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Recommendations on employment problems further explained

The recommended interventions in the guideline are developed according to the Guideline Method. More information and further elaboration on the selected interventions can be found on this page.

Interactional Justice

Interventions and evidence

Disputes that emerge at the workplace can result from vague top-down guidelines from managers, uncooperative colleagues, diverging interests of team members, lack of clarity on roles and responsibilities, misunderstanding or communication gap among colleagues and so on. As persons responsible for leading teams and meeting goals of the organization, supervisors or line managers are responsible for preventing and resolving such disputes. To do that, supervisors or leaders have to understand the emotions, needs and interests of both disputing parties. Therefore, in this recommendation, we will discuss two leadership styles namely transactional leadership and transformational leadership, that are most helpful in understanding needs, emotions and interests of disputing parties in an employment dispute. Leaders can deploy these leadership styles proactively i.e prior to the occurrence of the dispute as well as while resolving the dispute. 

“Bass and Avolio developed a general leadership theory called the Full Range Leadership Model in which they described 3 leadership styles, namely: laissez-faire, transactional and transformational. Laissez-faire leaders avoid making decisions or taking positions, hesitate to take action, abdicate their authority, and are typically absent when they are needed” (as cited in Harms and Crede 2010, p.6). Given the passive nature of this leadership style, scholars and practitioners recommend the other two leadership styles to manage employees. Therefore, in this recommendation, we will examine how transactional and transformational leadership styles affect the well-being of employers and employees. 

Transactional Leadership

“Transactional leadership focuses on the exchanges that occur between leaders and followers [or in this context, employees] (Bass 1985; 1990; 2000; 2008; Burns, 1978). These exchanges allow leaders to accomplish their performance objectives, complete required tasks, maintain the current organizational situation, motivate followers through contractual agreement, direct behavior of followers toward achievement of established goals, emphasize extrinsic rewards, avoid unnecessary risks, and focus on improve organizational efficiency” (McClesky 2014, p.122).

“Transactional leaders award rewards and punishments to subordinates based on their performance. They identify goals, assign roles and responsibilities and delegate tasks. They monitor the performance of employees, check for mistakes or errors and conduct two-way discussions on tasks at hand. “They focus on operational efficiency and time management” (Afsar et al. 2017, p.312). “This leadership style aims to maximise operational and individual gains” (McClesky 2014, p.122). 

Transformational Leadership

“Bass and Avolio (1997) defined transformational leadership as a leadership style that motivates followers by appealing to their higher order needs and inducing them to transcend self-interest for the sake of the group or the organization. This form of leadership involves creating an emotional attachment between leaders and followers. Jin (2010) noted that transformational leadership integrates “empathy, compassion, sensitivity, relationship building, and innovation” (p. 174)” (Men 2014, p. 267). 

“Transformational leaders take a genuine interest in the well-being of employees, foster a climate of trust, nurture confidence in their followers, and encourage individual development. To these ends, transformational leaders often engage in close interactions with their followers to understand and address their needs better. In terms of decision making, transformational leaders seek to empower followers. They are willing to share power and delegate significant authority to followers to make them less dependent on the leader (Aldoory & Toth, 2004; Men & Stacks, 2013). Therefore, transformational leaders are characterized by interactive, visionary, passionate, caring, and empowering communication behaviors” (Hackman & Johnson, 2004)” (as cited in Men 2014, p.267).

For parties looking to prevent or resolve an employment dispute, where the employer and employee want to recognise emotions, needs and interests (understanding), is transactional leadership or transformational leadership more effective for well-being?

The databases used are: Rouletledge, Sage

For this PICO question, keywords used in the search strategy are: transactional leadership, transformational leadership

The main sources of evidence used for this particular subject are:
  • Men, L. R. (2014). Strategic internal communication: Transformational leadership, communication channels, and employee satisfaction. Management communication quarterly, 28(2), 264-284.
  • McCleskey, J. A. (2014). Situational, transformational, and transactional leadership and leadership development. Journal of business studies quarterly, 5(4), 117.
  • Lee, M. (2014). Transformational leadership: is it time for a recall?. International journal of management and applied research, 1(1), 17-29.
  • Clarke, S. (2013). Safety leadership: A meta‐analytic review of transformational and transactional leadership styles as antecedents of safety behaviours. Journal of occupational and organizational psychology, 86(1), 22-49.
  • Odumeru, J. A., & Ogbonna, I. G. (2013). Transformational vs. transactional leadership theories: Evidence in literature. International review of management and business research, 2(2), 355.
  • Hay, I. (2006). Transformational leadership: Characteristics and criticisms. E-journal of Organizational Learning and Leadership, 5(2).
  • Sandilands, T. (n.d). What type of organisations employ transactional leadership? Chron. 
‘Safety leadership: A meta‐analytic review of transformational and transactional leadership styles as antecedents of safety behaviours’ is an academic article by Sharon Clarke who is a professor of organisational psychology at the University of Manchester. She has co-authored several articles on leadership and organisation safety. This paper is a meta-analytic review that tests whether transformational or transactional leadership is instrumental in creating a safe working climate at the workplace. The authors included 103 studies in the meta analysis. According to the GRADE methodology, we assess the quality of this paper to be high given that the study is a meta-analysis.  ‘Strategic internal communication: Transformational leadership, communication channels, and employee satisfaction’ is a paper by Men, who is an associate professor at University of Florida. She has authored several articles on leadership at the workplace. In this paper, she investigates how leadership influences relationships with employees by building the linkage between transformational leadership, the use of communication channels, symmetrical communication, and employee satisfaction. An online survey was conducted with 400 employees who worked in medium and large-sized corporations in the USA. The authors used a stratified and quota random sample to make sure that the sample was representative and comparable across, age, gender, income and education levels. According to the Grade methodology, we assess the quality of the study to be moderate.  The study by McCleskey (2014) describes 3 leadership theories: situational leadership, transactional leadership and transformational leadership. McClesky is associated with the Western Governors University in Utah. He has written several papers on the topic of leadership at the workplace. The paper is solely based on literature review, so the quality of the paper is assessed to be very low. But because the paper has received a high number of citations (952), we upgrade the quality of the paper to low, according to the GRADE methodology. ‘Transformational leadership: Characteristics and criticisms describes transformational leadership and its criticism’ is a paper by Iain Hay who is an emeritus professor at Flinders University, Australia. The paper is based on literature review. At 162, the paper has a moderate number of citations. All in all, according to the GRADE methodology we assess the quality of this paper to be very low. The paper by Lee (2014), who is a PhD student at University of Salford UK, examines transformational leadership and inspirational leadership using literature review that is based on observational studies and expert opinions. According to the GRADE approach, we assess the quality of the study to be very low.  The paper by Odumeru and Ogbonna (2013) compares transactional and transformational leadership drawing evidence from literature review that is mostly based on expert opinions. But because the paper has been widely cited (535 times), we upgrade the quality of the evidence to low, according to the GRADE methodology.  ‘What type of organisations employ transactional leadership?’ is blog article. Although blog articles are not recommended in the GRADE methodology, we use them for this recommendation due to lack of more substantive literature that points to the aptness of each leadership style in different contexts. We grade the quality of this article as very low.  Quality of evidence and research gap According to our research method, we grade the evidence comparing transactional leadership style and transformational leadership style as very low.  There exists a lot of empirical as well as theoretical literature on the topic of transformational and transactional leadership. However, most of the empirical research has been conducted in Western countries. So knowledge on how leadership styles affect employees in different cultural contexts is lacking.  Literature on how transformational and transactional leadership styles affects the wellbeing of employees and the employer is abundant. But the literature does not directly address how the two leadership styles are useful in preventing and resolving disputes at the workplace.

Recommendation

 

Transactional Leadership

Transformational Leadership

Transactional leaders facilitate adherence to rules and regulations in the workplace. Rules and regulations are essential in establishing behaviour standards, achieving goals, minimising risks to health, safety as well as project and in managing tasks. Non-adherence to rules and regulations can cause conflicts in the team and can cause projects to go off-track. So adherence to rules and regulations prevents disputes from arising. “Active transactional leadership is important in ensuring compliance with rules and regulations” (Clarke 2013, p.22).

 

“Transactional leaders monitor subordinates’ behaviour, anticipate problems and take proactive steps to implement corrective actions” (Clarke 2013, p.25). Because the leader is proactively monitoring tasks, employees are less likely to make mistakes and are aware of actions to take in case if plans don’t work out. In other words, by being closely involved in day-to-day management of operations, transactional leaders prevent problems and the disputes that arise out of problems.

 

Active transactional leadership provides the opportunity for error recovery and learning from mistakes, which are key elements of a learning culture” (Reason, 1997) (as cited in Clarke 2013, p. 25). By giving employees room for error as well for improvement in performance, transactional leaders promote growth of employees, which is likely to increase their job satisfaction. 

 

Active transactional leaders are involved with proactive monitoring of employees’ behaviour and correcting errors before they lead to problems. Such leaders pay attention to safety rules and regulations by employees, leading to greater safety compliance. Furthermore, the emphasis on individual learning and proactive error management demonstrated by active transactional leaders should encourage employees themselves to engage in safety-related activities” (Clarke 2013, p.26). Since transactional leaders prevent problems from occurring and encourage safe behaviour among employees, they prevent disputes that arise out of problems or risky behaviour.

 

Transactional leadership allows followers to fulfill their own self-interest, minimize workplace anxiety, and concentrate on clear organizational objectives such as increased quality, customer service, reduced costs, and increased production (Sadeghi & Pihie, 2012)” (as cited in McCleskey 2014, p.122). Since transactional leaders give subordinates space to fulfill their own interests and work on minimising workplace anxiety, subordinates are likely to feel satisfied and comfortable at work, which helps in preventing disputes. 

 

Transactional leadership was also [found to be] negatively related to work-related bullying, perceived person-related bullying, and perceived physically intimidating bullying” (Dussault and Frenette 2015, p.724). 

 

Transformational leaders employ

intellectual stimulation (i.e., leader challenges assumptions, takes risks and encourages subordinates to be creative). This final aspect of transformational leadership is enacted through cognitive, rather than affective processes, whereby subordinates develop new ways of solving problems and are encouraged to question the status quo” (Clarke 2012, p.23).Because subordinates are given the opportunity to be creative, they can grow into their roles better, which is likely to bring them satisfaction at the workplace. 

 

‘…transformational leadership leadership evokes changes in subordinates’ value systems to align them with organizational goals (Clarke 2013, p.23). If the goals of the organisation and individual are aligned, then employees will work according to the expectations of the leader. Similarly, the organisation will also cooperate better with the employee, all of which together will prevent disputes from arising. 

 

“[A] transformational leadership style develops trust and enhances interpersonal relationships between managers and their subordinates” (Clarke 2013, p.26). Because interpersonal relationships between managers and employees are strong, in case a dispute arises, both are likely to co-operate with each other, understand each other’s needs and put more effort into resolving a dispute. 

 

Transformational leadership has been shown to lead to a better understanding of safety issues at the workplace and improved communication”  (Conchie, Taylor, & Donald, 2012) (as cited in Clarke 2013, p.26). Improved communication will facilitate resolution and prevention of disputes among employees as well as with the manager. 

 

“… it would be expected that transformational leadership would lead to compliance, but more particularly would encourage safety participation, as a form of safety citizenship behaviour” (Clarke 2013, p. 27). Because transformational leaders encourage safe behaviour, employees even during a heated dispute, are unlikely to engage in risky behaviour. 

 

“Transformational leaders adopt face to face communication methods with subordinates which is positively associated with employee satisfaction” (Men 2014, p.264)

 

“…transformational leadership strongly emphasizes listening, openness, feedback, participation, and relationship, which are key attributes of symmetrical communication” (Men 2014, p. 268). Symmetrical communication allows employees to air their grievances and provide feedback to managers which in turn improves the functioning of the organisation and helps employees in meeting their own needs. 

 

“Transformation leaders engage in discussions with their subordinates, they communicate well and address their higher order needs. By communicating a desirable, inspirational, and attainable vision, transformational leaders give followers a sense of meaning within the organization (Yukl, 2006) and thus improve their relational satisfaction (Men 2014, p. 268). Given that employees have relational satisfaction, they are less likely to engage in behaviour that can lead to a conflict. Similarly, they will try to resolve a dispute in a less adversarial way, which will reduce the negative emotions around the dispute.

 

Transformational leadership, charisma, intellectual stimulation, and individualized consideration were negatively correlated with work-related bullying, person-related bullying, and physically intimidating bullying (ranging from –.21 to –.60, p < .01)” (Dussault and Frenette 2015, p. 728) .

 

 

Transactional Leadership

Transformational Leadership

Transactional leaders form short-term relationships with employees. These relationships tend toward shallow, temporary exchanges of gratification and often create resentments between the participants” (McCleskey 2014, p.122).

 

“…highly empowered employees may view transactional leadership style as restrictive, less flexible, controlling, and risk aversive which demotivates them to display entrepreneurial behavior” (Afsar et al. 2016, p. 324). Employees who are driven and creative can feel restricted under a transactional leader who does not permit subordinates to be innovative. They may voice their discontent with the manager, which itself can lead to a dispute or pursue a direction that is different from what is suggested by the manager, which can also give rise to a dispute with the manager. 

 

Under transactional leadership, employees don’t push the envelope nor do they work over and above what is required of them. This limits the growth of the organisation. “…transactional leadership, in contrast, is found to have a negative effect on employees’ entrepreneurial behavior. Under transactional leadership, employees are extrinsically motivated (i.e. contingency rewards and active management-by-exception) and thus they are less willing to go beyond their job

responsibilities to try out innovative ideas for the benefit of the organization” (Afsar et al. 2016, p. 322).

 

By encouraging employees to take risks, transformational leaders  can decrease the safety quotient at the workplace. “…[S]ome aspects of transformational leadership could have deleterious effects on safety, such as the association of intellectual stimulation with risk-taking, given that this aspect of leadership encourages novel and creative ways of thinking” (Clarke 2013, p.26).

 

Under transformational leadership, where followers are emotionally attached to the leader, there is a risk where the leader manipulates the employees without giving due consideration to their well-being. Employees can also become dependent upon the leader. “Transformational leaders motivate followers by appealing to strong emotions regardless of the ultimate effects on followers and do not necessarily attend to positive moral values. As Stone, Russell and Patterson (2003, p. 4) observe, transformational leaders can exert a very powerful influence over followers, who offer them trust and respect. Some leaders may have narcissistic tendencies, thriving on power and manipulation. Moreover, some followers may have dependent characters and form strong and unfortunate bonds with their leaders (Stone, Russell and Patterson, 2003, p. 4)” (as cited in Hay 2006, p. 13). 

Because transformational leaders emphasise on the common good, it can lead to neglecting the needs of employees.. “…transformational leaders aim to get people’s thoughts off distributional questions and refocus them on common goals or communal interests” (Keeley, 2004: 167, emphasis in original). This implies that the leaders are putting themselves above followers’ needs, which is “antidemocratic” (Northouse, 2013: 203)” (Lee 2014, p. 20).

 

Under transformational leadership, employees are emotionally invested in work, which benefits the company but at the risk of employees feeling exhausted. “Stevens et al (1995) believes that transformational leadership is biased in favour of top management, owners and managers. Followers can be transformed to such a high level of emotional involvement in the work over time that they become stressed and burned out” (Odumeru and Ogbonna 2013, p. 357).

Taken together, the available research suggests that both transactional and transformational leadership are necessary in uncovering emotions, needs and interests of employees and preventing or resolving disputes. 


Transactional leadership is most effective in taking care of day-to-day operations of the organisation. The leaders are aware of everyday challenges that subordinates face. Because such leaders are interested in attaining operational efficiency, they are likely to address emotions that employees attach to each task. They help employees to complete tasks efficiently and give them the opportunity to learn from their mistakes. They ensure that employees adhere to rules and regulations which make the workplace a safe place to work. A few pitfalls of transactional leadership are that it doesn’t demand creativity from employees and that motivated and enterprising employees might find it a stifling environment to work in. 


All in all, transactional leadership is instrumental in preventing and resolving disputes at the workplace. For example, if two subordinates are assigned a task with a deadline. But one of them has not been able to make much contribution to it because he or she is inundated with more pressing activities, there might be delay in achieving the previous deadline. Because a transactional leader monitors subordinates, he or she will quickly grasp the problem and can reprioritise certain activities which will free up the time of the employee. Similarly, if the other teammate feels that the coworker is not pulling his weight and it leads to a quarrel among the two, because the transactional leader is involved in everyday operations and is interested in efficiency, he or she will try to resolve the dispute so that the subordinates continue to have a good working relationship and produce good results for the organisation. 


Transformational leadership stimulates employees intellectually, helps them align with the goals and objectives of the organisation, and emphasises employee well-being by keeping conversation channels between seniors and subordinates open. There is a risk that transformational leaders manipulate employees or misuse their trust. The bond between the senior and subordinate can cause the latter to work until they burn themselves out.


Altogether, transformational leadership is also instrumental in preventing and resolving disputes at the workplace. Because transformational leaders nurture a good interpersonal relationship with subordinates, if an employee feels that certain tasks are not going well or if there is misalignment of interests with coworkers, he or she is likely to bring it up with the leader, who can then take action to resolve the issue. Similarly, in an ongoing dispute, transactional leaders make an effort to understand the stand of disputing parties, communicate well and try to resolve the underlying needs of the disputing parties. 


Therefore, a mix of transactional and transformational approaches is preferred.

Taking into account the balance of outcomes, and the quality and consistency of the evidence, we make the following recommendation: A combination of the two leadership styles, transactional and transformational, is most conducive to the well-being of employees and the organisation. As explained in the technical remarks, the type of work environment can justify the usage of one style to a greater extent than the other, but one should not be used to the complete exclusion of the other.  choose a style depending upon the type of organisation they work for and the roles employees they are they work with.

There are certain situations or organisations where either one of two leadership stylesis better suited. Those are: 

 

  • A company with fixed operations such as a manufacturing company is well-suited for transactional leaders (Sandilands, n.d). 
  • A company that requires employees to be creative such as a PR agency or a marketing company (Sandilands, n.d). 
  • CEOs or directors and the like who are in charge of giving the company direction might find transformational leadership useful to inspire mid-level managers and others who he or she works with to think outside of the box. That said, they also need to use transactional leadership to accomplish day-to-day tasks (Sandilands, n.d).  

User-centred contracts

Interventions and evidence

First literature search: The most plausible interventions that emerged during literature review for documenting rights and responsibilities of the employer and employee are

  • User-centred contracts

  • Legalistic Employment Contracts

 

‘Contracts contain vital business and relationship information, not just legal provisions: they contain information about roles, responsibilities, and requirements that need to be translated into action. They also contain crucial information about price, payment, product or service characteristics, functionalities, and so on, along with procedures, timelines and milestones that need to be followed. When contracts are seen as business enablers and communication tools it becomes obvious that contracts need to be designed, not just drafted’ (Haapio, Plewe and de Rooy 2016). 

 

To make such documents enforceable and clear, lawyers use several legal expressions that the layperson is not familiar with. As a result, ordinary people often fail to understand legal documents. An interdisciplinary approach has been suggested to address this issue. Experts, especially those belonging to the school of Legal Design suggest the use of visual elements. Some propose to use visuals as contracts. For example, Robert de Rooy has experimented with using comic contracts for workers who have low literacy skills. Others propose using plain and simple language to make contracts more comprehensible to ordinary people. But some scholars believe that the simplification of contracts using plain language has its limitations and for legal documents to be valid, relevant and enforceable, the use of legal expressions is unavoidable. Similarly, using visual elements also has its own limitations. 

 

To examine which method of drafting contracts is most useful, in this recommendation we compare user-centred contracts with contracts containing legal expressions. 

 

User-centred contracts

 

For the purpose of this recommendation, we define user-centred contracts as contracts that contain visual elements as well as those that are drafted using plain, simple language. We do not include contracts that are exclusively visual (do not contain any text) because this intervention has not been tested on a large scale and research on it is scant. On the other hand, using visuals together with plain language (to create user-centred contracts) are interventions that have been the subject of a considerable amount of research. . 

 

Visualisation

 

Proponents of user-centred contracts encourage the use of visualisation to simplify contracts.Visualisation in contracts ‘refers to adding flowcharts, icons, timelines, images, matrices to highlight, clarify and explain the content’ (Haapio, Plewe and de Rooy 2016). ‘Visual language can be utilized to explain a variety of concepts, with different goals, both in contracts and in supporting and explanatory materials about the contracts’ (Passera, Haapio and Barton 2013, p.11). Visual in contracts are being used by businesses when procuring. For example, a Finnish company operating in the metals and engineering sector used visualisation for B2B procurement contracts. It used timelines and icons to summarise and clarify the written text to ensure that the documents communicate the message clearly (Passera, Haapio and Barton 2013, p.14). Another company in the UK, NEC, offers procuring works, services and supply. It uses flowcharts to help the reader in understanding (as cited in Passera, Haapio, Barton 2013, p. 13).”

 

Plain language

 

The use of plain language in the legal sector emerged in the second half of the twentieth century. It was first used in government forms and consumer-related documents and eventually spilled to the broader legal sector. It entails breaking down long sentences into shorter sentences, replacing archaic and Latin words with words that are understood by the public and other such measures. Proponents of the plain English language movement argue that laws are primarily meant to address the needs of ordinary people, and not lawyers and judges. So they should be drafted in a way that they are ‘fully intelligible’ to their primary users, i.e the masses. The UK, USA, Australia, Canada and other English speaking countries have already begun using plain language to draft legislations and government forms (Assy 2011). 

 

Legalistic Employment Contract

 

‘Contracts outline roles and responsibilities, construct communication structures, provide for change management and contingency planning, and nominate dispute resolution methods in the event of trouble. In addition to legal and technical terms, contracts contain financial terms and project-related timelines and procedures’ (Passera, Haapio and Barton 2013, p.3).

 

They are meant to minimise risk and maximise rights of the contracting parties. ‘They contain legal rules, principles, and doctrines that help legal professionals in recognizing the relevant facts and classify them into the pertinent legal categories, and to engage in a particular type of interpretation and reasoning’ (Assy 2013, p.378). Given that legal expressions play an important role in enforcing the contract, completely doing away with legal expressions is not in the best interest of the contracting parties or the larger public. 

 

For employers and employees who want to document rights and agreements before entering into an employment relationship, is a user-centred contract or a legalistic contract more effective for well-being?

Key words: plain language drafting, legalese, contracts, legal enforcement, legal language, visual contracts

 

Database: A general Google search strategy was used without referring to any one database.

The main sources of evidence used for this particular subject are:

  • Geerlings, M., & van Montfort, A. J. G. M. (2020). What exactly did the judge decide? Clear language and well-arranged structure lead to better comprehensible court judgments. Archives of Business Research, 8(1), 248-260

  • Haapio, H., Plewe, D. and deRooy, R. (2016). Next generation deal design: comics and visual platforms for contracting. In Networks. Proceedings of the 19th International Legal Informatics Symposium IRIS (pp. 373-380).

  • Stefania Passera, Helena Haapio, and Thomas D. Barton (2013). Innovating Contract Practices: Merging Contract Design with Information Design, in PROCEEDINGS OF THE 2013 ACADEMIC FORUM ON INTEGRATING LAW AND CONTRACT MANAGEMENT: PROACTIVE, PREVENTIVE AND STRATEGIC APPROACHES.

  • Siebörger, I., & Adendorff, R. D. (2011). Can contracts be both plain and precise?. Southern African Linguistics and Applied Language Studies, 29(4), 483-504.

  • Assy, R. (2011). Can the law speak directly to its subjects? The limitation of plain language. Journal of Law and Society, 38(3), 376-404.

  • Masson, M. E., & Waldron, M. A. (1994). Comprehension of legal contracts by non‐experts: Effectiveness of plain language redrafting. Applied cognitive psychology, 8(1), 67-85.

 

The paper by Geerlings and Montfort (2020) tests whether a judgement given in a District Court in the Netherlands is more comprehensible to readers after it is improved in terms of linguistic and textual clarity. Linguistic clarity refers to usage of simple and clear language instead of old-fashioned or formal language. Textual clarity refers to flow of the text and placement of important sections within a document. The sample size of the study is 106 respondents. Majority of the respondents (76%) did not have any legal experience but were highly educated (had a bachelor’s or master’s degree). The size of this study is comparable to a small observational study so we grade the quality of the paper to be low, according to the GRADE methodology. 

 

Haapio, Plewe and de Rooy (2016) outline contracting pitfalls and propose new approaches to the use of visualisation to overcome them. This paper is based on literature and expert opinion. Given that visualisation in contracts is a relatively new concept, its usage is very limited. Consequently, the concept’s validity has not been empirically tested which means that large empirical studies or systematic reviews of this topic are lacking. Nonetheless, due to the absence of empirical research on this topic, we grade the quality of this paper to be very low. 

 

The article by Passera, Haapio and Barton (2013) explores the application of user-centred design, contract visualisation and information design in the drafting of contracts. It gives examples of countries where contracts have been visualised. Given that the article is based on the opinion of experts, the quality of this paper is graded as very low. 

 

The article by Sieborger and Adendorff (2011) tests whether plain language contracts are easier to understand than text written in legal language by redrafting an extract

from a lease agreement into plain English in three stages, producing three versions of

the extract in progressively plainer English. This study is comparable to a small experimental or observational study. According to the GRADE method, we grade the quality of this paper to be low.

 

Assy (2011) examines the advantages and disadvantages of using plain English in place of legal texts. While doing so, she cites numerous empirical studies and also develops arguments using literature and original analysis. This evidence primarily falls in the category of opinion of international experts, we grade the quality of this paper as very low. 

 

Masson and Waldron (1994) produce empirical evidence on the effectiveness of three kinds of simplification of standard legal contracts to increase understanding of the layperson. They redrafted a set of legal contracts using simple language and tested if usage of simple language contracts improved the understanding of non-experts. This size of this study is comparable to an observational study so we grade the quality of this paper as low. 

 

Quality of evidence and research gap

 

According to our research method, we grade the evidence comparing user-centred contracts and contracts containing legal expressions as very low. 

 

Literature on the effectiveness of user-centred contracts in enhancing well-being of employers and employees is in its nascent stage. This can be explained by the fact that user-centred contracts are a relatively new development in the field of contracts. Consequently, the use of user-centred contracts to document employment relationships is scant. Therefore, this recommendation uses literature that highlights the advantages and disadvantages of all contracts falling under the umbrella of user-centred contracts and is not specific to employment contracts. 

 

Despite the lack of literature or research done on this issue, we chose to develop a recommendation because we believe user-centred contracts have the potential to positively affect the well-being of employer and employee. Their usage is being currently debated among practitioners, which also makes it an important and relevant intervention that ought to be covered in a guideline for practitioners such as this one.

Recommendation

 

Legalistic employment contract 

User-centred employment contracts 

The use of specialist language helps in condensing complex information. For instance, in the sentence : ‘The discovery of gold in Gauteng triggered the modernization of South Africa,’ one nominalized process, discovery, is made to act on another nominalized process, modernization. If these two processes were expressed as verbs…congruently, one would need a longer and more complex sentence to convey the same meaning: Someone discovered gold in Gauteng, and this triggered the process by which people modernized South Africa” (Sieborger and Adendroff 2011, p.11). 


Legal language represents theories and principles that help in understanding of the law and resolution of disputes. “The body of theories, doctrines, principles, and rules knowledge that is embedded in legal language is necessary to fully account for the meaning and scope of legal concepts and to use them effectively and efficiently in court” (Assy 2011, p.403).  


Legal expressions have meanings beyond their dictionary definitions. These meanings help legal professionals in defining cases in a way that it takes into account unique features of every case. ”Legal expressions contain more than their dictionary-based linguistic definitions. These concepts are employed to leave room for later interpretation that would take account of legal policy and normative considerations, allowing these expressions to evolve on a case-by-case basis, thus deviating from their `raw’ or `core’ ordinary meanings, so to speak” (Assy 2011, p. 402). 


Even in ordinary language, the meaning of words changes according to their context. Similarly, legal expressions encompass more meanings than the linguistic definition so as to capture the various facets of a concept or expression. Therefore, language in contracts needs to retain its legal character so as to convey the right message. E.g. “The expression `contract’ and its components `offer’ and `acceptance’ may mean different things to different people: for some, verbal agreements would qualify as a `contract’ whereas for others only written ones would deserve that name. Likewise, individuals may disagree as to the degree of particularity and specificity required to render their agreement a binding contract, or whether agreements can be inferred from certain actions or omissions. Thus, if the law is to provide a unified meaning of what constitutes a ‘contract,’ it must inevitably deviate from one ‘ordinary’ definition in favour of another” (Assy 2011, p. 401).  


Legal expressions allow for the inclusion of all possible circumstances that may occur in future. This renders the law applicable in unforeseen situations, thus ensuring that laws stay relevant and sustainable in the course of time. “The scope of legal rules is dynamic; they evolve by being adapted, adjusted, restricted, qualified, or otherwise, to meet the needs of future cases” (Assy 2011, p. 396).


Legal clarity ensures that terms and conditions, consequences are clearly mentioned, without any scope for ambiguity and contradiction. So foregoing linguistic clarity to ensure legal clarity is more important. “For one thing, a text may be clear but so general or so incomprehensive as to make its application to concrete cases open to dispute and argument. A person may comprehend what is written, but not be able to find in the text the answer to his concern because of vagueness, open texture, and borderline factors. Therefore, there seems to be a point up to which the more detailed the law is, the clearer it is likely to be in the legal sense, that is, the better equipped it is to resolve legal conflicts in advance or provide guidelines for resolving them” (Assy 2011, p. 392).  


Plain language cannot replace some legal concepts, which require a specialist’s knowledge to understand. “Some legal concepts do not deal directly with human behaviour and therefore cannot be said to have any ordinary meaning that the layperson can appeal to. Some expressions are created by the law and they require some specific legal knowledge to decode them and apply them successfully …” (Assy 2011, p.403).


 


 

 

 

 

 

 


 



 

Visuals in contracts: Information design and visualisation redistribute information to different parts of the cognitive structure so the mind is not inundated with information and can process the message more efficiently. [This helps in] “clarifying what written language does not manage to fully explain. When readers interact with visual content, their information processing is more efficient and effective, leading to greater speed and fewer errors (Kirsh, 2010). This is because different presentation codes—verbal and visual, in this case—distribute the cognitive load on different information processing systems, preventing information overload (Keller & Grimm, 2005)” (as cited in Passera, Haapio, Barton 2013, p. 9).


Visuals in contracts: Lists, diagrams, variations in headings help in presenting information in a coherent manner. “Making the logic and structure of the documents more visible. This is achieved through access structures, which are typographic features of texts such as lists, headings of various types, summaries, indexes and diagrams revealing the structure of the document (Waller, 1979)” (as cited in Passera, Haapio, Barton 2013, p.10).


Visuals in contracts: “Visual elements assist readers in focusing on important items and processing the text selectively when necessary (Duchastel, 1982)” (as cited in Passera, Haapio, Barton 2013, p.10).


Visuals in contracts: “Visualizations support analytical thinking and the generation of new insights, because they make patterns explicit and accessible to users (Chabris & Kosslyn, 2005)” (as cited in Passera, Haapio, Barton 2013, p.10).


Visuals in contracts: “Visualization allows for an explicit encoding of information that makes concepts easier to understand (Kirsh 2010). Helping the parties articulate tacit assumptions and clarify and align expectations” (as cited in Passera, Haapio, Barton 2013, p.10).


Visuals in contracts: People who don’t respond well to excessive text feel demotivated in reading contracts. So visual elements engage the attention of the reader. “Information design can engage stakeholders who have been alienated by the conventional look and feel of contracts. User engagement is seen as crucial by different authors, because the readers’ affective response to a document ultimately affects the motivation to read and the attention paid to it” (Gribbons, 1991; Carliner, 2000) (as cited in Passera, Haapio, Barton 2013, p.10).


Visuals in contracts: Studies indicate that visual elements communicate risk better. “In a case study conducted at University of Oslo, a group of lawyers, managers, and engineers were asked to analyze the risks related to a contract proposal using a method based on graphical language and diagrams. The case study showed that graphical language was helpful in communicating risk amongst the participants, but also suggested the need for a combination of graphical and natural language for improved decision-making. (Mahler, 2010) (as cited in Passera, Haapio, Barton 2013, p.10).”


Visuals in contracts: Visualisation can reinforce the message contained in the text and reduce ambiguity. “The use of visualizations in the context of B2B procurement contracts has been recently evaluated in a case study carried out by one of the Authors in a Finnish company operating in the metals and engineering sector (Passera, 2012; Passera & Haapio, 2012). Both types of visualization provide a summary and a clarification of what was already stated in textual form, reinforcing its message and reducing ambiguity” (as cited in Passera, Haapio, Barton 2013, p.14).


Visuals in contracts: Visual elements improve speed of reading and comprehension. “A study conducted by Passera, 2012; Passera & Haapio, 2012 clearly indicate positive results in terms of speed of reading and enhanced comprehension, as well as a strong user preference for a visualized contract as opposed to a text-only version  (as cited in Passera, Haapio, Barton 2013, p.15).”A study tested understanding of law students of text from a bank guarantee form and its summary in plain English. Results reveal that the plain English text improves understanding of readers by 16% (Assy 2011, p. 386). 


Plain language: Studies indicate that judges and clients appreciate the use of plain language. “A number of studies confirm the preferred status of plain language among many groups of readers—clients (Adler, 1991), judges (Kimble, 2006, 2012) and the public (Plain Language Institute of British Columbia, 1993).  The use of plain language will make law more intelligible to lawyers as well” (Assy 2011, p. 383). 


Plain language: “Studies in which plain-language redrafts of texts are tested on likely readers show that the plain language text enabled faster and better understanding of the text. Two such studies are those by Kimble (2003) and Masson and Waldron (1994). Kimble’s study compared originals of a legal contract and a South African statute with versions that he had redrafted in plain language. In all cases, the redrafted versions were found to increase comprehension of the text, speed and ease of reading as rated by the readers who tested the documents” (Sieborger and Adendroff 2011, p. 7). In a study conducted in Australia that tested understanding of law students and lawyers of legal texts, plain language texts reduced the  “the time needed by law students to read the text was reduced by a third, and the time needed by lawyers was reduced by almost half” (Assy 2011, p.385).

“An empirical study conducted by Masson and Waldron (1994) showed that replacing legal or uncommon  words with more commonly used words and using straightforward syntax resulted in greater comprehension for the reader” (Sieborger and Adendroff 2011, p.7).  


Plain language: The use of plain language will enable people to “adhere to legal documents’ and will reduce the incidence of litigation by enhancing conformity to law”. This is because use of plain language will “help people in better understanding their rights and obligations” Assy 2011, p.383). 


Plain language: The use of plain language can “enhance the capacity of laypeople to evaluate the service provided by their lawyers and by the legal system” (Assy 2011, p.404). 


Plain language: Most lawyers and experts believe that there are good opportunities to improve the linguistic and textual quality of court judgments without affecting their legal quality (Van der Bruggen as cited in Geerlings and Montfort 2020, p.249).


Plain language: Studies show that “respondents prefer the rewritten forms and letters from district courts in terms of readability and comprehensibility,compared to the original ones” (Jansen & Steehouder, 1989; Van der Pool &Van Wijk, 2010 as cited in Geerlings and Montfort 2020, p. 249).

 

Legalistic employment contract 

User-centred employment contracts

Contracts govern the relationship between parties to the contract. But contract drafters are focused on the contracts and not on how to build a conducive environment for the relationship to develop. When “contract drafters too often seem focused exclusively on the contract itself rather than on facilitating successful relationships. This produces contracts that are unnecessarily complex and difficult to use (Passera, Haapio, Barton 2013, p.4)”. 


Excessive use of legal language in contracts is rooted in tradition and not on a strong logical rationale. “Common arguments focus on the difficulties of adopting plain language (Tiersma, 2006), rather than explaining why legalese is superior from a cognitive, communicational, or even “practical” (i.e. efficiency/effectiveness) perspective. Rather than a substantiated choice, legalese appears to be a professional convention, grounded in tradition and sustained by the difficulty of achieving change (Passera, Haapio, Barton 2013, p.8)”. 


Legalese can alienate other professionals who are also engaged in the fulfilment of the contractual relationship. “Cumbersome, jargon-laden contracts can alienate the very executives and domain experts whose contributions would be crucial to the success of those particular contracts (Malhotra, 2012), and the broader contracting process” (as cited in Passera, Haapio, Barton 2013, p.4). 


The focus on legalese prevents drafters from integrating the needs of those who construct the deal, draft the contract and those who must carry it out. “The need to produce traditional legal language in contracts (i.e lawyers drafting contracts for other lawyers) diverts drafters attention away from the needed integration among those who construct the deal, draft the contract, and those who must carry it out” (Haapio, Plewe and de Rooy 2016).


Because the layperson is not trained in understanding legal language, those who specialise in it have power over the layperson. “Those trained in understanding legal discourse can have particular power over laypeople…Few are able to understand the contracts they sign, which places power in the hands of contract drafters, who are able to introduce clauses in contracts that signatories might object to if they could understand what they meant” (Sieborger and Adendroff 2011, p.5). 


Legal language borrows words from Latin which is a language that the layperson is not familiar with. This compounds the issue of specialist language. Given that the use of such vocabulary varies across disciplines, it cannot be taught in schools. “…specialist legal vocabulary can be encoded in Latin forms such as sui generis, meaning “unique ” (Dictionary Unit for South African English 2002). Specialist vocabulary, unlike specialist grammar, varies across disciplines, so that it would be impossible to teach school pupils the vocabulary of every specialized text with which they may have to engage in their lives (Sieborger and Adendroff 2011, p.5).


Persons who are acquainted with the specialist language in capacity of it being a second language, find it all the more difficult to decode specialist text (Sieborger and Adendroff 2011, p.5). 


Some critics say that non-experts are not interested in reading legislation so translation into plain language is not required. However, other scholars have argued that the content of contracts concerns the everyday lives of people. Since they are affected by the dealings made, they have the right to understand what’s written. “Certain critics, particularly in the legal fraternity, argue that it is unnecessary and impossible to rewrite official texts in plain language. Hunt (2003) argues that non-experts are not interested in reading legislation, and so there is no point in writing laws in plain language. 

Kimble (2003) disputes this, saying that every law directly affects certain members of the public, who should therefore have a chance to read it for themselves, even if they may choose not to. This is in keeping with the principles of open democracy, in which all individuals should be able to comment on and contribute to government policies and laws that affect them” (Sieborger and Adendorff 2011, p.6).


It is financially draining or not possible for people who don’t understand legal text to hire someone to interpret it for them. “…contracts such as lease agreements, which untrained people are obliged to sign in order to receive certain goods or services, as O’Donnell (1983) points out. If such people had to seek a legal opinion in order to understand each contract they signed, they would soon be bankrupt and business would proceed at a much slower pace” (Sieborger and Adendroff 2011, p. 6). 


 

Visuals in contracts: To draft a user-centred employment contract, lawyers and managers who are usually responsible for drafting employment contracts will need assistance from designers. This requires additional efforts and costs to draw up the contract. “Companies may have to rely on professional designers to make a procurement contract” (Passera, Haapio and Barton 2103, p.19).


Plain language: According to Hunt (2003), plain language is not precise enough to be legally binding (as cited in Sieborger and Adendroff 2011, p.6).


Plain language: Plain language might simplify text, but it will not eliminate the need for lawyers because legal expertise is needed in interpreting laws, doctrines, principles. Plain language proponents argue that drafting in simple language will make the law intelligible to the larger public in a way that they would no longer require assistance of lawyers. However, there exist “complex aspects of the law that are not eliminated by mere simplification of language. Other skills such as the ability to identify the pertinent legal rules, principles, and doctrines, to recognize the relevant facts and classify them into the pertinent legal categories, and to engage in a particular type of interpretation and reasoning also play a role in making the law intelligible to the public” (Assy 2011, p. 378). 


Plain language: In a study conducted in Australia that tested the understanding of law students and lawyers of legal texts, plain language did not improve the accuracy of answers given by the participants. “…the empirical study conducted for the Victoria Commission, tested two excerpts from two Australian statutes against their plain English versions and found that the latter made no significant difference in the level of accuracy of the answers given by participants, who were law students and lawyers” (Assy 2011, p.385). 

 

Plain language: A study tested understanding of law students of text from a bank guarantee form and its summary in plain English. Results reveal that readers did not understand a third of the text which reveals that plain English is not a panacea to making documents such as a bank guarantee comprehensible (Assy 2011, p. 386). 


Plain language: Most empirical research has not tested understanding of the layperson of plain English, so we cannot conclude with full confidence that if legal professionals benefit from plain English text, then the layperson will. The “majority of the studies that tested the understanding of plain English texts were conducted with persons trained in law i.e judges, lawyers, and law students. These studies did not text the understanding of the layperson. We can only make a speculation that if law students benefited from plain English (albeit not immensely), laypeople might benefit even more” (Assy 2011, p. 386).


Plain language: There is no evidence indicating that the use of legal expressions has led to litigation or violation of the law due to lack of understanding by the parties involved. “No one has sufficiently demonstrated that the language used in the typical legal text (as opposed to what is anecdotally selected) gives rise to litigation, or to violations of the law, that could have been avoided had plain English been used”  (Assy 2011, p. 387).  


Plain language: The use of plain language will not help the user in understanding rules of procedure. This requires the help of a lawyer. In case an employment dispute escalates to litigation, the parties to the dispute will need a lawyer to navigate the rules of procedure set by the court. “Rules of procedure facilitate the process of investigating and determining a case, including rules on jurisdiction, joinder of parties, standing, pleadings, service, disclosure, expert evidence, cross-examination, appeal, and so on. Furthermore, the trial is governed by a set of evidence rules having to do with the kind of evidence that is admissible and for what purposes, types of evidence (documents, physical objects, oral testimony), the distinction between direct and opinion evidence, questions of weight, and so on. To be able to use this procedural and evidentiary apparatus, one needs to know which substantive legal rules are pertinent” (Assy 2011, p. 395).


Plain language: The use of plain language has limited benefits. To understand and navigate the complexity of a case, law users need knowledge of legal theory which non-experts are unlikely to possess. “For a law-user to develop a legal theory applicable to her circumstances, she must be able to identify which specific legal texts are relevant to her circumstances and which particular parts of these texts capture those circumstances. To do that, she needs to be aware of the different sources. These are important issues that have been so immensely cultivated in legal literature that they cannot be made straightforward or bypassed simply by breaking the law into short and elegant clauses, free of technical terms, or presented in a user-friendly style, as the Plain English Movement proposes” (Assy 2011, p. 394).


Plain language: An empirical study conducted by Masson and Waldron (1994) shows that “plain language redrafting could not completely demystify legal texts to lay readers. It led the authors to conclude that extra education in basic legal concepts and legal counselling may also be required” (Sieborger and Adendroff 2011, p.7).

From the section on desirable and undesirable outcomes, it is clear that including visual elements in contracts complements the text and helps the reader in understanding the contract better. As for using plain language in legal documents and contracts, that has its benefits to the extent that archaic vocabulary and long sentences are replaced with more clear and succinct ways of writing. However, as demonstrated above, it is clear that using plain language does not negate the need for lawyers unlike what some of the proponents of plain language would like to believe. Even if plain language is adopted in contracts, legal experts will be required to interpret various laws and doctrines. Having said that, we can conclude that visual elements and plain language both are beneficial to legal experts and the layperson alike, as they represent and communicate the message in a better manner.

 

Based on the above arguments, in the absence of empirical research, one can conclude that in the context of employment relationships, a user-centred employment contract that has plain language and visuals has clear benefits for the employee. He or she will be able to understand the role, rights and responsibilities and the terms and conditions of the employment relationship better. It is likely that the employer will incur additional costs and time in drafting an easily comprehensible employment contract. However, such investment on part of the employer is not a recurring event as a template of one employment contract can be used for other employees as well.

 

So, in the case of an employment contract, we suggest that current employment contracts should embrace plain language and visuals in contracts which will lead to development of contracts that are user-friendly and legally enforceable. Having said that, such a hybrid form of contract is unlikely to negate the need for a lawyer to interpret the contract or to deal with consequences arising out of an escalated employment dispute.

Taking into account the balance of outcomes and the quality and consistency of the evidence, we make the following recommendation: For employees and employers, who want to document rights and agreements before entering into an employment relationship, combining a user-centred contract along is most effective for well-being.

This recommendation is focused on requirements of an employment contract. Therefore, we have selectively chosen the desirable and undesirable outcomes of each intervention such that they are applicable to employment contracts. As a result, a few desirable and undesirable outcomes of the two interventions, that are not relevant to employment contracts, have not been included.

Single Employment Contract

Interventions and evidence

First literature search: During the orientation process of the available literature, we were able to identify two ways of documenting the rights of employers and employees 

  • Single employment contract

  • Dual contracts: permanent and fixed term contract 

Dual contracts

The European labour market is characterized by dualism or the simultaneous existence of fixed term contracts, also known as temporary contracts, and permanent contracts. As the name suggests, employees on temporary contracts or fixed term contracts  enter into an employment relationship for a relatively short period whereas permanent employees have open-ended contracts i.e there is no termination date specified in their contract. 

‘’This segmentation in the labour market can occur for a variety of reasons: related to technology (e.g. assuming that workers under different contracts are different factors in the production function); due to preferences – assuming that workers value being under a permanent contract differently than being under a temporary contract), or that they are subject to different market frictions’’ (Cao, Shao and Silos 2010, p.4).  Blanchard and Landier offer another explanation for the segmentation in the labour market. They posit that firms hire employees on a temporary contract for entry level positions. If the employer is satisfied with the performance of the employee, he or she is offered a permanent contract (as cited in Cao, Shao and Silos, p.4). 

Meanwhile, the  Eichhorst et al. (2018) posit that the absence of permanent employment motivates workers to take up temporary employment. Education does not emerge as a factor that pushes workers into temporary employment, except for countries such as Austria, Germany and Denmark where strong vocational programmes lead workers into fixed-term apprenticeships and contracts (ibid). 

The primary difference between fixed term contracts and permanent contracts is that they offer varying degrees of protection to the employee. Permanent contracts offer full protection to employees in terms of employment protection legislation as compared to temporary contracts. The fixed term contracts provide low quality benefits in terms of pay, opportunities for training, health benefits and access to social protection to employees. They are less likely eligible to receive skill enhancing training as employers will prefer to invest in skill enhancement of permanent employees. Fixed term contracts tend to offer none or a small severance payment. Young persons, migrants, low and medium-skilled workers make up the majority of the labour force in temporary/fixed-term employment (Eichhorst et al. 2018).

On the other hand, permanent employees enjoy the security of having a stable job, accompanied by opportunities to develop skill-sets and advance in their career, access to credit and housing in the market, health and other social security benefits (Dolado, Lale and Siassi 2015). 

Single employment contract

The single employment contract was introduced by the European Commission’s Green Paper on modernizing labour law in 2006. The idea was then further defined by the report Employment in Europe 2010 (Casale and Perulli 2014). 

Single open-ended contracts or single employment contracts is one of the solutions proposed by many to end dualism in the labour market in Europe. There are two types of single employment contracts:

  • Single employment contract that replaces all existing contracts by one single contract. This is called the pure single employment contract. 

  • Single employment contract that lies between permanent contract and temporary contract. It allows other types of contracts such as interim contract and agency contract to operate. It’s called the extended single employment contract. 

The latter one has a lot of supporters, especially among lawyers and economists. This contract would essentially replace fixed term contracts and permanent contracts allowing interim and agency contracts to operate. It calls for increasing the probation period, termed as contracts with long probationary periods (CLPP),  increasing the criteria based on which employees can be dismissed  and contracts offering more rights to the employees his/her tenure increases – termed as contracts with progressive seniority rights (CPSR). To offset the impact of these measures on the well-being of the employee, the single labour contract provides a severance pay to the employee so that incase of termination of the contract, the employee will be paid a certain amount. The size of this pay will depend on the seniority of the employee (Lepage-Saucier, Schleich, and Wasmer 2013). 

To reduce unemployment and tackle the duality of the market, several countries have introduced degrees of flexibility in their permanent contracts to give more leeway to employers. This initiative has achieved mixed results. For example:

1.       Example of long probation periods and severance pay: Contract Nouvelle Embauche (CNE)

CNE was implemented by French government in 2005. It allowed employers/employees to terminate a contract within two years of employment without justification. In case of termination of contract, employees had to be paid 8% of the salary earned since the beginning of the contract. This initiative did not work for legal reasons. Its successor, CPE (first employment contract) was also repealed due to protests and opposition from unions. 

 

2.      Italy in 2012 tackled the duality of the labour market replacing permanent contracts with open ended contracts. The open-ended contracts permitted employers to terminate the contract of an employee within 3 years of being employed. If an employee works for a firm for more than three years, then he or she has to be made permanent. However, this reform was eventually replaced with a reform that capped the duration for which a fixed term contract could be used, gives incentives to firms to convert apprentices into permanent workers and gives large and medium sized firms more leeway in firing workers. 

For employers and employees who want to document rights and agreements before entering into an employment relationship, is using dual contracts (permanent and fixed term) or the single employment contract more effective for wellbeing?

Key Words: fixed term contract, temporary work, single labour contract, single employment contract, dual contracts

 

Data Base: Since most  of the literature used on single-employment contracts has been published by think tanks and centres of labour economics, a simple Google search strategy was used to locate it.

The main sources of evidence for this particular subject are:

  • OECD (2019). OECD Input to the Netherlands Independent Commission on the regulation of work. 
  • Lepage-Saucier, N., Schleich, J., and Wasmer, E. (2013). Moving towards a single labour contract: pros, cons and mixed feelings. Sciences Po University.  
  • Eichhorst, W., Marx, P., Broughton, A., Linckh, C. (2018). Mitigating Labour Market Dualism: Single Open-Ended Contracts and Other Instruments. European Parliament: Brussels
  • Dolado, Juan José, Etienne Lalé, and Nawid Siassi. (2015) Moving towards a single labour contract: Transition vs. steady-state. Discussion Paper Series: Centre for Economic Policy Research (CEPR).
  • Bentolila, S., Dolado, J.J.  and Jimena, J.F. (2019). Dual Labour Markets Revisited. cesifo Working Papers. 
  • Garcia Perez, J.I. and Osuna, V. (2014). Dual labour markets and the tenure distribution: Reducing severance pay a single contract. Labour Economics, 29, p.1-13.
  • Cao, S., Shao, E. and Silos, P. (2010). Fixed-term and permanent employment contracts: Theory and evidence. CESifo working paper, No.3150. (This paper was not used in assessment of evidence. It was used only as a source in the introduction. So it is not graded)

 

The OECD (2019) report provides a comprehensive review of empirical and conceptual research addressing the issue of non-standard forms of work. It describes and analyses a few recommendations that address the dichotomy between fixed term contracts and permanent contracts. It presents trends in employment in the Netherlands using empirical data combined with the opinion of international experts. The empirical data used in the report is comparable to an observational study, we grade the evidence as low. 

 

The paper by Lepage-Saucier, Schleich and Wasmer (2013) analytically deconstructs single-employment contracts and demonstrates how the intervention will not eliminate dualism in the labour market. Examples of reforms undertaken in France and Italy are used as evidence to support this argument. The authors suggest undertaking partial reforms instead of the single employment contract. This paper contains literature review and empirical and policy research. In doing so, it develops a model that is comparable to a small observational study. So we grade the quality of this paper as low.

 

The article by Eichhorst et al. (2018) compares the single-employment contract with partial reforms. The analysis of single employment contract is not thorough, as compared to the research undertaken by Lepage-Saucier, Schleich and Wasmer. On the other hand, the article provides a rather comprehensive review of employment reforms undertaken by several countries in Europe. It uses literature review, case studies, policy review and some empirical data to substantiate its claims. So we grade this paper as low.

 

Doldo, Lale, Siassi (2015) in their paper, develop a theoretical model calibrated to the Spanish labour market prior to the Great Recession to examine the effects of introducing a single labour contract in an economy where employment protection afforded to permanent workers is very high and employment benefits given to temporary workers is low. This study is comparable to a small observational study. So we grade this evidence as low. 

 

This paper by Bentolila, Dolado and Jimeno (2019) provides an overview of recent research on dual labour markets. It has a literature review on theoretical and empirical contributions on the labour-market effects of dual employment protection legislation. It analyses the impact of dual contracts on employment, productivity, growth, wages and labour market inflows and outflows. The analysis presented is backed by literature review, some empirical research and policy discussions. So we grade this paper graded as low.  

 

The paper by Garcia Perez and Osuna (2014) evaluates Spain’s 2012 labour market reform of reducing severance pay from 45 to 33 days of wages per year of seniority and the introduction of a new subsidised permanent contract. They compare this policy with the introduction of a single open-ended labour contract with increasing severance payments for all new hires. To do this, they develop a theoretical model. This study is comparable to a small observational study so we grade the quality of this paper as low. 

 

Quality of evidence and research gap

 

There have been reforms made to labour contracts in Spain, Italy and France that inch close to what a single-employment contract might look like but single-employment contract has not been implemented in its full form in any country. So empirical research on that subject is lacking. Scholars have examined the effect of implementing a single employment contract by developing theoretical models and simulations, which is a standard practice in the field of economics as many interventions are tested in this manner because implementing them requires national and political buy-in. In that sense, we are yet to understand the true effects of the single employment contract. Therefore, despite the evidence being of sound research design, keeping in line with our methodology of grading evidence, we grade the overall quality of evidence as low. 


Note: Both interventions, dualism in the labour market and single-employment contract, have macro-economic ramifications such as productivity and growth. It is beyond the scope of this recommendation to explore these ramifications because they are not directly related to the well-being of the employer and employee. By limiting the analysis to the perspective of the employer and employee, we also intend on clearly identifying and highlighting the immediate impact of both interventions on the well-being of the employer and employee.

Recommendation

 

Dual Contracts (Temporary Contract/ Fixed term contract and Permanent Contract)

Single Employment Contract

Dual contracts offer flexibility to firms to adjust the size of the labour force depending upon market conditions.  Allows firms to adjust the demand for labour according to market conditions (OECD 2019, p.3).

The use of temporary contracts gives firms more choice in hiring employees in the long term. Short-term contracts allow firms to screen employees and examine whether they would like to employ them in the long term (Lepage-Saucier, Schleich and Wasmer 2013, p.12).

A model developed by Lepage-Saucier, Schleich and Wasmer (2013) shows that if temporary contracts are eliminated, employment levels will fall at a macro level. ‘The elimination of temporary contracts leads to a drop in total employment (by 7 percentage points in our quantitative exercise) and would require a very large reform of employment protection of permanent contracts in order to compensate for the loss of the temporary contracts as an instrument of flexibility (e.g. a decline by two third of the cost of laying off workers) (p.8).

Under dual contracts, permanent employees are well protected. Workers with permanent jobs develop stable working habits, their wages are relatively high, and they are highly protected (severance pay) in the case of a dismissal  (Lepage-Saucier, Scheich and Wasmer 2013, p.26).

‘Workers with a permanent contract, regardless of their individual characteristics or productivity levels, are much more likely to remain employed than temporary workers, as employers will choose not to renew temporary contracts when facing a bad shock’’ (Lepage-Saucier, Scheich and Wasmer 2013, p.26). 



As more employees transition from being into permanent employment, the cycle of employment to unemployment that employees experience when switching jobs will end for a large number of employees.“More employees will transition into permanent employment, there will be less churning (Eichhorst et al. 2018, p.45).” 

The introduction of the single labour market will reduce unemployment and job destruction. A model developed by Perez and Osuna by introducing a single employment contract for new/incoming employees in the Spanish labour market in the year 2012 shows that unemployment and job destruction will reduce by 31.5% and 35% (Perez and Osuna 2014, p.2). This brings down the duration of unemployment spells suffered by workers who swing back and forth between job and unemployment.

Employment related benefits will be distributed in a fair manner among all employees. Temporary workers are not entitled to a severance pay. Under the single employment contract, all employees will get a severance pay. The severance pay will increase with the seniority in the current job. (Lepage-Saucier, Schleich and Wasmer 2013, p.36).  

If all employees get a severance pay, the cost of dismissing all types of workers becomes the same for the firm. The firm cannot take advantage of a severance pay differential between permanent and temporary employees. This will in turn, smoothen the tenure of workers as ‘’22.5% more workers could have tenures of more than three years and there could be 38.5% fewer one-year contracts’’ (Perez and Osuna 2014, p.3).


Employees have varying degrees of skill sets. Under dual contracts, firms cannot retain high-performing employees on temporary contracts and terminate permanent employees as it affects the morale of other permanent employees. Under single employment contract, since all workers have the same contract, terminating contracts of under performing employees is easier for firms. It will increase the productivity of firms. (Lepage-Saucier, Schleich and Wasmer 2013, p.8).  


Firms can change the size of the labour force in response to upheavals in the market by terminating contracts of employees who are under probationary periods. This is especially true for Contracts with Large Probationary Periods (Lepage-Saucier, Schleich and Wasmer 2013, p.26).


The Continuous Progressive Seniority Rights will eliminate discontinuities in the degree of employment protection as all employees will have minimum protection at the time of entering the firm (Lepage-Saucier, Schleich and Wasmer 2013, p.26). 

Single employment contract decreases requirements for dismissal by expanding grounds on which the contract can be terminated. This is beneficial for employers as it gives them room to expand or reduce the labour force (Lepage-Saucier, Schleich and Wasmer 2013)

A model developed by introducing single-employment contract in the Spanish labour market prior to the Great Recession shows that consumption levels (consumer spending on health, education, goods and so on) of new workers increases by 1.7% as they did not experience long unemployment spells, they will have high entry wages and lower unemployment insurance tax (Dolado, Lale and Siassi 2015, p.4). The current generation of workers will witness an increase of 0.9% in their lifetime consumption.  87% of these workers stand to win, however the wins are distributed equally across different age groups.  Prime age workers (18-54) gain by 1.3% whereas older workers (54-64), lose by the same magnitude. (Dolado, Lale and Siassi 2015, p.4 & 5).

‘’A single labour contract will reduce the complexity in the menu of contracts for employers. This is true only if it really replaces temporary contracts instead of creating a new one ‘’((Lepage-Saucier, Scheich and Wasmer 2013, p.33).

 

Dual contracts in the labour market

Single Employment Contract

Workers face employment volatility: Access to stable jobs is reduced and there is a recurrent spell of temporary jobs (Dolado, Lale and Siassi 2015, p.2). Empirical evidence shows that in some cases this is true and in some, not. Workers face volatility depending on where they are geographically situated. In countries with low firing costs on open ended contracts and a lower prevalence of fixed term contracts, fixed term contracts serve as stepping stones to permanent employment. Eg. Austria, Denmark, Germany, Sweden, the Netherlands, the UK or the US–, though even for these countries there are conflicting results. On the other hand, the evidence shows that the stepping stone hypothesis does not hold true in dual labor markets with high EPL gaps and a high FTC incidence –such as Italy and Spain (Bentolila, Dolado and Jimeno 2019, p.18).The transition rate (from temporary to permanent employment) in France is 10%, Spain is 12%, 12.3% in the Netherlands and 12.6% in Greece. The average rate of transition from temporary work to permanent work in European Union is 22.8%. Certain countries and sectors are marked by chains of fixed term contracts of the duration of 12 months (Eichhorst et al. 2018).Several countries such as Belgium, France, Hungary, Latvia and Lithuania offer temporary contracts of one to three months only.  As a consequence, fixed term workers oscillate between temporary jobs and unemployment (Dolado, Lale and Siassi 2015). 

Unskilled people, youngsters, immigrants are more likely to work on temporary contracts.The dual contract system ‘allows employers to discriminate between workers based on demographics or skills’’ (Lepage-Saucier, Schleich and Wasmer 2013, p.26) . 

Workers in fixed term contracts have lower wages (Lepage-Saucier, Scheich and Wasmer 2013, p.26). 

Fixed term workers have low bargaining power: Workers on flexible contracts often lack voice. This is partly due to their weak labour market position, as a consequence of which many do not dare to raise their voice out of fear of losing their job. This may be due partly to the legal limitation of membership and/or voting rights for works councils to employees with a permanent contract and partly due to the fact that the interests of flexible workers are not (sufficiently) represented by trade unions (Eichhorst et al 2018, p.44). 

Temporary employees receive fewer opportunities for improving skills: Temporary employees are less likely eligible to receive skill enhancing training as employers will prefer to invest in skill enhancement of permanent employees (OECD 2019, p.41). For instance, a study based on the Survey of Adult Skills (collected by the OECD over 2008-2013 in 21 countries) reports that being on an FTC reduces the probability of receiving employer-sponsored training by 14%  (Bentolila, Dolado and Jimeno 2019p.19).

Firms face high turnover setting off gains from flexibility: Temporary employees receive a low severance pay, if any. This leads workers to quit, as show my research conducted in France and Spain. A high rate of employees quitting nullifies gains from improved flexibility for the employer (Lepage-Saucier, Scheich, p.26).

Banks are less willing to grant temporary workers a loan in order to buy a house and landlords favour workers with permanent contracts making it more difficult for a temporary worker to rent a house or an apartment (Cahuc and Kramarz as cited in Lepage-Saucier, Schleich and Wasmer 2013) . For instance, Cahuc and Kramarz  report that in France, young workers (between 20 and 35) are 4 to 8 percentage points more likely to live on their own and not with their family when they have a permanent contract as opposed to a temporary contract. At all ages above 30, there is a 10 to 15 percentage point difference in the home ownership rate between the two types of contracts, the rate being higher for permanent workers (Lepage-Saucier, Schleich and Wasmer 2013, p.30).

The usage of temporary contracts is increasing bringing down employment related benefits for a significant number of workers which can cause social unrest. Fixed Term Contracts are now not prevalent only among young workers, but they are also becoming more common among adult workers. When these workers reach pensionable age, it is unlikely that their labour history will meet the statutory requirements for a contributory pension, so that they will fall into much less generous assistance pensions. This development is bound to cause social unrest and a demand for higher non-contributory pension levels (Bentolila, Dolado and Jimeno 2019, p.30). 

Dual employment contracts reduce efficiency because permanent employees become complacent knowing that they cannot lose their job and because the contract of fixed term employees cannot be terminated in advance, firms hire them at a lower entry wage- ‘Cahuc et al.’s (2016) model shows that dual EPL reduces efficiency. The reason is that when firing cost increases, the average productivity of workers on open-ended contracts increases. This is because firms retain open-ended jobs with lower productivity, i.e. standard labour hoarding. A higher firing cost also raises the duration of fixed term contract jobs, since firms face lower incentives to convert them into open-ended contract jobs due to the smaller surplus of the latter. As a result, in countries where fixed term jobs cannot be destroyed before they expire, they are kept more often, leading firms to pay positive wages to unproductive fixed term contract workers. This reduces their entry wage (which is not renegotiated) (Bentolila, Dolado and Jimeno 2019, p.18). Similarly, firms might lay off “good” temporary workers and not be able to lay off workers in permanent contracts that have a low productivity (Lepage-Saucier, Schleich and Wasmer 2013, p.33).

A negative externality is that employers will increasingly use agency contracts/ training /apprenticeships contracts which are also precarious forms of employment, to avoid using single employment contracts (Lepage-Saucier, Schleich and Wasmer 2013, p.35). 

‘’The extended trial/probationary period reduces job security for employees  Incorporating new legal motives for dismissal into the single employment contract also has the same effect of reducing job security. This is equivalent to the job insecurity experience by employees under dual contracts’’ (Lepage-Saucier, Schleich and Wasmer 2013, p.32)

Given that fixed duration contracts are fairly well protected, unions are unlikely to support a single employment contract with a long probationary period as it reduces the protection offered to permanent employees. ( Lepage-Saucier, Schleich and Wasmer 2013, p.36). This was observed in France (mentioned previously) . 

The provision of increasing severance pay depending on seniority of the employee discourages professional mobility (Lepage-Saucier, Schleich and Wasmer 2013, p.62). 

‘’To circumvent cost of lay-off, firms may induce quitting by bullying the employee.  Firms may increase monitoring of workers to ensure that employees make an adequate level of effort which puts employees under psychological pressure.’’ (Lepage-Saucier, Schleich and Wasmer 2013, p.35).

Workers who are under a long probationary period will have challenges in accessing credit for housing as banks are likely to discriminate between the workers who are past the probationary period and workers who are still under their probationary period (Lepage-Saucier, Schleich and Wasmer 2013, p.30) .

Abilities of employees under single-employment contracts will be questioned if their employment contract is terminated by the employer, as the expectation is for the employee to transition into permanent employment.If a worker under a Contract with Progressive Seniority Rights (CPSR) or with Long Probation Periods (CLPP), is laid-off, it is likely to send a negative signal in the absence of objective reasons: the termination of such a contract would be due to workers’ effects such as lack of skill or motivation with certainty, not to firms’ effects or the formal impossibility to go on with the contract. So workers will not receive the benefit of the doubt. Him/her being laid off will be considered to be a reflection of his motivation/skill set (Lepage-Saucier, Schleich and Wasmer 2013, p.33).


Employees under a single-employment contract may not receive skill-enhancement training. ‘’Workers under temporary contracts are typically not trained as employers perceive them to be temporary workers so they don’t invest resources in training them. Workers under long probationary periods in single employment contract will not benefit from more training under the current incentive system of training. Workers in a CPSR may have better access to training, but this remains to be demonstrated.’’ (Lepage-Saucier, Schleich and Wasmer 2013, p.32)


The single employment contracts provides a high employment protection which scholars have shown to have a negative effect on productivity of the firm or industry. ‘’Employment protection generally has distortive effects on capital accumulation and misallocation of productive units leading to lower productivity. Hopenhayn and Rogerson (1993) and Bertola (1994) find that productivity is lower because of a misallocation of employment in technologies, favouring less productive structures, leading to reduced incentives for capital accumulation. Bassanini et alii. empirically document the link between employment protection and productivity growth and find that EPL reduce productivity growth in industries where EPL are more likely to be binding’’ (as cited in Lepage-Saucier, Schleich and Wasmer 2013, p.34).


The stress of losing a permanent job is high for employees under a single employment contract. ‘’Given that risk of layoff is lower but associated loss is higher, Postel-Vinay and Saint-Martin (2005), Clark and Postel-Vinay (2009), and Deloffre et Rioux (2004) showed that employees perceived their job to be less secure using the European Community Panel survey data’’. (Lepage-Saucier, Schleich and Wasmer 2013, p.35).


Because employees will transition into permanent employment, even if they are not satisfied with their job, they will continue working in that position instead of quitting. ‘Lower labour turnover leads to a mismatch effect leading to potential job dissatisfaction among employees’ (Lepage-Saucier, Schleich and Wasmer 2013, p.35).

Dualism in the labour market has obvious and large disadvantages for employees. Employees on fixed term contracts or temporary contracts receive low wages and fewer employment related benefits such as pension and severance pay as compared to employees on permanent contracts.They are also subject to recurring spells of unemployment as they move from one employer to the other. They might face discrimination in the housing and loan market as financial institutions perceive them to have insecure and underpaid jobs. Given that the tenure of fixed term employees in the company is short, firms don’t provide them skill-enhancement training as a result, employees lose out on career advancement opportunities. 

 

The single employment contract gives employees the opportunity to become permanent employees of the firm, an advantage not given under dualism. So a single-employment contract provides employees job security. Given that it provides a baseline/minimum level of advantages to employees at the time of entry, there is continuity in job-related benefits. As the level of benefits that employees will receive will increase as their tenure increases, employees the level of protection provided increases. The theoretical model developed by Garcia Perez and Osuna (2014) by calibrating the 2012 Spanish labour market shows that job tenure of workers will increase, unemployment will fall and rate of job destruction will fall. 

 

However, this was a theoretical simulation where the authors controlled all parameters of the hypothetical reform of single employment contract. In practice, there is no clear indication of the level of baseline or floor of social protection benefits that single employment contracts offer. If the level of benefits provided is too low, then employees will face disadvantages similar to those that come with fixed-term contracts. In other words, the workers who are under a long probationary period and receive low protection while starting off will be stigmatised, just as workers who are under a temporary or fixed term contract. They will encounter challenges in accessing housing credit from banks as banks are likely to give preference to workers who are senior and are past the probationary period. 

 

To address this problem, the design of the single-employment contract should be such that employees under probationary period should be able to climb up the ladder of the payscale and become permanent employees at a relatively swift pace. Similarly, new employees should also have a basic floor of rights (receive a minimum salary and other financial benefits) so that they don’t start at the very bottom. Employees under low seniority should also have the right to receive skill-enhancing training. 

 

Tying the level of benefits to tenure also brings with it its own set of problems. It reduces mobility of the employee and encourages him or her to hold on to the job even when they are dissatisfied with it and would find it more beneficial to switch to a different company. On the other hand, it prevents employers from bringing in younger or more suitable persons. This issue can be resolved if the level of benefits is tied to the years of work experience that the employee has, instead of the completed tenure. Here, an employee can change jobs without the fear of losing out on the accrued benefits and the employer will also be able to maintain efficiency. 

 

Another aspect of dualism is the concentration of unskilled persons, youngsters and women in temporary jobs or fixed term contracts. It is not yet clear how the single-employment contract would address this problem.

 

There is very little literature on costs and benefits to firms of the single-employment contract. So we cannot fully assess the impact of the single-employment contract on firms. Below is what we know. 

 

For firms, the single-employment contract can act as a screening tool to retain high performing employees and let go of under-performing employees while they are on a probationary period. But for employees, that will lead to stigmatisation of workers who were laid off, as the common understanding in society would be that an employee on a single-employee contract should ideally progress to becoming a permanent employee. 

 

Temporary contracts allow firms to adjust the size of the labour force to economic conditions (p.25). Single-employment contracts do not address this need of firms. If employees with low seniority rights or under probationary period are terminated, it breaks the implicit contract of long-term employment affecting the morale of other employees in the firm and can also lead to litigation. This leads us to conclude that perhaps the single-employment contract is more suitable for firms who intend on offering employees long term employment and is not suitable for firms whose requirements fluctuate tremendously along with changes in market conditions.  

 

To conclude, dualism in the labour market is costly for both employers and employees. Having said that, scholars reason that the costs of dualism are still not well documented (Lepage-Saucier, Schleich and Wasmer 2013). The best way to tackle dualism in the labour market is an ongoing debate. The single-employment contract is a recent instrument suggested by economists and lawyers, the discussion of which is just taking off. It has not been implemented in its full form in any country. Researchers have arrived at advantages and disadvantages of the intervention by analysing them theoretically, by using simulations and by analysing reforms that come close to a single employment contract. So we don’t have a clear outline, design or conceptual and empirical understanding of this intervention either. Additionally, the literature on the single-employment contract has focused on evaluating its impact on employees. Very little is known about what costs and benefits it entails for employers. 

 

Furthermore, dualism in the labour market and single-employment contracts are inter-linked with labour laws, social security benefits and macro-economy of a country. To understand the full impact of both these interventions, it is necessary to understand how both these interventions interact with them. This leads us to conclude that the desirable and undesirable outcomes of both are not completely understood by scholars and policy-makers alike. This limits the strength of our analysis. 

 

Based on the evidence that we have, we conclude that the single-employment contract is preferable to dual contracts for employees. Given that little information exists of its impact on employers, we refrain from recommending it over dual contracts. However, to err on the side of caution, we believe that the effectiveness of the single-employment contract on the well-being of the employee is predicated on the design of the specific measure (level of protection in terms of notice period, severance pay and other employment related benefits provided to the employee) , interaction with labour markets, social security instruments and the socio-economic context.

The discussion in the balance of outcomes suggests that the single-employment contract has the potential to be more effective for the well-being of the employee as compared to having dual contracts. More research needs to be done on the costs and benefits for the employer of  the single employment contract. Until then, it cannot be ascertained if one is preferred over the other.

Dual contracts and the single employment contract are topical topics in the field of economics and labour market legislation. To bring about changes in the contractual relationships between employees and employers, rules, regulations and laws in those countries also need to change. Therefore, this recommendation needs support from policy makers for it to materialise. But in the absence of support from policy makers, employers and practitioners can work towards crafting contracts that give all employees the chance to benefit from employment related benefits.

Collaborative / integrative conflict-management style

Interventions and evidence

First literature search: most plausible interventions

  • Integrating/Collaborative Conflict Management Style
  • Compromising Conflict Management Style



Disputes that arise at the workplace are often related to tasks or activities that are related to projects. Team members have to work together to find solutions to the disputes. In such circumstances, if a team member is too dominating or is not concerned about the needs of his or her teammates, or behaves in the opposite way, by giving in to the wishes of the other person, it can lead to suboptimal outcomes for the organisation or strained relationships among team members. Therefore, in this recommendation, we will compare two interventions that can shape interpersonal or task related activities at the workplace. 

 

“Research on conflict management styles reveals that there exist 5 conflict management styles based on how cooperative (concerned for others) and assertive (concerned for self) an individual is in a conflict situation Those are: 

  1. dominating or competing, a focus on winning the conflict
  2. avoiding, withdrawing from a conflict and allowing the other party to gain all demands
  3. accommodating, allowing others to win in a conflict situation
  4.  compromising, based on giving concessions
  5.  collaborating or integrating, seeking mutually advantageous gains by both parties (Thomas 1977;  Rahim 1983 as cited in Jordon and Troth 2004, p.201)”

 

Of the five conflict management styles, we have chosen to compare compromising and collaborative/integrating as literature indicates that these two are the most effective and recommended strategies in resolving task related conflicts (Rahim 2002 as cited in Chung-Yan and Moeller 2010, p. 382). 

 

Integrating/Collaborative Conflict Management Style

 

“The integrating style (also described as problem solving, collaboration, cooperation, solution-orientation, and win-win or positive-sum style) focuses on problem solving in a collaborative fashion. It involves collaboration between the parties through open exchange of information, information seeking and sharing, and examination of differences for the diagnosis of and solution to a problem acceptable to both parties. Individuals with this style face conflicts directly and try to find new and creative solutions to the problems by focusing on their own needs as well as on those of others. Hocker and Wilmot (1998) maintain that this style is both direct and cooperative” (Yu, Sardessai and Lu 2006, p.21). “People using an integrating style have concerns for themselves and for others… (Rahim, 2000)” (as cited in Saeed et al. 2014, p.217).

 

 

Compromising Conflict Management Style

 

“The compromising style involves give and take, whereby both parties give up

something to make a mutually acceptable decision, characterized by moderate levels of

both cooperation and assertiveness” (Saeed et al. 2014, p.217). “The objective is to find an expedient, mutually acceptable solution that partially satisfies both parties. Compromise might mean splitting the difference, exchanging concessions, or seeking a quick middle-ground position”(Sportsman and Hamilton 2007, p.158). “Both parties have moderate concern for self and others” (Vokic and Sontor 2009, p.7). 

For parties to an employment dispute looking to find solutions on contentious issues (shaping solutions), is collaborative conflict management style or compromising conflict management style more effective for well-being?

The databases used are: Elsevier, Routledge, Emerald Insight

 

For this PICO question, keywords used in the search strategy are: conflict management styles, collaborative conflict management style, compromising conflict management style

The main sources of evidence used for this particular subject are:

 

  • Saeed, T., Almas, S., Anis-ul-Haq, M., & Niazi, G. S. K. (2014). Leadership styles: relationship with conflict management styles. International Journal of Conflict Management.
  • Chen, X. H., Zhao, K., Liu, X., & Wu, D. D. (2012). Improving employees’ job satisfaction and innovation performance using conflict management. International Journal of Conflict Management.
  • Huan, L. J., & Yazdanifard, R. (2012). The difference of conflict management styles and conflict resolution in workplace. Business & Entrepreneurship Journal, 1(1), 141-155.
  • Abas, N. A. H., Surdick, R., Otto, K., Wood, S., & Budd, D. (2010). Emotional intelligence and conflict management styles (Doctoral dissertation, University of Wisconsin-Stout).
  • Chung‐Yan, G. A., & Moeller, C. (2010). The psychosocial costs of conflict management styles. International Journal of Conflict Management.
  • Paul, S., Seetharaman, P., Samarah, I., & Mykytyn, P. P. (2004). Impact of heterogeneity and collaborative conflict management style on the performance of synchronous global virtual teams. Information & Management, 41(3), 303-321.
  • Peter J. Jordan & Ashlea C. Troth (2004) Managing Emotions During Team Problem Solving: Emotional Intelligence and Conflict Resolution, Human Performance, 17:2, 195-218
  • Deborah Weider-Hatfield & John D. Hatfield (1995) Relationships Among Conflict Management Styles, Levels of Conflict, and Reactions to Work, The Journal of Social Psychology, 135:6, 687-698,
  • Wall Jr, V. D., Galanes, G. J., & Love, S. (1987). Small, task-oriented groups: Conflict, conflict management, satisfaction, and decision quality. Small Group Behavior, 18(1), 31-55.
  • Tang, S. F., & Kirkbride, P. S. (1986). Developing conflict management skills in Hong Kong: An analysis of some cross-cultural implications. Management education and development, 17(3), 287-301.

 

The study by Saeed et al. (2014) examine the relationship between leadership styles and

conflict management styles among managers, while handling interpersonal conflict (managers and subordinates). A survey was conducted with 150 middle-level managers from various industries in the private sector. The data was analyzed using regression analysis. A plus point of this study is that it has received 123 citations while a minus point is that majority (115) of the participants in this study are men, so the sample is skewed. Taking into consideration all these factors, we assess the quality of this study to be moderate, as per the GRADE approach. 

 

The study by Chen, Zao and Liu (2012) examines how conflict management behavior impacts job satisfaction and innovation performance. For this purpose, the authors conducted a survey with 333 employees in China. The sample composition appears gender and education level balanced. The paper has received 133 citations. Taking into account all these factors, we assess the quality of the study to be moderate, according to the GRADE approach. 

 

The paper by Huan and Yazdanifard (2012) is a review of conflict management styles and conflict resolution from the managers and supervisors’ point of view. It is largely based on expert opinion and literature review. Therefore, we assess the quality of this paper to be very low, according to the GRADE approach. 

 

The paper by Chung-Yan and Moeller (2010) examines the interactive effect of interpersonal conflict at work and adopting an integrating/compromising conflict style on workers’ psychosocial wellbeing. Data was drawn from an online survey of 311 young employees living in Canada. Authors of the study have not indicated the sample composition of participants in terms of income level, ethnicity but have reported on age and gender. The study has received a moderate number of citations(50). Taking into account all these factors, we assess the quality of the study to be moderate, according to the GRADE approach.

 

The study by Paul et al. (2004) explores the relationships that might exist among the heterogeneity of the virtual teams, their collaborative conflict management style, and their performance outcomes. The authors conducted a laboratory experiment in which homogeneous and heterogeneous virtual teams, consisting of students from the USA and India, worked independently on a decision task involving the adoption of a computer use fee by an online university. In total, there were 63 participants in the study. This study is comparable to a small experimental study. So according to the GRADE methodology, we assess the quality of this study to be low. 

 

The study by Jordan and Troth (2004) examines how emotional intelligence predicts individual performance, team performance, and conflict resolution styles. A regression analysis was conducted using data of 350  student respondents. The study has been cited widely (737). Given the sample size used in the study and its citations, we assess the quality of this study to be moderate, according to the GRADE approach. 

 

The study by Weider-Hatfield and Hatfield (1995) examines the relationship between conflict management style, level of conflict and outcomes experienced by employees in the USA. Data was collected from 125 full-time managers (59 women) from state, regional, and local volunteer organizations. The study has received 174 citations until now. Taking into consideration all these factors, we assess the quality of this study to be low according to the GRADE approach. 

 

The study by Wall, Galanes and Love (1987) examines the relationship between the amount of conflict experienced, the style of its management, individual satisfaction, and decision quality of small, task-oriented groups. Data was collected from 129 students studying in an American university. The study has received 123 citations until now. Taking into consideration all these factors, we assess the quality of this study to be moderate according to the GRADE approach. 

 

The paper by Tand and Kirkbride (1986) reports the results of an empirical study into the orientations towards conflict and preferred conflict management styles of Chinese managers in Hong Kong. The paper examines how traditional values of the Chinese affect their conflict management styles.  A survey was conducted with 150 Chinese and British executives working in government and private sector. In all, it has received 158 citations. Taking into account all these factors, we assess the quality of the study to be moderate, according to the GRADE approach. 

 

Quality of evidence and research gap

 

Research on collaborative and compromising conflict management styles is supported by empirical studies as well as expert opinion. However, more empirical research is needed on compromising conflict management style. According to the Actionable Recommendations document and GRADE methodology, the overall strength of evidence is very low.

 

Note: Literature indicates that some of the desirable and undesirable outcomes of collaborative and compromising conflict management styles are the same. So readers will find the same outcome under both interventions.

Recommendation

 

Collaborative Conflict Management Style

Compromise Conflict Management Style

Open discussions among team members will lead to better understanding of the issue at hand and consensus on a solution. “Poole and Roth (1989) and Putnam (1986) argued that a more collaborative style in teams will result in superior outcomes because it encourages more open discussion and cooperation among members that will help the team synthesize information to derive a common solution” (as cited in Jordon and Troth 2004, p.201).


Studies have shown that supervisors who use an integrating style achieve more behavioral compliance, are less likely to experience persistent conflict at work and have less disputes (Rahim and Buntzman, 1990)” (as cited in Saeed 2014, p.217).


A study of 63 participants from the US and India, the participants required to make a decision. Findings of the study indicated that in groups that involved everyone in the decision making process, people felt that the final decision made was fair and felt satisfied with it.“The groups with higher levels of collaborative conflict management style attempt to integrate the views of all participants. They felt that the final decision is fair and the best outcome that the group can offer. As a result the members’ perception of decision quality improves” (Paul et al. 2004, p.316).


Collaborative conflict management style indicates high emotional intelligence i.e people are good at tackling their own and others emotions. So this intervention is correlated with qualities that are essential for managing interpersonal relationships. “Jordan and Troth (2002) found a link between collaboration as a preferred style of conflict resolution and the ability to deal with one’s own emotions and the ability to deal with others’ emotions” (as cited in Jordon and Troth 2004, p.213). This was confirmed in a study that examined conflict resolution styles and emotional intelligence of 350 respondents. The study showed that “individuals within teams were more likely to use integrative (collaborative) tactics if they were in a team that had higher average levels of emotional intelligence” (Jordon and Troth 2004, p.212). 


In a study of 125 full time managers based in the US, it was observed that people who used a collaborative style in tackling conflicts with supervisors reported less intrapersonal, intragroup, and intergroup conflict. “…participants who described themselves as high integrators in situations that involved managing conflict with supervisors reported significantly less intrapersonal, intragroup, and intergroup conflict than low integrators did” (Weider-Hatfield and Hatfield 1995, p.696).


Being able to collaborate and resolve disputes can increase the confidence of both parties and give them a sense of accomplishment (Chung-Yan and Moeller 2010, p.385).


Subordinates give good inputs to supervisors who use collaborative style, which can help the company prosper which in turn is beneficial for employees. “…supervisors who encourage an integrative approach are likely to receive valuable input from subordinates (Weider-Hatfield and Hatfield 1995, p.697). 


Parties using collaborative style want to resolve their own problems as well as that of the opposite party. This causes them to explore issues fully and also incorporate the suggestions of all parties. “With an integrative approach, according to Thomas, both parties are more highly motivated to ensure that their own concerns, as well as the concerns of the other, are met in the ultimate outcome of the situation. For this reason, communication will generally be more complete and accurate, the issues will be explored more fully, and a genuine attempt will be made to incorporate the suggestions of all parties into the solution. This in turn should yield outcomes of higher quality” (Wall, Galanes and Love 1987, p.31).


People who deploy collaborative style have good interpersonal relationships and pursue common goals which result in innovative solutions. “Employees who favor integrating behaviors are often relationship-oriented and object-oriented. They take responsibility to pursue common goals and are open-minded at the same time. They often have good interpersonal relationships. This creates frequent open discussion, which is significant for viewpoints integration and innovation” (Chen, Zao and Liu 2012, p.166). 

A person who compromises understands that time and resources are limited, which helps in reaching targets of the organisation. Compromise requires cooperation with team members, which results in improved relationship with team members. “Finally, it is important to note that Jamieson and Thomas (1974) showed com-

promise or accommodation were appropriate and acceptable conflict resolution behaviors when time and resources are limited and the issue is not important. For the emotionally intelligent individual in this study, we recognize the possibility that compromise or accommodation might be an appropriate response during the performance task and may be a sign of their ability to recognize and regulate their emotions to enhance their relationship with fellow workers and to achieve their goals within a limited timeframe” (Jordon and Troth 2004, p.202).


Compromising conflict management style is positively related to interpersonal outcomes such as a sense of belonging, recognition, appreciation, and job friendships.” (Weider-Hatfield and Hatfield 1995, p.687)


Compromising is linked with high emotional intelligence as it is interlinked with high self-awareness. So this intervention is correlated with other positive personality traits. “Emotional intelligence was also able to predict a compromising style of handling conflicts with a positive significant relationship; F (1, 40) = 4.40, p < 0.05. The compromising style also could be predicted by supervisors’ self-awareness; t(36) = 2.33, p < 0.05, indicating that the higher self-awareness the supervisors had, the more the compromising style would be used by the subordinates. In Kabanoff’s (1989) theoretical review of compromising, he found that compromising conflict management was favorably viewed, especially for less competitive people because they portrayed it as a sign of strength. (Abas et al. 2010, p. 21). 


Being able to compromise and resolve disputes can increase the confidence of both parties and give them a sense of accomplishment. “…the mutually satisfying solutions attained through active and cooperative conflict management styles (i.e. integrating and compromising) may result in greater confidence and sense of accomplishment, and in turn, improved health and well-being.” (Chung-Yan and Moeller 2010, p.385).


In China, people believe that when disputes continue for a long duration, compromising is an effective way of handling conflict. “For example in China, integrating is not the only way to manage conflict, sometimes if disputes continue, compromising will be a good way to handle conflict” (Chen, Zao and Liu 2012, p. 167). 

 

 

 



 

 

 

 



 

Collaborative Conflict Management Style

Compromise Conflict Management Style

A study of 63 participants from the US and India required the participants to make a decision. In this study, it was found collaborative style of conflict management did not improve the level of agreement in the group.“The results of the study, however, did not support our expectation that the group agreement level improves with higher levels of collaborative conflict management style” (Paul et al. 2004, p.316).


Collaborative style of conflict management can also increase intrapersonal and intragroup conflict. So this “…supervisors using a high-integrating style with subordinates reported more intrapersonal and intragroup conflict…” (Weider-Hatfield and Hatfield 1995, p.687). Or in other words, managers’ attempts at using integrative approaches to managing conflict with subordinates may involve additional levels of conflict (Weider-Hatfield and Hatfield 1995, p.692).


Collaborative style will lead to better outcomes only when decision-making is rigorous. “…Hirokawa (1982) found that the positive relationship between consensus-which by extension is analogous to an integrative approach-and quality of outcome held true only under conditions of vigilant decision-making (as cited in Wall, Galanes and Love 1987, p.35).


Falk (1981) found higher quality decisions to be associated with the distributive, not the integrative, style of conflict resolution  (as cited in Wall, Galanes and Love 1987, p.35).


It takes a lot of time and effort to arrive at solutions that are acceptable to both parties (Huan and Yazdanifard 2012, p. 146). 


When people compromise, the main issue goes unresolved, which leads to suboptimal outcomes. “Often the central problem is left unresolved or only partly solved in situations where conflict avoiding or compromising behaviours are adopted by the participants. As a result the organisation may not be operating at optimal efficiency or adopting the most appropriate means in order to realise its goals” (Tang and Kirkbride 1986, p.294).  

 

 

 




Compared to compromising conflict management style, collaboration is preferred to resolve task related conflicts at the workplace because the former leads to suboptimal decisions and main issues are not completely resolved. Collaboration between colleagues, on the other hand, results in innovative solutions which are beneficial for the employer in the long run. However, as indicated in the above section when collaboration fails or when time and resources are few, compromising conflict management style is most effective as it speeds up the decision-making process as well the time required to achieve intended outcomes. 

 

To illustrate the outcomes, let us take an example of a task-related dispute that arises at the workplace. Suppose, in an organisation there is an employee who is facing a computer related issue. She requests help from the IT department in resolving the issue. But the IT department is not able to provide her a satisfactory solution. So the employee wants to contact an external agency for help but the IT department wants to avoid doing that because the external agency in question in the past has not been efficient at resolving IT problems. So they believe that contacting the agency will be unproductive and will result in unnecessary expenditure. Here, the IT department and the employee are having a disagreement. 

 

In a collaborative style, the IT department would spend more time in finding a solution to the problem in a way that’s acceptable to the employee and will resort to contacting the external agency only if they have exhausted all means. That will take more time and effort but will save the organisation money. On the other hand, in a compromising style, the employee will accept the solution that the IT department provided, even if its not the best solution, so that the organisation will save money. Here, the employee accepts a suboptimal solution to prevent the organisation from spending time, effort and money. 

 

From the above example, there is a trade-off between the most effective solution and time and money in both conflict management styles. But because in the long run, most effective solutions are better for the well-being of the organisation and employee, we recommend collaborative management style

Taking into account the balance of outcomes for parties to an employment dispute, and the quality and consistency of the evidence, we make the following recommendation: For employees having disputes over specific tasks, collaborative conflict management style is more conducive to well-being than compromising conflict management style.

 

Literature indicates that different cultures have preferences for different conflict management styles. For example, in China, which is a collectivist society, avoiding conflict is also an acceptable in the face of a conflict, whereas in the West which is characterised by an individualistic society, collaborative conflict management style is preferred  (as cited in Chen, Zao and Liu 2012, p.158). So we advise justice practitioners to take into account the culture and values of a society when recommending a specific conflict management style to resolve conflicts.

Interactional Justice

Interventions and evidence

First literature search: most plausible interventions

 

During the orientation process of the available literature, we were able to identify the following interventions for containing employment disputes:

  • Supervisor applies interactional justice within an organisation
  • Supervisor applies an authoritarian leadership style within an organisation

 

Interactional justice

 

Interactional justice occurs in informal interactions between employees and an organisation’s management. This includes the interpersonal treatment employees receive. Employees expect fair, honest, courteous, and truthful treatment by the organisation that employs them and/or its agents. Interactional justice is also about the extent to which the management of the organization treats its employees with respect, courtesy, sensitivity, and attentiveness (Rahmawhati et al, p. 42). 

 

Interactional justice is determined by the interpersonal behavior of management’s representatives (Cohen-Charash and Spector, p. 281). Interactional justice is most likely to occur when decision makers (a) treat individuals with interpersonal dignity [sometimes also referred to as interpersonal justice] and (b) provide subordinates with justifications or explanations. Employees may hold supervisors responsible for interactional justice [outcomes, such as respect, courtesy, sensitivity and attentiveness] (Lavelle, et al, p. 843).



Authoritarian leadership

 

Authoritarian leadership places emphasis on the asymmetric power between leaders and followers, which allows leaders to dominate and control followers (Jian, Chen, Sun & Yang, Introduction). Authoritarian managers believe they know more than others in their organisations and have the right to get things done in their own way. As a result, they stress ‘‘personal dominance’’ over employees, unify the authority in themselves, and make unilateral decisions. In authoritarian management, leaders exhibit strong control and authority over employees and in turn the group is forced to obey the leader (Jian, Chen, Sun & Yang, Introduction). Authoritarian managers are likely to exercise control by initiating structure, issuing rules, promising rewards for compliance, and threatening punishment for disobedience (Kiazad et al, p. 514).

 

We compare these two interventions because they both touch on interpersonal treatment between supervisor/employer and subordinate/employee. They are distinct in the following three ways: 

  • Interactional justice focuses on outcomes (such as dignity and justification) for the employee while authoritarian leadership does not.
  • Interactional justice holds supervisors accountable to the employees, authoritarian leadership does not.
  • Interactional justice allows for information sharing between the supervisor and the employee, while authoritarian leadership does not.

For employers and employees looking to contain conflict in the workspace, is applying interactional justice or applying an authoritarian leadership style within the organisation more effective for well-being?

The databases used are: HeinOnline, Westlaw, Wiley Online Library, JSTOR, Taylor & Francis, and ResearchGate.

 

For this PICO question, keywords used in the search strategy are: employment, disputes, mediation, prevention, justice, organizational, leadership

The main sources of evidence used for this particular subject are:

  • Yochi Cohen-Charash and Paul E. Spector: The Role of Justice in in Organizations: A Meta-Analysis (2001)
  • Maureen L. Ambrose: Oxford Handbook of Justice in the Workplace (2015)
  • Maryline Meyer, Marc Ohana and Florence Stinglhamber: The Impact of Supervisor Interpersonal Justice on Supervisor-Directed Citizenship Behaviors in Social Enterprises: A Moderated Mediation Model (2018)
  • SuJin Son, Do-Yeong Kim and Mina Kim: How perceived interpersonal justice relates to job burnout and intention to leave: The role of leader–member exchange and cognition-based trust in leaders (2014)
  • Jiang, Chen, Sun, Yang: The Relationship between Authoritarian Leadership and Employees’ Deviant Workplace Behaviors: The Mediating Effects of Psychological Contract Violation and Organizational Cynicism (2017)
  • Richard A. Posthuma, James B. Dworkin, Maris Stella Swift: Arbitrator Acceptability: Does Justice Matter? (2000)
  • Kohyar Kiazad, Simon Lloyd D. Restubog, Thomas J. Zagenczyk, Christian Kiewitz, Robert L. Tang: In pursuit of power: The role of authoritarian leadership in the relationship between supervisors’ Machiavellianism and subordinates’ perceptions of abusive supervisory behavior (2010)
  • Rahmawati Rahmawati, Rispantyo Rispantyo, and Subekti Djamaluddin: Mentoring Function and Quality of Supervisor Auditor Relationship: Organizational Justice as A Mediation (2017)
  • Olugbenga J. Ladebo, Joseph M. Awotunde, Petra AbdulSalaam-Saghir: Coworkers’ and Supervisor Interactional Justice: Correlates of Extension, Personnel’s Job Satisfaction, Distress, and Aggressive Behavior (2008)
  • James J. Lavelle, Deborah E. Rupp and Joel Brockner: Taking a Multifoci Approach to the Study of Justice, Social Exchange, and Citizenship Behavior: The Target Similarity Model (2007)
  • Jeanne Le Roy, Marina Bastounis and Jale Minibas-Poussard: Interactional Justice and Counterproductive Work Behaviors: The Mediating Role of Negative Emotions (2012)

 

Cohen-Charash and Spector conducted a meta-analysis, where they researched the correlation of distributive, procedural, and interactional justice. They examined 190 studies samples, totaling 64,757 participants. This article can be regarded as high quality evidence.

 

The Oxford Handbook of Justice in Work Organizations provides a comprehensive review of empirical and conceptual research addressing the vital topic of workplace justice. It is a meta-analysis and can therefore be regarded as high quality evidence.

 

The article by Lavelle, Rupp and Brockner reviews and organizes multifoci research and theory in justice, social exchange, and citizenship behavior, develops a “target similarity” model to provide a theoretical framework for conceptualising and integrating multifoci research, and offers suggestions for future multifoci research. This literature review is graded as moderate quality evidence.

 

The study conducted by Son, Kim and Kim examines the linkage between employees’ perceptions of the interpersonal justice demonstrated by their leaders and consequent job burnout resulting in turnover intention. Data were obtained from 158 MBA students attending a large university in South Korea. The study can be graded as moderate.

 

The article by Posthuma, Dworkin and Swift uses measures of distributive, procedural and interactional justice to explain the acceptability of arbitrators in disputes. This empirical study collected data at two different points in time to reduce threats from common method variance. This article can be graded as moderate.

 

The paper by Meyer, Ohana and Stinglhamber aims to examine the impact of supervisor interpersonal justice on supervisor- directed citizenship behaviors by developing a moderated mediation model. Survey data were collected from 196 supervisor-subordinate dyads employed in diverse French social enterprises. This study is graded as moderate.

 

The paper by Kiazad, Restubog, Zagenczyk, Kiewitz, and Tang considered both supervisor (personality and leadership behavior) and victim characteristics (organisation-based self-esteem) in predicting perceptions of abusive supervision. They tested their model in two studies consisting of supervisor–subordinate dyads from Australia and the Philippines. Evidence is graded as moderate.

 

The article by Rahmawati Rahmawati, Rispantyo Rispantyo, and Subekti Djamaluddin is a medium sized observational study, examining the antecedents and consequences of organizational justice. According to the HiiL Guideline Approach this article is graded as low.

 

The study conducted by Le Roy, Bastounis and Minibas-Poussard draws on the cognitive theory of emotions and extended work published on the mediating role in this relationship, by conducting a survey with insurance company employees (N = 187). This empirical study is graded as moderate.

 

The paper by Ladebo, Awotunde and AbdulSalaam-Saghir examined the effects of coworkers and supervisors’ interactional fairness on employees’ job satisfaction, distress, and aggressive behavior. Surveys were employed to elicit data from 270 extension personnel from two Agricultural Development Programs in Nigeria. This article can be graded as low.

 

The article by Bouckenooghe and De Clercq draws from the Conservation of Resources theory. The study examines the mediating role of relational conflict in the link between interpersonal justice and commitment to change, as well as how social interaction might moderate this mediating effect. Data were captured from employees directly affected by a large-scale restructuring in a European-based organisation. Evidence can be classified as being low, according to the HiiL Guideline Approach.

 

The study by Jiang, Chen, Sun and Yang investigated the relationship between authoritarian leadership and employees’ deviant workplace behaviors (DWB), as well as the mediating effects of psychological contract violation and organizational cynicism. A cross-sectional survey was conducted among 391 manufacturing workers in a northern city of China. This is a large observational study. According to the HiiL Guideline Approach, this source can be regarded as low.

 

Research that touches on interaction between supervisor and subordinates focuses mostly on different leadership styles and procedural/distributive justice. Research about leadership is predominantly from the perspective of the employer/supervisor. It would be interesting to discover findings from the perspective of the employee/subordinates (in particular how the different leadership styles affect the wellbeing of subordinates). Furthermore, it would be interesting if research could be focused on how the interaction between supervisor and subordinate affects procedural and distributive justice outcomes.

 

Taking all individual assessments of sources into consideration, according to the HiiL Guideline Approach, the evidence can be graded as low to moderate.

Recommendation

 

Interactional justice

Authoritarian leadership

Fair treatment (a central element of interactional justice) leads to greater commitment, increased job satisfaction, improved job performances and other outcomes that contribute to de-escalation of potential conflicts. “… employees who perceive fair treatments by authorities [such as supervisors] are more likely to evidence positive actions through greater commitments to the values and goals of the organization; exhibit increased job satisfaction, organizational citizenship behaviors, improved job performances and reduced withdrawal behaviors” (Cohen-Charash & Spector, p. 281-282).


By focusing on interactional justice, supervisors can increase employees’ commitment to their work, which might reduce the chance of escalating conflicts. “… when employees have a positive perception of their supervisor’s fair treatment, they tend to reciprocate this favorable treatment by displaying more citizenship behaviors [voluntary commitment of the employee to the employer] directed to him/her” (Meyer et al., p. 5-11).


Interactional justice positively impacts the well-being of employees. “… [employees] having good interpersonal relationships with their supervisor represents a key predictor of employees’ well-being which, in turn, improves their job performance.” (Ambrose)


Interactional justice can lead to economic success. A respectful and helping relationship [between employer and employee] increases operational effectiveness leading to the provision of high quality services which fit with the new challenges of quality management and customer satisfaction in SEs [small enterprises] (Borzaga et al., 2011). In this way, by sustaining good relationships between supervisors and their subordinates, SEs contribute to create a sustainable competitive advantage crucial to their economic success (Frumkin & Andre-Clark, 2000). Examining how employees perceive to be treated by managers at the interpersonal level is thus of particular relevance. [Economic success leads to more and better employment opportunities] (Meyer et al., p. 5-11).

Authoritarian leadership can get things done. “Authoritarian leaders emphasize personal dominance and control over subordinates, and they habitually [are able to get results] in their own ways” (Jiang et al., p. 3).

 

Interactional justice

Authoritarian leadership

Wrongly interpreting interactional justice harms the relationship between subordinate and superior.  “Because interactional justice is determined by the interpersonal behavior of management’s representatives, interactional justice is considered to be related to cognitive, affective, and behavioral reactions toward these representatives, that is, the direct supervisor or source of justice.

Thus, when an employee perceives interactional justice the wrong way (interactional injustice), he/she is predicted to negatively react toward his/her supervisor (or the entity that was interactionally unfair to that person) rather than negatively react toward the organization as a whole.” (Cohen-Charash and Spector)

Authoritarian leadership can lead to employees feeling angry and excluded and employees being counterproductive “… the perception of unfair interpersonal treatment generates anger, which predicts more active CWB [counterproductive work behaviour]. On the other hand, the perception of not being well informed activates feelings of fear, which, in turn, can predict withdrawal reactions.” (Le Roy et al., p. 1341-1356).


Authoritarian leadership is characterized by poor communication flow between employer and employee, which leads to withdrawal behaviors. “Problems related to poor access to information could be seen as involving more serious problems that, in turn, are perceived as threats. The fear of being rejected by the group may lead to withdrawal behaviors, not in terms of wishing to not be rejected by others, but in rejecting others in advance.” (Le Roy et al., p. 1341-1356).


Employees are important social resources to leaders, they should therefore not be treated in a humiliating manner. “… when employees perceive unfair and humiliating treatment from leaders [who apply an authoritarian leadership approach], they feel a significant loss of valuable resources, which influences the relationship with leaders since employees consider leaders an important social resource in organizations.” (Son, Kim and Kim).

Taking into account the balance of outcomes, it is clear that Interactional justice has significant benefits to the well-being of the employee. Employers focusing on interactional justice can make a positive difference for employees. Employees will feel a better sense of commitment towards the employer and increased job satisfaction. However, when interactional justice is being perceived wrongly, employees can develop resentment towards employers. Applying an authoritarian leadership approach can potentially be detrimental to employees’ well-being, as it leaves employees feeling angry and excluded. Therefore, the balance is towards applying interactional justice.

Taking into account the balance of outcomes and the quality and consistency of the evidence, we make the following recommendation: For employers and employees looking to contain conflict in the workplace, applying interactional justice is more conducive to well-being than applying an authoritarian leadership style.

Actively creating a high psychosocial safety climate

Interventions and evidence

First literature search: most plausible interventions

During the orientation process of the available literature, we identified the following  approach to preventing the escalation of (containing) an employment dispute creating a high psychosocial safety climate, which is discussed in the literature and can be compared to a low psychosocial safety climate.

 

PSC refers to an organizational climate for employee psychological safety and health (a high level of psychological safety). The content domain of PSC comprises: (1) senior management support and commitment for stress prevention through involvement and commitment; (2) management priority to psychological health and safety versus productivity goals; (3) organizational communication, that is, the organization listens to contributions from employees; and (4) organizational participation and involvement, for example, participation and consultation occurs with unions, and occupational health and safety representatives (Dollard et al. p. 355).

 

The psychosocial safety climate (PSC) of a workplace influences employees’ coping strategies and ultimately the extent to which bullying escalates (Kwan et al.). PSC concerns the values and attitudes of senior management toward care and practices in relation to employee psychosocial well being.

 

High and low PSC environments

In a high PSC environment, managers are expected to show commitment for the prevention of work stress and for the promotion of psychological health among employees. In a low PSC environment, they are not. In contrast to low PSC environments, in high PSC environments communication systems are established so that stressful work conditions become known and action is taken to prevent or control psychosocial hazards. In high PSC environments there is involvement and participation of all levels of the organization in stress prevention. Furthermore, psychological health is a priority at least on equal footing with production goals. In a low psychosocial environment, production goals are more important (Dollard et al.).

 

The PSC construct has four main aspects that connect to best practice principles in the stress prevention, intervention, and safety climate literatures.

  • First is senior management support and commitment to psychological health through involvement and commitment. This aspect is evident when senior management take quick and decisive action to address and correct issues that affect psychological health. 
  • Second is the priority the management gives to employee psychological health and safety versus productivity goals. For example, job demands (e.g., work pressure) may be modified to make them more manageable, and management have the discretion to offer a variety of resources, such as work flexibility, autonomy, and social support that may buffer demands and reduce work stress in the interests of worker psychological health and productivity. 
  • Third is organizational communication that concerns how the organization communicates with employees about psychological health and safety issues that affect them, and brings these to the attention of employees. 
  • The fourth aspect, organizational participation and involvement, concerns participation and consultation regarding stress prevention that involves all levels of the organization, and the integration of stakeholders including employees, unions and health and safety representatives in occupational (psychological) health and safety processes. (Dollard et al.)

For employees and employers looking to prevent the escalation of (contain) an employment dispute, is keeping a high psychosocial safety climate more effective for well-being than maintaining a low psychosocial safety climate?

The databases used are: HeinOnline, Westlaw, Wiley Online Library, JSTOR, Taylor & Francis, and ResearchGate.

 

For this PICO question, keywords used in the search strategy are: employment dispute, dispute settlement, containing, good HR-practices, keeping a safe climate.

The main sources of evidence used for this particular subject are:

  • Bret H. Bradley, Anthony C. Klotz, Bennett E. Postlethwaite, Maria R. Hamdani, Kenneth G. Brown, Reaping the Benefits of Task Conflict in Teams: The Critical Role of Team Psychological Safety Climate (2012)
  • Stijn Pletzers, Explaining the Silent Treatment: Knowledge Hiding in Organizations Explained by Psychological Safety Climate, SelfEfficacy and Proactive Personality (2017)
  • Maureen F. Dollard, Christian Dormann, Michelle R. Tuckey and Jordi Escartin, Psychosocial safety climate (PSC) and enacted PSC for workplace bullying and psychological health problem reduction (2017)
  • Maureen F. Dollard and Arnold B. Bakker, Psychosocial Safety Climate as a precursor to conducive work environments, psychosocial health problems, and employee engagement (2010)
  • Sharon Sam Mee Kwan, Michelle R. Tuckey and Maureen F. Dollard, The role of the psychosocial safety climate in coping with workplace bullying: A grounded theory and sequential tree analysis (2016)
  • Kamal Birdi, Chris Clegg, Malcolm Patterson, Andrew Robinson, Chris B. Stride, Toby D. Wall and Stephen J. Wood, The Impact of Human Resource and Operational Management Practices on Company Productivity: A Longitudinal Study (2008)

 

The study by Dollard, Dormann, Tuckey and Escartin theorizes that the PSC enactment mechanism works via psychosocial processes such as bullying mistreatment climate (anti-bullying procedures), work design (procedures reduce stress through work redesign), and conflict resolution (procedures to resolve conflict). The study used two-wave national longitudinal interview data from 1,062 Australian employees (Australian Workplace Barometer project) and structural equation modelling to explore relationships over 4 years. This is a large empirical study. We identified a risk for bias, as Dollard is the Director of the PSC Observatory. We therefore lowered the strength of evidence by one level. According to our research method, the strength of evidence can be regarded as low.

 

The study by Kwan and others is a qualitative study, where they examined the role of psychosocial safety climate (PSC) in influencing employees’ coping strategies and ultimately the escalation of bullying. Interviews were conducted with 20 Malaysian workers. This is a small observational study. Again, there is a risk of bias as Dollard is one of the co-authors. For this reason we lowered the strength of evidence by one level. According to our research method, the strength of evidence can be regarded as low.

 

Dollard and Bakker hypothesized that PSC as an upstream organizational resource influenced largely by senior management, would precede the work context (i.e., job demands and resources) and would in turn predict psychological health and work engagement via mediation and moderation pathways. They operationalized PSC at the school level and tested meso-mediational models using two-level (longitudinal) hierarchical linear modelling in a sample of Australian education workers (N = 209–288). Their results show that the PSC construct is a key upstream component of work stress theory and a logical intervention site for work stress intervention. This is a large empirical study with the risk of bias, as mentioned in the other sources of evidence by Dollard. We lowered the strength of evidence by one level. According to our research method, the strength of evidence can be regarded as low.

 

The study by Bradley and others looks at how psychological safety can increase team performance. The study is using evidence from 117 project teams. Their research found that psychological safety moderates the relationship between task conflict and performance. Specifically, task conflict and team performance were positively associated under conditions of high psychological safety. The results support the conclusion that psychological safety facilitates the performance benefits of task conflict in teams. According to the research method, the evidence from this large observational study can be regarded as moderate.

 

The paper by Pletzers examines knowledge hiding and aims to explain it by looking at perceptions of a psychological safety climate, self-efficacy and proactive personality. A theoretical framework was presented. To test the proposed model, data was gathered from Dutch organizations and via the researcher’s social network using convenience sampling (N=134). According to the research method, the evidence from this empirical study can be classified as moderate.

 

The study by Birdi and others investigates the relative merits of human resource practices through a study of the productivity of 308 companies over 22 years. This large empirical study can be graded as strong quality.

 

According to our research method, we grade the evidence on a high PSC environment as low. 

 

More studies with lower risks of bias are needed in order to close the research gap on how to contain a dispute in the workplace. More different kinds of interventions (other than a high PSC environment) need empirical testing.

Recommendation

 

High PSC environment

Low PSC environment

“PSC gives rise to procedures that lead to fair and predictable interactions between managers and employees” (Dollard & Bakker, 2010), thereby limiting the risk of escalation in a conflict.


Conflict about tasks that occur on the workfloor in a psychologically safe environment should improve creativity and decision-making without damaging interactions. “This way, psychological safety may amplify the involvement of each team member and the intensity of interaction among teammates without endangering the harmony of the team, thereby increasing team performance” (Bradley et al. p. 151).


High PSC is positively linked to learning behavior. “[High] psychological safety is positively related to learning behavior and team performance, suggesting that teams with a psychologically safe climate learn more and perform better” (Bradley et al., p. 152).


Employees feel safer challenging their leaders. “Psychological safety mediates the positive relationship between ethical leadership and voice behavior, indicating that employees feel comfortable challenging their leaders when a psychologically safe climate has been established” (Bradley et al., p. 152). This may prevent severe conflict escalation in the long run.

Performance is mostly linked to factors that are solely designed to increase productivity. The individual and collective impact on manufacturing performance are most associated with these three theoretical perspectives: empowerment, training, teamwork, total quality management, just-in-time, advanced manufacturing technology, and supply-chain partnering. (Birdi et al., p. 469)

 

High PSC environment

Low PSC environment

Some employers see PSC as a risk factor in itself, even though it is meant to improve employees’ wellbeing. “[By some employers, integrating and working with] psychosocial safety climate is conceived of as a preeminent psychosocial risk factor [in itself] capable of causing psychological and social harm through its influence on other psychosocial risk factors” (Dollard & Bakker, 2010).

Low PSC environments can create pressure and extra workload for employees. “Senior management that prioritise productivity over worker health may engender and promote bullying from middle managers and first line supervisors (e.g., via increased work pressure and workload for their subordinates) in order to get the job done” (Dollard et al.). Thereby potentially creating conflict or escalating conflict.


Left unchecked [in a low PSC environment], social conflict in the workplace that characterised by negative interpersonal relationships may escalate into bullying. “Job frustration is correlated with employees’ tendency to abuse their co-workers. Hence, poor work design creates fertile soil for bullying” (Dollard et al.). 


“Unclear roles and contradictory goals may create competition and low trust, and high work pressure likely indicates little time or concern within organizations to resolve conflict” (Dollard et al.). 

Taken together, the available research suggests that creating a high PSC environment is beneficial to the well-being of employees and employers. A high PSC environment with a high level of psychological safety leads to fair and predictable interactions between employer and employee. It is also regarded to be the most ideal environment for conflict to appear, as in a high PSC environment conflict can enhance creativity. Furthermore, PSC is linked to a safe environment for employees to challenge their leaders, thereby possibly preventing escalation of conflict. 

 

On the other hand, a low PSC environment is only linked to undesirable outcomes. Low PSC environments cause extra work pressure, social roles and unclarity about roles.

 

Therefore, actively creating a high Psychosocial Safety Climate with high levels of psychological safety is preferred.

Taking into account the balance of outcomes, the effect on well-being for all parties involved in an employment dispute, and the quality and consistency of the evidence, we make the following recommendation: For employees and employers looking to prevent the escalation of (contai)n an employment dispute, actively creating a high psychosocial safety climate is more effective for well-being.

Co-created performance indicators

Interventions and evidence

Performance appraisal refers to a formal process, which occurs infrequently, by which employees are evaluated by some judge (typically a supervisor) who assesses the employee’s performance along a given set of dimensions, assigns a score to that assessment, and then usually informs the employee of his or her formal rating. Organizations typically base a variety of decisions concerning the employee partially on this rating (DeNisi and Murphy, p. 421).

 

Applying a system of performance indicators co-created by employer and employee

 

The Productivity Measurement and Enhancement System (ProMES) is a human resource intervention that provides feedback to members of an organizational unit via a measurement system constructed by the unit personnel. The unit constructs the system by defining their objectives, identifying productivity indicators for each objective, and developing utility curves or contingencies for each indicator, specifying the overall and relative value to the organization of different performance levels on each indicator (David, p. iii).

 

ProMES works according to a 4-step model:

  1. Identify Organisational Objectives. In ProMES, these objectives are called products. A design team composed of supervisors, representative job incumbents and facilitators working together.
  2. Developing Indicators To Measure These Products. The team is asked to think of measures that they would use to show how well they were generating their products.
  3. Establishing Contingencies. A contingency can be defined as the relationship between the amount of the indicator and the effectiveness of that amount. This is important because it allows the organization to see how much of a contribution differing amounts of an indicator make it the overall product.
  4. Creating a Formal Feedback Report. Effectiveness scores can be determined based on the contingencies of each indicator.

 

ProMES is an intervention that relies on feedback to let personnel know their levels of performance; this knowledge then serves as a tool that leads to more efficient and effective ways of performing tasks (Pritchard, 1990). The system is developed and agreed upon by both employees and management, and provides an overall index of productivity (David, p. 5).

 

Classic top-down performance appraisal

Traditional top-down performance appraisal systems are formal meetings between employer and employee (DeNisi and Pritchard, p. 271). Performance reviews in the classic way work with rating scales. [A common] intervention here has been rater-training. This includes a strategy of telling raters about so-called rating errors (e.g., leniency, range restriction, halo) and urging them not to commit these errors (Adler et. al.).

For employees and employers looking to find out what led to a dispute related to being sacked or made redundant (fact-finding), is applying a system with performance indicators they have co-created or classic top-down formal performance appraisal more effective for well-being?

The databases used are: HeinOnline, Westlaw, Wiley Online Library, JSTOR, Taylor & Francis, and ResearchGate.

 

For this PICO question, keywords used in the search strategy are: Performance, review, management, appraisal, improvement, productivity, goal-based, relationships, dispute prevention, ProMES

The main sources of evidence used for this particular subject are:

  • Angelo S. DeNisi and Robert D. Pritchard: Performance Appraisal, Performance Management and Improving Individual Performance: A Motivational Framework (2006)
  • Robert D. Pritchard, Lawrence G. Weiss, Amie Hedley Goode and Laurie A. Jensen: Measuring Organizational Productivity with ProMES (1990)
  • Jose Hernan David: Identifying the Factors that Contribute to the Effectiveness of the Productivity Measurement and Enhancement System (ProMES) (2003)
  • Seymour Adler, Michael Campion, Alan Colquitt, Amy Grubb, Kevin Murphy, Rob Ollander-Krane and Elaine D. Pulakos: Getting Rid of Performance Ratings: Genius or a Folly? A Debate (2016)
  • Daniel Schmerling and Anne Scudato: Use the Best; Leave the Rest: The Productivity and Enhancement System (ProMES) for Performance Ratings (2016)
  • Rob B. Briner and Denise M. Rousseau; Evidence-Based I-O Psychology: Not There Yet (2011)
  • Dev Kumar; Performance Appraisal: The Importance of Rater Training (2005)

 

The study by DeNisi and Pritchard is a literature review about designing and implementing performance appraisal systems. The authors review trends and their genesis, and propose a motivational framework as a means of integrating what we have learned and generating proposals for future research that focus on employee’s performance improvement. This literature review is mostly based on expert observational studies. The strength of this evidence can therefore be classified as low.

 

The article by Pritchard, Weiss, Goode and Jensen is a literature review on productivity improvement strategies. The study is mostly based on observational studies and expert opinions. The strength of this article is classified as very low.

 

The article Adler et al. is based on expert opinions. It reiterates the pros and cons of retaining performance ratings. The study by David identifies the effectiveness of the ProMES system and is also largely based on expert opinions. According to the Recommendations Methodology, the strength of these articles are classified as very low. 

 

The article by Schmerling and Scudato is a response to the article of Adler et al. They discuss  the shortcomings described in performance ratings and performance management, as well as challenge the field to further consider this well-researched and established evidence based solution as a viable alternative. This study is based on observational and empirical studies, and according to the Recommendations methodology the strength of evidence is classified as low.

 

There is a significant gap in the research on fact-finding in an employment dispute setting. Performance management and performance appraisal are important topics within employment dispute resolution research and can provide an important role in fact-finding when a dispute arises on the workfloor. However, research on performance appraisal is very limited. More interventions need to be studied, which would in turn improve this PICO question and employment research as a whole.

 

According to the HiiL Actionable Recommendations document and the GRADE approach, overall evidence is graded as very low.

Recommendation

 

ProMES

Formal appraisal

ProMES allows the employees to see whether they are productive versus those aspects that need improving. “The single index [part of the ProMES] allows the effectiveness of a complex [team of people] to be summed into one easily communicable number” (Pritchard et al., p. 265)


There is a bigger chance that ProMES is accepted by organizational personnel and increases employee buy-in. “A productivity measurement system cannot work unless organizational personnel accept it. Because of [personnel] involvement in building the system [including products, indicators and contingencies] they have to defend their work to higher management. This causes them to develop a sense of ownership of the system.” (Pritchard et al., p. 266).


ProMES enables employees to see the results of their efforts. “Most jobs are structured so that doing a better job does not show up in any measurable way. With ProMES, the connection between the actions of the unit and its level of productivity is improved by the frequency of the feedback. When an indicator does improve, there seems to be considerable satisfaction. This allows employees to see how their efforts have increased productivity.” (Pritchard et al., p. 266)


Employees get role clarification. “Through the process of developing, refining and getting approval for the products, indicators and contingencies, employees are helped to more clearly understand their roles. Through the discussions to develop the system, personnel determine what their objectives should be.” (Pritchard et al., p. 267)


ProMES provides information about the work to be done. “The system helps guide personnel by indicating which activities employees should be doing and their importance”. (Pritchard et al., p. 267)