Keywords

1 Introduction

The Fourth Industrial Revolution or Industry 4.0 “tsunami” is changing various facets of our existence (Abod, 2017; Ismail, Kadir, Khan, Yih, & Al Hosaini, 2019). Through digitalisation, globalisation, and virtualisation, we are exposed to innovative technologies, new flairs of governing and policy-making styles, developments in mass media, new modes of transportation, creative living spaces as well as new ideologies of work (Scholz, 2019). Organisations are subsequently hard-pressed, through technological and digital forces, to adapt their strategies in terms of managing their human resources (Liboni, Cezarino, Jabbour, Oliveira, & Stefanelli, 2019). In addition to the effects of Industry 4.0 on the workplace, Generation Z, the youngest generation and natives to this globally connected world, is entering the workplace with a renewed way of thinking about the world of work (Kirchmayer & Fratričová, 2020). Kirchmayer and Fratričová (2020) further postulate that the members of this generational cohort exhibit a fresh set of preferences and perceptions in terms of what they expect from their employing organisation. Managing these preferences and expectations is seen as a critical challenge for organisational performance, especially in this ever-changing work environment (Kutaula, Gillani, & Budhwar, 2019).

The psychological contract is seen as an important measure used to determine employees’ idiosyncratic perceptions and expectations of their employment relationship (De Vos, 2002; Rousseau, 1989; Sheehan, Tham, Holland, & Cooper, 2019). Misalignment of employees’ perceptions and expectations of their employment relationship may have a negative impact on their performance, engagement, and overall work experience (Solomon & Van Coller-Peter, 2019). Therefore, in order to avoid this misalignment and ultimately a breach or violation of the psychological contract, a pro-active approach is needed (Van Niekerk, Chrysler-Fox, & Van Wyk, 2019). Although research in the psychological contract theory has experienced a great deal of interest, substantial gaps persist in our knowledge regarding the distinctions of the psychological contract, which may be as a result to how researchers have attempted to measure this concept (Bankins, 2011; Sherman & Morley, 2020). Overcoming challenges regarding the measuring of the psychological contract is a critical issue in psychological contract research (Sherman & Morley, 2020).

Previous research on the psychological contract has focused on three distinct focus-areas including content-focused area (concentrating on the specific terms included in the contract), feature-focused area (linking the psychological contract to a specific characteristic or dimension), and evaluation-focused area (determining the fulfilment, or lack thereof, of the contract) (Santos, Coelho, Gomes, & Sousa, 2019).

2 Chapter Objective

Against this backdrop, the purpose of this chapter is to draw upon existing generational literature to determine the specific terms included in the contents of the psychological contract of digital natives. The typical characteristics of members of the digital natives’ cohort may raise many theoretical questions for the field of HRM and specifically psychological contract theorists and HRM practitioners. Linking the psychological contract theory to generational cohorts will allow us to determine the specific characteristics of the emerging digital natives cohort in order to determine whether current psychological contract measures, focusing on the content of the psychological contract, are actually measuring what the digital natives expect. The following section provides a conceptualisation of the psychological contract theory.

3 The Psychological Contract

The concept of the psychological contract has its origin in the social exchange theory (Blau, 1964) and was expanded by the equity theory (Adams, 1965). Based on these theories, exchanges between parties in an exchange relationship in terms of certain inputs accord with certain accompanying outcomes for each party (Emerson, 1976; Van Niekerk et al., 2019). According to Rousseau (1995), the psychological contract refers to an employee’s schematic understanding of the subjective terms encompassed in the exchange agreement of the employment relationship. Consequently, a psychological contract occurs as soon as an employee accepts that an agreement has been made in terms of the inputs provided, in exchange for the outcomes received from the organisation, thereby binding the parties to the employment relationship to a set of mutual commitments (Sheehan et al., 2019). The most important aspects of the definition of the psychological contract are that it is subjective in nature, concerning an employee’s schematic perspective in terms of the exchange relationship; and it is reciprocal, considering the mutual commitments of both employee and employer in the employment relationship (Santos et al., 2019; Sels, Janssens, & Brande, 2004).

An employee’s schematic perspective is developed from different experiences and societal influences, economic factors, and organisational fluctuations (Rousseau, 2001; Santos et al., 2019; Solomon & Van Coller-Peter, 2019). Therefore, Lub, Bal, Blomme, and Schalk (2016) posit that the schematic perspectives of different generational cohorts will differ, resulting in generation-specific inputs and outcomes in terms of the exchange relationship. The schematic perspective will thus have an effect on the content of the psychological contract (Solomon & Van Coller-Peter, 2019). Sherman and Morley (2015, 2020) subsequently postulate that a deeper understanding into the elements of the psychological contract is necessary for psychological contract measurement.

Previous research has focussed on determining the elements of the psychological contract. Rousseau and McLean Parks (1993) identified four dimensions forming the foundation of the elements of the psychological contract, which include time frame (duration of employment relationship), stability (flexibility/restrictions of contract), scope (boundary between employment relationship and personal life), and tangibility (terms of contract clearly specified and observable). Sels et al. (2004) included two more dimensions including exchange symmetry (acceptability of unequal employment relationship) and contract level (individual/collective regulation of employment relationship). De Vos and Maganck (2009) in their study identified career development, social atmosphere, and job content as important elements of the psychological contract.

Linde (2015) provided a summary of the content elements underlying the psychological contract as important outcomes from the employer, which include job content, rewards, management policy, social aspects, career development, and organisational support. Job performance, loyalty, ethics, extra-role behaviour, and flexibility were identified as important employee inputs as content elements of the psychological contract (Linde, 2015; Van Niekerk et al., 2019). Further research on the elements of the psychological contract also identified job content, job security, and rewards as important elements (Lub et al., 2016; Solomon & Van Coller-Peter, 2019). However, with the digital natives starting to enter the workforce, it is important to determine whether these inputs and outputs are still relevant for the new generational cohort. The characteristics of the digital natives will be discussed next to determine the specific inputs and outcomes they value in terms of the employment relationship.

4 Characteristics of Digital Natives

The emergence of a new generation into the workplace captivates both scholars and practitioners attempting to understand this new cohort of employees (Kirchmayer & Fratričová, 2020). Generational theory, originated by Mannheim (1952), refers to the notion that persons from a specific generational cohort are fused by not only their similar birth years but also shared social and historical experiences during critical developmental life stages (Karaivanova & Klein, 2019; Kirchmayer & Fratričová, 2020; Maloni, Hiatt, & Campbell, 2019). The experiences or events influencing generational cohorts can include wars, politics or economic calamities, globalisation and technology, work and family life, fashion, movies, music, celebrities, and prominent figures (Kuron, Lyons, Schweitzer, & Ng, 2015; Maloni et al., 2019; Scholz, 2019). These shared experiences and events subsequently result in generational cohorts sharing consciousness and collective thoughts (Karaivanova & Klein, 2019), which consequently result in similar opinions, attitudes, behaviours, and principles (Kirchmayer & Fratričová, 2020). Kirchmayer and Fratričová (2020) therefore postulate that, in order to attract and retain talented employees, it is critical to understand the specific opinions, attitudes, behaviours and principles of each generation.

At present, the workplace consists of three dominant generational cohorts, which include Baby Boomers (1946–1964), Generation X (1965–1979), and Generation Y (1980–1994) (Kirchmayer & Fratričová, 2020). The youngest generational cohort, the digital natives (1995–2012), is now making an entry into the workforce. According to Kirchmayer and Fratričová (2020), a reasonable possibility exist that this generational cohort will transform the workplace significantly in the forthcoming years. Therefore, in order to successfully integrate this generation into the workforce, academics and practitioners have to obtain a better understanding of their specific behaviour and needs (Schroth, 2019), which will subsequently assist in a better understanding of the elements that will form the content of their psychological contract.

In order to appreciate the digital natives, it is important to comprehend the specific formative experiences and events that have contributed to their development as future employees (Schroth, 2019). Their familial setting is characterised by older parents, fewer relatives, traditional morals and principles, working mothers, tight schedules, while being monitored and protected (Rothman, 2016). The developmental years of the digital natives were influenced by continuous exposure to economic downturns, calamitous global events, and uncertain outlooks for the future (Chicca & Shellenbarger, 2018; Hampton, Welsh, & Wiggins, 2019). This include aspects such as terrorism and extremism, climate change and global warming issues, the global economic recession, the growth of mobile device usage as well as the internet and cloud computing (Meret, Fioravanti, Iannotta, & Gatti, 2018; Rothman, 2016). The digital natives is the first generational cohort that has always been exposed to the internet (Goh & Lee, 2018) and in a sense, connected to technology from the day they were born (Lanier, 2017). As Singh and Dangmei (2016) posit, this generation is brought up in a digital world, therefore being digital centric and connected with the digital world through social media.

As a result of the shared formative experiences and events, this generation exhibit different characteristics than their predecessors. Growing up with technology as part of their identity (Singh & Dangmei, 2016), members of this generation is technologically fluent with integrated technological systems being part of their daily existence (Kirchmayer & Fratričová, 2020). Consequently, they are globally connected with the world through electronic devices, such as smart phones and tablets (Hampton et al., 2019; Moore, Jones, & Frazier, 2017). Being constantly connected, this generation can consume information much faster than any other generation (Lanier, 2017); however, having all the information available at the click of a button, they lack critical-thinking skills and being able to differentiate between truthful facts and opinions (Hampton et al., 2019). Adding to this, the digital natives also lack face-to-face communication skills, which is a consequence of relying on electronic devices for socialisation, entertainment, relaxation, education, and exercising (Schroth, 2019).

With social media platforms, their global connectedness expands even more, being exposed to different cultures, upbringings, and environments from all and any part of the world (Lanier, 2017). Consequently, this generation is more diverse in terms of ethnicity, race, and gender (Schroth, 2019) and thus expects diversity (Lanier, 2017; White, 2018) and equality (Schroth, 2019) in the workplace. They are also conscious about environmental matters and very concerned with preserving natural resources (Singh & Dangmei, 2016). Digital natives are expected to become the most educated generation, favouring an engaged, interpersonal and interacting environment for learning (Kirchmayer & Fratričová, 2020; McCrindle, 2014) and appreciating being socially connected with their peers during groupwork (Hampton et al., 2019).

Previous research has recognized seven personality characteristics for this generation, which include (1) their perception of themselves as special, trusting in their abilities to change the future; (2) their sense of being protected by both families and supervisors; (3) they feel confident and positive about the future; (4) they are seen as conventional; (5) they thrive in teamwork; (6) their purpose in life is to feel blessed and to accomplish greater personal achievements in the future by concentrating on education; and (7) they feel pressurised to be successful (Howe & Strauss, 2007; Meret et al., 2018; Withe, 2016).

5 Digital Natives and the Psychological Contract

Human resources practitioners and researchers should consider the unique characteristics of digital natives in an attempt to best manage and understand this group of employees (Schroth, 2019). For instance, members of the digital natives expect a positive workplace culture through open and transparent conversations about decisions affecting business (Deloitte, 2017; White, 2018). Subsequently they value managers that demonstrate honesty and integrity (Goh & Lee, 2018; Half, 2015; Singh & Dangmei, 2016). Although communication on social media platforms is highly regarded by digital natives (Goh & Lee, 2018), they prefer face-to-face communication with their supervisors (Lanier, 2017; Schawbel, 2014). They expect their supervisors to pay attention when they share their ideas and voice their opinions (Singh & Dangmei, 2016). Feedback on performance should be provided in small, concise, and swift chunks (Chicca & Shellenbarger, 2018; Twenge, 2017) and should be ongoing instead of the traditional annual formal performance evaluations (Goh & Lee, 2018; Goh & Okumus, 2020). Research has found that this generation seeks constant nurturing, direction, and support from their supervisors (Chicca & Shellenbarger, 2018; Twenge, 2017).

In terms of their physical workplace, this generation prefer corporate offices to be simple and adjustable (Goh & Lee, 2018; Singh & Dangmei, 2016). Simultaneously, they value flexibility in terms of work arrangements such as working hours and work location (Kirchmayer & Fratričová, 2020). For them, flexibility and personal freedom are aspects of their workethics that are non-negotiable (Bascha, 2011; Singh & Dangmei, 2016). Adding to their work ethic, this generation is loyal to their employing organisation and respect positions of authority (Chicca & Shellenbarger, 2018); however, they prefer to work independently and not to be micro-managed (Goh & Okumus, 2020; Ozkan & Solmaz, 2015). Studies have also indicated that the members of this cohort seek opportunities to enhance their skills (White, 2018) in a workenvironment that promotes mentoring, coaching, training and development opportunities (Singh & Dangmei, 2016) with the assistance of a motivating supervisor (Schroth, 2019). According to Goh and Okumus (2020), digital natives have the expectation of a strong trajectory in their career path and to advance quickly in the career pecking order, working in more than only a single country during this career (Goh & Lee, 2018).

Aspects of an organisation that attracts this generation includes the brand and reputation of the organisation as well as how innovative and adaptive to change the organisation is (Kirchmayer & Fratričová, 2020; Sidorcuka & Chesnovicka, 2017). Karaivanova and Klein (2019) postulate that digital native employees wants to work for an organisation that has a cause and they prefer to be involved in purposeful work. Corporate social responsibility and close ties with the community in which they operate therefore attracts this generation to an organisation (Singh & Dangmei, 2016). Digital natives view the success of work through the lens of personal fulfilment; therefore, organisations should present the purpose of the organisation in such a way to attract the digital natives cohort (Karaivanova & Klein, 2019).

According to previous research, digital natives are motivated by career advancement opportunities, monetary compensation, and purposeful work (Kirchmayer & Fratričová, 2020; Kubatova, 2016; Schawbel, 2014). Meret et al. (2018) found the following aspects as important for members of the digital natives’ cohort: (1) networking and relationship-building; (2) job security; (3) sound workplace relationships; (4) training and development opportunities; (5) trust; and (6) independence. Digital natives also expect adequate compensation in exchange for the work they do (Karaivanova & Klein, 2019). A study by Deloitte (2018) found positive organisational culture, monetary rewards/benefits, flexibility, and continuous learning opportunities as important workplace values for digital natives (White, 2018). Questioning digital native employees on what they expected most of their supervisors in the workplace, open communication and continuous feedback and clearly set objectives were cited (Bresman & Rao, 2018; Schroth, 2019). A study conducted by Sharma and Pandit (2020) found that digital natives valued flexibility, a supervisor that act as their guardian, well-defined targets, good rapport with colleagues, and a friendly and positive work environment.

In an attempt to link the workvalues of digital natives with the psychological contract, Deas (2019) provided a list of certain inputs and outcomes of the psychological contract for digital natives as indicated in Table 16.1.

Table 16.1 Inputs and outcomes of the psychological contract for digital natives
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Re-examining the current psychological contract measures, specifically those measuring the content of the psychological contract, should be considered as members of the digital natives are entering the workplace. Over the years, various studies have resulted in different conceptualisations of psychological contract content measurements. As such, scholars don’t generally agree on the content elements of the basic schematic structure of the psychological contract (Sherman & Morley, 2020). Table 16.2 provides a summation of the different psychological contract measures focussed on the content of psychological contracts of employees.

Table 16.2 Summary of psychological contract measures
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6 Discussion

Against this backdrop and considering both Tables 16.1 and 16.2, all the elements measured in the psychological contract content measures are elements that have been indicated by the literature as important to the digital natives, tough some to a lesser extent. However, there are inputs and outcomes identified by the literature that are lacking from the current measures. For instance, it is indicated that digital natives value a diverse and multi-cultural workplace. According to Lanier (2017), the digital natives is the first generation to prodigiously expect their workplace to be diverse. They expect equal treatment, respect, compensation, and promotion of all individuals in the workplace (Schwieger & Ladwig, 2018) and they have a strong cultural philosophy which is driven by social justice (Lanier, 2017).

Meehan (2016) mentions that digital natives will bout for themselves and others if they are being treated in an unfair manner due to their gender, sexual preference, race, salary, or the environment. Marthur and Hameed (2016) further augment that a cross-cultural mentoring programme will assist in the orientation and induction of this young generation. Another element not addressed in the current psychological contract content measures is that digital natives want to work for an organisation with a reputable brand where they can contribute meaningfully. Organisations should therefore focus on their branding strategies in order to attract and retain new employees (Tanwar, 2017). In a study conducted by Sidorcuka and Chesnovicka (2017), they found that the image of the organisation was the third most important aspect in terms of factors attracting digital natives to an organisation and that this image should be renowned, growing, and energetic. According to a more recent study conducted by Kirchmayer and Fratričová (2020), digital natives indicated that they value jobs where they can contribute meaningfully. Adding to this, digital natives prefer to be employed by organisations that have established open and honest commitments with their surrounding communities demonstrating social responsibility (Singh & Dangmei, 2016). As these aspects are important to digital natives, it should be considered when measuring the content of the psychological contract.

7 Implications for Organisational Practice

Various aspects have influenced the digital natives to reason and act in the way that they do. As a result, they bring a fresh set of perspectives to the table in terms of what they expect from their employing organisation. Organisations should therefore understand the behaviour and distinct expectations of the youngest generational cohort in order to successfully integrate them into the industry 4.0 workplace (Schroth, 2019). An understanding of the expectations and preferences of the digital natives will assist organisations in the development and implementation of human resource practices specifically designed to attract and retain this young generation. Schroth (2019) therefore suggests that managers should engage with new employees in terms of their expectations of the employment relationship. Organisations should furthermore specifically focus on creating diversity management practices and interventions in order to overcome generational differences within the organisation (Meret et al., 2018).

8 Future Research Directions and Limitations

Although the concept of the psychological contract has been investigated quite extensively, limited studies have focused on the psychological contract from a generational perspective (Lub et al., 2016). The arrival of the digital natives into the workplace therefore necessitates new and cutting-edge research ideas, especially for human resource practitioners and researchers in this field (Deas, 2019). Researchers have also postulated that the schematic perspective of the psychological contract is best understood by primarily identifying the inherent inputs and outcomes of the psychological contract (Sherman & Morley, 2020). This chapter signifies an initial footstep in the evolvement of the content measures of the psychological contract specifically taking generational differences into account.

Maioli (2017) posits that digital natives have different psychosocial characteristics than the generations before them and organisations should therefore be aware of their specific expectations in order to successfully recruit and retain this generation. As this generational cohort is still emerging into the workforce, limited research on their specific workvalues are available (Kirchmayer & Fratričová, 2020). Adding to this, research on this generational cohort have resulted in mixed reviews and results (Sharma & Pandit, 2020). Consequently, this presents a critical gap for future research in order to gain a deeper understanding into the workvalues and expectations of the digital natives. This chapter proposes that the content of the psychological contract of digital natives can assist in defining the workvalues and expectations of this group of employees; however, current psychological contract content measures fail to address all the anticipated expectations of this generational cohort. It is however not the intention of this chapter to refute current psychological contract content measures but rather to enhance these measures by addressing the specific workvalues and expectations of members from the digital natives generational cohort. While this chapter provides insights into the workvalues and expectations of digital natives, there are limitations for future researchers to consider. This chapter was based on a narrative review of the current literature, therefore presenting a fundamental gap for future systematic and empirical research. A narrative review of the literature also presents an element of subjectivity.

9 Conclusion

This chapter sought to demonstrate that the emerging generational cohort, the digital natives, are joining the workforce with their own unique characteristics, workvalues, and expectations. The psychological contract is a very effective tool to determine their specific inputs and outcomes in terms of their expectations of their employment relationship; however, current psychological contract content measures may fail to measure what the digital natives expect from their workplace. This chapter subsequently concluded by providing future research directions in the field of Human Resource Management and Industrial and Organisational Psychology to extend current psychological contract content measures in order to include the expectations of the digital natives cohort.