DEFINING THE EMPLOYMENT RELATIONSHIP

Two types of contracts defining the employment relationship have been distinguished by Macneil (1985) and Rousseau and Wade-Benzoni (1994):

● Transactional contracts have well-described terms of exchange, which are usually expressed financially. They are of limited duration, with specified performance requirements. 

● Relational contracts are less well defined with more abstract terms and refer to an open-ended membership of the organization. Performance requirements attached to this continuing membership are incomplete or ambiguous.

However, the employment relationships can also be expressed in terms of a psychological contract, which, according to Guzzo and Noonan (1994), has both transactional and relational qualities. The concept of a psychological contract expresses the view that at its most basic level the employment relationship consists of a unique combination of beliefs held by an individual and his or her employer about what they expect of one another. This concept is discussed in more detail in Chapter 16.

SIGNIFICANCE OF THE EMPLOYMENT RELATIONSHIP CONCEPT

The concept of the employment relationship is significant to HR specialists because it governs much of what organizations need to be aware of in developing and applying HR processes, policies and procedures. These need to be considered in terms of what they will or will not contribute to furthering a productive and rewarding employment relationship between all the parties concerned.