Running Head: IDIOSYNCRATIC DEALS Idiosyncratic …...Idiosyncratic Deals 2 Abstract In a sample of 166 hospital workers, this study investigated the extent to which negotiating individual,

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.


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:

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


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


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


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 &


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


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


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


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.


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.


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 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.


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


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


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------


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


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


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


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


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


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


(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


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.


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


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


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


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.


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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


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


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


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


Figure Caption

Figure 1. Proposed model of i-deals and employment relationship Figure 2. General Model Figure 3. Final Model


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


�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.


Ex Ante Negotiation

Ex Post Negotiation


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


.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.


Ex Ante Negotiation

Ex Post Negotiation


Support

Social Exchange

Economic Exchange

Documents

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