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Abstract
Conventional wisdom tells us that only if the employees are paid enough, they can be made happy consequently productive. However, studies have suggested that the nature of the relations between employer and employee have a vital role to play in employee’s job satisfaction and hence productivity. Psychological Contract is a model which will help one to understand the employer-employee relationship. The mutual expectations and obligations proportionate to each one’s contribution is a general way to define psychological contract. Research suggests that a breach of this contract can affect the organizational outcomes and employee reactions negatively. In this context it is imperative to study factors that can mitigate the degree of psychological contract breach. Studies have suggested that importance of communication in reducing the breach. This study if made on bank employees and employers of public and private sector to understand the effect of communication on the psychological contract breach perceived by them. Data were collected from 210 public sector and 140 private sector bank branches, using stratified sampling. A dyadic survey method was used and one sample unit consisted of a branch head and an employee (clerical or managerial). Two versions of questionnaire was made- one for employee and the other of employer. 276 completed questionnaires were received. The employee communication was found to negatively affect both employee-PCB and employer-PCB. However, employer-communication negatively affected only employer-PCB and it did not affect employee PCB. The study also showed that there is a significant difference between the Employee PCB and the Employer PCB. A significant difference in the Employee PCB based on Public Sector banks and Private sector banks was observed. Likewise a significant difference in the Employer PCB of Public Sector banks and Private sector banks was also noticed. This work is noteworthy as it assesses the effect of communication on psychological contract breach. The results suggest communication satisfaction will mitigate the psychological contract breach perceived by bank employees.