Idiosyncratic Deals 1 Running Head: IDIOSYNCRATIC DEALS Idiosyncratic Deals: How Negotiating Their Own Employment Conditions Affects Workers’ Relationships with an Employer

In a sample of 166 hospital workers, this study investigated the extent to which negotiating individual, idiosyncratic conditions of employment impacted worker relationships with the employer. Confirmatory factor analysis provided evidence of three types of idiosyncratic arrangements, Development (career-focused), Flexibility (schedule), and Reduced Workload (hours and effort); and the two points in time at which these were negotiated, Ex Ante (during recruitment) and Ex Post (once on the job). Both type and timing of idiosyncratic arrangements were significantly related to beliefs regarding the employment relationship. In particular, Ex Post Negotiation and Development were related to assessing one’s employment as a Social Exchange, while Ex Ante Negotiation and Flexibility were unrelated to such beliefs. Reduced Workload was negatively related to perceived organizational support (POS) and in turn POS was negatively related to assessing employment as an Economic Exchange. POS also mediated the relationship between Development and Social Exchange. Leader-member exchange was positively related to Ex Post Negotiation. Implications for future research on idiosyncratic arrangements are presented. Idiosyncratic Deals 3 Idiosyncratic Deals: How Negotiating Their Own Employment Conditions Affects Workers’ Relationships with an Employer Workers play an active role in shaping the conditions of their employment. There is evidence that workers incorporate into their jobs those activities they find particularly meaningful and satisfying (Wrzesniewski & Dutton, 2001), and seek customized arrangements that help them create more satisfying personal and family lives (Hochschild, 1997; Lee, Macdermid & Buck, 2001). However, the processes by which individuals shape the actual terms of their employment have received little direct attention. In contrast, how employers shape the employment arrangement is widely established through the level of support they provide workers (Eisenberger, Armeli, Rexwinkel, Lynch & Rhodes, 2001), career opportunity they make available (Arthur, Inkson & Pringle, 1999), and the quality of the relationship managers have with workers (Graen & Cashman, 1975). The present study examines how individual workers directly shape the terms of their employment arrangement by negotiating valued work conditions. These worker-initiated arrangements, referred to as “idiosyncratic deals” (or “I-deals”, Rousseau, 2001), are investigated with respect to their timing, that is, during the hiring process (ex ante) or once on the job (ex post), content (e.g., flexible hours, career development), and impact on worker beliefs regarding the nature of their relationship with an employer (e.g., economic versus social exchange). Although previous research on the employment relationship has examined it as an antecedent of worker and employer responses (e.g., Robinson & Rousseau, 1994; Rousseau & Tijoriwala, 1999), in the Idiosyncratic Deals 4 present study the nature of the employment relationship is examined as a consequence of action workers take and their employer’s responses to it. Finally, it examines the link between worker-initiated arrangements and two commonly used indicators of worker beliefs, perceived organizational support (POS) and leader-member exchange (LMX), integrating emerging research on I-deals with the existing body of literature on the employment relationship. Competing models are examined to investigate alternative explanations of the manner in which worker actions shape their employment relationship. Idiosyncratic Deals I-deals are employment terms negotiated by individual workers for themselves (Rousseau, 2001). Accounts of exceptional individuals (“superstars”) capable of negotiating distinct terms of employment are not new (e.g., Rosen, 1981; Frank & Cook, 1995). However, changing labor market conditions have expanded the opportunities for a broader array of workers to seek and receive I-deals (Rousseau, 2001; Rousseau, Ho & Kim, 2003). Far from being isolated cases, individuals negotiating I-deals can do so as employers face market pressures to attract and retain talent (Cappelli, 2000) and heightened expectations among workers for voice in shaping their on-the-job experiences (Freeman & Rogers, 1999). I-deals, while characteristic of hypercompetitive dot.com era, continue to be in evidence during the less robust economic conditions (Rousseau, in press). They may represent one way in which incompletely specified employment contracts become instantiated over time (Williamson, 1979). I-deals are voluntary agreements of a non-standard nature between employers and employees regarding employment terms that will benefit each party (Rousseau, in press; Rousseau, Ho & Greenberg, 2003). These individual terms differ both from standardized Idiosyncratic Deals 5 ones that employees access as a group (e.g., benefits allocated to full-time employees) and those based upon the particular positions workers hold (e.g., more flexible work hours and vacations a firm’s professionals enjoy in contrast to its non-professional staff). A common focus of idiosyncratic arrangements is flexibility where individual workers can obtain support for their personal needs, enriching their nonwork lives. Arlie Russell Hochchild’s (1997) book Time Bind is replete with examples of local arrangements made to the firm’s valued workers in order to attract or retain them (from flexible work hours to one-year sabbaticals to make underwater photographs of coral reefs). Klein, Berman, and Dickson (2000) report similar willingness to be flexible on the part of employers where workers sought accommodations for institutionally legitimate reasons (in that study of lawyers “legitimate” accommodations were to mothers caring for their children, but not fathers; demands from family but not personal hobbies). The idiosyncratic arrangements studied here are distinct from two other forms of person-specific employment arrangements. I-deals are distinct from preferential treatment or cronyism, that is, the favored treatment offered to worker by an agent of firm, usually the immediate manager or supervisor, to strengthen their personal relationship, as in the case of lowered performance standards for a worker who is a friend of the boss. They are also distinct from unauthorized arrangements, where workers confiscate resources from their employer without authorization, as in the case of theft or misrepresentation (Rousseau, 2003). In contrast to other forms of person-specific arrangements, I-deals involve active negotiation of work arrangements that benefit the worker, and can enhance the organization’s ability to attract and retain a valued contributor. Two features that differentiate i-deals from other arrangements are the role of both individual and employer Idiosyncratic Deals 6 in negotiating terms of mutual benefit and the particular terms workers obtain through them, often providing resources that individuals otherwise might find difficult to access. Resources and the employment exchange relationship All employment arrangements involve the exchange of resources between worker and employer. The kinds of resources workers access through employment are a powerful signal regarding the nature of that relationship. The traditional view of employment is as an economic exchange where incentives and equity are emphasized (Vroom, 1964) and market factors of supply and demand dictate the conditions of employment (Lazear, 1981). Economic exchanges are characterized by discrete and typically well-specified employment conditions involving money and other monetizable employment conditions (benefits, vacation days) provided by the employer and specific services and performance levels contributed by the worker. More recent research expands the array of resources exchanged in employment recognizing that it can take on a more social or relational nature where the worker and employer provide each mutual support and responsiveness to each other’s needs (Eisenberger et al., 1990; Rousseau, 1995). Social exchanges are characterized by a broad array of resources exchanged between the parties under often more open-ended conditions based upon the needs and mutual interests. The broad support employers can provide to workers extends to include flexibility in accommodating needs in one’s personal life (Guzzo, Noonan & Elron, 1996; Lee et al, 2001), opportunities for career development (Guzzo et al., 1996; Robinson, Kraatz & Rousseau, 1994), and relational experiences (Graen & Uhl-Bien, 1995), while employers might receive in turn extra-role contributions (Deluga, 1994), and long-term retention of valued workers who have developed organization-specific skills (Leana & Idiosyncratic Deals 7 Rousseau, 2000). Whether workers come to believe their employment is essentially an economic arrangement or a more personal social exchange can have profound implications for their attachment to the firm and future behaviors (Blau, 1964; Foa & Foa, 1974). The timing of I-deals Successful negotiation of an i-deal can cause employees to think differently about the nature of their relationship with an employer. But what workers conclude about the nature of their relationship is likely to depend on when in the context of employment the negotiation occurs. In particular, employment negotiations occurring during recruitment, that is, ex ante negotiations, can have different dynamics from those that occur once the individual is on the job and has built a relationship and performance record with that employer, that is, ex post negotiations (Rousseau, in press). Ex ante bargaining occurs where workers can propose, accept, and reject terms of employment at its outset. Where workers have a high degree of market power, ex ante bargaining is more likely to occur (e.g., the high technology industry before the dot.bomb era). In some societies, ex ante negotiation by workers is considered rude (e.g. Singapore, Japan; Rousseau, in press). Where ex ante bargaining is not the norm, idiosyncratic deals still do arise, but they occur later in the employment relationship and rest upon a different foundation – where a relationship of mutual interdependence and trust has formed. Ex post bargaining can give rise to understandings of the employment relationship differing from those occurring ex ante because the former takes place in the context of an existing relationship. Employers who might be reluctant to accommodate special preferences on the part of workers whom they don’t know or who have little leverage at Idiosyncratic Deals 8 the time of hire (the young, inexperienced, non-credentialed) over time can come to depend on particular individuals. Workers who may for cultural or personal reasons fail to bargain at the time of hire (e.g., women may be less willing to negotiate than are men; Babcock, 2003) can find themselves in a more comfortable position once on the job to request accommodations to their personal preferences. We expect that the timing of an idiosyncratic arrangement will affect the attributions workers make about the nature of the employment relationship The point in time when an idiosyncratic deal is created affects the information workers have available to make attributions regarding the resources involved and their employer’s intentions in providing them. Ex ante i-deals arise under conditions of information asymmetry on the part of both the worker and the firm. There is greater ambiguity regarding an employer’s motives for accommodating a recruit’s request for special arrangements because a variety of credible reasons from the worker’s market value to employer good will can be behind the willingness to do so. Despite this ambiguity, workers can still develop attributions regarding their ability to negotiate an i-deal, attributions we would expect to focus more upon personal and market factors rather than on attributes of their employer. Thus we make no prediction regarding a relationship between ex ante arrangements and worker beliefs regarding the nature of their employment relationship. The absence of a relationship for ex ante i–deals is particularly likely once workers have been on the job a while and acquired more information about their employer and its relationship to them. In contrast, ex post i-deals are negotiated in the context of an existing employment relationship, making market-based motivations less salient and relational ones more so. Thus, we expect that workers who successfully negotiate with their employers for ex post Idiosyncratic Deals 9 i-deals are more likely to believe that their employer supports and values them, consequently increasing the likelihood that the employment relationship is viewed as a social exchange. Hypothesis 1: Ex Post Negotiations will be positively related to worker beliefs that the employment relationship is a social exchange. Content of Idiosyncratic Arrangements Attributions workers make regarding employment, as an economic or a social exchange, are shaped by the kinds of resources they access through it. Those resources workers receive from their employer provide powerful cues regarding the nature of their relationship. Exchange relationships focused primarily upon monetizable resources are more likely to be construed to be economic in nature with a focus on equity and limited personal involvement between parties. In contrast, social exchanges in employment go beyond monetizable resources to include interpersonal support and mutual concern, typically in the context of a relationship expected to continue into the future. Idiosyncratic arrangements are expected to shape a worker’s beliefs regarding his or her employment relationship depending upon the nature of the resources for which that person has successfully bargained. We postulate that resources of a concrete and monetizable nature will promote a worker’s belief in an economic exchange, particularly where such resources are the primary focus of the employment exchange. Such resources include hours worked and workload or duties performed, that is, those basic conditions of employment typically tied to levels of compensation and specified job requirements. Hypothesis 2: I-deals involving monetizable conditions of employment will be positively related to worker beliefs that the employment arrangement is an Idiosyncratic Deals 10 economic exchange, when effects of non-monetizable conditions of employment are controlled. I-deals involving relational content, that is, conditions of employment related to the worker’s well-being and his or her future with the organization, are expected to provide powerful signals that the employment relationship is a social exchange. In particular, we expect that I-deals involving career development can provide important signals to workers regarding their value to the firm and their employer’s intentions toward them in the future. In employment relations where career development conditions have been bargained for along with monetizable conditions, broadening employment to include such relational resources is expected to lead workers to believe that their employment is a social exchange. Hypothesis 3: I-deals involving relational conditions of employment will be positively related to worker beliefs that the employment relationship is a social exchange. Responsiveness to I-deals and beliefs regarding the employer Support workers receive from the employer is an important predictor of their assessment of the employment relationship’s quality and of their attachment to the employer (Eisenberger et al., 1990; 2001). In particular, employers who act in ways that anticipate or respond to worker needs tend to score highly on a commonly used indicator of employment relationship quality, Perceived Organizational Support (POS; Eisenberger et al., 1989). POS potentially can play several roles in relation to idiosyncratic arrangements. POS can be a cause of idiosyncratic arrangements where employers rated highly on POS promote more worker attempts to negotiate idiosyncratic arrangements. Idiosyncratic Deals 11 On the other hand, POS can be a result of successful worker negotiation of idiosyncratic arrangements, where employer responsiveness to worker requests for special accommodations increases worker assessments that the employer is high on POS. We postulate a positive relationship between Ex Post Negotiation and POS (following arguments made for Hypothesis 1). Further while we suspect that over time high POS employers are likely to encourage more idiosyncratic arrangements than low POS firms, we predict that POS is also a consequence of employer responsiveness to I-deals and that POS mediates the relationship between Ex Post Negotiation and Social Exchange Hypothesis 4a: Ex Post Negotiation will be positively related to POS. Hypothesis 4b: POS will mediate the relationship of Ex post Negotiation with Social Exchange. Worker’s relations with their employers are often instantiated by interactions with their immediate manager. These interactions are widely operationalized in terms of Leader-Member Exchange (LMX), a measure of the quality of the interpersonal relationship between a manager and an individual worker. LMX has been found to be positively related with subordinate-supervisor mutual support and high LMX relationships are characterized by mutual loyalty, liking, respect and supportive behaviors (Dansereau, Graen & Haga, 1975). Graen and Scandura (1987) argue that supervisors offer their high LMX subordinates greater flexibility and discretion in performing their duties along with enhanced personal support and mentoring. Thus, we predict that workers with high LMX relationships with their manager will negotiate more idiosyncratic arrangements than their counterparts in lower quality relationships. Hypothesis 5: LMX is positively related to Ex Post Negotiation. Idiosyncratic Deals 12