LINKING STRATEGY AND HUMAN-RESOURCE PRACTICES - HOW EMPLOYEE AND CUSTOMER CONTRACTS ARE CREATED

Organizations implement their business strategies through the human re source (HR) practices they use. These practices are major determinants of employees' psychological contracts. How employees interpret the te rms of their employment impacts motivation, innovation, and customer s ervice. This article describes four common types of psychological cont racts in US firms and the HR practices that create them. It develops a framework for understanding how each contract shapes employee perform ance, retention, cooperation with fellow employees and customer respon siveness. It presents recommendations for more effectively managing th e link between business strategy and the psychological contract of emp loyees. (C) 1994 by John Wiley & Sons, Inc.