Reciprocity matters : shaping the psychological contract to foster employee (behavioural) engagement in times of austerity

This study aimed to understand how employee (behavioural) engagement is fostered within LAs (local authorities) when the levers available to managers are reduced due to austerity, and how this has shaped the psychological contract in terms of the reciprocal expectations/promises between employees and their line managers. The study was conducted because following the 2007/08 global financial crisis, the UK public sector experienced major funding cuts from 2010/11 to 2017/18, resulting in staffing reductions and a dilution in the employment deal including pay freezes, reductions in benefits, terms and conditions, and a loss of the 'job for life'. Whilst there is current political (pressure) commitment to increase spending, there was no indication of reversing these cuts within the Budget 2018 which contained an indicative spending path to 2023/24 (Zaranko, 2018; Emmerson, 2019). The study was investigated qualitatively in four teams within one English LA. Team participants included line managers and either professional or non-professional employees. Methods included 29 x one-to-one and three focus group semi-structured interviews incorporating the critical incident technique using a Heideggerian phenomenological approach. The main contribution to knowledge made by this study is to extend Foa and Foa's (1974; 1976; 1980; 2012) resource theory. Whereas they say that a less particularistic resource is not expected to be substituted by a more particularistic resource, this occurred in the teams sampled. Here, once concrete and universal resources were available to a certain level (eg. pay), the difference (eg. inflationary pay rise, external training) appeared to be substituted by more particularistic resources (eg. flexibility and task i-deals). Additionally, more particularistic resources were expected such as favours ('give and take'), communication (meaningful and timely) and employee voice, and trust. By examining the new reciprocations through the lens of social exchange theory (Blau, 1964), this demonstrated how some employees may try to shape their psychological contract by negotiating alternative new low-cost reciprocations to increase their quality of working life in adverse economic conditions, and foster their engagement. This suggests that even in austerity, reciprocity matters.