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Journal of Organizational Behavior

J. Organiz. Behav. 23, 469–488 (2002) Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/job.151

Promise breaking during radical organizational change: do justice interventions make a difference?

JILL KICKUL 1 *, SCOTT W. LESTER

2 AND JONATHON FINKL

1 DePaul University, Department of Management, U.S.A.

2 University of Wisconsin — Eau Claire, Department of Management and Marketing, U.S.A.

Summary Previous research examining the relationship between organizational justice perceptions and reactions to psychological contract breach has not considered how the type of outcome being breached may influence the effects that procedural and interactional justice have in determin- ing employee responses. By delineating between intrinsic (e.g., autonomy) and extrinsic (e.g., pay) contract breaches, this study attempts to clarify the differential roles of procedural and interactional justice. As expected, results revealed that procedural justice has a significant effect on responses to breaches of extrinsic outcomes while interactional justice significantly affects employee responses to breaches of intrinsic outcomes. Specifically, significant two- way interactions between extrinsic contract breach and procedural justice showed that job satisfaction, in-role job performance, and organizational citizenship behavior were lower and intentions to leave were higher when procedural justice was perceived to be low following an extrinsic contract breach. Furthermore, significant two-way interactions between intrinsic contract breach and interactional justice revealed that job satisfaction, in-role job perfor- mance, and organizational citizenship behavior directed toward other individuals were lower and intentions to leave were higher when interactional justice was perceived to be low follow- ing an intrinsic contract breach. Implications of the differential roles of procedural and inter- actional justice are discussed. Copyright # 2002 John Wiley & Sons, Ltd.

Introduction

With corporate strategies that emphasize new market penetration, mergers and acquisitions, mass

customization, and e-commerce technology and process improvements, the ‘new age’ employment

roles and responsibilities have blossomed from a specific and defined job into a wide variety of posi-

tions and duties (Drucker, 1997; Morgan & Smith, 1996; Noe, Hollenbeck, Gerhart, & Wright, 2000;

Smith, 2001). The current business environment has had a substantial impact on employees’ work

expectations, demands and obligations (Bauman, Jackson, & Lawrence, 1997; Drucker, 1997; Lawler

* Correspondence to: Jill Kickul, DePaul University, Department of Management, 1 East Jackson Boulevard, Chicago, Illinois 60604, U.S.A. E-mail: [email protected]

& Finegold, 2000). In order to meet many of their financial and operating goals and objectives, busi-

nesses are increasingly pressured to make rapid changes to their workforce as the trends toward

restructuring and downsizing continue to be an integral part of the economic and employment land-

scape that characterizes the ‘brave new workplace’ (Hitt, 1998; Noer, 1993). In some instances, staff

reductions created through restructuring and downsizing have resulted in ‘lean and mean’ organiza-

tions, which will likely lead to increased work expectations and longer working hours on the part of the

surviving employees (Moskal, 1992). Within this dynamic environment, researchers and practitioners

have attempted to uncover job and organizational factors that contribute to key employee attitudes and

performance behaviors as organizations try to manage these radical change processes.

Previous research has demonstrated the negative consequences of a poorly implemented downsizing

effort. Negative effects can range from financial losses to reductions in employee morale and satisfac-

tion to increased absenteeism and turnover (e.g., Worrell, Davidson, & Sharma, 1991; Mishra &

Spreitzer, 1998; De Meuse & Tornow, 1990). Although companies are very cognizant of the detrimen-

tal impact of layoffs on those who are losing their jobs, companies often forget about the struggles of

those who remain with the organization. Noer (1993) labels these struggles ‘layoff survivor sickness’

and identifies the debilitating symptoms that may accompany this sickness (e.g., anger, guilt, fatigue,

stress, anxiety, and fear). Noer (1993) recognizes that a major reason for the long-term suffering of

layoff survivors is that they feel violated by changes in the psychological contract. Many employees

have grown tired of what they have perceived as inequities in their relationship with their employer.

Rudy Oswald, chief economist for the AFL-CIO aptly describes why employees could have adverse

reactions to the radical changes occurring in the workplace as we enter a new age of business opera-

tions: ‘Workers have a right to be upset and angry. They have been bought and sold and have seen their

friends and relations fired and laid off in large numbers. There is little bond between employers and

workers anymore’ (Noe et al., 2000, p. 52).

The employee–employer relationship in the ‘old’ economy was characterized by long-term commit-

ments where growth and compensation came from expanding domestic markets (Kochan, 2001). The

‘old’ psychological contract promoted lifetime employment and loyalty between employee and

employer. The brave new workplace is heavily influenced by global economies and heavy international

competition. This globalization has rendered regional labour expendable and interchangeable (Smith,

2001). Where employees in the past could rely on their employer to provide stability, the ‘new’ econ-

omy offers very little certainty in regards to job stability, loyalty, and trust (Kochan, 2001). The ‘new’

psychological contract emphasizes the need for a short-term orientation in the employment

relationship (e.g., Jaffe & Scott, 1998; Rogers, 2000).

Many current business trends suggest that radical changes and perceptions of injustice (e.g., psycho-

logical contract breach) will be a prominent feature within the brave new workplace. For example,

budgetary constraints are forcing organizations to expect equal, or in many cases higher, output from

a smaller workforce. These expectations necessitate longer working hours for employees (Hochschild,

1997). Longer hours are likely to produce perceptions of injustice since many employees are placing a

premium on achieving more balance between work and family life (Lawler & Finegold, 2000).

Increased competitive pressures and rising health care costs have also forced employers to rely more

on the contingent workforce (Rogers, 2000). The use of limited contracts and temporary workers

allows organizations to keep up with demand without the added expense of employee benefits.

However, this reluctance to pay employee benefits may also create feelings of perceived injustice.

In general, the psychological contract refers to employees’ beliefs about the mutual obligations

between the employee and his/her organization (Rousseau, 1989, 1998). These beliefs are based on

the perception that employer promises have been made (e.g., competitive wages, promotional oppor-

tunities, job training) in exchange for certain employee obligations such as giving of their energy, time,

and technical skills (Rousseau & Tijoriwala, 1998).

470 J. KICKUL ET AL.

Most of the empirical research on the psychological contract has investigated employees’ reactions

to unfulfilled organizational promises (i.e., contract breach; Robinson, 1996; Robinson, Kraatz, &

Rousseau, 1994; Robinson & Rousseau, 1994). However, researchers (Morrison & Robinson, 1997;

Rousseau, 1995) have recently noted that the strength of the emotional and behavioral reactions that

follow a contract breach may be moderated by how an individual cognitively assesses the organiza-

tional context that surrounds the breach. Part of this cognitive assessment involves an interpretation of

how fairly the individual was treated by the organization (Morrison & Robinson, 1997; Rousseau,

1995). In situations where an individual can distinguish unfair procedures and treatment (i.e., low

levels procedural and interactional justice) that occurred along with the breach of the psychological

contract, more intense feelings of anger and frustration may result (Morrison & Robinson, 1997).

The first objective of this study is to examine how contract breach interacts with both procedural and

interactional justice to determine attitudes and reactions to changes that occur within the employee–

employer relationship. Although a few researchers have begun to investigate these relationships, more

research is needed to identify and clarify how different types of unfairness perceptions contribute to

the attitudinal and behavioral effects of contract breach. The effects of negative employee attitudes and

behaviors may have an impact on organizational effectiveness and efficiency. An employee’s attitude

and behavioral intentions, including job satisfaction and intentions to leave, may hinder how well the

employee feels and reacts while performing required duties and job responsibilities, as well as his/her

willingness to engage in extra-role behaviors for his/her work group, department, and organization

(Organ, 1988). In their model of the development of psychological contract violation, Morrison and

Robinson (1997) predict an interaction effect between psychological contract breach and perceptions

of fairness. That is, feelings of violation (negative employee attitudes) will be influenced by judgments

concerning the outcomes (a breach of contract has occurred), the procedures implemented (procedural

justice), and the quality of the interpersonal treatment received from the organization (interactional

justice).

Although many researchers (e.g., Bies & Shapiro, 1988; Gilliland, 1993; Greenberg, 1990;

Moorman, 1991; Tyler & Bies, 1990) have advocated making a conceptual distinction between the

structural and interpersonal aspects of procedural justice, more research needs to be conducted to clar-

ify how these types of justice perceptions may differentially influence subsequent employee attitudes

and behaviors (Folger & Cropanzano, 1998; Niehoff & Moorman, 1993; Moorman, 1991; Skarlicki &

Folger, 1997; Williams, 1999). Additionally, in her review of the procedural justice literature published

since 1990, Konovsky (2000) contends that it is important to distinguish and test the structural and

interpersonal aspects of procedural justice. In separating the procedural and interpersonal components

of justice, this study will be able to determine how both types of justice interact with psychological

contract breach to affect job satisfaction, in-role job performance, organizational citizenship behavior,

and intentions to leave the organization.

The second study objective is to examine whether interactional justice assumes a more prominent

role than procedural justice in determining employee reactions to contract breach when intrinsic con-

tract components (that relate to the nature of the job itself; e.g., challenging work, autonomy) are per-

ceived to be violated. Most researchers agree that the psychological contract is multidimensional

(e.g., Robinson, 1996; Rousseau, 1995), yet it’s components are discussed in a variety of ways. At

the broadest level, researchers highlight the distinction between transactional and relational obliga-

tions (Morrison & Robinson, 1997; Rousseau, 1990; MacNeil, 1985). However, recent research on

the psychological contract has identified as many as seven separate contract dimensions (Rousseau,

1998; Robinson, 1996). The common thread that appears across these different conceptualizations

is that some psychological contract components focus on intrinsic outcomes while other components

focus on extrinsic outcomes (that relate to the consequences of completing the job; e.g., pay, rewards)

(Kickul & Lester, 2001). Employees may focus most of their attention on formal procedures when

CONTRACT BREACH AND PROCEDURAL JUSTICE 471

certain tangible outcomes have been adversely affected while raising their level of focus on the inter-

personal treatment they receive when other personal outcomes have been negatively impacted. The

answer to this research question may have implications for how organizations manage perceived

psychological contract breach.

When employers break their promises: contract breach and organizational justice

Studies have shown that the strongest reactions to organizational injustice occur when an individual

perceives unfair outcomes (distributive injustice) and/or unfair procedures and treatment (for a review,

see Brockner & Wiesenfeld, 1996). Distributive justice deals with the allocation of rewards or resources

to individuals (Homans, 1961). Psychological contract breach can be seen as a form of distributive

injustice where actual or implied promises have not been fulfilled (Morrison & Robinson, 1997;

Rousseau, 1995). In other words, contract breach is based on the employee’s perception that he/she

was treated unfairly because they did not receive the outcome(s) he/she deserved or was promised.

Several theories discuss how forms of justice (distributive, procedural, and interactional) predict

employee emotions and reactions (e.g., Lind & Tyler, 1988; Rutte & Messick, 1995; Thibaut &

Walker, 1975). One of the first notable explanations to focus on the role of procedural justice was

offered by Thibaut and Walker (1975) through their self-interest model (also known as the instrumen-

tal hypothesis). This model suggests that individuals want to seek control of the decision-making

process because they are interested in maximizing the tangible or material outcomes that they receive

in an exchange relationship. In this model, individuals engage in the rules or procedures set forth by the

group or organization based on the belief that these rules will promote equitable behavior and assist

them in achieving personal gain. Thus, procedures are seen as instruments that allow individuals to

receive positive rewards and benefits (e.g., organizational promises) in the long term through social

interaction.

However, one of the criticisms of the self-interest model is its inability to explain the non-

instrumental effects of procedural justice. Tyler (1988) found that judgments of procedural justice

were strongly influenced by concerns of how individuals were treated in the implementation of the

procedures. Bies and his colleagues (Bies & Moag, 1986; Bies, Shapiro, & Cummings, 1988) also

found that showing respect for individuals and following social norms of politeness are part of an indi-

vidual’s interpretation of procedural justice. This second form of procedural justice, dealing with how

an individual was treated during the enactment of procedures, is commonly referred to as interactional

justice (Bies & Moag, 1986). This form of justice includes: (a) whether individuals believe that the

reasons underlying a resource allocation decision were clearly and adequately explained to them (Bies

et al., 1988), and (b) whether those responsible for implementing a decision actually treated them with

both respect and dignity (Bies & Moag, 1986; Shapiro, Buttner, & Barry, 1995).

An explanation of why interpersonal treatment influences procedural justice judgments can be found

in group-value theory (Lind & Tyler, 1988). According to this theory, individuals value their associa-

tions and relationships with people, groups, and organizations. When there is a perception of fair treat-

ment, employees may feel that they have a respected and dignified position within the group or

organization, thereby heightening their feelings of self-worth. These feelings may be seen in their

working relationships with others where they take pride in being a group or organizational member

(Lind & Tyler, 1988; Tyler, 1994; Tyler, DeGoey, & Smith, 1996). However, the absence of fair

policies and treatment, combined with the loss of an outcome (e.g., an employment promise), may

imply that an employee is not worthy of respect and is seen as an insignificant organizational member.

The employee, in turn, may have strong feelings of anger and thereby blame the organization for being

causally responsible for not fulfilling their contract promises.

472 J. KICKUL ET AL.

Recent field experiments have started to take a preliminary look at the moderating role of procedural

and interactional justice between employment outcomes and employee attitudes and behavior (e.g.,

Brockner et al., 1994; Schaubroeck, May, & Brown, 1994; Skarlicki & Folger, 1997). Brockner

et al. (1994) investigated the interactive effects of fairness judgments on survivors, lame ducks (indi-

viduals who were aware that they will be laid off ), and victims of a job layoff. Instead of separately

examining procedural and interactional justice, the authors combined both the process and interperso-

nal elements of organizational fairness into their overall measure of procedural justice. They found that

when their combined measure of procedural justice was low and outcomes were negative, employees

had lower levels of organizational commitment and trust. However, Brockner and his colleagues dis-

covered that when procedural justice was high, there was little association between outcome negativity

and commitment and trust in the organization.

Schaubroeck et al. (1994) studied employee attitudes at a manufacturing plant that had implemented

a year-long pay freeze. Half of these employees participated in seminars in which they were given infor-

mation about why the pay freeze was necessary. The organization followed fair procedures by discuss-

ing and communicating the vital facts (pertaining to the pay freeze) in an understandable manner and

conveying that senior level managers had made good faith efforts to ensure that employees’ concerns

regarding such a decision were considered. All of the information and explanations helped to clarify the

actual process and procedures that management used to make their decision. Therefore, those employ-

ees who attended these seminars received both procedural fairness and positive interpersonal treatment.

The remaining employees at the manufacturing plant who did not participate in these seminars were

given no information about the pay freeze from their employer. Schaubroeck et al. (1994) then had all

participants rate the harshness of the economic hardship of the pay freeze (outcome fairness). The

authors found that when employees were treated in a fair manner, the economic hardship of the pay

freeze was not associated with organizational commitment or employees’ trust in the organization.

Employees who were not treated fairly were more likely to dwell on the negative outcome of the

pay freeze and thus had lower levels of job satisfaction and expressed greater intentions to leave

the organization.

Finally, in a study that separated both procedural and interactional justice into two distinct measures,

Skarlicki and Folger (1997) found an association between workplace justice (distributive justice, pro-

cedural justice, and interactional justice) and organizational retaliation behaviors (ORBs). Skarlicki

and Folger argued that when these forms of justice interact in a negative manner, disgruntled employ-

ees are more likely to partake in covert retaliation behaviors that can have adverse consequences on the

successful functioning of the organization. With a sample of 240 first-line employees from a manufac-

turing plant, the authors found the relationship between ORBs and outcome unfairness (i.e., perception

of the pay received) to be significant when both procedural and interactional justice were low. That

study suggested that as long as perceptions of one type of justice (interactional or procedural) are high

the organization could avoid the ORBs. However, Skarlicki and Folger argued that more research is

needed in order to determine whether these results would be found if a global assessment of distribu-

tive justice, other than pay outcomes, had been measured.

The present study responds to the call for the use of a global assessment of distributive justice by

examining perceived psychological contract breach as it pertains to a variety of psychological contract

outcomes. Specifically, this study not only examines extrinsic outcomes that pertain to the conse-

quences of completing a job (such as the pay variable used by Skarlicki and Folger (1997)), but also

examines intrinsic, psychological contract outcomes that pertain to the nature of the job itself

(e.g., autonomy and participative decision-making). This study will examine whether the roles of pro-

cedural justice and interactional justice in determining employee attitudes and behaviors are different

based on the type of outcomes (i.e., intrinsic versus extrinsic) that have been violated (i.e., perceived

psychological contract breach).

CONTRACT BREACH AND PROCEDURAL JUSTICE 473

Study hypotheses

As previously mentioned, this study provides two global assessments of employee outcomes and their

corresponding breach. One assesses intrinsic outcomes including freedom, autonomy, control, partici-

pative decision-making, opportunity for development, and support. The other assesses extrinsic out-

comes including flexible work schedules, competitive salaries, safe work environments, and rewards.

Organizations often have formal rules and procedures for determining compensation issues such as

salaries and rewards. Extrinsic outcomes are frequently more quantifiable than intrinsic outcomes and

therefore it is easier to construct formal procedures for allocating these outcomes. Because extrinsic

rewards are more tangible than intrinsic rewards (Herzberg, 1966), we propose that employees will

focus their attention on the procedures that are in place to determine how extrinsic outcomes are

distributed when these psychological contract obligations are breached.

Clear-cut guidelines for the distribution of intangible rewards are more difficult to construct.

Consequently, employees are likely to receive more intrinsic outcomes as their relationship with the

employer, and specifically their supervisor, grows over time (Rousseau, 1995; Schein, 1985). When

employees feel like the organization is putting its people first, they are likely to have higher levels

of trust in the organization (Pfeffer, 1998). The difficulties that are frequently associated with down-

sizing and other types of radical change are often a result of employees’ perceptions that they are now

being viewed as costs rather than assets and can no longer trust the organization (e.g., Noer, 1993).

When intrinsic components of the psychological contract are breached, we expect that employees will

be more concerned about the interpersonal aspects of justice (i.e., interactional justice) because the

intrinsic outcomes being breached may have been closely tied to interpersonal relationships that

had been built during their organizational tenure. Thus, we propose the following:

Hypothesis 1: Procedural justice will moderate the relationship between psychological contract

breach of extrinsic outcomes and job satisfaction, intentions to leave the organization, in-role

performance, and organizational citizenship behavior such that job satisfaction, in-role job perfor-

mance, and organizational citizenship behavior will be lower and intentions to leave will be higher

when procedural justice is perceived to be low.

Hypothesis 2: Interactional justice will moderate the relationship between psychological contract

breach of intrinsic outcomes and job satisfaction, intentions to leave the organization, in-role

performance, and organizational citizenship behavior such that job satisfaction, in-role job perfor-

mance, and organizational citizenship behavior will be lower and intentions to leave will be higher

when interactional justice is perceived to be low.

Organizational Context

Time frame When the data were collected in winter of 2001, many US firms were struggling to meet many of

their financial and operating goals and objectives. After experiencing a strong economy for most of

the previous decade, firms were encountering an economic slowdown and feeling pressure to make

rapid changes to their workforce and their general operations. These changes likely had an impact

474 J. KICKUL ET AL.

METHOD

Participants

Participants were 246 employees enrolled in a part-time MBA (Master of Business Administration)

programme at a large, Midwestern university. These students were recruited from management courses

included within the graduate curriculum. Only those students who were currently employed full-time

by an organization were included in the study. Of the 246 participants, 49 per cent were male and

51 per cent were female. The average age was 33.43 years. The average tenure of employees within

their respective organizations was 4.22 years. Over 31 per cent of the respondents were in supervisory

positions. Participants were employed in a variety of occupational fields including: finance and bank-

ing, sales and marketing, computer science, human resources and staffing, accounting, engineering,

health care, and organizational consulting.

Because we were interested in how procedural and interactional justice influenced employee atti-

tudes and behaviors when certain elements of their contract had been breached, we utilized a sample

where there was an increased likelihood of breaches being experienced by the participants. Conse-

quently, all participants involved in the study were from organizations that had undergone a radical,

organizational change initiative (i.e., their organizations had either re-structured their business opera-

tions, and /or had merged with another organization, and/or had been acquired by another company)

within the past 12 months. We felt that this sample would be more representative of employees who

had been affected by recent transitions associated with the brave new workplace. To increase the like-

lihood that perceptions of organizational justice were a result of the recent change initiative,

participants were asked to complete the justice measures in light of how their organization conducted

itself during the change initiative.

on employees’ work expectations, demands, and obligations. While employees in previous decades

could rely on their employer to provide stable wages and other incentives, the current economic

landscape did not provide much in the way of job stability, loyalty, and trust. Consequently, respon-

dents may have perceived higher levels of psychological contract breach due to the struggling econ-

omy and increased competitive pressures.

Respondents Participants were 246 employees enrolled in a part-time MBA at a large, Midwestern university.

Students who were currently employed full-time by an organization were included in the study.

Of the 246 participants, 49 per cent were male and 51 per cent were female and the average age

was 33.43 years. The average tenure of employees within their respective organizations was 4.22

years.

All participants involved in the study were from organizations that had undergone a radical, orga-

nizational change initiative (i.e., their organizations had either re-structured their business opera-

tions, and/or implemented layoffs, and/or had merged with another organization, and/or had been

acquired by another company) within the past 12 months. We felt that this sample would be repre-

sentative of employees who had been affected by recent transitions associated with the ‘brave new

workplace.’

CONTRACT BREACH AND PROCEDURAL JUSTICE 475

Overview and procedure

We utilized a new methodology for data collection: on-line survey completion (i.e., Internet-based).

Individuals who volunteered to participate in the study directly contacted the lead author for the

secured Internet address of our survey. When they located the on-line questionnaire, they were

informed that they could submit their survey responses directly to the lead researcher. That is, when

the employees completed the on-line questionnaire, they submitted their information and responses to

a secured Internet database.

Given the growing popularity of the Internet, the use of on-line surveys has become more prevalent.

While this type of surveying may require more sophisticated programming expertise (over the tradi-

tional mail format which are paper and pencil based), the software used to develop the questionnaire

can be programmed automatically to collect summaries of the data that can be readily tabulated and

analysed (Dommeyer & Moriarty, 2000). Researchers who have compared on-line and traditional mail

respondents have concluded that there are no significant response biases between these two methods

on attitudinal data and/or demographic data (refer to Bachmann, Elfrink, & Vazzana, 1996; Mehta &

Sivadas, 1995; Tse, 1998).

All participants were told that we were conducting research to better understand the relationship that

an employee has with his or her organization. In their questionnaire, employees were asked to assess

how well their organization had fulfilled its intrinsic and extrinsic psychological contract obligations.

Participants also assessed their job satisfaction, their behavioral intentions (intentions to leave the

organization), and their performance on the job (in-role and citizenship behaviors). We purposely

asked participants to assess both in-role performance and organizational citizenship behavior

(OCB) to gain insight about the severity of the negative consequences associated with psychological

contract breach. When employees perceive injustice, they are often inclined to first withhold OCBs

(i.e., extra-role behaviors) to restore equity in the relationship (Organ, 1988). If our results show that

psychological contract breach leads to both a reduction in OCBs and in-role performance, it will sug-

gest that organizations are facing more serious consequences when breach occurs.

Measures

Psychological contract Participants were asked to indicate those obligations that the organization had promised to them. The

extrinsic and intrinsic items of the contract were adopted from Kickul and Lester (2001). Participants

were informed that organizational promises or obligations may have been communicated to them

explicitly (verbally or in writing) or implicitly (simply implied through other statements or behaviors).

After specifying the promises that their organization had made to them, respondents were asked to

indicate how well their organizations had fulfilled each of those promises. They rated each of the

marked promises using a five-point Likert scale (1 ¼ ‘not at all fulfilled’; 5 ¼ ‘very fulfilled’). Extrinsic outcomes (four items) included promises regarding competitive salaries, rewards, and flexibility in

scheduling, whereas the intrinsic promises (seven items) addressed outcomes such as employee free-

dom, participation, and increased responsibilities. All rated items were reverse coded in order to repre-

sent psychological contract breach. Cronbach’s alpha (internal consistency) for the two factors

(extrinsic and intrinsic contract outcomes) was: 0.90 and 0.89, respectively.

In order to demonstrate that the extrinsic and intrinsic contract outcomes are separate dimensions, a

confirmatory factor analysis for a two-factor model of the psychological contract was conducted on the

current study’s sample. The analyses were carried out in Lisrel 8 (Joreskog & Sorbom, 1993) using the

covariance matrix. Model parameters were estimated using the maximum likelihood method.

476 J. KICKUL ET AL.

Although the chi-square score for this model was significant, (�2(43, n ¼ 246) ¼ 78.75, p < 0.001), two incremental fit indexes, the comparative fit index (CFI) and the Tucker–Lewis index (TLI) were 0.96

and 0.95, respectively. These indexes are independent of the size of the sample and degrees of freedom

(Marsh, Balla, & McDonald, 1988). Bentler and Bonett (1980) recommended that a value of 0.90 or

higher on the CFI and TLI indicates an adequate fit of model to data. In addition, a single factor model

of justice was estimated and compared to this two-factor structure. This unidimensional model had a

chi-square score of 133.75 ( p < 0.001) with 44 degrees of freedom (CFI ¼ 0.92; TLI ¼ 0.90). The chi- square difference (Hayduk, 1987) between the unidimensional model and the two-factor model was

significant ��2(1, n ¼ 246) ¼ 55.00, p < 0.001). Therefore, from these results and comparisons, sup- port was found for extrinsic and intrinsic contract outcomes as distinct dimensions.

Procedural justice The measure for procedural justice was taken from a questionnaire developed by Niehoff and

Moorman (1993) based on the procedural elements identified by Leventhal, Karuza, and Fry

(1980). Sample items include: ‘All job decisions are applied consistently across all affected employ-

ees;’ ‘Job decisions were made by my organization in an unbiased manner.’ Individuals were asked to

indicate the extent to which they agree with these statements using a 7-point Likert scale (1 ¼ ‘strongly disagree’; 7 ¼ ‘strongly agree’). The internal consistency of this 6-item measure was 0.86.

Interactional justice Interactional justice was measured with a scale from Niehoff and Moorman (1993). Sample items

include: ‘When decisions are made about my job, the organization treats me with kindness and con-

sideration;’ ‘The organization offers adequate justification for decisions made about my job;’ ‘When

making decisions about my job, the organization offers explanations that make sense to me.’ Partici-

pants were asked to indicate the extent to which they agree with the work-related statements using a

7-point Likert scale (1 ¼ ‘strongly disagree’; 7 ¼ ‘strongly agree’). This 9-item interactional justice scale had an internal consistency of 0.93.

Job satisfaction Job satisfaction was measured with the overall job satisfaction subscale from the Michigan Organiza-

tional Assessment Questionnaire (MOAQ; Cammann, Fichman, Jenkins, & Klesh, 1975). This 3-item

subscale gives an indication of an employee’s affective response to his or her job. Participants

responded to these statements using a 7-point Likert scale (1 ¼ ‘strongly disagree’; 7 ¼ ‘strongly agree’). Cronbach’s alpha for this subscale was 0.86.

Intentions to leave the organization Intentions to leave the organization were measured using a 3-item scale from Meyer, Allen, and Smith

(1993) that assesses an employee’s tendency to continue as an employee of the organization. Partici-

pants were asked how often they think about quitting their organization, how likely it was that they

would search for a position with another organization, and how likely it was that they would leave the

organization in the next year. Responses to these three items were made on a 7-point scale

(1 ¼ ‘strongly disagree’; 7 ¼ ‘strongly agree’). Cronbach’s alpha for this scale was 0.85.

In-role job performance and citizenship behaviors Items to measure in-role performance and organizational citizenship behavior (toward the individual

(OCBI) and the organization (OCBO)) were derived from Williams and Anderson’s (1991) study.

In-role performance pertains to assigned responsibilities associated with an individual’s formal

employment contract. Organizational citizenship, on the other hand, is defined as ‘individual behavior

CONTRACT BREACH AND PROCEDURAL JUSTICE 477

that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the

aggregate promotes the effective functioning of the organization’ (Organ, 1988; p. 4). Because of its

impact on an organization’s ability to successfully function, citizenship behavior is an outcome of

interest in this study. Employees were asked to rate themselves on each of the in-role performance,

OCBI, and OCBO items using a 7-point Likert scale (1 ¼ ‘strongly disagree’; 7 ¼ ‘strongly agree’). The internal consistency reliabilities of these three scales were 0.79, 0.80, and 0.72, respectively.

Results

The means, standard deviations, intercorrelations, and reliabilities for the measures used in the study

are reported in Table 1.

Hierarchical multiple regression was used to test the hypotheses. The main effects and second-order

and third-order interaction terms were entered as the predictors in four steps. That is, the main effects

were entered in step 1, the contract breach in question (intrinsic or extrinsic) by procedural justice

interaction was entered in step 2, the contract breach in question by interactional justice interaction

was entered in step 3, and finally, the three-way interaction of contract breach by procedural justice

by interactional justice was entered in the fourth and final step. Guidelines for the statistical analysis of

interactions dictate that lower-order effects can’t be interpreted accurately in the presence of higher-

order effects (Aiken & West, 1991). Therefore, we included step four to confirm that interpretations of

the second-order effects of procedural and interactional justice were appropriate (i.e., by demonstrat-

ing that the three-way interaction was non-significant).

As described by Cohen and Cohen (1983), hierarchical regression is useful when there is a prior

theoretical basis for describing the sequence of variables to be added in the regression equation.

The primary test is for the additional variance of the dependent measures that is accounted for with

each additional predictor. For the purposes of our study, a significant change in R 2

from step 1 to step 2

indicates that there is a significant interaction (Cohen & Cohen, 1983) between contract breach

(extrinsic or intrinsic) and procedural justice on employee reactions. Additionally, a significant change

in R 2

from step 2 to step 3 indicates that there is a significant interaction (Cohen & Cohen, 1983)

between contract breach and interactional justice on employees’ attitudes and behaviors.

Table 1. Descriptive statistics, correlations, and reliabilities

Variable Mean SD 1 2 3 4 5 6 7 8 9

1. Psychological contract 3.28 0.81 (0.90) breach: extrinsic

2. Psychological contract 3.56 0.80 0.59* (0.89) breach: intrinsic

3. Procedural justice 2.66 0.78 �0.31* �0.45* (0.86) 4. Interactional justice 3.04 0.83 �0.37* �0.42* 0.67* (0.93) 5. Job satisfaction 3.49 0.94 �0.36* �0.53* 0.42* 0.38* (0.86) 6. Intentions to leave 3.12 1.18 0.16y 0.38* �0.26* �0.16y �0.51* (0.85) 7. In-role performance 4.50 0.49 �0.08 �0.05 0.08 0.08 0.15y �0.16y (0.79) 8. OCBIs 3.94 0.53 �0.01 �0.07 0.12y 0.09 0.05 �0.01 0.16y (0.80) 9. OCBOs 3.99 0.76 �0.05 �0.05 0.20* 0.09 0.09 �0.06 0.32* 0.16y (0.72)

Notes: n ¼ 246; *p < 0.01; yp < 0.05; Internal consistency reliabilities are provided along the diagonal in parentheses.

478 J. KICKUL ET AL.

Tables 2 and 3 depict the results of the predictors (interactions) on job satisfaction, intentions to

leave the organization, in-role job performance, and citizenship behavior (OCBI, OCBO). In examin-

ing the first hypothesis, which proposed procedural justice will moderate the relationship between psy-

chological contract breach of extrinsic outcomes and employee attitudes and behaviors, Table 2 shows

a significant two-way interaction between extrinsic contract breach and procedural justice on job satis-

faction, �R2 ¼ 0.03, p < 0.05; intentions to leave, �R2 ¼ 0.03, p < 0.05; in-role job performance, �R2 ¼ 0.02, p < 0.05; OCBIs, �R2 ¼ 0.02, p < 0.05; and OCBOs, �R2 ¼ 0.02, p < 0.05. As for the moderating role of interactional justice with extrinsic outcomes, there were no significant interactions

between extrinsic contract breach and interactional justice on any of the attitudes and behaviors (refer

to step 3). That is, extrinsic contract breach and interactional justice did not explain additional variance

beyond the hypothesized interaction of extrinsic contract breach and procedural justice in determining

employee attitudes, in-role job performance, and organizational citizenship behaviors.

In the test of the second hypothesis, which predicted interactional justice will moderate the relation-

ship between psychological contract breach of intrinsic outcomes and employee attitudes and behavior

(see Table 3), a significant two-way interaction was found between intrinsic contract breach and inter-

actional justice on job satisfaction, �R2 ¼ 0.03, p < 0.05; intentions to leave, �R2 ¼ 0.02, p < 0.05; in-role job performance, �R2 ¼ 0.04, p < 0.05; and OCBIs, �R2 ¼ 0.02, p < 0.05. These significant interactions of interactional justice and intrinsic contract breach explained additional variance (as seen

in �R2 between step 2 and step 3) beyond the interaction of procedural justice and intrinsic contract breach as expected.

In order to fully examine each part of our two hypotheses and the nature of the significant interac-

tions, we used the procedures developed by Aiken and West (1991). Simple slope results revealed that

as the number of extrinsic contract breaches increased, job satisfaction, in-role job performance,

OCBIs, and OCBOs decreased, while intentions to leave the organization increased when procedural

justice was low. Similar results were also found when examining the role of interactional justice and

intrinsic outcomes. As the number of intrinsic contract breaches increased, job satisfaction, in-role job

performance, and OCBIs decreased, whereas intentions to leave the organization increased when inter-

actional justice was low. Surprisingly, the interaction of intrinsic contract breach and interactional jus-

tice did not have a significant effect on organizational citizenship that was directed toward the

organization as a whole (OCBO).

Discussion

The main objectives of this study were to explore the interactive effects of psychological contract

breach, procedural justice, and interactional justice in determining employees’ attitudes and behaviors

and examine the differential effects that procedural justice and interactional justice may have on

employees reactions when global assessments of distributive injustice (i.e. contract breaches) are used.

More specifically, we wanted to examine whether procedural justice perceptions had greater influence

(than interactional justice perceptions) on the relationship between extrinsic, psychological contract

breach and corresponding employee attitudes and behaviors and whether interactional justice percep-

tions had a stronger effect (than procedural justice perceptions) on the relationship between the breach

of intrinsic, psychological contract outcomes and employee responses to that breach. As noted by

Morrison and Robinson (1997), research was needed to understand the interpretation process follow-

ing a breach in an employee’s psychological contract. In particular, they recommended that researchers

take a broader perspective in examining the organizational circumstances (i.e., procedures

CONTRACT BREACH AND PROCEDURAL JUSTICE 479

T a b

le 2

. S

u m

m a ry

o f

h ie

ra rc

h ic

a l

re g

re ss

io n

a n

a ly

si s

fo r

e x

tr in

si c

b re

a c h

o u

tc o

m e s,

p ro

c e d

u ra

l ju

st ic

e ,

a n

d in

te ra

c ti

o n

a l

ju st

ic e

p re

d ic

ti n

g e m

p lo

y e e

a tt

it u

d e s

a n

d b

e h

a v

io rs

D e p

e n

d e n

t v a ri

a b

le s

In -r

o le

O rg

a n

iz a ti

o n

a l

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a n

iz a ti

o n

a l

jo b

c it

iz e n

sh ip

c it

iz e n

sh ip

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sa ti

sf a c ti

o n

In te

n ti

o n

s to

le a v e

p e rf

o rm

a n

c e

b e h

a v

io r:

in d

iv id

u a l

b e h

a v

io r:

o rg

a n

iz a ti

o n

� R

2 �

R 2

� R

2 �

R 2

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2 �

R 2

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2 �

R 2

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2 �

R 2

S te

p 1

: M

a in

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� 0

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P J

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4 *

� 0

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* 0

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0 .1

9 *

0 .3

5 *

IJ 0

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te p

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9 0

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9 0

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N o te

s: n ¼

2 4

6 ;

P C

B E ¼

p sy

c h o

lo g

ic a l

c o n

tr a c t

b re

a c h

: e x

tr in

si c ;

P J ¼

p ro

c e d

u ra

l ju

st ic

e ;

IJ ¼

in te

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ic e .

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2 ¼

is th

e in

c re

m e n

ta l

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la in

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b e tw

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5 .

480 J. KICKUL ET AL.

T a b

le 3

. S

u m

m a ry

o f

h ie

ra rc

h ic

a l re

g re

ss io

n a n

a ly

si s

fo r

in tr

in si

c b

re a c h

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tc o

m e s,

p ro

c e d

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e , a n

d in

te ra

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a l ju

st ic

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re d

ic ti

n g

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p lo

y e e

a tt

it u

d e s

a n

d b

e h

a v

io rs

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e n

d e n

t v a ri

a b

le s

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a n

iz a ti

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a l

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a n

iz a ti

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a l

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o le

c it

iz e n

sh ip

c it

iz e n

sh ip

Jo b

In te

n ti

o n

s jo

b b

e h

a v

io r:

b e h

a v

io r:

sa ti

sf a c ti

o n

to le

a v e

p e rf

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a n

c e

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u a l

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a n

iz a ti

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� R

2 �

R 2

� R

2 �

R 2

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2 �

R 2

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2 �

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2 �

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p 1

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0 .0

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9 IJ

0 .1

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8 0

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8 0

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8 *

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8 S

te p

2 :

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ra c ti

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0 .1

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5 0

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0 .0

4 0

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te p

3 :

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IJ 1

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0 .0

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0 .0

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1 .5

5 *

0 .0

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* 0

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0 .0

8 0

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p 4

: T

h re

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P J �

IJ 1

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0 .0

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0 .2

1 0

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0 .0

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0 .0

7 0

.0 0

0 .1

2 0

.0 6

0 .0

0 0

.1 6

0 .0

8 0

.0 0

N o te

s: n ¼

2 4

6 ;

P C

B I ¼

p sy

c h o

lo g

ic a l

c o

n tr

a c t

b re

a c h

: in

tr in

si c ;

P J ¼

p ro

c e d u ra

l ju

st ic

e ;

IJ ¼

in te

ra c ti

o n

a l

ju st

ic e .

� R

2 ¼

is th

e in

c re

m e n

ta l

v a ri

a n

c e

e x p

la in

e d

b e tw

e e n

e a c h

st e p

. * p <

0 .0

5 .

CONTRACT BREACH AND PROCEDURAL JUSTICE 481

implemented and treatment received) surrounding a contract breach and their influence on organiza-

tional-level and job-level attitudes and behaviors.

Study results provided support for most of our hypothesized relationships. When psychological con-

tract breach pertained to extrinsic outcomes, a significant interaction effect of contract breach and pro-

cedural justice predicted all the dependent measures of interest ( job satisfaction, intentions to leave,

in-role job performance, organizational citizenship behavior directed toward individuals (OCBI), and

organizational citizenship behavior directed toward the organization as a whole (OCBO)). When psy-

chological contract breach pertained to intrinsic outcomes, a significant interaction effect of contract

breach and interactional justice predicted intentions to leave the organization, job satisfaction, in-role

job performance, and OCBIs. The interaction between intrinsic contract breach and interactional

justice did not affect the level of OCBOs.

Our results are consistent with previous research on psychological contract breach that has found

breach to be negatively related to job satisfaction, in-role performance, and organizational citizenship

behaviors and positively related to intentions to leave the organization (Robinson & Rousseau, 1994;

Robinson & Morrison, 1995; Robinson, 1996; Turnley & Feldman, 1999). This study contributes to the

literature by examining a wide breadth of outcome measures within the same study and by demonstrat-

ing that justice perceptions do moderate the relationships between psychological contract breach and

the aforementioned outcomes.

These findings support the contentions of previous researchers that procedural and interactional

justice should be conceptualized as distinct constructs (e.g., Greenberg, 1990; Moorman, 1991; Tyler

& Bies, 1990). This study contributes to the literatures on organizational justice and the changing psy-

chological contract by examining the differential effects that procedural and interactional justice have

on employee responses to psychological contract breach. As discussed by Folger and Cropanzano

(1998), these two justice constructs may implicate blame and responsibility in different fashions

and to varying degrees. This study adds to our understanding of when each of these justice constructs

may take on additional importance by accounting for whether perceived psychological contract breach

pertained to intrinsic or extrinsic outcomes.

Another contribution of this study is that it responded to Skarlicki and Folger’s (1997) call for an

examination of the effects of procedural and interactional justice on employee responses to outcome

unfairness (distributive injustice) when global assessments of unfairness are used. Skarlicki and Folger

(1997), in their study of retaliation in the workplace, found a significant three-way interaction effect of

distributive justice (perceived pay fairness), procedural justice, and interactional justice on the level of

organizational retaliation behaviors (ORBs). Specifically, they found that a perceived lack of fairness

regarding pay only resulted in increased ORBs when procedural justice and interactional justice were

low. In other words, their results suggested that high levels of one type of justice (either procedural or

interactional) could compensate for low levels of the other and allow the organization to avoid retalia-

tion. They encouraged future research to examine whether this phenomena was supported for a variety

of employee outcomes beyond pay.

Our study examined multiple types of contract breach: some dealt with extrinsic outcomes (e.g.,

rewards) and some focused on intrinsic outcomes (e.g., freedom). It is important to note that only

one of our 10 regression analyses produced a significant three-way interaction (that being a three-

way interaction effect of intrinsic contract breach, procedural justice, and interactional justice on

job satisfaction). In other words, contrary to Skarlicki and Folger’s findings, our results suggest that,

depending on the type of outcome breached, procedural justice or interactional justice perceptions may

take on greater importance in determining employee responses to psychological contract breach.

Our results clearly indicated that procedural justice perceptions had a greater influence on employee

responses to extrinsic contract breach. There was a significant two-way interaction of extrinsic contract

breach and procedural justice for each dependent measure, while none of the interactions between

482 J. KICKUL ET AL.

extrinsic contract breach and interactional justice were significant. Specifically, perceptions of

procedural justice were positively related to job satisfaction, in-role job performance, OCBIs, and

OCBOs and negatively related to intentions to leave the organization when extrinsic outcomes were

breached.

Interactional justice had a stronger effect on responses to intrinsic contract breach. The two-way

interaction of intrinsic contract breach and interactional justice was significant for four of the five

dependent measures ( job satisfaction, intentions to leave, OCBIs, and in-role job performance), while

the two-way interaction of procedural justice and intrinsic contract breach was only significant for in-

role job performance. In the case of in-role job performance, it should be noted that the interaction of

intrinsic contract breach and interactional justice explained variance above and beyond the effects of

the interaction of procedural justice and intrinsic contract breach. The only non-finding involves the

relationship between intrinsic contract breach and interactional justice and OCBO. One possible expla-

nation for the lack of significance may be that employees that perceived this type of injustice were

upset with a specific organizational member (most likely their immediate supervisor) and therefore,

their response would be more strongly associated with a reduction in OCBIs.

In summary, our findings suggest that interactional justice (interpersonal sensitivity), as shown

through individuals and agents in the organization, has a stronger effect on employee behaviors and

reactions to breaches of intrinsic outcomes than do fair procedures and policies. Conversely, when

more tangible, extrinsic outcomes are breached, employee reactions were driven by perceptions of pro-

cedural justice. Employees appear to be less forgiving of unfair procedures when outcomes are easily

quantifiable and short-term in nature.

Study limitations

One of the limitations of this research study is that the relationship between the predictors (contract

breach, procedural justice, and interactional justice) and the dependent measures (employee attitudes

and behaviors) included common method variance. These predictors and beliefs were taken from one

source (the employee). These associations could, therefore, be attributed to a response bias on the part

of the employee. It should be noted, however, that a social desirability bias (by participants) would

have likely attenuated the strength of the relationships. In other words, employees were probably more

lenient in their self-ratings of performance and citizenship behaviors than outside agents (e.g., their

supervisors) would have been. It is possible that independent ratings of employee behaviors would

have resulted in stronger relationships between our variables of interest. Because on-line surveys were

used, the participants could complete their survey in private and directly submit the survey to the lead

researcher’s secure Internet database. This collection procedure reduces the likelihood that social

desirability bias was a problem. Another concern is that there may have been a consistency bias from

the employees completing our survey. That is, in order to fulfil the basic psychological need to appear

consistent, it may be plausible that employees who reported a large number of unfulfilled promises

(contract breaches) may have been more likely to report lower levels of job satisfaction, citizenship

behaviors, and greater intentions to leave the organization.

Moreover, this study used a cross-sectional design, yet the hypothesized model and relationships

suggests causal direction. Causal inferences created from cross-sectional designs are only inferences

(Spector, 1981). In an effort to address this limitation, we used participants that had previously experi-

enced a radical change initiative. This sample was preferable because it increased our confidence that

the changes associated with perceptions of injustice preceded the attitudes and behaviors (i.e., the out-

come measures) that the participants reported rather than the attitudes and behaviors leading to the

perceptions of injustice. Nevertheless, one should use caution when interpreting our findings. Future

CONTRACT BREACH AND PROCEDURAL JUSTICE 483

studies in this area would benefit from implementing longitudinal research designs and utilizing multi-

ple data sources.

Although it is common for employees to judge our interactional justice measure in reference to their

immediate supervisor, respondents may have used different reference points (e.g., top management,

co-workers) when assessing this construct. It is possible that the use of a different reference point

may have impacted individual outcomes. Additionally, while our research included full-time employ-

ees within various organizational settings (e.g., finance and banking, sales and marketing, engineering,

and health care), further research needs to be conducted on employees who may have alternative forms

of employment agreements (e.g., contingent workers, part-time employees, union and non-union

employees). This will allow for a better understanding of how perceptions of contract breach are

formed. As more information is gathered about the generalizability of the cognitive processes under-

lying perceptions of psychological contract breach, organizations will be better equipped to avoid the

detrimental consequences that are frequently associated with contract breach.

Suggestions for managing the psychological contract in the ‘brave new workplace’

Despite the study’s limitations, the findings of this investigation provide needed insight into how

different types of justice interventions may influence an organization’s ability to manage employee

responses as they implement radical change initiatives that affect employees’ intrinsic and extrinsic

outcomes. For example, study results showed that when intrinsic psychological contract outcomes

were breached, high levels of procedural justice did not offset the negative consequences that resulted

from employee perceptions of low interactional justice. In addition, high levels of interactional justice

did not prevent the detrimental outcomes that resulted when extrinsic contract outcomes were

breached and employee perceptions of procedural justice were low.

One of the implications of these findings is that organizations should pay attention to both the formal

procedures used to guide the distribution of employee outcomes and the interpersonal treatment that

their employees receive as organizational decisions are communicated to them. In other words, if high

levels of one type of justice do not necessarily mitigate the consequences that result when another type

of justice is ignored, the best way for organizations to protect themselves from the negative conse-

quences that can be associated with organizational change (i.e., psychological contract breach) is to

be proactive in establishing clear and fair procedures and make an extra effort to ensure that all

employees are treated with respect and dignity.

This study also suggests that the outcomes in question may dictate what types of information are

most important to communicate to employees when they feel the organization has betrayed them.

Specifically, this study indicates that when extrinsic outcomes are placed in question (e.g., pay,

rewards) it is critical that the organization (or the manager acting as an agent of the organization)

directs the upset employee(s) to the procedures that were used to determine the allocation of these

outcomes and clearly explain why these formal procedures provide the fairest results.

When breaches of intrinsic outcomes (e.g., autonomy, control, freedom) occur, the most important

information to communicate to employees appears to be different. Since breaches of intrinsic out-

comes tend to bring into question the status of valued interpersonal relationships that have been built

between the employee and representatives of the organization, managers should first communicate to

employees that they are still valued and are considered to be an asset to the organization. In these cases,

the employee needs to be assured that although their outcomes may be affected by the radical transi-

tions that the organization is making, the respect and dignity that they have come to expect will not be

compromised in any way.

484 J. KICKUL ET AL.

To summarize, focusing on and clarifying the fairness of company procedures may be sufficient

when outcomes in question are tangible. However, if the disputed outcomes are intrinsic by nature,

the organizational representative should place a premium on demonstrating sensitivity, concern, empa-

thy, and above all else respect to his or her disgruntled employees. If these employees aren’t convinced

that they will continue to be respected, fair procedures alone may not be enough to prevent reductions

in performance and morale.

In this study, our interest was focused on employees’ beliefs regarding employment promises and

justices, independent of their employers’ perspectives. Further development into the employer’s view-

point of their set of psychological contract obligations may be useful in uncovering the discrepancies

between the two parties about issues pertaining to the psychological contract itself and the conduct and

actions of the organization. By gathering data on the employer’s perceptions of both the psychological

contract and organizational justice, future research can make contributions in two areas. First, it will

help overcome some of the methodological concerns highlighted in the previous section. Secondly, by

exposing discrepancies in the perceptions of both parties, possible remedies for re-establishing high

levels of justice and psychological contract fulfillment within the employee–employer relationship

may be identified.

This study affirmed the importance of ensuring procedural and interactional justice within the orga-

nization during times of change. With competition growing on a daily basis (e.g., e-commerce, mer-

gers and acquisitions, globalization, downsizing, etc.), it appears as if we will continue to see changes

in the employee–employer relationship (Lawler & Finegold, 2000; Rogers, 2000; Smith, 2001).

Additionally, the responses to these radical changes seem to be increasingly influenced by employees’

needs and perceptions of how management adapted to these aforementioned competitive challenges.

Thus, we hope that future research will attempt to replicate the findings in this study as well as iden-

tify other key influences on this vital employee–employer relationship in an age of risk, globalization,

and radical change (Smith, 2001). Success in the current business environment is often predicated on

an organization’s ability to convince their employees of the benefits associated with a proposed change

initiative. Procedural and interactional justice may be two key mechanisms through which they can

communicate the potential benefits and rewards that may result from the changes. Our findings suggest

that by adopting practices that facilitate fair procedures and treatment, organizations can keep employ-

ees better informed and increase their likelihood of preserving a positive employment relationship.

This improved relationship may become an integral part of an organization’s ability to develop a sus-

tainable competitive advantage in today’s workplace.

Author biographies

Jill Kickul is an Assistant Professor of Management in the Charles H. Kellstadt Graduate School of Business at DePaul University. She received her PhD in industrial/organizational psychology at

Northern Illinois University. Her research interests include psychological contracts, organizational

justice, and strategic and innovation processes in entrepreneurial ventures.

Scott W. Lester is an Assistant Professor of Management at the University of Wisconsin–Eau Claire. He received his PhD in organizational behavior from the University of South Carolina. His research

interests include psychological contracts, group potency, other-oriented work values, and organiza-

tional citizenship behavior.

Jonathon Finkl is a graduate student in the Charles H. Kellstadt Graduate School of Business at DePaul University. His research interests include employment relationships, and organizational justice

and change.

CONTRACT BREACH AND PROCEDURAL JUSTICE 485

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