Running Head: IDIOSYNCRATIC DEALS Idiosyncratic …...Idiosyncratic Deals 2 Abstract In a sample of...
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Idiosyncratic Deals 1
Running Head: IDIOSYNCRATIC DEALS
Idiosyncratic Deals:
How Negotiating Their Own Employment Conditions Affects
Workers’ Relationships with an Employer
Denise M. Rousseau Heinz School of Public Policy
And Graduate School of Industrial Administration Carnegie Mellon University
Pittsburgh, Pennsylvania USA 15213 1-412-268-8470 (voice) 1-412-268-5338 (fax)
[email protected] (email)
Tai-Gyu Kim
Graduate School of Industrial Administration Carnegie Mellon University
Pittsburgh, PA 15213 [email protected]
We thank Marge Hardt and an H.J. Heinz Professorship for support of this research. We
also appreciate the constructive advice provided by Mark Fichman and Guillermo Dabos
in the writing of this paper.
Idiosyncratic Deals 2
Abstract
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
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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
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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
Method
Sample
The organizational setting was a 154 bed hospital in a metropolitan area in the
northeastern United States. This hospital had a history of financial difficulties in the ten
years prior to the survey, limiting its capital investments and human resource programs.
Part of a multi-hospital system, its wage rates typically were lower than other hospitals in
the system. Facing particular difficulties in recruiting and retaining workers, the site was
chosen in part because the researchers believed it plausible that idiosyncratic
arrangements might be used to offset some of the difficulties the employer faced in
recruitment and retention.
To investigate the dynamics of idiosyncratic arrangements, we first conducted a
series of interviews with hospital managers, employees, and human resource specialists.
Interviewees noted that idiosyncratic arrangements took a variety of forms including
reduced work hours and demands, flexibility in hours, adjustments in performance
requirements, opportunities for on-the-job learning and career development. These
interviews were used as a basis to develop measures regarding employment
arrangements. Newly developed measures were combined with existing scales to create a
questionnaire distributed to all hospital employees. A total of 166 employees completed
questionnaires (a response rate of 45%). Staff groups included nurses (the largest
occupational category), medical technicians, security, janitorial and administrative
personnel. All measures except demographics employed a five point Likert-type scale.
Idiosyncratic Deals 13
Idiosyncratic Deal Measures
Timing of idiosyncratic arrangements. Respondents were asked two sets of
questions regarding the timing of any idiosyncratic arrangements they might have sought
with their employer. The actual questionnaire asked respondents to indicate the extent to
which they negotiated special arrangements based upon their preferred work hours,
development opportunities or other personal preferences they might have pertaining to
work. Ex Ante negotiation of I-deals was measured using 3 items. A sample item is “at
the time I was hired, I negotiated with (name of hospital) for work arrangements that
differ from the typical employee here” (alpha reliability: .74). Ex Post negotiation of I-
deal was measured also by using 3 items. A sample item is “after I started working here, I
have been able to negotiate special arrangements that suit me personally” (alpha
reliability: .80). Exploratory factor analysis with varimax rotation yielded two factors
with eigenvalues greater than 1 with each scale falling neatly into its own factor. We also
conducted confirmatory factor analysis (CFA) using AMOS software (Arbuckle, 1997).
We assessed the fit of the CFA model by a joint consideration of several goodness-of-fit
indices: the incremental fit index (IFI); the nonnormed fit index (NNFI); the comparative
fit index (CFI); and the root mean square error of approximation (RMSEA). The IFI,
NNFI, and CFI indicate how much better the hypothesized model fit the data than a null
model and values of .90 or greater indicate good fit (Bentler & Bonett, 1980; Bollen,
1989; Jaccard & Wan, 1996). RMSEA indicates the average standardized residual and
values of less than .10 imply adequate fit. The CFA results supported the existence of
two factors with almost perfect fit indices, IFI=1.00, NNFI=1.00, CFI=1.00 and
RMSEA=.00.
Idiosyncratic Deals 14
Content of idiosyncratic arrangements. Respondents were asked to indicate the
extent to which they have asked for and successfully negotiated each of the items
developed for the current study. The instructions were:
“Individual employees can have employment arrangements that differ from their
coworkers (e.g., different schedules or job duties). Please rate whether you have
ASKED FOR AND SUCCESSFULLY NEGOTIATED any of the following in
your current job”
A one to five scale was used ranging from (1) “not at all” to (5) “to a very great extent.”
Eight items assessed the content of idiosyncratic arrangements workers might have
negotiated. These were subject to an exploratory factor analysis yielding three distinct
factors. Developmental I-deal is based upon three items: “Skill development different
from other workers,” “Performance goals different from other workers” and “Career
development different from other workers” Flexibility I-deal is based upon 3 items:
“Flexibility in starting and ending your work day,” “Schedule different from coworkers”
and “Greater work hours” Reduced Workload I-deal include 2 items: “Reduced work
demands” “Reduced work hours” Also, the results of CFA demonstrated that the three-
factor i-deals measurement model provided a good fit to the data (IFI=1.00, NNFI=1.00,
CFI=1.00 and RMSEA=.04), which stands in significant contrast of the test results of one
factor I-deals model with all the items together (IFI=.93, NNFI=.88, CFI=.93 and
RMSEA=.20). The above results provide evidence of good discriminant validity among
three forms of I-deals.
In measuring the content of i-deals, we faced the choice of developing
conventional scales or treating the items as effect indicators associated with a latent
Idiosyncratic Deals 15
construct (Bollen & Lennox, 1991). Both the exploratory and confirmatory factor
analysis indicated that participants differentiated three constructs (i.e., Development,
Flexibility, and Reduced Workload) and if scaled each yielded an alpha reliability greater
than .75. Nonetheless, we elected to use latent variables in subsequent structural analyses.
Since participants could negotiate discrete i-deal terms, such as where a worker with
Reduced Workload I-deal had “reduced work demands” but not “reduced work hours,”
we operationalize i-deals as latent variables in this study.
In the context of hypotheses 2 and 3 regarding the impact of i-deal content on
worker assessments of the employment relationship, Development is used to
operationalize socio-emotional content and Reduced Workload operationalizes economic
content. Flexibility does not fit neatly in either category and is included in the analyses
without any relations hypothesized for it.
Measures of Relationship Quality
Social Exchange and Economic Exchange. Each of Social Exchange and
Economic Exchange were measured using scales developed by Tetrick, Shore, Bommer
and Wayne (2001). Social Exchange items (alpha =.90) included: (name of organization)
has made a significant investment in me; the things I do on the job today will benefit my
standing at (name of organization) in the long run; there is a lot of give and take in my
relationship with (name of organization); I don’t mind working hard today – I know I will
eventually be rewarded by (name of organization); my relationship with (name of
organization) is based on mutual trust; I try to look out for the best interest of (name of
organization) because I can rely on (name of organization) to take care of me; even
Idiosyncratic Deals 16
though I may not always receive the recognition from (name of organization) I deserve, I
know my efforts will be rewarded in the future.
Economic exchange items (alpha = .81) included: My relationship with (name of
organization) is strictly an economic one – I work and they pay me; I only want to do
more for (name of organization) when I see that they will do more for me; I watch very
carefully what I get from (name of organization), relative to what I contribute; all I really
expect from (name of organization) is that I be paid for my work effort; my relationship
with (name of organization) is impersonal – I have little emotional involvement at work; I
do what (name of organization) requires, simply because they pay me; I do not care what
(name of organization) does for me in the long run, only what is done right now.
Perceived organizational support (POS). POS was measured using the 6-item
short form used in previous research (Eisenberger, Fasalo& Davis-Mastro, 1990). In the
present sample its alpha was .92.
Leader-member exchange (LMX). LMX was measured using Wayne, Shore and
Liden’s (1997) measure. Its alpha was .96.
Demographic variables. Demographics were assessed to determine whether
idiosyncratic arrangements varied for people with different backgrounds. These included
categorical variables for Education (five categories from High School to Masters, plus an
Other category), Age (eleven categories from under 21 to over 65), Gender,
Organizational and Job Tenure (nine categories from “under a year” to
”over 30 years”). Descriptive statistics including means, standard deviations and bivariate
correlations are presented in Table 1.
------Insert Table 1 about here------
Idiosyncratic Deals 17
Results
We conducted hypotheses testing with structural equation modeling (SEM) using
AMOS software (Arbuckle, 1997). The overall structural model based on a series of
hypotheses (Figure 1) was specified as follows: Ex Ante Negotiation and LMX have a
direct effect on Ex Post Negotiation which in turn is positively related to all forms of I-
Deals while also enhancing how workers rate the employer on POS. POS in turn
mediates the relationship between I-deals and worker assessments of Social and
Economic Exchange.
------Insert Figure 1 about here------
Testing alternative models
Based on the hypothesized model presented in Figure 1 we first tested two sets of
alternative models. The first set modified the causal sequences of POS and LMX of the
model presented in Figure 1. Different from the hypothesized model in which LMX
precedes Ex Post Negotiation and POS follows Ex Post Negotiation, alternative models
were tested (Table 2) in which 1) both LMX and POS precede Ex Post Negotiation, 2)
both LMX and POS follow Ex Post Negotiation or 3) POS precedes Ex Post Negotiation
and LMX follows Ex Post Negotiation. Results reveal that the hypothesized model has
superior fit compared to alternatives as show by its lower chi-square and better goodness
of fit values.
------Insert Table 2 about here------
After confirming the superiority of the hypothesized model with LMX as an
antecedent of Ex Post Negotiation and POS as a consequence of i-deals, we then tested
other variants of the hypothesized model to examine its parsimony. To conduct this series
Idiosyncratic Deals 18
of tests, we begin with a general model, which contains all the paths of theoretical
interest (Figure 2). The symbols used in Figure 2 follow the general notation of structural
equation modeling: λ for factor loading; δ and ε for measurement errors; γ and β for path
coefficients; ζ for residual. This subsequent analysis constrained certain paths while
allowing others to be free.
------Insert Figure 2 about here------
As indicated in Figure 2, we allow for errors in the measured construct by using a
latent variable with a single item. Following discussions by Kenny (1979) and James,
Mulaik and Brett (1982), the values of measurement parameters are fixed prior to the
analyses for identification purposes using the square root of the reliability of the
measured variable for factor loadings (λ’s) and one minus the reliability for measurement
errors (δ’s and ε’s). These fixed values are noted with an asterisk (*) and their values are
reported in parantheses in Figure 2.
Seven different models were sequentially evaluated using chi-square values, chi-
square/df, IFI, NNFI, CFI and RMSEA. Free parameters and a description for each model
are presented in Table 3. The results of model comparisons shown (Table 4) indicate that
Model F best fits the data with the fewest free parameters and all its path coefficients
significant (p <.05). Consequently, Model F is presented as the final model in Figure 3.
These results form the basis for testing this study’s hypotheses.
------Insert Tables 3 and 4 and Figure 3 about here------
Hypothesis testing
Hypothesis 1 postulated a positive relationship between Ex post Negotiation and
Social Exchange is supported by the raw correlation (see Table 1, r=.31, p<.001) but our
Idiosyncratic Deals 19
model indicates that the effect is not direct. Adding a direct effect did not improve model
fit as indicated by comparison between Model C and Model D in Table 4, ∆χ2 (df = 1) =
1.285, n.s. and the direct effect of Ex Post Negotiation on Social Exchange (β3 in Figure
2) is not significant in Model C (β3 = .05, n.s.). Given the high correlation between Ex
Post Negotiation Social Exchange, this result supports mediation by Perceived
Organizational Support, consistent with hypothesis 4b.
Hypothesis 2 predicted that i-deals involving economic conditions (i.e., Reduced
Workload) would be positively related to Economic Exchange, but it is rejected. The raw
correlation between Reduced Workload I-deal and Economic Exchange was non-
significant (r=.13, n.s.). However, the structural model in Figure 3 indicates that Reduced
Workload I-deal had a significant, negative effect on Perceived Organizational Support (β
= -.20, p<.05), which in turn negatively related with Economic Exchange (β = -.42,
p<.001). To determine whether a direct path from Reduced Workload I-deal to Economic
Exchange significantly improved the overall model fit, we added a direct path. Model fit
did not improve (∆χ2 (df = 1) = .78, n.s.) and there is no direct effect of Reduced
Workload on Economic Exchange (β = .07, n.s).
Hypothesis 3 predicted that I-deals involving relational conditions of employment
would be positively related to Social Exchange, and it is supported by both the positive
correlations between Development and Social Exchange (see Table 1, r=.26, .25, and .29,
p’s<.001 for each of three items of Development I-deals, respectively) and
Development’s mediated relationship involving Perceived Organizational Support (see
Figure 3). In addition to the comparison between Model A and Model B presented in
Table 3, we tested a direct path from Development and Social Exchange. Model fit did
Idiosyncratic Deals 20
not significantly improve, ∆χ2 (df = 1) = .15, n.s., and there no direct effect of
Development on Social Exchange (β = ..02, n.s.). This result supports POS’s role as a
mediator in the Development-Social Exchange relationship.
Ex Post Negotiation was predicted in Hypothesis 4a to have a positive
relationship with POS. This prediction was supported (path coefficient, β=.18, p<.001).
We note also that consistent with theory, Ex Ante Negotiation had no direct relationship
with measures of employment relationship quality (See Table 1). However, Ex Ante and
Ex Post Negotiations are positively related (path coefficient, β=.40, p<.001), such that
those workers who bargained before being hired are more likely to bargain once on the
job than are workers who did not bargain in the first place. Hypothesis 4b, predicting that
POS would mediate the relationship between Ex post Negotiation and Social Exchange,
is also supported as discussed above. We note that POS and Social Exchange are very
highly and positively related (path coefficient, β=.87, p<.001) while POS and Economic
Exchange are negatively related (path coefficient, β=-.42, p<.001). To address the
discriminant validity of Social Exchange and POS, we conducted a confirmatory factor
analysis. A two factor model (IFI=.99, NNFI=.98, CFI=.99, and RMSEA=.09) was
superior to a one factor solution in every fit index (IFI=.97, NNFI=.96, CFI=.97, and
RMSEA=.12). The Chi-Square test supports a two factor solution (∆χ2 (df = 1) = 86.5,
p<.001). Finally, Hypothesis 5 predicted a positive relationship of Leader-Member
Exchange with Ex-post Negotiation, and was supported (β=.39, p<.001).
Given the role of Development i-deals in shaping beliefs regarding POS and
Social Exchange, we investigated whether the timing of these developmental
arrangements mattered. Using a regression analysis entering both Ex Ante and Ex Post
Idiosyncratic Deals 21
and all three o-deals to predict Social Exchange (available from the authors though not
reported here), we find a significant drop in the coefficient for Ex Post Negotiation once
POS is added to the equation. This finding suggests that the effect Development i-deals
have on POS occurs where these arrangements arise ex post. In this organization,
developmental arrangements negotiated during recruiting do not appear to signal the
same level of support to workers as those made once on the job.
We also considered the role of timing and other forms of idiosyncratic
arrangements. Correlations (Table 1) indicate that Flexibility and Development were
negotiated both prior to hire as well as once on the job, while Reduced Workload was
negotiated once on the job. However, the latter finding may well be an artifact of the
way in which this I-deal was measured. “Reduced” workload items may have implied
modification of an existing workload. Thus, it is unclear from these data whether the
various I-deals differed in the point in the employment relationship at which they were
negotiated. What is evident from results regarding this study’s hypotheses is that the
meaning workers attribute to idiosyncratic deals varies with their content and timing.
According to Table 1, some demographic variables (i.e., age and organizational
tenure) correlate with exchange relationship variables as well as the forms I-deals take
and Ex Post Negotiation. This result suggests that age and organizational tenure may
affect the relationships examined here. In contrast to multiple regression analysis where
such effects are addressed using control variables, SEM employs a multiple group
analysis to examining the effects of “control modifiers” (Klein, 1998), where the same
specified models are run across groups defined by the control variables of interest. To
conduct a meaningful multiple group analysis in SEM, measurement models need to be
Idiosyncratic Deals 22
consistent across sub-groups in terms of goodness of fit and significance of factor
loadings. Thus, we first divide the sample into two groups based on age and
organizational tenure to evaluate whether the measurement models for timing of
negotiation and content of I-deals are consistent across sub-groups (Using a median split,
the samples were broken out by age 45 years and 5 years organizational tenure). The
results showed a consistent measurement model across the four sub-samples. Next, we
tested our final model (i.e., the model in Figure 3) on each sub-sample.
The results of multiple group analysis in SEM demonstrate that the model
operates somewhat differently across sub-groups. For employees of age of 45 or younger
(N=81), the specified model works as previously discussed (provides the same goodness
of fit indices for the overall model and comparable path coefficients and significance
levels). On the other hand, for employees of age 46 or older (N=82), although the
goodness of fit indices for the overall model remains the same, some path coefficients
became non-significant. For example, the path from Ex Post Negotiation to Reduced
Workload changed from .32 (p<.01) to .13 (n.s.) and the path from Reduced Workload to
POS changed from -.38 (p<.01) to -.04 (n.s.).
Similar findings were obtained from investigating sub-samples based on
organizational tenure. For employees with 5 years or fewer in the firm (N=80), the
specified model is consistent with that of entire sample. Contrastingly, for employees
with 6 or more years (N=84), the overall model fit turned weak (IFI=.97, NNFI=.96,
CFI=.97 and RMSEA=.10) and many paths changed significantly. In particular, path
coefficient from Ex Ante Negotiation to Ex Post Negotiation changed from .47 (p<.001)
to .24 (n.s.), path coefficient from Development to POS changed from .27 (p<.001) to .04
Idiosyncratic Deals 23
(n.s.) and the path coefficient from Workload POS changed from -.24 (p<.05) to -.07
(n.s.). In sum, i-deals seem to be more central in understanding the employment
relationships of younger people in this sample and those more recently hired.
Discussion
Overall, results suggest that being able to negotiate a career-enhancing special
arrangement impacts worker beliefs regarding the quality of their employment
relationship. Other kinds of special arrangements do not necessarily send a positive
signal regarding relationship quality. Indeed some idiosyncratic arrangements might be
associated with lower quality employment relationships, as in the case of work reduction
in this organization.
Though being able to negotiate a special arrangement can be a sign of
organizational supportiveness, the particular resources involved can send different
signals. In a study of participants in professional degree programs, where participants had
extensive work experience, idiosyncratic arrangements made with the current employer
were assessed along with the terms of participants’ psychological contract (Rousseau, Ho
& Kim, 2003). Those arrangements involving development and training opportunities
were positively related to their reported obligations to pursue career development with
the employer as well as their perceived employer obligation to provide long-term career
opportunities with the firm. In contrast, those arrangements associated with pay and
material resources had limited impact on any psychological contract beliefs. Training and
development opportunities require an investment of time and effort on the part of both
employer and worker, while offering more money or material benefits do not. Those
resources that actually require a relationship in order to be exchanged, as in the case of
Idiosyncratic Deals 24
personal support and development (Foa & Foa, 1974), are more likely to impact worker
beliefs.
In the present study, most idiosyncratic arrangements arose ex post, after workers
were on the job and had developed a relationship with the employer. Ex post negotiations
(M=2.25) were significantly greater than ex ante (M=1.54, t=6.25, p <.001). Bargaining
in the context of a relationship increases the likelihood that both parties create reciprocal
obligations that, in certain cases are likely to strengthen the relationship by increasing the
degree of investment each has in it. Moreover, where the idiosyncratic arrangements
incorporate employment conditions that offer personal development and career advantage
to workers, the overall quality of the employment relationship tends to be high. While it
is possible that workers negotiate i-deals where they view their employer as supportive,
modeling POS as a cause rather than an effect of ex post idiosyncratic arrangements
resulted in poor fit to the current data. Results thus suggest that a large part of being a
supportive employer entails being responsive to employee requests for developmental
opportunities.
We note that since Ex Ante Negotiations were assessed among current employees,
many of whom with high tenure, we cannot rule out the possibility that workers may have
forgotten that certain terms of their employment were negotiated ex ante, thus accounting
for the lower mean score of Ex Ante Negotiation. However, while further research is
needed on the dynamics of Ex Ante Negotiation and worker recall, forgetting does not
account for the strong positive effect of Ex Post Negotiation on worker beliefs regarding
their employment relationship.
Idiosyncratic Deals 25
It is likely that the parties who represent the employer differ during recruitment
from those workers encounter once on the job. If ex ante negotiations occur with different
parties than bargaining undertaken ex post, it could be that workers derive signals from
the parties themselves, interpreting their negotiations with Human Resource
representatives differently than from a future manager. Attention is needed regarding the
representatives of the firm, the signals they send during negotiation, and how workers
interpret these.
Along these lines, research is needed into the other side of the idiosyncratic
arrangement, the employer. Employers have their own reasons for responding to worker
efforts to negotiate special arrangements. Idiosyncratic arrangements can be a means of
solving a current personnel problem, such as the need to retain a valued worker with an
outside offer, or of courting subsequent reciprocity. How legitimate the firm’s
management views the reason for the request has been found to impact their willingness
to grant idiosyncratic arrangements (for mothers with young children but not fathers, for
family reasons but not for other personal reasons; Klein, Berman & Dickson, 2000).
Idiosyncratic arrangements can take on different meanings to the employer over time if
the same person repeatedly attempts to bargain for special treatment. Workers who do so
risk creating the impression of gaming the system. Employers also may seek to minimize
idiosyncratic arrangements to avoid creating the impression of favoritism or
inconsistency. On the other hand, used carefully, such arrangements can create a
reverberating network of obligations by cultivating mutual support. While we have
evidence that workers interpret idiosyncratic arrangements differently depending upon
their timing and content, we do not know whether the same is true of employers and their
Idiosyncratic Deals 26
agents (e.g., managers) or whether employer interpretations are similar to those of the
employee involved. Interpretations are likely to depend not only the content of the
idiosyncratic arrangement, but also upon the motives worker and employer have in the
arrangement in the first place.
Research on idiosyncratic arrangements in employment can provide a basis for
identifying a broader array of features that enter into recruiting, retaining and motivating
workers than scholars normally recognize. A case in point is the decision to promote an
employee. Certain promotions are likely to be a product of idiosyncratic arrangements
since many events labeled a promotion involve no change in position or duties (Permagit
& Veum, 1999). Rather they are simply an upgrade of the current position, where the
worker continues to perform the same duties as before but with a new title often with
more pay. In light of the dynamics of idiosyncratic contracting, some of these non-
competitive promotions are likely to effectively formalize idiosyncratic accommodations
made with regard to worker skills, preferences, and career aspirations.
Another area which research on idiosyncratic arrangements can inform is research
on the exchange relationship between workers and managers, a process we have begun
with the present study. Wayne, Shore and Liden (1997) point out that despite the
conceptual similarities between POS and LMX scholars have not attempted to integrate
these two literatures, though they found that each has unique antecedents and is
differentially related to outcome variables. In the present study, LMX appears to increase
the likelihood that workers will seek an idiosyncratic arrangement, and the consequences
of seeking that arrangement once upon the job is enhancing POS. Our results suggest
Idiosyncratic Deals 27
that LMX and POS have functionally different roles to play in formulating idiosyncratic
arrangements.
Idiosyncratic arrangements may shed light on the other dynamics of leader-
member exchange as well. LMX theory predicts that within-group variation in a
manager’s treatment of individual workers is due to differences in the trust and
relationship quality that develop between a leader and members over time (Graen &
Scandura, 1987). Managers who maintain high quality interactions with certain
subordinates over time are expected to provide them with creative flexibility to achieve
both organizational and individual goals. The idiosyncratic arrangements that an
individual subordinate negotiates can account for some of the consequences associated
with LMX, such as higher commitment and trust. The construct of idiosyncratic
arrangements offers a fresh look at leader-member exchange by examining the nature of
the resources exchanged and the role that negotiation plays in shaping the on-going
relationship between worker and manager.
Limitations
Although the study’s major hypotheses were confirmed, some of the specific
patterns observed in our sample may not be broadly generalizable. Idiosyncratic
arrangements in this study were more central to the employment relations of younger
people and more recent hires. This pattern may be sample specific in that the hospital
had a history of financial difficulties in the ten years prior to the survey, limiting its
capital investments and human resource programs. Its wage rates were lower than other
area hospitals. Therefore it is likely that its need to recruit and retain people in recent
years led to an increase in idiosyncratic arrangements, especially among new hires and
Idiosyncratic Deals 28
more mobile younger workers. While we cannot ascertain the likelihood that
idiosyncratic arrangements will exist in other settings, our data do suggest that these can
underpin certain phenomena organizational researchers typically study including leader-
member exchange and perceived organizational support.
The use of a cross-sectional survey raises issues of causality. As discussed above,
while tests of alternative models provide support for the relationship quality as a
consequence of idiosyncratic arrangements, it is reasonable to expect a reciprocal
relationship whereby relationship quality increases worker willingness to attempt to
bargain idiosyncratically. Longitudinal research is needed to tease out the underlying
causal dynamics.
Conclusion
Individual workers actively shape their relationship with their employer, in
particular, by bargaining for terms and conditions they personally value. In both theory
and practice, the role of employees in creating the terms of their employment offers a
challenge to existing models and assumptions. Being able to negotiate special
arrangements with an employer, particularly with one’s current employer, has a direct
positive impact on beliefs regarding organizational supportiveness. Moreover, the
specific resources exchanged also shape worker beliefs regarding the employment
relationship. Greater attention is needed to the bundle of resources exchanged in
employment, how workers themselves influence the resources they acquire, and the
meanings both workers and employers attach to these.
Idiosyncratic Deals 29
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Idiosyncratic Deals 34
Variables M SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1. Ex Ante Negotiations 1.54 .98
2. Ex Post Negotiations 2.25 1.22 .26**
3. Leader member exchange 3.56 1.04 .03 .28**
4. Perceived organizational support 3.03 .96 .02 .32** .52**
Development I-Deal Items
5. “Skill development” 2.16 1.24 .17* .19* .16 .26**
6. “Performance goals” 2.17 1.24 .11 .26** .26** .26** .53**
7. “Career developments” 2.12 1.18 .07 .22** .24** .30** .57** .77**
Workload I-Deal Items
8. “Reduced work hours” 1.63 1.18 -.07 .25** .04 -.03 .11 .16 .16
9. “Reduced job demands” 1.33 .77 -.10 .22** .02 -.02 .21** .25** .20* .62**
Flexibility I-Deal Items
10. “Flexibility in starting and ending work day” 2.60 1.40 .04 .25** .02 .22** .23** .30** .28** .17* .20*
11. “Schedule different from coworkers” 2.18 1.38 .27** .23** .02 .05 .32** .28** .28** .39** .31** .46**
12. “Greater work hours” 1.90 1.32 -.07 .22** .11 .01 .24** .19* .12 .28** .19* .28** .43**
13. Social exchange 2.86 .94 .02 .31** .43** .79** .26** .25** .29** -.04 .00 .23** .10 -.01
14. Economic exchange 2.25 .80 .07 -.09 -.19* -.42** -.16* -.13 -.16* .10 .05 .02 .02 .11 -.40**
15. Age1 .02 -.21** .04 .08 -.02 .01 .03 -.12 -.16 -.02 -.13 -.14 .10 -.23**
16. Tenure1 -.11 -.25** -.13 -.09 -.06 -.02 -.05 -.14 -.21** -.09 -.12 -.04 -.17* -.20* .46**
Table 1
Descriptive statistics and correlations
Note. *p<.05. **p<.01 1Both age and tenure were categorized and the actual number of years is not reported here
Idiosyncratic Deals 35
Model χ2 df IFI NNFI CFI RMSEA
Hypothesized model: LMX precedes Ex Post Negotiation and
POS follows Ex Post Negotiation 147.04 71 .982 .974 .982 .081
Both LMX and POS precede Ex Post Negotiation 355.10 70 .934 .900 .933 .157
POS precedes Ex Post Negotiation and LMX follows Ex
Post Negotiation 309.62 71 .944 .917 .944 .143
Both LMX and POS follow Ex Post Negotiation 163.82 69 .978 .966 .978 .091
Table 2
Structural Models Comparing Hypothesized Model
Idiosyncratic Deals 36
Model Free parameters Descriptions
A γ1 – γ7; β1 – β14 Contains the most free parameters and serves as a basis for
model comparisons (Presented in Figure 2)
B γ1 – γ7; β1,β2, β3, β4, β5, β7, β8, β10,
β13, β14
Direct paths from I-deals to Social and Economic Exchange are constrained in order to test for mediation by POS between
Ideals and Social (or Economic) Exchange
C γ1 – γ7; β1,β2, β3, β4, β5, β7, β8, β13,
β14 The path from Flexibility I-deal to POS is constrained in
order to see any contribution of this path to the model
D γ1 – γ7; β1, β3, β4, β5, β7, β8, β13,
β14
The direct path from Ex Post Negotiation to Social Exchange is constrained in order to test for mediation by POS between
Ex Post Negotiation and Social Exchange
E γ1, γ3, γ4, γ7; β1, β3, β4, β5, β7, β8,
β13, β14
Direct paths from LMX to I-deals are constrained in order to test for mediation by Ex Post Negotiation between LMX and
I-deals
F γ3, γ4, γ7; β1, β3, β4, β5, β7, β8, β13,
β14 The direct path from LMX to Social Exchange from Model E
is constrained to see a series of mediations
G γ1, γ4, γ7; β1, β3, β4, β5, β7, β8, β13,
β14
The direct path from LMX to POS is constrained in order to see mediation by Ex Post Negotiation between LMX and
POS
Table 3
Alternative Structural Model Descriptions
Idiosyncratic Deals 37
Model χ2 df IFI NNFI CFI RMSEA χ2 Difference from prior model
A 105.06 61 .990 .982 .990 .066
B 107.19 65 .990 .984 .990 .063 2.13, df=4, n.s.
C 107.19 66 .990 .985 .990 .062 .002, df=1, n.s.
D 108.48 67 .990 .985 .990 .061 1.285, df=1, n.s.
E 115.53 70 .989 .984 .989 .063 7.055, df=3, n.s.
F 117.53 71 .989 .984 .989 .063 1.62, df=1, n.s.
G 147.02 71 .982 .974 .982 .081 31.488, df=1, p<.001
(comparison with Model E)
Table 4
Nested Model Comparisons
Idiosyncratic Deals 38
Figure Caption
Figure 1. Proposed model of i-deals and employment relationship Figure 2. General Model Figure 3. Final Model
Idiosyncratic Deals 39
H5 +
H3 +
H4a +
H4a +
H2 +
H1 +
I-Deal Flexibility
I-Deal Development
I-Deal Workload
* Solid lines represent hypothesized links; dashed lines and constructs represent the links that are implied and discussed but not actually hypothesized in the paper
Figure 1.
Leader Member Exchange
Ex Ante Negotiation
Ex Post Negotiation
Perceived Organizational
Support
Social Exchange
Economic Exchange
Idiosyncratic Deals 40
�Y4*
(.90)
�Y3*
(.95)
�Y2*
(.96)
�1* (.20)
�Y1*
(.89)
�X2*
(.86)
�X1*
(.98)
β14
β13
β12
β11
β10
β9
β8
β7
β6
β5
Β4
β3
β2
β1
γ7 γ6
γ5
γ4
γ3
γ2 γ1
I-Deal Flexibility
I-Deal Development
I-Deal Workload
Figure 2.
Leader Member Exchange
Ex Ante Negotiation
Ex Post Negotiation
Perceived Organizational
Support
Social Exchange
Economic Exchange
X1 X2
Y1
Y2
Y3 Y4
�1*
(.04)
�2*
(.26)
�2* (.08)
�3* (.10)
�4* (.19)
Note: I-deal constructs are latent variables with multiple observed variables, which do not appear here
Idiosyncratic Deals 41
.87***
.39***
.27***
.27***
.18***
.26***
.40***
.39***
-.42***
-.20**
.17**
I-Deal Flexibility
I-Deal Development I-Deal
Workload
Path coefficients are standardized. **p<.05 ***p<.01
Figure 3.
Leader Member Exchange
Ex Ante Negotiation
Ex Post Negotiation
Perceived Organizational
Support
Social Exchange
Economic Exchange