Page 183 - IMDR JOURNAL 2023-24

IMDR’s Journal of Management Development & Research 2023-24

organization. For employees with a transactional orientation, the company is simply a place to work. They
invest little emotional attachment or commitment to the organization, primarily seeking immediate rewards

like pay and qualifications (Millward & Hopkins, 1998). Studies by Miles and Snow (1980) and Rousseau
(1990) highlight the specific nature of transactional contracts. They involve clear, quantifiable exchanges (e.g.,

pay for attendance) over a defined timeframe, often seen in temporary employment or recruitment by

companies focused on "buying" talent. The term "transactional psychological contracts" gained prominence
in response to the growing emphasis on labour market flexibility and economic restructuring. These contracts

reflect an understanding that employees may not expect long-term, "relational" commitments based on loyalty
and job security. Instead, they view their employment as a transaction, offering their time and skills in

exchange for high wages and training (Cullinane & Dundon, 2006).

Relational/ Traditional Contracts

Traditional contracts are often seen as rigid and focused solely on economic exchanges. However, relational

contracts are broader and more flexible, encompassing personal, social, emotional, and value-based elements.
These contracts exist over time and are based on trust and mutual understanding. Williamson's research

highlights the increasing importance of relationships and obligations in economics and organizations. Guest
argues that workplaces are becoming fragmented, leading to quicker abandonment of promises and deals due

to market pressures. The decrease of collective bargaining and the development of individualistic attitudes

have increased the importance of informal workplace arrangements. As a result, traditional employment
relations literature may fail to adequately reflect current workplace dynamics.

Transitional Contract

Transitional contracts, as the name implies, are temporary arrangements between two parties in a working

relationship. Unlike traditional employment agreements, they lack guarantees or commitments about future
employment. This temporary status reflects a period of change within the organization, where the original

employment arrangement no longer aligns with current circumstances. According to Aggarwal & Bhargava

(2009), these contracts aren't psychological contracts themselves, but rather a way to acknowledge the impact
of organizational shifts on the employment relationship. They act as a cognitive bridge between the past,

defined by a specific agreement, and the uncertain future, where new arrangements might be negotiated.

Rousseau (2000) further emphasizes this point by stating that transitional contracts are a consequence of
organizational change, highlighting how they arise when existing agreements no longer fit the evolving

situation. In essence, transitional contracts provide a temporary framework for navigating a period of
uncertainty. While they offer no guarantees about long-term employment, they can help manage expectations

and ensure a smoother transition for both parties during organizational changes.

Balanced Contract
175