Volume 23 Issue 2 Article 3 August 2021 Get What You Give? Investigating Employer and Young Get What You Give? Investigating Employer and Young Professionals’ Psychological Contracts in European SMEs Professionals’ Psychological Contracts in European SMEs Katarina Katja Mihelič University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia Mark Bailey Northumbria University, School of Design, Newcastle, UK Julie Brueckner Dublin City University Business School, Dublin, Ireland Agnieszka Postuł a University of Warsaw, Faculty of Management, Warsaw, Poland Nada Zupan University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia, nada.zupan@ef.uni-lj.si Follow this and additional works at: https://www.ebrjournal.net/home Part of the Business Commons Recommended Citation Recommended Citation Mihelič , K. K., Bailey, M., Brueckner, J., Postuł a, A., & Zupan, N. (2021). Get What You Give? Investigating Employer and Young Professionals’ Psychological Contracts in European SMEs. Economic and Business Review, 23(2). https://doi.org/10.15458/2335-4216.1008 This Original Article is brought to you for free and open access by Economic and Business Review. It has been accepted for inclusion in Economic and Business Review by an authorized editor of Economic and Business Review. ORIGINAL ARTICLE Get What You Give? Investigating Employer and Young Professionals’ Psychological Contracts in European SMEs Katarina Katja Mihelic a, *, Mark Bailey b , Julie Brueckner c , Agnieszka Postuła d , Nada Zupan a a University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia b Northumbria University, School of Design, Newcastle, UK c Dublin City University Business School, Dublin, Ireland d University of Warsaw, Faculty of Management, Warsaw, Poland Abstract This paper looks at psychological contracts in small and medium-sized enterprises, an underrepresented topic in the psychological contract literature. Adopting a multi-perspective approach, we explore what employers and young pro- fessionals expect regarding their employment obligations. The results of a qualitative research design and interviews conducted in four European countries reveal the importance of competence and performance-enhancing behaviours on one side and support for performance and development, good working conditions, autonomy, flexibility, workelife balance, and relationships on the other. Moreover, we identify what is offered and expected by both members of the dyad and shed light on the changing dynamics of today's psychological contracts. Our findings hold implications for bothemployerswishingtoretaintheirbestyoungprofessionalsandindividualsinterestedinunderstandingwhatsmall and medium-sized enterprises are offering prospective candidates. Keywords:Psychologicalcontract,Employers,Youngprofessionals,SMEs,Expectations,Obligations,Qualitativeanalysis JEL classification: M1, M12 Introduction I n a VUCA (volatile, uncertain, complex, and ambiguous) world, organisations seek to maintain a competitive advantage and provide value to customers by employing talented in- dividuals. By 2025, three-quarters of the global workforce will belong to the Millennial genera- tion (Catalyst, 2019) and in the US, they are already the largest cohort in the workforce (Fry, 2018).Theirvalues,attitudesandwaysofworking and living (Ng, Lyons, & Schweitzer, 2018; Parry & Urwin, 2011) tend to differ from those of other generations. This makes work relationships more complex and warrants new organisational structures and routines. Researchers and practi- tioners alike are searching for ways to attract, manage and retain Millennials, hence headlines in the popular press such as “what do young employees really want?” (Goler, Gale, Harring- ton, & Grant, 2018; Hewko, 2018; Pfau, 2016) are not surprising and indicate the general curiosity and business interest in this area. Small- and medium-sized companies (hereafter SMEs) employ 60e70% of workers in the world and playandimportantroleinjobcreation(OECD,n.d.). They often find it challenging to compete against largeandmultinationalorganisations,whenitcomes to employing talented people (Cardon & Stevens, 2004;Festing,Harsch,Sch€ afer,&Scullion,2017).One wayofacquiringandretainingtalentedemployeesis Received 30 January 2020; accepted 2 April 2021. Available online 19 August 2021. * Corresponding author. E-mail address: katja.mihelic@ef.uni-lj.si (K.K. Mihelic). https://doi.org/10.15458/85451.1008 2335-4216/© 2021 School of Economics and Business University of Ljubljana. This is an open access article under the CC-BY-NC-ND license (http://creativecommons. org/licenses/by-nc-nd/4.0/). bymanagingnotjusttheiremploymentcontractsbut alsopsychologicalcontracts.Apsychologicalcontract (PC) is a mental model (Baruch & Rousseau, 2018) defined as “individual beliefs, shaped by theorgani- zation, regarding terms of an exchange agreement between individuals and their organization” (Rous- seau, 1995, p. 9). As the definition implies, psycho- logicalcontractsareimplicit.Therefore,PCsarevery relevant for studying employment relationships in SMEs,sinceonlyafewobligationsaretypicallystip- ulated in written contracts and relationships tend to be more informal than in large organisations (Kitch- ing&Marlow,2013). In a standard employment relationship, the psy- chological contract has two dimensions: 1) the em- ployer'sobligationsand2)theemployees'obligations. Knowingthecontentsofpsychologicalcontractsand (re)acting in line with perceived obligations on both sides is important for effective talent management (Baruch& Rousseau, 2018). This can lead to psycho- logical contractfulfilment,which inturnfosterspro- ductive employment relationships and helps keep talented employees in organisations, thereby sup- porting organisational success (Coyle-Shapiro, Per- eiraCosta,Doden,&Chang,2019)and,morebroadly, the success of a society. Conversely, if PCs are not managed well, perceived breaches result in lower productivity, commitment and greater turnover in- tentions (Estreder,Tomas,Chambel,& Ramos,2019; Zhao,Wayne,Glibkowski,&Bravo,2007). Drawing on the psychological contract literature (Baruch & Rousseau, 2018; Coyle-Shapiro et al., 2019; Guest & Conway, 2002; Rousseau, 1995), the purpose of this study is to better understand the nature and substance of employer/employee psy- chological contracts in SMEs by adopting a multi- perspectiveapproach(Guest,2002).Thismeansthat we explore 1) two aspects of psychological contracts (i.e.theexpectations andtheoffers), andconsider2) two stakeholders of the employment relationship (i.e. the employer and the employee). We develop the narrative of mutual employment obligations through a qualitative research design and by ana- lysing the contents of interviews with individual SME representatives and young professionals working in SMEs. This paper makes three main contributions to the literature. First, extant research on psychological contracts andtheirfulfilmentgenerallyfocusesonemployees, whilst the employer perspective is considerably less studied (Baruch & Rousseau, 2018). Further, more research can be found about what each party ex- pectstogetfromtheother,butlessonwhattheyare willing to give in return. In this study, we offer an insight into the current state of psychological contracts between young professionals and their employers in SMEs. Second, we focus on SMEs, which are relatively underrepresented in the psychological contract realm (Atkinson, 2008; Nadin& Cassell, 2007), even though it is clearly recognised that context matters while studying PCs (Guest, 2004). We, therefore, complement the existing literature by critically evaluating current perceived reciprocal obligations in the SME context. This is relevant because SMEs have long faced challenges in the area of employee management, especially with regard to attracting and retaining talented employees (Festing et al., 2017) for whom psychological contracts hold important implications (H€ oglund, 2012). Finally, we consider young professionals, namely, university graduates who working in their field of expertise (Lattuch & Young, 2011) shed light on what they desire and need, when it comes to an employment relationship with an SME. This is important because young professionals are often a key resource for SMEs and understanding their expectations may improve SMEs’ ability to suc- cessfully attract, manage and retain them. Research has explored what young students or employees expect to obtain from employers (De Hauw & De Vos, 2010) and not so much what they are willing to give in return. In addition, most studies utilise deductive survey methods and thus rely on previ- ously determined frameworks. As such, they may omit some emerging and important issues for un- derstanding the current state of PC. Therefore, a qualitativeapproachprovidesanopportunitytoadd fresh insights of relevance. 1 Theoretical background 1.1 Psychological contracts A psychological contract is most frequently con- ceptualised as the individual beliefs regarding mutual obligations in an employment relationship (Guest, 2004; Rousseau, 1995). These beliefs encap- sulate both expectations expressed explicitly (e.g. verbal and nonverbal agreements) as well as im- plicit promises (interpretations of behaviours) (Coyle-Shapiro et al., 2019). The concept of mutual obligations/psychological contracts is rooted in so- cialexchangetheory(Cropanzano&Mitchell,2005), where this theoretical perspective is associated with the terms mutuality and reciprocity. According to Rousseau (1995), psychological con- tracts can be classified either as transactional (i.e. short-term with a mostly materialistic focus) or relational (i.e. long-term and not restricted to ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 87 economic exchange). Later, a balanced type was added (i.e. dynamic and open-ended employment arrangements that include both the economic suc- cess of the firm and employees’ opportunities to develop their career advantages). This was because the usual transactionale relational continuum was not sufficient to accommodate changes in the employment relationships due to flexibilization, new forms of work, knowledge economy, global- ization, etc. (Rousseau, 2004). A psychological contract is a framework useful especially for understanding individuals’ work be- haviours and career decisions (Sturges et al., 2005). Over time, the psychological contract develops into a mental model, ranging from specific beliefs about the obligations (e.g. learning and growing to be employable) to general beliefs that add meaning to anemploymentrelationship(e.g.acalling,afamilial relationship) (Baruch & Rousseau, 2018). McNulty (2014) asserts that, unlike written contracts, PCs havenoofficialstartandenddateandaresubjectto ongoing and constant renegotiation (McNulty, 2014).PCschangebecausetheinterestsandgoalsof bothpartieschangeovertime(Rousseau,Hansen,& Tomprou, 2018), also as a response to shifting social and economic realities (Ramirez, Velez-Zapata, & Madero, 2015). Due to our focus on young pro- fessionals,itisinterestingtoobservetheirtransition from school to work. Upon organizational entry, newcomers undergo socialization and are exposed to the reality of inducements they get from em- ployers, and subsequently their expectations adapt, andbecomelower,andmorerealistic(De Vosetal., 2003). The next section outlines the specifics of employment relationships in SMEs. 1.2 Employment relationship characteristics in SMEs SMEs are heterogeneous and operate in different sectors, economic conditions, social and familial norms, and institutional contexts (Edwards, Ram, Gupta, & Tsai, 2006). Therefore, generalisations are difficult and might be misleading, if caution is not applied.Highlevelsofinformality,spatialandsocial proximity, and resource poverty distinguish SMEs from larger corporations. Due to having fewer em- ployees, each employee must make a visible contribution and there is little room for social loaf- ing (Nadin & Cassell, 2007). In a small setting, the interaction between owner managers and em- ployees is more frequent and direct (Kitching & Marlow, 2013), friendly relations can develop over time and there is often an overlap between the personal and employment relationship. In SMEs, the owner's philosophy and actions considerably affect both formal relationships and psychological contracts (Atkinson, 2008). ForSMEs,itischallengingtocompetefortalented professional with larger companies for various rea- sons: lack of professional HR resources for recruit- ing (Festing et al., 2017); poor owner and supervisor awarenessofthenewestHRprocessesandpractices (Skoumpopoulou, Stalker, & Kohont, 2019); lack of resources (Harney & Alkhalaf, 2020) to access latest formalized external training and developmental opportunities (Skoumpopoulou et al., 2019); fewer possibilities to hire best HR specialists (Atkinson, 2007); high workload, interruptions in workflows, and expectations to work on different tasks requiring generalist rather than specialist knowl- edge (Festing et al., 2017); fewer benefits, less attractive compensation packages (Festing et al., 2017) and little opportunities for promotion; poorer knowledgeincross-culturalissues(e.g.effective on- boarding of an employee from a different culture) (Harney & Alkhalaf, 2020); and, last but not least, a management style (e.g. authoritarian) which does not assume cooperation and negotiations with em- ployees (Harney & Alkhalaf, 2020). Due to SMEs' heterogeneity, it is also impossible to depict a typical employment relationship (Atkinson, 2008). In general, two opposing views of the effect of SME characteristics on employment relationships exist. One stresses the need for har- mony and good treatment of the employees, since the success of SMEs depends heavily on their em- ployees’ skills, commitment and loyalty (Ram & Edwards, 2003). The other view asserts that fierce competition pushes owner-managers to treat the employeesmoreharshlytominimisecosts(Rainnie, 2016). Informality may be viewed as a key charac- teristic of employment relationships in SMEs asso- ciated with either harmonious or autocratic managerial styles. Another useful way to describe and evaluate employment relationships is by considering the implementation of HRM practices (Harney, Dun- don, & Wilkinson, 2018). In this respect, SMEs are often described as not having sophisticated and formalised HR practices nor employing HR pro- fessionals and experts (Harney et al., 2018). It seems that informal practices are the preferred mode of SMEs' operations (Atkinson, 2008). The absence of HR specialists or formalised strategies may be due to owner-managers’ perception that these reduce agility (Dundon & Wilkinson, 2009) or that they possibly even lack managerial skills. Research also shows that HRM in SMEs is largely focused onoperational,day-to-day work issues (e.g. 88 ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 lack of skills, underperformance) rather than being strategic and long-term (Dundon & Wilkinson, 2009). Recruitment occurs mostly through informal and cost-effective channels (e.g. personal and pro- fessional networks); besides skills, employers are looking for candidates that “fit the team” (Euro- found, 2015), while in family-owned firms the focus is even more on a cultural match than on skills (Dyer & Panicheva Mortensen, 2005). Similarly, learning and development are also mostly informal, reactive and short-term (Nolan & Garavan, 2016; Tam & Gray, 2016). Overall, SMEs provide signifi- cantly less formal training than larger firms (Kotey & Folker, 2007). In addition, pay is mostly deter- mined by owner-managers based on their gut feel- ings and available resources, and individually negotiated (Gilman, Raby, & Pyman, 2015). 1.3 Young employees and the changing employment relationship There are many challenges and opportunities for youngemployeesjoiningthemodernworkforce.On one hand, they face greater job insecurity, fewer chances of accumulating wealth, and ambiguous careerpaths(Coyle-Shapiro&Kessler,2000).Onthe other hand, young employees benefit from more flexible work arrangements and higher autonomy (Hess & Jepsen, 2009). Therefore, researchers are increasingly interested in what implications these changes in the world of work hold for young em- ployees’ PCs. Existing research on Millennials as currentrepresentativesofyoungpeopleatworkhas given mixed results and empirical evidence seems to be “confusing at best and contradictory at worst” (Deal, Altman, & Rogelberg, 2010, p. 191). Whilemeta-analyseshavefoundmoresimilarities and few differences between generations(Costanza, Badger, Fraser, Severt, & Gade, 2012), some studies pointout meaningfuldifferences that must betaken into account while working with Millennials. For Millennials (Ng et al., 2018), the work environment and working conditions (e.g. workelife balance, job security, salary and benefits, supportive supervisor) are important. However, their top priorities are interesting work, achievement and advancement. Further, Rawlins, Indvik, and Johnson (2008) estab- lishedthatMillennialspaylessattentiontofinancial returns from their jobs and more to working for an organisation that is socially responsible and offers personal satisfaction. According to Dries, Peper- mans and De Kerpel (cited in Macky et al., 2008), Millennials value meaningful work more than other generations do. Deal and Levenson (2016) suggest that Millennialswanttobebothhappyandperform well at work; they wish to do interesting work with people whose company they enjoy, but they also want to be paid well and have enough free time to live their lives. Myers and Sadaghiani (2010) describe Millennials as thriving in a team-based culture, enjoying close contact and communication withtheirsuperiors,andwishingtoreceivefrequent feedback. Hess and Jepsen (2009) investigated generational effects on psychological contracts and found small, yetsignificanteffectsofindividuals'careerstageand generational cohort on their PC perceptions. Over- all, their study found that younger employees placed bigger emphasis on their employer's obliga- tion to provide balanced incentives (corresponding to opportunities for personal development) rather than relational incentives (corresponding to oppor- tunities for long-term stability and job security), or transactional incentives (corresponding to short- term benefits, pay, and specific employment con- ditions). Fulfilment of the balanced obligations of employees' psychological contracts, in turn, related more positively to their commitment and job satis- faction and more negatively to their turnover in- tentions than the fulfilment of relational or transactional obligations (Hess & Jepsen, 2009). De Hauw and De Vos (2010) found that young employees’ optimistic expectations with respect to workelife balance declined in times of economic instability. Still, their high expectations of fulfilling job content and personal development remained unchanged. Thus, it appears that while young em- ployees are willing to make certain concessions in their psychological contract obligations, violating their high expectations on developmental opportu- nities and self-actualisation can negatively impact the organisationeemployee employment relation- ship (De Hauw & De Vos, 2010). 2 The present study Thecurrentstateofresearchonthecharacteristics of employment relationships, specifically in SMEs, and what is currently known about the youngest generation in the workforce, and their side of employmentrelationship,wereoutlinedabove.This existingbodyofknowledgeisthefoundationforthe present study. Following the psychological contract framework(Coyle-Shapiroetal.,2019),weemploya multi-perspectiveapproach(Guest&Conway,2002) to obligations and consider both stakeholders of the employment relationship: the expectations and of- fers of the employerand the expectations andoffers of young professionals. In particular, we are inter- ested in gathering specifically the opinions and ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 89 beliefs of the youngest members of the Millennial generation who are currently in their twenties. To account for the fact that the employment relationship is dyadic in nature, we also investigate the employers’ side. In SMEs, which are under- studied in this context, most employereemployee obligations emerge informally and are often im- plicit, more part of a psychological rather than an explicit, formal, employment contract. Hence the importance of understanding and managing psy- chological contracts may be even greater for SMEs than for larger firms (Nadin & Cassell, 2007). Given the above, it is important to explore continuouslycurrentperceptionsof,andstanceson, psychologicalcontracts,sincetheychangeovertime (Alcover, Rico, Turnley,& Bolino, 2017). This is also important due to shifting economic realities, constantly altering for both employers and em- ployees. We took the above as the basis for our orienting research questions that guide the empir- ical analysis in the next section, namely: RQ1: What do SME employers expect to obtain from young professionals and what do they offer in exchange? RQ2: Whatdoyoungprofessionalsexpecttoobtainfrom SME employers and what do they offer in exchange? RQ3: How do the expected obligations overlap/differ for both stakeholders? 3 Method 3.1 Sample and procedures Data were collected from the SMEs located in the following four European countries: Ireland, Poland, Slovenia, and the United Kingdom. Purposive samplingthroughpersonal networksof participants in an international project consortium was used. Participants were managers (i.e. employers’ agents) and young professionals working in various SME settings. The dataset includes a total of 22 interviews (10 managers and 12 employees; see Table 1 for a detailed description). The interviews were semi- structured to ensure an authentic understanding (Yin,2015)oftheobligationsperceivedbymanagers and young professionals captured in their thoughts, perceptions and opinions. They took place on the company premises and lasted from 1 to 1.5 hours each. The respondents (i.e. representatives of em- ployers and employees) came from the same orga- nisation in a given country. The interviewer acquainted the interviewee beforehand with the study's purpose and the interview protocol, and provided the necessary consent forms. Further, the participants were explained the recording and data handling, and were thus assured that their com- ments and remarks would be treated confidentially and that the source of opinions would in no circumstance be identified. An information sheet containing a consent form was given to each inter- viewee prior to the interview. The audio files were transcribed verbatim and anonymised. 3.2 Analytical procedure In terms of the analytical approach, the data were analysed to identify emerging themes and sub- themes. Atlas.ti software was used to structure the empirical material. We applied two types of trian- gulation in order to authenticate and validate the terrain material: data and researcher. An interpre- tative perspective was adopted with the main focus on explaining and understanding the studied pop- ulations (Burrell&Morgan, 2016). We used an open coding method, followed by the building of cate- gories, which we present in what follows (Salda~ na, 2015). 4 Results This section offers findings of the interviews with employers(i.e.managersastheiragents)andyoung professionals regarding what they expected by way of mutual obligations 1 in line with the proposed research questions. 4.1 What employers expect of young professionals First, we inquired about employers' expectations of young professionals (Table 2). The initial response was often along the lines of: “I expect hard work” [IreM2]. This was followed by behavioural cues, which are important for doing one's job well, such as reliability, punctuality, responsibility, pro- fessionalism and speed. A Polish manager mentioned: “I expect them to be reliable, to be fast. At thebeginning,todothejobastheyaretoldandthenlater to come up with ideas and improvements” [PolM1]. A few employers indicated that reliability, punctuality 1 We provide quotations to illustrate the findings and use the following codes to identify respondents: country abbreviation (Ire-for Ireland, Pol-for Poland, Slo-for Slovenia, and UK- for the United Kingdom), M for managers, E for employees (i.e. young professionals), and the number assigned to an interviewee. 90 ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 and responsibility may be challenging for young people, forcing them to make these aspects more explicit, while describing expectations of employing young people. Enthusiasm and taking initiative were also frequently mentioned as a Polish manager explained: “… we expect them to be independent and proactive. We encourage them to try new ideas and new ways of working, we always try to follow the best ideas” [PolM3]. Commitment and engagement seem to be more important for the employers than specialist technicalskills [UKM1],whichcanbeacquiredfairly quickly with professional development. However, when employers' business depends on specialist knowledge or professionals working in R&D then they do seek those with strong technical skills and expertise.Somerelymoreonageneralabilityofthe employee. For example, one Irish manager said: “I'm not necessarily looking for the person that has honoursandwastopofherclass atschool.…I'mlooking Table 1. Sample characteristics by country and company. Ireland Poland Slovenia UK Company size 50 5 12 95 3 80 18 Sector Biochemistry/ Biotechnology research Marketing/ Web design Accelerator/ Biotech Food Supplements Consulting Software Technology Company age in years 15 5 11 70 8 12 5 Number of managers interviewed 3113011 Gender* of managers IreM1 M IreM2 M IreM3 F PolM1 M PolM2 F SloM1 M SloM2 F SloM3 M e UKM1 M UKM2 M Number of young professionals interviewed 3212130 Young professionals' gender* and tenure in years IreE1 M 4Y IreE2 M 4Y IreE3 M 3.5Y PolE1 M 1Y PolE3 M 2Y PolE2 F 0.1Y SloE1 M 1Y SloE2 M 10Y UKE1 M 0.2Y UKE2 M 2.5Y UKE3 M 3Y UKE4 F 2.5Y e Note: *M-Male, F-Female. Table 2. Employers’ expectations of young professionals: Attributes and quotes. Desired Attribute Indicative Quote Hard-working and proactive “I expect hard work.” [IreM2] “We are at an early stage, so we expect them to give more than what is required, also in terms of time spent at work to finish a certain project.” [PolM1] “… we expect them to be independent and proactive. We encourage them to try new ideas and new ways of working, we always try to follow the best ideas.” [PolM3] Reliable (punctual, responsible, professional, fast) “I expect them to be reliable, to be fast. At the beginning, to do the job as they are told and then later to come up with ideas and improvements.” [PolM1] “I would rather have a responsible person who can think and be constructive and join the team and cooperate with the team than the most skilful employee.” [SloM3] Learning Mindset (enthusiastic, taking initiative, independent) “… they really have to be enthusiastic, motivated, self-motivated. Because everyone is trainable. Plus, if you don't have that enthusiasm, that desire to learn, willingness to learn and willingness just to jump on board, no amount of training is going to make that person a really successful employee.” [IreM2] Soft Skills (teamwork, problem-solving, creativity, communication and empathy) “We want them to be empathetic. We want them to be supportive. We want them to be a great communicator, we want them to be proactive. We aren't bothered about whether they have not got their Prince2 qualification in project management or have not even worked in the sector.” [UKM2] Values (honesty and a positive attitude) “I expect honesty, honest feedback or information when stuff will be done or not. I encourage everybody to even tell me about problems because if I know that we can adjust. … if they have some lack of knowledge or experience, if they don't know how to do it, to just tell it straight.” [PolM1] ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 91 for someone who has a reasonable level of intelligence and capability.” [IreM1]. 4.2 What employers offer young professionals On the other side of expectations, one finds the employer'soffer:whataretheywillingtogivetoyoung professionals(Table3).Overall,theimpressionisthat employers recognise the importance of a balanced exchange:“Wenotonlywanttohaveourexpectationsmet, but alsofor the employees toget whatthey want outof the employment relationship.” [PolM1] They understand that in return for good work they need to support youngprofessionals'performance:“…it'snotaone-way street;inreturn,Ialsoexpectintermsofatwo-waystreetto providethemwithresources,support,training.”[IreM2]. Employersclaimthattheyofferyoungprofessionals good working conditions, includingflexible working hours, good office space, and options to work from home. [PolM1, IreM1, UKM2] They also mentioned somesimpleideasthatappealtoyoungprofessionals, such as fruit baskets [SloM1], rest areas and healthy food[PolM2].Employersseetheimportanceofagood work climate, open cooperation and positive re- lationships among team members [IreM1] and providingemployeeswithasenseofsecurity,stability [PolM2]andgeneralcare[SloM2]. We noted a few cases where managers were aware of young professionals' expectations, but also described limitations imposed by the SME's char- acteristics. For example, with regard to advance- ment within SMEs, opportunities are limited: “the difference in large and small companies is that you have many, many more management levels in large com- panies. … We only have two levels, so you cannot get much higher.” [SloM3] Several employers acknowl- edged that young people have high expectations, especially with respect to pay and other benefits, so that as SMEs they too find it hard to compete with largefirmstoattracttalent:“Theyexpectlotsofmoney, really, it's like lots of money, lots of free time, flexible working hours.” [PolM1] This contrasts with what we found when discussing pay with employees. 4.3 What young professionals expect of employers Development, training, mentoring and learning opportunities were frequently mentioned by the young professionals in connection to what they ex- pected from employers (Table 4). Young people are looking for “… a good job that gives you amazing op- portunities, constant growth is really important.” [PolE3] OneIrishemployeewasclear:“Thefirstoneisrespectas an employee. But that's the baseline, right? You have to meetthoseexpectationsbeforeyoucaneventalkaboutwhat Iwantasdevelopment.Iwouldexpecttohavesomeonewith whom I can discuss ideas. I expect some form of personal developmentinadditiontothe workI'm doing.”[IreE1]. Another common observation was the need for interesting,challengingwork,thatisworkthatmakes a difference. As one Irish young professional stated: “So the must-have would definitely be that the job, the tasks,areexciting,motivating.…it'slonghoursyouspend at work so what you're doing has to be fulfilling.” [IreE2] To do something new and exciting makes a job attractive. Young professionals also expect “… flexi- bilityandautonomy…Ifyouareacreativeperson,youdo notlikegettingtoldwhattodo.”[UKE1]But,atthesame time,theyalsoappreciateguidanceandinstructions, orasoneIrishemployeedescribedit:“WhenIsaythat an employee must have freedom, that doesn't mean abso- lute freedom, but structure has to be put in place and boundaries are to be defined.” [IreE1]. In the interviews, recognition and respect were repeatedly mentioned. One UK young professional stated that “… even though obviously you are young, you are entry level, you still want to be treated like a professional.” [UKE2] Here, the role of a supervisor becomes crucial: “I think it's very important that he motivateshisemployeessoyouhaveconstantaffirmation that you're doing a good job, that you're going in right direction.” [SloE2] Young professionals are in fact Table 3. Employers’ offer to young professionals: Attributes and quotes. Offer Attribute Indicative Quote Flexibility (flexible hours, options to work from home) “… flexible working hours, good office space, options to work from home, but we prefer at least twice a week for all of us to be in the office.” [PolM1] Work environment (collaborative and high-quality work space) “We also have fruit. All the time we have this basket in every production hall. Baskets with fresh fruit and once or twice per week is filled with fresh fruit.” [SloM1] Stability (job security) “They usually mention that they like that this is a stable company, that's been around for 65 years and that it's family oriented. I think they don't feel like we would sell the company to some multinational company, so they feel safer.” [SloM2] Development (personal and professional opportunities) “… the opportunity to do good science and the opportunity of advancing their career with maybe a good postdoc or a good industry position subsequently …” [IreM2] 92 ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 well aware that building high-quality relationships with the employer is a good path to self-develop- ment. Some respondents even seem to have high expectations, one of them stating that “… it's very importanttohaveagoodrelationship,youknow,thatthe superiorconstantlymotivatesyouandtalks toyou and,if youhaveanyproblems,thathe'sveryopenwithyou.Itis really important.”[SloE1]Inaddition,thereshouldbe “… fairness in the building … there should be no favouritism.” [IreE2]. Interestingly, in the interviews not many young professionals mentioned salaries or, if at all, only alongthelines:“… money is important, but it is not the top priority.” [PolE1] Salary needs to be at an appro- priate level, even in the first few months. A fair salary is important.” [PolE3] Finally, young professionals mentioned a good culture and work environment, with opportunities to socialise. It matters to them to have “a cool environment to work in. So that it doesn't look like a boring office … and flexibility, socials-are a big thing for making friends at work.” [UKE2] Another interviewee emphasised company picnics as an opportunity to develop good relationships. “I think it's really important to get to know other colleagues not only to speak about work, but to get to know them on a more personal level.” [SloE2] Table 4 summarises all the attributes sought by employees. 4.4 What young professionals offer the employers The last part of the empirical material was devoted to exploring what young professionals are willing to offer their employers (Table 5). It is worth noting that, compared with their expectations, they did not talk much about this side of the exchange. They mentioned the time they invest in work by simply stating: “I give my time.” [UKE4] One UK employeesimply respondedto thequestionof what hegivestohisemployerby stating:“I enjoy the work I am doing.” [UKE2]Suchapositiveattitudewasalso mentioned by a Slovenian young professional: “… whenever I arrive, I get a smile on my face, we can talk if there'saproblem,wecansolveit,wecommunicate.AndI think that is the best way for such a small company, to communicate,tocooperate,andsolveproblemstogether.” [SloE2] One Polish employee mentioned loyalty: Table 5. Employees’ offer to employers: Attributes and quotes. Offer Attribute Indicative Quote Time “I give my time.” [UKE4] Positive Attitude (passion, commitment, energy) “… whenever I arrive, I get a smile on my face, we can talk if there's a problem, we can solve it, we communicate.” [SloE2] Knowledge and Skills (specific to role) “… I bring my main work to the employer which is very much intertwined with the community work that I do there and deliver results, expand the science that the company is working on.” [IreE3] Creativity (problem-solving, experimentation) They're very good about saying I have this funny idea for a new app, let's develop it and see what happens. They're willing to take greater risks as a result.” [IreE1] Table 4. Employees’ expectations of employers: Attributes and quotes. Desired Attribute Indicative Quote Development opportunities (personal, professional, technical skills, mentoring) “… to build skills that will help them progress in the next stage of their employment. Life experience as well. Experience of working just in the workplace in general, which is quite different from, like, university. I think just learning general skills and getting experience.” [UKE2] Affirmation (appreciation, recognition, respect) “… it mostly comes to get good recognition for what you do. It kind of positively reinforces you to do better things again. And respect. The company should give respect to people and people should be allowed to make mistakes; you should not judge people.” [IreE3] Meaningful work (personally fulfilling, making a difference in the world) “What I like is that you get a chance to explore or at least look at something new every day. … so you have the possibility of finding something that nobody has looked at, and it has the potential to change somebody's life.” [IreE3] Stability “… you have to get the feeling that the company is good for you, that they are like parents to you; I mean, that the company cares for you. … because if you don't have this feeling, you will always be: ‘Oh’ and you will always be scared. You will never know what tomorrow brings.” [SloE1] Salary/Work-life balance “At the beginning, I was mostly thinking it was interesting projects and salary. Now I have children and I also need some stability. Also, to go home early enough, to have a good workelife balance.” [PolE2] ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 93 “Loyalty,tospeakwellaboutyourcompany.…youdon't need to work there all your life, but speak well about it when you do.” [PolE1]. Some interviewees mostly focused on their work contributions: “I bring my main work to the employer which is very much intertwined with the community work that I do there and deliver results, expand the science that the company is working on.” [IrishE3] Others describe more specifically the skills and specific knowledge they bring to the organisation. (PolE2). When asked about what they give to their em- ployers, many mentioned: “ideas, a lot of them.” [IrishE3] The young professionals in our sample are also ready to share their ideas and bring creativity, saying that young people are “pretty creative, they're pretty on point in turning like ideas into some kind of realised product. They're very good at that, I'd say. And that no matter what it would be, maybe it's like they're opening up their own beauty salon or they have an idea foranewapp.”[IreE1]Theyalsoreferredtoproblem- solving, expressing that: “Also, when you see prob- lems”, one should “report them and try to solve them. Reporting problems can help you and the company.” [PolE1]. 5 Discussion 5.1 Summary of the findings and theoretical implications This study contributes to a better understanding of PCs for young professionals, which are at large understudied in the literature. Moreover, by focusing on SMEs, which have not received much scholarlyattentioninthiscontext,wedrawattention to the complexities of the employment relationship in smaller organisations that attract young em- ployees with an entrepreneurial mindset at the start of their careers. SME employers are careful when selecting young employees to ensure they obtain those who are willing to work hard, take initiative, be creative and share the company's values. They realise that it is difficult for them to compete for talent with large corporations regarding the finan- cial aspectsofthejob offer, butthey compensate for this by providing good work opportunities (e.g. interestingandchallengingwork,workingwithnew technologies or making positive contributions) and good relationships (with the supervisor and other employees). Table 6. Perceived employee and employer obligations: Perspectives of managers and young professionals in SMEs 2 . Type Themes Subthemes Managers' perspective Young professionals' perspective Employee obligations Competence Specialised (technical) knowledge, soft skills General capability, learning on the job, developing independence Performance-enhancing behaviour Investmentoftime,hardwork,ideasharing,creativity,enthusiasm/passion,positive attitude Reliability, punctuality, responsibility, professionalism, speed, motivation, commitment, engagement, taking initiative, honesty, matching values Loyalty, taking risks Employer obligations Job characteristics Interesting and challenging work, autonomy/freedom, modern technologies Work that makes a difference Support for performance A safe environment allowing learning from mistakes Support from supervisor, recognition Development Opportunity to learn, mentorship Training programmes, to get experience, to diversify skills, international opportunities Working conditions and pay Flexible time and space of work, good office space, workelife balance, stability, general care Benefits (e.g. fruit, healthy meals), security Fair salaries Relationships/Culture Good relationships (with supervisors and team members) Respect, appreciation, authenticity, fairness, socialising at work 2 In mergedcells,onefinds mutually expressedobligationsor overlaps, and in separate columns for employers and youngprofessionals there are those that only one party identified, allowing us, therefore, to see the differences in perceived obligations. 94 ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 By answering the three research questions, we contribute to the existing body of knowledge by exploringthePCsofyoungprofessionalswhoarein the early stages of their careers and will soon as- sume decision-making positions in organisations. While much of the literature explores only employee expectations, this papers also delves into obligations,therebypaintingamorecomprehensive picture of PCs. The results presented in Tables 2e5 show the characteristics of psychological contracts from both employer (RQ1) and young professional (RQ2)perspectives.Themulti-perspectiveapproach taken in our study allows us to compare employer and employee views of mutual obligations (RQ3), thus providing a unique contribution to PC litera- ture. The emerging themes and subthemes regarding employer and employee obligations from themanagers'andyoungprofessionals’perspective, as well as their pertaining overlap or potential gaps are presented in Table 6. Overall, we observe that many more themes and subthemes emerged with respect to employer obligations, with managers proving more specific about employee obligations than young professionals, and the reverse being true for employer obligations. For employee obligations, two main themes emerged for both sides, which we named compe- tence (i.e. the ability to do a job well) and perfor- mance-enhancing behaviour. There is a considerable overlap of perceived obligations among employers and employees. Yet, employers were much more specific about what kind of behaviour they expect from employees. In general, despite development being highly valued by young professionals, they do not see it as their own obli- gation towards the employer. Instead, young pro- fessionals expect employers to provide sufficient opportunities for training and development and as they perceived these to be lacking they also wished for more structured programmes. Interestingly, loyalty was mentioned by the young professionals only,butnotinasenseofstayingwiththeemployer but rather as protecting the employer's good name. In addition, employers expect their employees to be self-reliant and independent. Young professionals expect validation for their work, would like greater recognition and expect supervisors to provide sup- port to accomplish their tasks. Regarding employer obligations, both intrinsic and extrinsic items emerged that were collapsed into five themes: job characteristics, support for per- formance, development, working conditions and pay, and relationships/culture. The young pro- fessionals had additional expectations in all themes, to name just a few: the opportunity to do meaningful work, development beyond the current job, recognition and respect. However, contrary to the belief that money is very important for them (e.g. Twenge, 2006), salary was not mentioned as a priority by the young professionals in our study andonlywhencombinedwithotherfactors.Above and beyond a good salary and interesting projects, young employees seek stability and predictability and a good workelife balance that allows time for family and friends. Yet, not all young employees in our study clearly separate their professional life fromtheirprivatelife.Instead,someinterpretwork as constituting part of their personal identity and therefore expect the relationship to be more than just transactional. Interestingly, both the managers and young professionals see stability as an employer obligation, yet the young ones seem unwilling to commit to stay with the employer unless they get what they need in terms of devel- opment and opportunities. When it comes to re- lationships and culture, the young professionals were very specific and the fact that the managers did not even mention any of these aspects may pose a serious threat to the psychological contract fulfilment.Inanycase,ourresultsalsoconfirmthat the young wish to contribute and make a differ- ence, which is similar to what is proposed by Rawlins et al. (2008). We extend the existing body of knowledge by exploring the overlap between expectations and obligations, as enabled by the unique research design. Due to the relatively large overlap of employerobligationsasperceivedbymanagersand young professionals, it seems that young pro- fessionals' expectations were not unrealistic or too high, as has been a popular claim for Millennials. It may be that the effect of the crises at the start of the last decade saw them adopting more realistic views of the employment relationship exchange as pro- posed by De Hauw and De Vos (2010). Our study alsosuggeststhatweneedtodistinguishthetimeof one's first entry to full-time work and later years of employment.Ourresultsconfirmthatpsychological contracts are dynamic and change over time and suggestthatyoungprofessionalsmovequitequickly from naïve perceptions of obligations, when they first enter the workforce, to more realistic ones. While cross-cultural comparisons were not the primary focus of this study, we found no major differences between the components of PCs. This could suggest that European SMEs operate in a similar context, where national culture character- istics are not the leading driver of the employment relationship. For young professionals, culture may be converging, due to their international mobility ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 95 and global experiences regarding education, work, and consumerism, which results in similar gener- ational values and mind-sets (Lichy, 2012; Raskovic, Ding, Hirose, Zabkar, & Fam, 2020). Our study confirms the need to use the multiple perspective approach (Guest & Conway, 2002), when investigating PCs. More specifically, when it comes to employee obligations, for both employers and youngprofessionals the dominatingthemes are competence and performance. This is understand- ableifwetakeintoaccountthefactthatinSMEsthe contribution of each employee is relatively more important, due to a smaller workforce. The typical SME characteristic, described by Wapshott and Mallett(2015)intermsofhighdegreeofinformality, spatial and social proximity, and resource poverty, seems to have both a positive connotation when we consider good relationships due to informality and proximity, as well as a negative connotation as youngprofessionalswouldsometimespreferamore formal, structured approach to training and devel- opment and pertaining resources. Given our focus on young professionals, it is un- derstandable that harmony and good treatment of employees are at core of employment relationships (Ram & Edwards, 2003). Our results also confirm previous findings that SMEs are mostly focused on operational, day-to-day performance issues (Wap- shott & Mallett, 2015). A lack of long-term perspective may be problematic for retaining young professionals, astheywantand expectdevelopment beyond current job. Taking into account how managers and young professionals described their mutual obligations, it becomesobviousthatabinaryviewofpsychological contracts being either transactional or relational is not particularly useful. Namely, performance and development, which Rousseau (1995) identified as elements of a balanced type of psychological con- tracts, were most clearly expressed as mutual obli- gations. This is in line with the results of a previous study of young employees (Hess& Jepsen, 2009), as well as with anticipatory psychological contracts of young entrants to labour market (Zupan, Dziewa- nowska,&Pearce,2017),wherethebalancedtypeof psychological contract was the prevalent form. Although external marketability as the third element of a balanced psychological contract was notdirectlymentioned,itwasimplicitlyassumedby the young employees, as they linked development to career opportunities beyond current job and employer. All in all, our study revealed very few indications of the transactional type of PC, nevertheless, stability as a relational construct has been quite strongly expressed, which was less so in Hess and Jepsen (2009) study. 5.2 Practical implications This study offers practical recommendations for employers in terms of workplace design, personal development, supervisor support, and recognition. First, young employees place significant value on their personal development. This falls broadly into two categories; technical knowledge and soft skills. Historically, employers tend to invest training budgets in the former because it is easier to draw a direct line between this investment and billable activity(e.g.specificsoftwaretrainingtosupportthe delivery of a new service). Investing in developing individuals such that they may become more attractive targets for poaching by competitors may becounterintuitive,buttheevidencebroughtbythis study suggests that such activity would directly benefit the employer by way of enhanced perfor- manceandstrengtheningthepsychologicalcontract inbothbalancedandrelationalterms.Suchtraining need not be company-specific and could be devel- oped and delivered through local consortia to help minimise costs and open up opportunities for the employees of smaller and micro SMEs. Personal development training can be delivered in a variety of ways and does not need to be over-demanding: providing employees access to on-line learning re- sources, such as MOOCS, gamified challenges and targeted ‘bite-sized’ assets, is of assistance. Interac- tive workshops that would enable self-inquiry and reflection could help employees better assess the gaps in own critical skills. Similarly, ensuring that employees have ownership of their own develop- ment is just as importantdestablishing a mentoring programme with well-trained mentors where facil- itating the mentee to co-construct their develop- ment needs is vital. To gain an insight into what a founder's job actually entails, young employees could spend two weeks with the founder(s), observing their engagement in activities, i.e. shad- owing. Investing in mentor training would not only benefit both the employer-manager (who is trained) and the young employee, but also deliver halo benefits across some of the other perceived obliga- tions, such as those forming the support for per- formance and performance-enhancing behaviours themes. The third recommendation concerns supervisor support and recognition, where supervisors could 96 ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 provide two forms of support that help retain em- ployees(Eisenberger,Stinglhamber,Vandenberghe, Sucharski, & Rhoades, 2002). One form is instru- mental in nature and corresponds with young pro- fessionals'expressedwishforguidance.Supervisors could task employees with brief weekly check-in sessions, where approach to solving current chal- lenges could be revised and further instructions given. The second type of support is emotional. During informal meetings, supervisors could inquire about employee well-being, thereby demonstrating care and compassion. Offering spe- cific advice and sharing own experience on how to overcome work-related challenges (for example, those related to increased overload in peak season) could help increase employee resilience and pro- vide information on different coping strategies. When it comes to recognizing employee contribu- tions, supervisors could also employ different tac- tics. They could organize celebrations for important achievements (i.e. finished projects), but also for crucial milestones during long projects. These informal celebrations could be held with the entire staff or only department members, depending on SME size, whereby the purpose would be to have fun. Handwritten notes with expressions of grati- tude could help improve morale and increase engagement. Similarly, mentioning an individual's success during a regular weekly meeting and showing appreciation would make employees feel not overlooked and serve as a resource in times when demands are high (Stocker et al., 2019). Aside from mentoring schemes recommended above, SMEs could also engage in reverse mentor- ing (Kase, Saksida, & Mihelic, 2019), where young employees could transfer their expertise to their older counterparts, for example digital skills. This wouldincreasetheirself-efficacyandalsofulfiltheir desiretocontributetotheSMEandmakeanimpact. Finally, both employees and employers view a high-quality working environment as important. Making small investments in this regard can serve to improve productivity and improve the health and well-being of staff. A well-designed physical workplace can promote many of the values that both employers and employees reported as important; collegiality, social interaction, idea- sharing, innovation, openness, teambuilding and agility, and soft-skills acquisition more broadly. Recommendations here include configuring the space to enable high-quality connections (e.g. seating areas in the hallways that enable short conversations, while “on the go”), designing rooms for brainstorming with a playful atmosphere, communal gathering spots that enable impromptu meetings, and huddle spaces with audio and video conferencing equipment. 5.3 Limitations and future research Whilst this study considered SMEs in four Euro- peancountrieswithafocusonyoungprofessionals,it hasseverallimitations.First,itdoesnottakeaccount of country-specific cultural factors which might bias the responses. Instead, it is limited to the two-party reciprocal model of the psychological contract and doesnotconsiderothersocialorfamilialfactorsthat may influence respondents’ relationships with their work environments. The overall sample size is rela- tivelysmallandtypicallyfocusedononlyoneortwo SMEs in each country. Hence, this paper does not attempt to make any generalizations. While the contextual variability in terms of the countries involved may be problematic, our findings indicate substantial consistency in answers across countries, suggesting cultural convergence. That said, more research is needed, employing larger samples to further validate the presented findings. he range of sizes and types of industry of SMEs, including the associated organisational structures and cultures, makesitdifficulttomakegeneralisedobservations. Further research is needed to address these limi- tations. Specifically, individual studies building from these generalised results could be useful within specific country contexts and differentiated across SME types regarding size, industry, whether it is a family-owned or non-family SME, etc. Another interesting avenue would be to compare PCs for traditional and non-traditional employment relationships (e.g. part-time, temporary, gig) since these relationships are becoming very common for young professionals. Such studies would provide a platform for engagement with education providers and policymakers to bring about a positive, evi- dence-based change in this area. Conflict of interest statement: Theauthorshavenoconflictsofinteresttodeclare. Acknowledgement The development of this paper was supported by the European Union's Horizon 2020 research and innovation programme under Marie Skłodowska- Curie grant agreement No. 734824. We are grateful to Charles Richardson, Rose Quan, Hyemi Shin, Ilsang Ko, Andrej Kohont, Alison Pearce, Suzanne Crane, Peter Pease, and Brenda Stalker for help in the data collection. ECONOMIC AND BUSINESS REVIEW 2021;23:86e99 97 References Alcover, C.-M., Rico, R., Turnley, W. H., & Bolino, M. C. (2017). Multi-dependence in the formation and development of the distributed psychological contract. European Journal of Work& Organizational Psychology, 26(1), 16e29. Atkinson, C. (2007). Building high performance employment relationships in small firms. 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