Investigating the Effects of Performance and Compensation Management on the Psychological Contract in Higher Education

Amidst recent technological advancements, organizational culture has evolved, with a heightened focus on bolstering the employee-manager relationship. This shift is underscored by the psychological contract, embodying the mutual perceptions developed between employees and employers. This study aims to delineate the influence of quantitative HR practices on the development of transactional psychological contracts. Delving into higher education, the research employs an inclusive approach, identifying two human resource practice domains. Data collection utilizes the HR Practice Scale and Psychological Contract Inventory Tool, along with insights from scholarly articles, to examine compensation management's role, including annual salaries and working hours. This research's foundation lies in advanced literature and contextual information. The investigation divulges that employees’ perceptions of manager performance insignificantly affect their transactional behavior. In contrast, compensation management significantly shapes the development of transactional perceptions. These findings contribute to evolving psychological contract theory in higher education and hold relevance for educational executives.