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“Oops, I Did It” or “It Wasn’t Me:” An Examination of Psychological Contract Breach Repair Tactics

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Abstract

This study investigated ways an organization might mitigate the negative effects of psychological contract breach. Drawing on the trust repair literature and organizational justice theory, we examined six general repair tactics (i.e., full penance, partial penance, denials, apologies, excuses, and combined apology/excuse) in terms of whether they improve trust and diminish the negative emotions following a breach. Data were obtained via two experimental studies employing 918 participants, including both college students and working adults. All of the repair tactics were effective at enhancing trust and easing negative emotions, except for denying that the breach occurred. Full penance (i.e., offering full reparation) was the most effective, with the next best option depending upon what outcome was being addressed and the population studied. The type of contract and magnitude of breach did not play a significant role in the effectiveness of repair tactics. The results of this study show that companies can do something to “fix” breaches. We extend the trust repair research to the context of breach and show that the effectiveness of repair tactics differs across outcomes. Practically, based upon our results, we advise companies to use these repair tactics (except denial) when breaches occur. This study is the first to empirically examine how companies might address breaches to avoid their negative consequences. It is also among only a few studies on trust repair to include emotions, initial trust, more than three repair tactics, and a sample of working adults.

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Authors and Affiliations

  1. University of St. Thomas, 2115 Summit Avenue, MCH 316, St. Paul, MN, 55105, USA

    Kevin E. Henderson & Elizabeth T. Welsh

  2. University of Arkansas, 301 Business Building, Sam M. Walton College of Business, Fayetteville, AR, 72701, USA

    Anne M. O’Leary-Kelly

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  1. Kevin E. Henderson
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Correspondence to Kevin E. Henderson.

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Appendix

Appendix

Study 1. Manipulations

Psychological Contract Type (Two Conditions)

Transactional—You are an assistant manager that works for a large Fortune 500 company. You have been with the company for a couple of years and have enjoyed your time there so far. You have a formal employment contract that renews every year, which provides details regarding what each party owes the other (i.e., job duties, salary). You like the pay and benefits the company has provided to you as a result of your good performance and plan on remaining with the company as long as the relationship continues to be beneficial.

Relational—You are an assistant manager that works for a large Fortune 500 company. You have been with the company for a couple of years and have enjoyed your time there so far. You do not have a formal employment contract with the company because what each party owes the other (i.e., job duties, salary) is both more subjective and fluid than what you would normally see in such contracts. The company has provided you with a variety of training and development opportunities, including helping you pay to get an MBA part-time. You feel a sense of loyalty to the company due to the support it has provided and hope that you can continue working for the company in the years to come.

Magnitude of Breach (Three Conditions)

Minor—You recently found out that your raise will be lower than what you thought the company said it was going to give you during your last performance appraisal. More specifically, rather than giving you a 5% raise, the company will now only be increasing your pay by 3%.

Major (Salary)—You recently found out that your raise will be lower than what you thought the company said it was going to give you during your last performance appraisal. More specifically, rather than giving you a 5% raise, the company will now only be increasing your pay by 1%.

Major (Promotion)—You recently found out you were not going to receive a promotion, even though you thought the company said it was going to give you one during your last performance appraisal.

Repair Tactic (Six Conditions)

Wording was adjusted depending on magnitude of breach (e.g., “we wanted to give you a promotion…we are simply unable to promote anyone at this point in time” for major promotion breach and “we will make sure that your future paychecks reflect a raise of 5%, rather than 1%” for major salary breach).

Apology—Soon after you found out about this decision, the company’s HR representative met with you and stated the following: “We messed up. We are very sorry for this situation and assure you that a similar mistake will not occur in the future.”

Denial—Soon after you found out about this decision, the company’s HR representative met with you and stated the following: “We never said that we would give you a 5% raise. You must have misunderstood what we said. The raise you received was exactly what we had promised to you.”

Excuse—Soon after you found out about this decision, the company’s HR representative met with you and stated the following: “We wanted to give you a 5% raise; however, due to the still sluggish economy, we are simply unable to offer raises that high at this point in time.”

Full penance—Soon after you found out about this decision, the company’s HR representative met with you and stated the following: “We will fix this mistake. We will make sure that your future paychecks reflect the raise of 5% we had promised to you.”

Partial penance—Soon after you found out about this decision, the company’s HR representative met with you and stated the following: “Although we won’t be able to offer you the full 5%, we will be able to give you a higher raise than we originally anticipated. More specifically, we will make sure that your future paychecks reflect a raise of 4%, rather than 3%.”

Combination—Soon after you found out about this decision, the company’s HR representative met with you and stated the following: “We messed up and are very sorry for this situation. We wanted to give you a 5% raise; however, due to the still sluggish economy, we were simply unable to offer raises that high at this point in time. We assure you that a similar mistake will not occur in the future.”

Study 2. Manipulations

Introduction to the Survey

Thank you for agreeing to participate in this study! Today, you will be asked to answer several questions about your attitudes towards your current employer. After doing this, you will then pretend that your company broke an employment-related promise. You will then answer questions about your reactions to the broken promise, your company’s attempt to fix the situation, and yourself (i.e., age, gender, personality).

Before completing current work attitude questions—think about your relationship with your current employer. Please answer the questions below with this company in mind.

Magnitude of Breach (Two Conditions)

Minor—You recently found out that your raise will be lower than what you thought the company said it was going to give you during your last performance appraisal. More specifically, rather than giving you a 5% raise, the company will now only be increasing your pay by 3%.

Major (Salary)—You recently found out that your raise will be lower than what you thought the company said it was going to give you during your last performance appraisal. More specifically, rather than giving you a 5% raise, the company will now only be increasing your pay by 1%.

Repair Tactic (Eight Conditions)

The six tactics used in study 1 were also used in study 2.

Again, wording was adjusted depending on magnitude of breach.

Partial penance with raise—Same as partial penance in study 1.

Partial penance with bonus—Soon after you found out about this decision, the company’s HR representative meets with you and says the following: “Although we won’t be able to offer you a 5% raise, we will be able to give you a bonus. More specifically, we will give you the equivalent of a 1% bonus, which is in addition to your 3% raise.”

Partial penance with vacation days—Soon after you found out about this decision, the company’s HR representative meets with you and says the following: “Although we won’t be able to offer you a 5% raise, we will be able to give you some days off. More specifically, we will give you a full week of vacation for the coming year, which is in addition to your 3% raise.

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Henderson, K., Welsh, E. & O’Leary-Kelly, A. “Oops, I Did It” or “It Wasn’t Me:” An Examination of Psychological Contract Breach Repair Tactics. J Bus Psychol 35, 347–362 (2020). https://doi.org/10.1007/s10869-019-09624-z

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