questions for greenfield organising. A case study of one
workplace cannot give general answers to these questions, but what it can do is show
possibilities.
At Reading, the nature of the workplace and the employer were as important asanything Unite did in forming union members’ decision to join the union. The
physical nature of the workplace, the pattern of work, and the pre-existing social
networks all gave distinct advantages to union organising that may not have been
available in other workplaces. In addition, management practices and pay policy
meant that workers had no illusions about the effectiveness of individual bargaining,
and wanted to change their workplace bargaining. However, there is more to making aunion workplace than just joining on. What happened at Reading also shows thatbuilding a union, building collectivity takes many steps, but it can be done.
Workplace meetings, escalating action, pickets, strike votes, even collecting union
fees in person are all traditional union practices that helped build collectivity in thisyoung workforce who had only just joined the union. Gaining a collective agreement
was a great victory for Reading cinemas workers. In less than a year, they went fromnever having joined a union, to voting unanimously for strike action.

References
Blackwoord, L., Feinberg-Danieli, G., and Lafferty, G. (2006). Union and Union
Membership in New Zealand: Annual Review for 2005. New Zealand Journal of
Employment Relations. 31(3): 77 – 87
Fryer, B. (1985). Trade Unionsim in Crisis: The Miners’ Strike and Challenge toUnion Democracy. In H. Beynon (ed). Digging Deeper: Issues in the Miners’ Strike.
(pp. 69 – 85). London: Verso
Harbridge, R. (ed). Employment Contracts: New Zealand Experience. Wellington:
Victoria University Press.
115New Zealand Journal of Employment Relations 34(2):108-116

Hanes, P., Vowells, J. and Boxall P. (2005). Explaining the Younger-older Worker
Union Density Gap: Evidence from New Zealand. British Journal of Industrial
Relations. 43(1): 93 – 116
Hubbard, A. (2005, March 6). A Piece of the Action. Sunday Star Times. p.C3
May, R., Walsh, P., and Otto, C. (2004). Unions and Union Membership in New
Zealand: Annual Reviews for 2003. New Zealand Journal of Employment Relations.
29(3): 83 – 96

Notes
1

These rates, like much of the material for this article was obtained from the Reading File at Unite
Union.
259 of the membership forms from Reading are dated from that first weekend, the organising notes
demonstrate that most workers who talked to an organiser and did not join immediately joined over the
next few weeks.
3

These are based on estimates; Unite union did not complete any formal surveys

4

There was a large range of reactions, including misconceptions about unions. These were
documented in the Organising Notes, Reading Cinema File, Unite Union.
5
Haynes et al (2005) discuss these debates in more detail, (pp. 94-95)
6

The relationship map made by the delegates is still in the Reading Cinema File, Unite Union

7

The details of bargaining are complex, and incidental to the subject of this article

116

New Zealand Journal of Employment Relations 34(2):117-127

Chronicle: February 2009 – May 2009
February 2009
It was reported in the Dominion Post that changes to the Employment Relations Act
and in particular the Employment Relations (Probationary Periods) Amendment Act
would come into force 1 March 2009. The Department of Labour’s Deputy Secretary,
Workplace, Craig Armitage also promoted the employment agreement builder tool on
its website in which he stated that: “… the employment agreement builder is designed
to take out the hassle, and make it an easy and straightforward job that will takeminutes not hours of time...”.
The NZ Herald reported the announcement of a Job/Employment Summit to takeplace in late February. Chaired by NZX chief executive Mark Weldon, the purpose of
the summit was to come up with a clear and practical plan to minimise job losses
during the recession. In a general discussion on the current economic climate and its
impact, the article noted that it was unlikely that companies would give generous
wage increases with some large employers announcing that their senior executives
would not be receiving any increases. The Government adopted the same stance with
the Prime Minister calling for a zero increase in MP salaries and urging unions tomoderate their pay claims. The article argued that while the role of the summit was tokeep as many people as possible employed, the real challenge was to improve
productivity to enable companies and their employees to weather the downturn andposition them to take advantage when conditions improve. It concluded that a bigger
step would be the creation of a common vision for New Zealand by the Government,
employers and unions.
However, Job/Employment Summit was not without its cynics as reported in the
Waikato Times in which one observer noted that the summit would be all talk and noaction. While it was agreed that it was good that the Government was taking action,
the observer was not sure what would come out of it, particularly as business leadersin the Waikato had not been invited. Notwithstanding, Port of Tauranga chief
executive Mark Cairns saw the summit as an opportunity for collaboration and to
reduce the negative impact of the global recession. Also a number of Waikato
business leaders had suggestions for the Government to ensure the success of thesummit.
Some of the more sensational employment cases before the Employment Relations
Authority were also highlighted in the February media. In particular, the case of Davisv Toolking Plus Limited was reported in the Press illustrating that the act of telling
one’s employer to “stick the job” in the heat of the moment may not necessarily meanthat the employee actually wanted to resign. The dispute was between Mr and Mrs
Davis, who managed the Hamilton shop for Toolking Plus and lived on the premises,
and Mr Edge, who was one of the directors of the company. Mr Edge, who had
looked after the shop while Mr and Mrs Dfavis were away, was not happy with thestate in which he found the shop. When Mr and Mrs Davis returned from their annual
leave Mr Edge raised his concerns with them and an argument ensued in which Mr
Davis told Mr Edge to “stick his job”. The next day Mr Edge told Mr and Mrs Davisfor the keys to the shop and told them to vacate the flat above the shop. The ERA
ruled that while an employer was entitled to rely on a clear resignation, care was117New Zealand Journal of Employment Relations 34(2):117-127
needed when words were spoken as “…part of an emotional outburst in the heat of the
moment”. A fair and reasonable employer would have realised the Davis’s had notintended to resign immediately or to vacate their flat above the shop straight away andwould have approached them the next day to clarify their intentions. Mr Davis wasawarded $8,450 for lost earnings and $6,000 compensation for distress, but this was
reduced by 30 per cent because of his remark and his failure to talk about theexchange.
The Waikato Times reported that in spite of the fact that a Tairua restaurant proprietor
dismissed her waiter after he sent her flying into a door, she was ordered by the
Employment Relations Authority to pay her assailant $500. The former waiter andbarman was successful with his claim of unjustified dismissal against his employer
despite being found guilty of serious misconduct with his “unprovoked, andunnecessary” actions in pushing past his employer. The employer immediately
dismissed the youth and complained to police, but did not proceed with assault
charges. However the ERA ruled there was a complete absence of procedural fairness
in the dismissal. The youth was dismissed by a text message and a letter confirming
the dismissal was then delivered to him that evening. The ERA ruled that the youth
had been unjustifiably dismissed and the employer should have written to him, giving
notice of a meeting, and setting out the allegations and potential consequences if
serious misconduct was proven.
The Dominion Post reported on a drawn out 13 year old ‘legal stoush’. One of the
Court of Appeal judges labelled the delays in the case as scandalous and added that itrivalled “a tale in a Charles Dickens classic”. The case involved the former probation
officer who sued the Department of Corrections for work induced stress. After a Courtof Appeal hearing Justice Bruce Robertson said it was “scandalous” there was still noresolution to the case. He added that “Gilbert v Attorney-General must at least beentering the race to compete with Jarndyce v Jarndyce,” referring to the Dickens
novel Bleak House. Mr Gilbert resigned from the Probation Service at the age of 51,
on medical grounds saying the job had cost him his mental and physical health. He
sued the department for breaching his employment contract and forcing him to retire
after a 21-year career. He claimed that he had suffered stress-related chest pains anddepression after being overloaded with difficult cases involving sex offenders andviolent criminals, and that Corrections' management was grossly deficient. In 2000,
the Employment Court awarded him $750,000 for lost salary, humiliation anddistress, loss of career and exemplary damages. The Court of Appeal later reduced thepayout by $100,000. Since then the case has clogged both courts with appeals andcross-appeals. Mr Gilbert said his legal fees were already more than $650,000 but hewas not going to give up.
In another high profile personal grievance case reported in the Dominion Post, it was
revealed that the Director General of Conservation secretly taped a phone
conversation with a lawyer who he later dismissed. In issuing an apology Mr Al
Morrison said he understood how “alarming and disconcerting” it could have been for
lawyer Sue Grey to learn he taped their conversation without her knowledge. The
revelation came out during an investigation by the ERA into a claim of unfair
dismissal when Ms Grey was dismissed for an alleged conflict of interest. Ms Greyalso alleged that the Solicitor General, Dr Collins had attempted to pervert the courseof justice by informing her employer, the Director General of Conservation of her

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New Zealand Journal of Employment Relations 34(2):117-127
involvement in a legal case – the Saxmere Case v Wool Board – in which she and Dr
Collins were representing opposing parties. In response to Dr Collin’s alleged
telephone call to the Director General of Conservation, Ms Grey’s partner laid acomplaint with the police against Dr Collins. In a later article in the Nelson Mail Ms
Grey was told by ERA Paul Montgomery that she faced a high threshold to prove hercase. In an unexpected twist the Attorney General made an offer that if Ms Grey
withdrew her allegations he would not pursue her for legal costs. This offer was
accepted but she still sought compensation and her job back with the Department ofConservation.
In a sign of tough economic times the Nelson Mail reported that between 900 and1000 applications were received for two permanent truck driver positions that Nelsontransport company Brian Stanaway Roading advertised on Trade Me Jobs. The
company offered “competitive pay” for two experienced drivers. According to Mr
Stanaway, the applications came from all around, including one from Iraq but addedthat he was not surprised by the response.
Also in the Tasman Nelson region concerns were again raised in the MarlboroughExpress about the hazardous exposure of methyl bromide used to fumigate exported
wood products. Methyl bromide is an odourless, colourless gas and is used to killinsects in imported and exported goods. It is also extremely toxic to humans and has
been linked to motor neuron disease. Health issues associated with methyl bromide
gas in New Zealand first came to the public attention in Nelson, the first port town to
use the chemical, as a result of the concerns raised by the widows of six port workers
who died from motor neuron disease and who had a rate 25 per cent higher thaninternational averages. The Marlborough Express reported the announcement by thePort Marlborough that methyl bromide emissions at Shakespeare Bay will have to be
80 per cent less than legally allowed if plans to fumigate export logs go ahead. The
log exporter Zindia was scheduled to fumigate the hold of a Hong Kong-registeredship Kang Shen two days after the Port Marlborough’s announcement. Port chairman
Ed Johnson said the directors' decision was based on careful consideration ofenvironmental, community and commercial aspects.

March 2009
At the conclusion of the February Job Summit a number of reports discussed the mainfeatures of the summit and its success or otherwise. The Independent Financial
Review reported the view of Roger Kerr, executive directive of the Business
Roundtable that “…preserving jobs in a recession is all about removing barriers tohiring”. Kerr and several other participants were dismayed to be told labour market
regulation was “off the agenda as a sop to the unions”. Kerr warned that outcomesfrom the summit would be “limited” unless or until the Government implements
labour-market reform. The article claimed that this was the price the Government had
to pay to get union leaders to attend the summit table. There was to be no discussionof the two labour-market issues many employers regarded as vital. These were thereview of the Holidays Act and repealing or amending the Employment Relations
Act. Kerr added that business confidence is important when it comes to taking on new
staff and governments should make the decision to hire somebody as easy as possible.

119New Zealand Journal of Employment Relations 34(2):117-127
He claimed that the 90-day probationary period for new employees was a godsend tojobseekers.
As a postscript to the jobs summit The Dominion Post reported that the Government
was close to reaching a deal with unions and employers over a nine-day fortnight forsome employees. One of the main recommendations from the job summit to prevent
redundancies was to ask workers to take one day off a fortnight. The proposal
appeared to stall after the Government resisted helping to fund the 10th day, insteadoffering to pay for training or education. Prime Minister John Key said that while theGovernment would not fund the 10th day, it would be possible for the Crown toconsider some allowance for workers. Business New Zealand spokesperson on
employment relations policy, Paul Mackay, said employers were flexible about how adeal was reached, but the bottom line had to be reduced costs for the employer.
The Southland Times and the Dominion Post reported that provincial airports might
be forced to shut down for 30 minutes a day to allow air traffic controllers a meal
break under new workplace laws. The Airways Corporation said Invercargill,
Gisborne and New Plymouth airports, which all operate single-staff control towers,
might have to close between scheduled passenger flights as a last resort to meetchanges made under the Employment Relations (Breaks and Infant Feeding)Amendment Act, passed in September 2008. Workplaces must provide two 10minute rests and one half- hour meal break during each eight- hour shift. Workers andtheir employers must agree on times for breaks or if unable to agree the breaks must
be taken at specific times. Corporation air navigation services group manager David
Rollo said the state-owned enterprise, responsible for air traffic control, was working
with the Airline Pilots Association, which represents controllers, to agree how the law
should be implemented. Although the controllers already had regular breaks, thesewere not formalised in one-person towers and there was concern about the impact ofthe meal provisions. Through her spokesman, Labour Minister Kate Wilkinson
commented that there was flexibility in the Act, and the Government would monitor
its application to ensure common sense was applied.
Elsewhere the Nelson Mail reported on a planned rally being organised by the Service
and Food Workers Union to be held in Nelson to show support for workers who arefacing the prospect of losing their job, and to warn employers not to use the economiccrisis as an excuse to cut wages, conditions and jobs. The planned rally was in thewake of news that Nelson employers Sealord and Nelson Pine Industries wereplanning to shed 240 jobs.
The announcement of a review of the Holidays Act generated additional media
coverage. The Manawatu Standard reported that the Government plan to allow
workers to trade their fourth week of annual leave for cash had trade unions and theLabour Party “in a lather”. Prime Minister John Key said any decision would have to
be made in agreement with employers and would not be feasible for everyorganisation but Opposition leader Phil Goff and union leaders claimed that workers
will be pressured into making the swap by their employer or for financial reasons. It
was also claimed that the proposed law change would undermine people's work/lifebalance, emphasising the importance for working parents to have quality time with
their children.

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New Zealand Journal of Employment Relations 34(2):117-127
Fresh concerns were raised when it was revealed that the review would consider
extending provisions allowing employers and employees to agree to transfer any or allof the 11 statutory holidays to normal working days. Current provisions are limited toworkers on overnight shifts which cross from a normal working day to a public
holiday. Minister of Labour Kate Wilkinson said she wanted the review to explore
whether the provision should be extended to other workers, such as those who wanted
to observe religious festivals other than Christmas and Easter. Council of Trade
Unions president Helen Kelly said the fact that the matter would be reviewed
indicated that changing the law was on the Government's agenda. She added that there
were concerns that widening the scope for transfers would lead to employers whowanted staff to work on public holidays pressuring them to transfer the statutory
requirements to another day when they did not want them to work.
The Sunday Star Times reported that a “stoush” had broken out on the popular TV
drama Outrageous Fortune following attempts by the actors' union to get a better deal
for cast members. The chief executive of South Pacific Pictures the television
production company that made the show accused Actor’s Equity of trying to muscle
in on negotiations. The union attempted to meet the show's producers, to negotiate
standard, unionised contracts for the cast. The company refused to meet the union,
because it had no status in negotiations and all cast members had signed contracts
appointing agents to represent them. The article claimed that the actors were runningso scared that they “gagged” the union from speaking to the media about the issue.
The NZ Herald reported that Air New Zealand had begun recruiting flight attendants
in bid to keep flights operating when it’s Trans Tasman and Pacific Islands cabincrews go on strike. Large advertisements in weekend newspapers sought flightattendants on the routes where 250 existing staff had given notice of a four-day strikeover the Easter break. The Engineering, Printing and Manufacturing Union,
representing the striking workers threatened to seek a court injunction if it did not get
assurances that the new staff would not be used as strike breakers. Union secretary
Andrew Little said the action appeared to be illegal under section 97 of the
Employment Relations Act 2000, which bans recruitment of strike-breakers except for
health or safety reasons.
The Dominion Post reported that a claim of age discrimination by Air New Zealandagainst a senior pilot because he turned 60 was heard in the Supreme Court. The 747
pilot with an added role of flight instructor was demoted to first officer because being
aged under 60 was a requirement of his job. The pilot was appealing against a Courtof Appeal decision that said age discrimination was not the reason he lost rank andwas shifted to a lower paying job. His lawyer told the Supreme Court that there
should be no exception for Air New Zealand under age discrimination law and thatthe pilot was discriminated against through his demotion and subjected to detriment.
The pilot had wanted to reach an agreement with Air New Zealand in which he could
do other jobs in line with being a flight instructor, but that had not happened. The
court reserved its decision.
The theme of recession and cutbacks continued with an article in the Dominion Post
warning that employers looking to cut staff pay and benefits in order to improve theirbottom line would come out of the recession worse off. However, employers who
continued to invest in and value key employees would continue to be rewarded for121New Zealand Journal of Employment Relations 34(2):117-127
their investment and be positioned to make the most of the inevitable recovery. The
article said that short term employers would use the times to take advantage of staff,
by increasing demands and / or reducing benefits. This would leave them without
their desired staff when times became good as these people would have longmemories about the way they were treated and would probably leave.
Another article in the Dominion Post warned that redundancies may be bad for
employees, but they can also be terrible for the organisation. The article quoted Kevin
Wheeler, founder of The Future of Talent Institute saying that getting rid of staff isthe ‘atomic bomb’ of choices available to an organisation during a downturn. Wheeler
claimed that redundancies can result in a loss of institutional knowledge, shredded
staff morale and affect corporate productivity, both in the short and long term. He alsosuggests corporate HR practitioners should apply the environmental mantra of “retrain, re-use, recycle and refresh” to the workforce. The advantage for an organisationin retaining most of its staff is that over a period of time the organisation ends up witha more agile workforce. He quoted examples of his favourite firms such as IBM who
try to maintain their workforce during difficult times. IBM had a core workforce thatthey maintain pretty rigorously and they tend to lay off or let go only thosecontractors they use to fill those peak demand times. He said that Toyota had alsodone a very good job of right-sizing the workforce, and they had a policy of when
you're not making cars, you're being trained. The article concluded that one of thebiggest challenges is smoothing out the peaks and troughs in the job market, and in
the supply of the talent that is available.

April 2009
The NZ Herald reported that migrant workers, advocates and union representatives
were due to meet to discuss a response to the Government's plan to cut the number of
migrant work permits. Meeting organiser Dennis Maga was quoted as saying that
migrant workers on temporary permits were “worried sick” about their futures, andwanted to know if the unions would act to protect their rights during the recession. He
claimed that politicians’ calls for migrant workers to be laid off first, revocation of
temporary visas by Immigration NZ not only contravened the Employment Relations
Act, but also the Human Rights Act. The meeting came at a time when the economic
downturn raised the issue of migrant workers on temporary permits. Immigration NZ
investigated a case where 28 New Plymouth workers were made redundant in October
2008, while Filipino welders kept their jobs and had their temporary permits renewed.
Immigration Minister Jonathan Coleman said that he expected the Department ofLabour to ensure that fewer migrants entered New Zealand on temporary permits
during the recession. Mr Coleman said there would not be new temporary migrants
coming in as no new permits would be issued, and temporary permit holders would
not have their permits renewed. A record 188,000 temporary work applications wereapproved in the 2007-2008 year, an increase of 13 per cent from the year before.
The Press reported that four Air New Zealand crew members refused to take off
novelty wigs which led to the grounding of a Christchurch-Sydney flight andstranding about 60 passengers overnight. The airline last night suspended the four inwhat the Engineering, Printing and Manufacturing Union (EPMU) said was a move to‘up the ante’ in their industrial dispute. The passengers had cleared Customs and122

New Zealand Journal of Employment Relations 34(2):117-127
were waiting in the departure lounge when they were told of a delay. Ten minutes
later they were told their flight was cancelled because some cabin crew were
inappropriately dressed. EPMU national secretary Andrew Little said the staff
involved refused to remove their wigs, and that was what caused them to besuspended. Little said he was mystified why Air New Zealand had suddenly
suspended the crew as the non compliance protest had been running for several days.
The union withdrew a notice that members intended to strike over Easter, but two
non-compliance notices which included not to work on standby and not to wear
company uniform remained in place.
The Southland Times reported that employees of Clifton Wool Scourers were
threatening to picket the plant after it closed until they receive what they saw was afair redundancy package. The plant, which has about 40 employees, was to close on
16 April. Meat Workers Union regional secretary Gary Davis said the plant’s 30
union members would get two weeks' pay for the first year's service plus a week's pay
for every five years' service thereafter. The deal was what the union negotiated within 2006 but was signed on the understanding there would be no redundancies at theplant in coming years. An employee said that some of the Clifton workers had otherjobs to go to in Southland when the plant closed but most did not.
The NZ Herald reported that lecturers at the Manukau Institute of Technology (MIT)were planning ‘short sharp lightning strikes’ in protest at their workloads. The
lecturers claimed their workloads had been increased, and they gave notice ofindustrial action. Tertiary Education Union organiser Chan Dixon said no decision
had been made on what days and times the strikes would happen, but they were likely
to last about a fortnight. She said MIT had among the highest workloads of any
polytechnics. The level had become unrealistic after administrative staff were maderedundant last year an increase in student numbers because of the economic climate.
The Dominion Post reported that Wellington property tycoons the Chow brothers
were ordered to pay a former hotel manager more than $100,000 after a long-running
employment dispute. The Employment Court found that James Jesudhass was unfairly
dismissed while in mediation over his job at the Just Hotel four years previously. In a
written decision, the court found John Chow had asked Mr Jesudhass to train his sisterto be the assistant general manager, despite her having no hotel experience. Mr
Jesudhass became concerned at Ms Chow's management style, which he said wascausing stress. The Chows hired migrant workers who could not speak English, andstudents without work permits, the decision said. In April 2005, Mr Jesudhass wastold that Sarah Dickens, Mr Chow's personal assistant, was sitting in reception andseemed to be monitoring staff. He told her she should have spoken to him first. Soon
after, Mr Jesudhass and the Chows went into mediation and he was suspended byJohn Chow on May 5, 2005 and told to leave the hotel immediately. He wasdismissed two weeks later, with Mr Chow citing unsatisfactory performance, failingto follow requests and refusal to attend meetings. Judge Barrie Travis found thedefendant, Just Hotel Ltd, had failed to show it had been a fair and reasonable
employer. Judge Travis stated that “…the defendant's actions were both procedurally
unfair and substantively unjustified”. He awarded Mr Jesudhass $119,237, including$68,000 in lost wages, $20,000 for loss of a car and $10,000 for distress.

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New Zealand Journal of Employment Relations 34(2):117-127
Another employment dispute which gained high profile concerned the well known
climate scientist Dr Jim Salinger who was dismissed by the National Institute of
Water and Atmospheric Research (NIWA) for ‘serious misconduct’ for talking to thenews media without permission. In a Dominion Post article Dr Salinger said he
intended to take legal action for what he called unjustified dismissal saying that hewas not being “…dismissed for my science – that can't be faulted – I've been
essentially sacked for not following protocol”. The Press reported later in the monththat Dr Salinger had taken a second personal grievance against NIWA over the way
he was dealt with when he was still an employee. The issue became politicised withLabour and Green politicians claiming that the dismissal had unnerved scientists who
were thinking twice about whether they could talk about their research. Research,
Science and Technology Minister Wayne Mapp was reported as saying that theexisting practices of Crown Research Institutes allowing scientists to speak out would
continue.
The Dominion Post reported a senior lecturer claiming of a “culture of bullying” bysome members of management at Victoria University's faculty of education. Dr
Joanna Kidman said some staff had sought medical treatment as a result. Colleagues
also spoke of students being bullied, and feared they could end up using similar
tactics in school classrooms after completing the course. The University
acknowledged the faculty had been through a difficult period since it announced in
December 2008 that 18 jobs would be disestablished but Human Resources Director,
Annemarie de Castro rejected the bullying allegations.
A study by health insurer Southern Cross reported in the Dominion Post found thatsick workers are costing employers more than $2 billion a year. The study found thatthe biggest cost associated with workers taking sick leave was not the time off work,
but the lost productivity of staff who turned up to work while sick. The average time
off work from illness was 4.2 days a year, while the average number of days on which
staff were at work and too sick to be productive was 11.1 days. The study reasoned
that if a sick employee was half as productive as they normally would be, the cost to
employers for a staff member on the average wage would be around $900. Thatcompared with an annual sick days cost of about $700 per employee. For mostbusinesses, staff illness was an invisible cost compared with the expense of offering
preventive health benefits, such as flu vaccinations or health insurance.
A Wellington supermarket’s English-only policy was labelled a disgrace by a leading
employment lawyer, but the store's owner claimed that the matter was blown out of
proportion. It was revealed that the Thorndon New World told employees they could
receive warnings for speaking foreign languages on the job. Signs, which were taken
down after media uncovered the policy, warned that talking in other languages could
make customers and other staff ‘feel uncomfortable’. Owner Brian Drake said thesigns had been put up by a junior manager and he would have worded themdifferently. Language itself is not a prohibited ground, but employment law expert
Peter Cullen said it could create indirect discrimination against people of different
national origins. Mr Cullen said he would be surprised if any employers adopted sucha policy, particularly in multicultural Wellington stating that: “We're not dealing with
the Taihape general store in 1932”.

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New Zealand Journal of Employment Relations 34(2):117-127
This event was soon followed by a Dominion Post report of bus drivers working for
Wellington Bus Company Mana Coach Services were forbidden in their company
handbook from speaking languages other than English, even while in the staffroom.
Tramways union secretary Kevin O'Sullivan contacted the company in February 2009about the perceived breach of human rights law, and was told “when in Rome, one
does as the Romans do”. Mana chief executive officer Geoff Norman wrote to theunion saying ‘…the use of a language in front of others who do not understand what
is being said, we consider to be the height of bad manners’. However, the Maori
Party co-leader Tariana Turia disagreed stating that the company’s actions wereoutrageous and that it needed to realise that “…language is the cornerstone of any
culture and not giving their staff the right to express themselves to another staff
member in a language they both understand is depriving them of their identity”.
The Dominion Post also reported on a study that found that companies that tolerate areasonable amount of personal internet use have happier workers. PhD student Andrea
Polzer-Debruyne from Massey University, the author of the study which surveyed
more that 300 people about work internet habits said that “…[u]sing the internet
reduces stress for employees, giving them mini-breaks that can make them moreproductive”.

May 2009
The Nelson Mail reported on Labour MP Darien Fenton’s private members’ Bill
providing minimum notice and redundancy compensation for people who lose theirjobs. Ms Fenton stated that the Employment Relations (Statutory Minimum
Redundancy Entitlements) Amendment Bill was based on the recommendations of areport by the Public Advisory Group on Restructuring and Redundancy. She said that
there were “tens of thousands” of people who had no redundancy entitlement incollective agreements.
The Dominion Post reported that an employee had laid a complaint with the
Employment Relations Authority claiming his employer and contractor, Garry
Maxwell-Smith, had underpaid him and other grape pickers in Wairarapa and had also
failed to provide a safe workplace. The Labour Department was investigating Garry
Maxwell-Smith after Work and Income revealed 20 of its clients had been underpaid
or received no wages. Mr Maxwell-Smith, however, disagreed with the allegations,saying those workers who complained are people who “can't make it”. He continued
that only a couple of pickers were underpaid and some had refused to provide tax
details. He was quoted as saying that: “…they were “cunning little monkeys...They
know that it’s going to take roughly three months for Winz, the court system . . . andchild support to catch up with them”. He argued that the workers had either
misunderstood the contract rates he switched them to or failed to show up for work.
The Press reported on concerns from members of the Corrections Association that
prison inmates were being locked in their cells earlier and for longer under new costcutting measures. President Bevan Hanlon said the longer lockdown period had
resulted in escalating tensions, with a mini-riot breaking out at Ngawha prison in the
North Island. The association planned to file an injunction through the Employment
Relations Authority on the basis that the Department failed to consult them and had

125New Zealand Journal of Employment Relations 34(2):117-127
ignored their concerns over the roster change. He said the safety of prison officers
was a major concern, with angry prisoners now locked down for about five hours
longer under the new system.
All of the major daily papers reported on the strike by employees employed by the Air
New Zealand subsidiary airline Zeal. The NZ Herald reported that the union
representing cabin crew launched an ‘aggressive campaign’ against Air New Zealandas the four-day strike got under way. Full-page advertisements appeared in each of thecountry's major daily newspapers expressing the Engineering, Printing andManufacturing Union's view that: “Air New Zealand is ripping us off”. The
advertisements claimed a ‘corporate trick’ by Air New Zealand has meant a pay
disparity of “…thousands of dollars a year less than other cabin crew performing thesame duties”. The advertisements stated that staff had been “…threatened,
intimidated, isolated even suspended”, for standing up to the injustice. The Press
reported on a demonstration in central Christchurch where approximately 70 people
gathered waving placards, chanting and cheering for passing motorists who tooted insupport. One employee was quoted as saying that: “…[w]e wear Air New Zealand
uniform, we work on Air New Zealand aircraft and provide service for Air New
Zealand, but we are paid lots less. It is unethical. It is the same job”. Air New
Zealand responded to the strike by locking out Zeal staff and bringing in management
to cover for Zeal staff.
The Press and the Nelson Mail reported that the fate of 400 workers at Sealord's
Nelson seafood processing plant was about to be decided. Sealord Group and theService and Food Workers’ Union were heading into mediation over plans to reduce
plant costs by $1.8 million. The chief operating officer of Sealord's NZ Fish business,
Jon Safey, stated that the company would commit to the factory for three years if it
could make the savings in labour costs. Proposed cost cuts, rejected by union
members, included a 12-month wage freeze, improved productivity and lower rates
for new staff. Mr Safey said that land-based processing cost Sealord $3.5m more ayear than processing at sea. The bargaining was a continuation of company plans toimprove the viability of its Nelson plants. One processing plant lost 180 jobs inMarch when 7000 tonnes of processing was moved to a leased trawler. Nelson's
Labour list MP Maryan Street asked the company to show restraint during the
economic downturn saying that “slashing pay and conditions adds insult to injury for
the workers.”
The case of dismissed NIWA scientist Dr Jim Salinger continued to receive media
attention. The Dominion Post and the Press reported that the parties were heading formediation and that his dismissal had ‘sparked an outpouring of public sympathy for
him and a chorus of criticism of Niwa’. Dr Salinger gave details of his hopes for a
resolution and a wish to return to his job. However mediation failed and the matter
was now heading for the Employment Relations Authority.
The Bay of Plenty Times reported on a Mount Maunganui trucking company that was
fined $14,500 for telling an employee he was too big to do the job and suggesting heundergo a stomach stapling operation. The ERA awarded the money to Hastings man
Bruce Douglas following his dismissal a week into his new job for Godfrey Haulage.
Mr Douglas was given a medical examination prior to being interviewed for aposition during September 2007. The nurse found he was fit to work, but noted that he126New Zealand Journal of Employment Relations 34(2):117-127
needed to lose weight. Mr Douglas also suffered pain from a leg injury and leg ulcer.
After training for one week, Mr Douglas was in the “smoko” room when his manager
phoned him to ask how the job was going. He responded that it was different to long
haul, but he was enjoying it and all was well. His manager replied that he had aproblem and that Mr Douglas should finish up. When Mr Douglas asked why, he wastold he should consider joining a gym and hiring a personal trainer to help him lose
weight. Godfrey Haulage was ordered to pay $10,500 in lost wages and $4,000
compensation for hurt and humiliation.
The Dominion Post reported that after more than a year after Sophie Melrose waswrongfully fired for being pregnant, she had ‘not seen a single cent of the $36,000 incompensation a court ordered her employer to pay’. Ms Melrose was demoted andthen fired from her job as general manager at Auckland's Vulcan Bar in January 2008,
after telling her manager that she was pregnant. In November 2008, the Employment
Relations Authority ordered Weka Group Limited, to pay Ms Melrose $35,775 in lost
wages and emotional reparation. When contacted the director of Weka Groupconfirmed that he had not paid Ms Melrose compensation and said he was appealing
against the decision to the Employment Court. The Employment Court had no recordof an appeal being lodged and Ms Melrose said she had not heard about an appeal.
In a sign of the times the Sunday Star Times reported that a number of employers
faced with making redundancies were messing up the process, exposing themselves tothe risk of being sued by laid-off workers. The number of grievance cases taken
against employers was rising steeply. The article gave several examples including thefreight forwarding company manager who emailed staff asking them to voluntary takea day’s leave each month without pay and adding that those who complied would betreated favourably when layoffs were considered. Kensington Swan lawyers
confirmed that grievance cases taken on by lawyers had more than doubled in two
years - with most of the increase coming since mid-2008, when the recession started.
Adding to this was an ‘emerging problem’ where New Zealand companies wereincreasingly being ordered by their global head offices to cut staff and in doing so
forcing them to break the New Zealand employment law.

Erling Rasmussen & Colin Ross
Auckland University of Technology

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