i-deals: idiosyncratic terms in employment filepaul goodman and loic cadin provided helpful ......
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I-DEALS: IDIOSYNCRATIC TERMS IN EMPLOYMENT RELATIONSHIPS
Denise M. Rousseau
Heinz School of Public Policy and Graduate School of Industrial Administration
Carnegie Mellon University Pittsburgh, PA 15213 1-412-268-8470 voice 1-412-268-5338 fax
Violet T. Ho
Nanyang Business School Nanyang Technological University
Nanyang Avenue Singapore 639798
65-6790-6236 [email protected]
Jerald Greenberg Fisher College of Business
2100 Neil Avenue The Ohio State University
Columbus, OH 43210 1-614-292-9829
The authors acknowledge the support of the H.J. Heinz II Professorship and the Irving
Abramowitz Memorial Professorship. Paul Goodman and Loic Cadin provided helpful
comments on an earlier draft and Tai Gyu Kim participated in the research that led to the
writing of this paper.
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I-DEALS: NEGOTIATING IDIOSYNCRATIC TERMS IN EMPLOYMENT
When individual workers negotiate employment terms that differ from those of
coworkers, these idiosyncratic arrangements or i-deals may benefit both the individual
worker and employer, but coworkers may respond negatively unless certain conditions
apply. We distinguish functional idiosyncratic arrangements from their dysfunctional
counterparts, and develop propositions specifying how i-deals are formed and impact
workers and coworkers. We also outline the implications of i-deals for employment
relations research and contemporary employment practices.
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I-DEALS: NEGOTIATING IDIOSYNCRATIC TERMS IN EMPLOYMENT
Idiosyncratic employment arrangements are special terms of employment that
individual workers negotiate for themselves, satisfying their own personal needs as well
as their employer’s. From the valued engineer whose employer gives him an educational
leave to spend a year doing underwater photography, rather than let a valuable worker
quit (Hochshild, 1997) to the American professor who talked a Japanese firm into hiring
him, moving him to Japan so he could learn how to manage a plant Japanese-style while
sharing his managerial knowledge with his new colleagues (Rousseau, in press), these
idiosyncratic deals--or simply, i-deals are more than mere wordplay. Rather, this phrase
highlights the fact that such arrangements are intended to be “ideal” in some way for each
party.
Accounts of a few exceptional individuals, “superstars” or “winners” capable of
negotiating distinctive employment conditions, are not new. Over the years, several
authors (e.g., Frank & Cook, 1995; Rosen, 1981) have noted that such individuals have
capitalized on their uniqueness by differentiating themselves in subtle and not-so-subtle
ways from their more ordinary colleagues. Famous movie stars demanding lavish
working conditions to match their lavish salaries immediately come to mind. Generally,
these individuals are the exceptions to the rule. Recently, however, changing conditions
in the labor market have expanded the opportunities for a broader array of workers to
seek and to receive i-deals (Rousseau, 2000, 2001; Rousseau, Ho & Kim, 2003). Far from
being isolated cases, the growth of i-deals challenges traditional organizational paradigms
for recruiting, motivating, and retaining valuable workers (Lee, MacDermid, & Buck,
2000). I-deals represent one outgrowth of employer responses to market pressures
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(Cappelli, 2000) and heightened expectations among workers for a say in their
experiences at work (Freeman & Rogers, 1999). Together, these forces promote greater
customization in various aspects of employment (Rousseau, 2000). As such, i-deals are to
some extent a feature of ever-shifting paradigms regarding the employment relationship.
This article addresses three fundamental issues: the context of i-deals, that is,
when and how they occur, their content and its consequences for employers and workers,
and the impact of i-deals on coworkers who are third parties to a colleague’s negotiation
of an i-deal. In doing so, it also highlights the implications idiosyncratic arrangements
have for research on the employment relationship and their practical applications in
response to contemporary changes faced by workers and firms.
DEFINING I-DEALS
Idiosyncratic deals, or i-deals, refer to voluntary, personalized agreements of a
nonstandard nature that individual employees negotiate with their employer regarding
terms which benefit each party. These individualized employment arrangements differ to
some extent from those received by coworkers. Several distinct features characterize i-
deals and differentiate them from other forms of person-specific employment
arrangements (e.g., cronyism or favoritism, as described below). Specifically, i-deals are:
• Individually negotiated: An i-deal arises when an individual worker
negotiates arrangements with an employer or prospective employer that differ
from his or her coworkers. The market power of certain workers and the value
their employer places upon these workers positions them to demand
compensation and perquisites significantly greater than their less favored
coworkers (Bartol & Martin, 1989). While either the employer or worker can
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initiate the i-deal, each can shape the actual terms negotiated. Our focus here
is on i-deals workers initiate.
• Heterogeneity: At least some of the specific terms included in the
arrangement are specially provided to that individual, differing from
conditions other employees experience in similar positions or in the same
work group. This results in within-group heterogeneity (Klein, Dansereau &
Hall, 1994) in some aspects of the rewards and benefits certain workers
receive relative to their coworkers.
• Employer and employer both benefit: I-deals serve the interests of both
employers and employees. I-deals are distinct from other forms of person-
specific employment arrangements in that the negotiation is based on the
value of the individual worker to the employer (Rousseau, 2003). The firm
attracts, motivates, or retains the services of a valued contributor while the
worker obtains resources of particular personal value.
• Variation in scope: I-deals individual workers enjoy can vary in scope from a
single idiosyncratic element in a larger standardized employment package to a
complete, entirely idiosyncratic employment arrangement. For example, one
worker with an i-deal might have distinctly more flexible hours than peers but
otherwise share with them the same pay, job duties, and other conditions of
employment. In contrast, another worker might have a unique arrangement in
which almost all employment terms are specially negotiated, from pay and
hours, to duties and title. Thus, both these individuals have idiosyncratic
features in their employment arrangements although the relative proportion of
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idiosyncratic to standardized conditions is greater for the second worker than
the first.
A central feature of i-deals is that the employee has had a hand in creating or
negotiating some aspect of his or her employment. The negotiations involved in creating
such arrangements can constitute a form of participation or voice in which individual
workers influence their employment conditions (Freeman & Rogers, 1999).
I-deals often occur in the context of an employment relationship that provides
some conditions that are standard to all workers (e.g., company-wide benefits) and others
specific to those in particular positions (e.g., professionals as opposed to unskilled
workers). Being able to negotiate idiosyncratic conditions is a sign of one’s acceptance as
a valuable commodity—someone worthy of special treatment, akin to the phenomenon of
idiosyncrasy credits accorded to high status group members (Hollander, 1958). I-deals
originate from some of the same processes, where using the credits a worker has at his or
her disposal can take the form of leveraging potential mobility or high contributions to
obtain special visibility and recognition along with more concrete rewards such as money
and perks. Implicit in the use of idiosyncrasy credits is existence of a differentiated
perception of the individual and his or her contribution to the group (Hollander, 1958). I-
deals are based on differentiated perceptions of the individual on the part of the employer
and his or her past, present, or future contribution to the organization.
I-deals occur in the context of a broader set of arrangements characterizing an
individual’s employment. They differ from both standardized employment terms workers
receive by virtue of membership in the firm (e.g., health care benefits provided all regular
employees) and the narrower set of terms associated with particular positions or jobs
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(e.g., the flexibly scheduled vacation time accorded a firm’s professional staff but not its
production workers; Figure 1). Although standardizing employment conditions (e.g.,
through wage structures, bonuses, or benefit plans) is a means of promoting cooperation
and trust (Lazear, 1981), employers also face increasing pressure to attract highly valued
workers by offering desirable employment conditions. The result is that more
idiosyncratic elements are included in some individuals’ employment arrangements. It
does, however, raise issues of the appropriateness of i-deals from the perspectives of
coworkers. For example, one’s coworkers are likely to raise questions about the fairness
of their own treatment relative to the recipient of the i-deal (Greenberg, Roberge, Ho, &
Rousseau, in press).
------------------------------
Insert Figure 1 about here
------------------------------
With respect to the array of rewards and benefits individual workers receive, i-
deals represent a form of within-unit heterogeneity (Klein, Dansereau & Hall, 1994).
This heterogeneity can mean different things to the employer, the individual worker, and
his or her coworkers. From the frame of reference of an employer who differentiates
among a set of workers, this heterogeneity can indicate the impact of management
practices rewarding high performers (thereby promoting instrumentality beliefs; Vroom,
1964). To a worker with an i-deal, it can signal the value an employer places in him or
her. To coworkers, within-unit heterogeneity in the nature of rewards and benefits can
signal their own relative standing in the eyes of the employer, the flexibility and
supportiveness with which the employer treats its workers generally, or both.
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Importantly, an i-deal conveys potentially divergent messages to workers depending upon
whether they are its principals or third parties. A consultant who has negotiated to be
assigned to projects that develop particularly valuable skills may believe her employer is
very supportive. Her coworkers, unaware of why special projects have been allocated to
only one of them, can see the employer favoring one while being neglectful and uncaring
to the rest. Idiosyncratic arrangements nonetheless have the potential for being seen as
fair by third parties, if these be appropriately differentiated from other person-specific
arrangements that are patently unjust and self-serving (Rousseau, 2003)
What I-Deals Are Not: Dysfunctional Person-Specific Arrangements
I-deals negotiated by workers differ from other person-specific employment
practices (see Table 1). One widely recognized form of preferential arrangement is
favoritism or cronyism, in which a firm’s agents (e.g., supervisors) favor certain workers
over others based on relational factors (e.g., personal relations or political ties). Such
arrangements are self-serving from the individual agent’s perspective, and not necessarily
beneficial to his or her firm (Pearce, Branyiczki & Bigley, 1994; Rousseau, 2003). In
fact, such arrangements can undermine the legitimacy of the formal organization by
allowing rule bending and workarounds to dominate formal rules and agreed-upon
procedures. It is doubtful that “playing favorites” benefits an organization overall even if
it were to result in having a lackey willing to do a manager’s bidding. Moreover, these
arrangements are predicated upon connections and not on individual capabilities that add
value to a company (Clarke, 1999). In contrast, through an i-deal a worker gains some
preferred employment condition(s) and the employer attracts, motivates or retains a
contributor to the organization. Thus both parties benefit.
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--------------------------
Insert Table 1 about here
--------------------------
Another form of person-specific employment condition is unauthorized
arrangements, such as when workers take resources from their employers for personal
use without permission (Greenberg, 1998; Rousseau, 2003). Unauthorized arrangements
are unilateral confiscation of employer resources by the worker and can harm the
employer. Although most acts of employee theft occur without management’s
knowledge, some managers have been known to turn a blind eye to acts of employee
theft, publicly denying them, but privately acknowledging their occurrence (Greenberg &
Tomlinson, in press). That is, an unspoken norm sometimes develops that theft is
tolerated, at least if kept within certain parameters (Dalton, 1959; Ditton, 1997a, 1997b).
Even more extreme cases have been reported in which managers have actively
encouraged acts of theft, using the pilfered merchandise as a means for rewarding
employees who agree to perform certain undesirable jobs (e.g., working the late-night
shift in convenience stores; Greenberg & Scott, 1996). Nonetheless, both favoritism and
unauthorized arrangements serve the interests of individuals but not the firm,
undermining the legitimacy of its formal practices and eroding the trust workers place in
it (Pearce, 2001; Rousseau, 2003).
Implications
I-deals extend our understanding of person-specific arrangements beyond
politicking and self-interest to circumstances where both workers and firms benefit from
flexibility. Workers whose employers derive competitive advantage from their
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contributions, such as those in knowledge-intensive firms (Cappelli, 2000; Leana &
Rousseau, 2000), are a fertile source of i-deals. So too are start-up firms where flexible
work roles often offset the employer’s inability to pay its workers at market rates
(Levesque, 2001). The distinctiveness of i-deals lies in the conditions giving rise to them,
the motivations behind them, and their potential for acceptance as fair by third parties.
Yet i-deals have received little systematic attention from scholars.
CONTEXTS OF I-DEALS
We next address the contexts in which i-deals arise and their impact on employee
responses. Circumstances both firms and workers face can impact the nature of the
bargaining process between them. Due to the decline of unionism and weakening labor
laws in many developed nations, fewer conditions of employment are pre-set at the state
or firm level, creating greater potential for variations in i-deals (Cappelli, 2000; Rousseau
& Schalk, 2000). Likewise, the market power of some workers puts them in position to
demand compensation and perquisites significantly greater than other less marketable
coworkers (Bartol & Martin, 1989). An i-deal also may reflect the strategic needs of
firms targeting particular segments of the labor market for which the firm’s existing
practices are not particularly attractive (e.g., young professionals, senior citizens, or
parents of small children; Ingram & Simon, 1994; Lee, MacDermid, & Buck, 2000).
Highly Valued Workers
Negotiating an i-deal is a form of customization, making it possible for employees
to work under conditions consistent with their personal needs, values, and preferences.
Individuals can value the same resources differently. Opportunities to travel may be
exciting to an unattached 20-something worker and a burden to middle aged one with a
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large family. Idiosyncratic arrangements allow individuals to find at work resources and
opportunities they particularly value. Although such individual differences always have
existed, traditional employment relationships in the developed world downplayed them,
where forces for consistency and standardization have been a means for creating
cooperation and trust at work (Pearce, 2001). The liberalization of labor laws and the
reduced popularity of unionism, coupled with growing recognition of the value of human
capital to a firm’s competitive advantage (Leana & Rousseau, 2000; Pfeffer, 1998), have
opened the doors to negotiating i-deals instead of accepting standardized offers. Against
the backdrop of fewer pre-set conditions governing terms of employment, workers who
recognize the value that potential or current employers place upon them can assert their
preferences overtly in the form of bargaining or more subtly hinting of alternative
opportunities elsewhere (Rousseau, in press). Greater ease of mobility among talented
people, especially those firms recognize as critical to their competitive advantage, only
adds to their bargaining power in creating i-deals (Frank & Cook, 1995).
Proposition 1: Individuals who are more highly valued by an employer (e.g., high
performers or critical and highly marketable workers) are more likely to be
granted idiosyncratic employment terms than those who are valued less.
Workers From Non-Traditional Backgrounds
The pressure to reach i-deals is likely to be particularly great whenever a firm
competing for labor seeks workers from backgrounds differing from its traditional
employee base (Ingram & Simon, 1994). Law and accounting firms, for example, have
had difficulties recruiting and retaining women because of their widespread use of time-
based, up-or-out promotion hierarchies, whose high-pressure, competitive internal
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markets have been characterized as “rat races” (Landers, Rebitzer & Taylor, 1996). Such
environments are unattractive for young women seeking to combine professional career
development with child rearing, and thus managers are often more inclined to create i-
deals for women than for their male counterparts (e.g., parental leaves that do not
prejudice the worker’s future career options; Klein, Berman, & Dickson, 2000).
Particularly in firms valuing diversity, i-deals can be an offset to the constraints of
existing practices and particularly likely among valued workers whose needs are at odds
with a firm’s standard human resource management practices, such as a partner in a
traditional law firm who is a nursing mother.
Proposition 2: Firms are more likely to offer i-deals to valued workers from
backgrounds distinct from those they traditionally recruit than those from less
unique backgrounds.
Repeated use of similar arrangements to recruit individuals from non-traditional
backgrounds ultimately may result in a revision of standard employment terms, making
them standard rather than idiosyncratic. In other words, once-unique policies are likely to
become institutionalized if the factors that give rise to idiosyncratic arrangements
continue, as in the case of flex-time originally introduced in response to the needs of
women workers becoming a standard management practice (Ingram & Simon, 1994).
Proposition 3: A firm that meets its human resource needs by offering a particular
type of i-deal to workers from non-traditional backgrounds will make the
arrangement more available to workers generally if that practice continues over
time.
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I-deals that are successful from the firm’s perspective become a source of new
work structures and human resource practices promoting both adaptation to changing
environments and legitimatization of the firm’s employment practices.
The Timing of I-Deals
Workers typically negotiate i-deals with their employers in two contexts: during
the recruiting process (i.e., ex ante; before employment), and on-the-job once a
relationship has been established (i.e., ex post; after employment). (Other idiosyncratic
negotiations, such as those occurring at the end of employment via termination or
retirement, are not treated here and may be governed by different processes.)
To a great extent, labor markets dictate the dynamics and normative
appropriateness of negotiating ex ante i-deals. For example, workers in a “hot” labor
market, where certain skills are in high demand but short supply, might be expected to
seek out and obtain more i-deals based on their personal desires and preferences
(Cappelli, 2000) than do those whose skills are demanded less. Under such conditions,
information about others’ successes in negotiating i-deals is likely to be communicated
informally and very rapidly (Belliveau, 2000; Granovetter, 1995), thereby promoting
interest in such arrangements. As qualified applicants clamor to “get in” on the good
deals, a “gold rush effect” can occur. This accounts for why i-deals were so common
among employees of dot-com firms in the late 1990s (e.g., Buckman, 2000). Under such
circumstances workers are not likely to attribute the firm’s willingness to provide them
special accommodations as an indication of the firm’s quality as an employer or its
positive intentions toward the individual worker. Rather, workers bargaining ex ante are
likely to attribute receipt of an i-deal to their personal market value. Whereas market-
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based attributions predominate among workers with ex ante i-deals, we expect that
workers will attribute their ex post i-deals to the quality of their relationship with the
employer.
Proposition 4: Ex post i-deals are more positively related to workers’ beliefs
regarding the quality of their employment relationship than are ex ante i-deals.
The role ex post i-deals play as a signal of relationship quality is at once a
consequence as well as a reason workers propose them in the first place and why
employers grant them, a point we develop below in the section on Content.
Since collaboration and trust are reduced with wide disparities in monetary and
other more visible conditions of employment, we expect that employers in general will be
reluctant to grant ex ante i-deals to all but those workers who are deemed to be most
critical or in demand. Ex ante i-deals may be limited severely in settings where labor
practices are highly regulated (e.g., government employment) or where societal or
cultural norms make them taboo (e.g., in China and Singapore, ex ante negotiation is
considered too assertive; Rousseau & Schalk, 2000). In contrast, once a relationship
exists between workers and managers within a firm, even settings that discourage ex ante
bargaining may promote informal negotiations and accommodations between individual
workers and their employers. It is far more likely that idiosyncratic arrangements enter
into the employment relationship after workers have formed a relationship with their
employers, that is to say, we expect ex post i-deals to be more common than are ex ante i-
deals.
Proposition 5: Other things being equal, an individual worker is more likely to
negotiate an ex post i-deal than an ex ante one.
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Repeated Bargaining
Thus far, our discussion of i-deals has focused on discrete arrangements made on
single occasions. However, in relationships between employees and employers, the
meaning of i-deals potentially can change over time. Although initial i-deals are likely to
be offered and interpreted as special, subsequent i-deals may be interpreted differently by
all parties. Diminishing marginal returns can result for both principals as each subsequent
deal is less special. Moreover, individuals who propose i-deals may grow concerned
about the impressions of themselves they are creating by pursuing such arrangements.
Individuals who repeatedly seek i-deals are likely to be seen as “players”—those who are
motivated primarily by the thrill of gaming the system. Organizations, on their end, may
also be unwilling to make i-deals with the same people repeatedly, for fear of being
construed as practicing favoritism or acting capriciously, and creating dissatisfaction
among other employees. This potential sensitivity suggests a trend toward selective and
limited use of i-deals.
Proposition 6: Concerns about the impressions created by proposing repeated ex
post i-deals will moderate workers’ willingness to propose them over time.
Proposition 7: Concerns about the impressions created by offering repeated ex
ante i-deals will moderate employers’ willingness to offer them over time.
THE CONTENT OF I-DEALS
The specific terms or content of idiosyncratic employment arrangements provide
insight into the exchange relations between workers and employers, the reward strategies
employers use to attract, retain and motivate workers, and how workers understand these
strategies and seek to get their own needs met. I-deals have been found to contain any
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number of diverse resources that workers value—from pay and travel expenses to
mentoring, development, and personal support (Rousseau, Ho & Kim, 2003; Rousseau &
Kim, 2003). Foa and Foa (1975) proposed an extensive, widely studied resource
classification based upon six categories: money, goods, services, information, status, and
love (the latter termed affiliation/friendship by Parks, Conlon, Ang & Bontempo, 1999).
These categories are classified along two dimensions: whether the resources are concrete
(tangible) or abstract (conveyed through verbal and paralinguistic behaviors), and
whether they are particular (their meaning and value depending upon their source and
context) or universal (having common meaning and value across sources and contexts).
Exchanging particularistic resources typically requires a relationship between giver and
receiver. Particularistic resources include bestowing special status (e.g. recognition),
services that benefit another’s well being (e.g. development, mentoring) and love
expressed via concern and socioemotional support (e.g., support and flexibility in
response to a family crisis). Though goods or money can be exchanged between parties
who do not know each other, relationships typically are the basis for particularistic
resource exchanges. Parties generally are familiar with or have information about each
other in the case of status or services; and trust each other in the case of love and related
forms of socioemotional support. In contrast, concrete resources, in particular
monetizable ones such as pay and material goods, are readily exchanged with limited
interaction and virtually no relationship between the parties.
Expanding Resources Offered in Employment
Firms seeking to recruit valued workers can find it difficult to compete if wages
are the only dimension on which they bargain with and motivate employees. Broadening
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the employment package, what Bloom and Milkovich (1996) have termed the
compensation bundle, to include non-monetary and particularistic as well as concrete,
monetary resources, enhances an employer’s ability to recruit, motivate and retain talent
while helping the firm remain competitive. Particularistic resources constitute part of an
invisible wage structure, providing informal ways organizations can compensate workers.
This invisible wage structure can range from higher quality relations with supervisors and
greater job scope (Graen & Scandura, 1987) to employers who overlook the odd or
deviant behavior on the part of otherwise high performers (Frank, 1985; Greenberg &
Scott, 1996; Hollander, 1972). Particularistic resources lack fixed metrics, and thus their
exchange is difficult to standardize or govern by rules. As such, employers and their
agents (e.g., managers) can find it easier to offer particularistic idiosyncratic
arrangements than concrete ones, especially those involving monetary resources.
Proposition 8: I-deals regarding particularistic employment terms are more likely
to occur than concrete resource-based i-deals.
I-deals of a particularistic nature can account for a common finding in
compensation research--that firms tend to under-pay high performers relative to their
marginal productivity and to over-pay low performers (Frank, 1985; Gerhart &
Milkovich, 1993). If high performers are compensated in part via particularistic i-deals
not accessed by lower performers, the employer is able to reward contributions in a way
that is less likely to generate ill-feelings on the part of their lower performing coworkers.
Signaling the quality of the employment relationship
I-deals provide a means by which a worker can seek and his or her employer can
demonstrate evidence of the quality of the relationship between them, thereby affirming
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the firm’s commitment to the employee. The capacity to create an i-deal with one’s
employer can be construed as a reflection of a worker’s value and importance. Employees
typically desire more information than they receive regarding their standing in the
organization (Ashford & Cummings, 1983). Seeking an i-deal can provide a means of
establishing one’s position and value—sometimes taking the form of testing the waters
when direct indicators of worth are difficult to obtain (Baxter & Wilmot, 1984; Rousseau,
1995). Indeed, others may refrain from engaging in this exercise for fear of discovering
undesirable facts about their standing in the organization, which they would rather not
know.
The signaling function of i-deals can combine with access to particularistic
resources to reduce the likelihood that the employee will seek employment with another
firm. From the employer’s vantage point, i-deals provide an opportunity to make a
worker’s job particularly valuable by creating an employment relationship that might be
difficult to obtain elsewhere (Lazear, 1981). Although applicants readily may bargain
over pay and hours, it is far more difficult for them to bargain for more intangible
features, such as respect or interpersonal support. Offering intangible benefits signals
employer concern about the individual worker’s well-being, enhancing not only a
worker’s organizational commitment (Meyer & Allen, 1997), but also his or her sense of
reciprocity and obligation (Eisenberger, Armeli, Rexwinkel, Lynch, & Rhodes, 2001).
Particularistic resources are a subset of non-monetary resources, requiring a
special relationship between parties for the resources to be exchanged. Such resources as
receiving mentoring and recognition take on their distinctive value in the relationship
formed between the giver and recipient. Thus, we expect that i-deals regarding
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particularistic resources will send stronger signals about the quality of the employment
relationship than will those based upon universalistic resources such as pay and benefits.
Proposition 9: I-deals regarding particularistic resources will be more highly and
positively related to workers beliefs regarding the quality of the relationship with
the employer than i-deals regarding universal resources.
The Interaction of Content and Timing
The timing of the idiosyncratic negotiation affects the perspective from which
each party views the relationship. Different relational schemas may be primed depending
on the timing: market transaction ex ante and a mutual relationship ex post (e.g., Baldwin,
1992). This is particularly the case where the i-deal comprises the types of resources
commonly bargained for on the current job market (e.g., pay, promotion opportunities, or
stock options). Moreover, the types of resources that would signal a high quality
employment relationship, such as development and mentoring, might be more difficult to
bargain for prior to joining an employer than once one is onboard. There are two reasons
for this. First, the employee does not have the type of contextual knowledge regarding the
firm that eases negotiating over particularistic conditions. Second, ex ante bargaining is
more likely to be shaped by information accessible in the external market. Thus, whereas
salary and benefits can be readily shared among job seekers and employers, more
particularistic resources are difficult to identify, let alone to compare.
Proposition 10: Ex ante i-deals are more likely to be based on concrete and
universal resources than on particularistic and abstract resources.
Individual workers negotiate ex post in the context of an existing relationship with
their employer. In contrast to pre-employment negotiations, a worker and employer who
20
negotiate post-hire may share a good deal of knowledge about one another’s interests and
already exchange a broad array of resources. Ex post i-deals can occur more readily
because of the more credible signals employers possess regarding a worker’s value than
exist pre-employment (Lazear, 1981) and the greater comfort level workers enjoy in
making special requests of an employer with whom they now have a relationship
(Rousseau, 2003). The greater access to information and the resources available in an
ongoing relationship make it likely that ex post i-deals will be more heterogeneous in
nature and more customized to the personal interests of the worker. Employers in long-
standing relationships tend to acknowledge loyalty, rewarding contributions based on an
extended track record and by providing certain perks associated with seniority (Lazear,
1981; Ritter & Taylor, 2000). Moreover, third parties are more likely to view special
treatment as acceptable where individuals with otherwise equal market value and
competence have seniority or an extended track record with the firm (Rousseau & Anton,
1988). This is particularly likely to be the case when particularistic resources are offered
to recognize contributions of high performing workers without creating more overt
differences in the outcomes coworkers receive.
Proposition 11: Ex post i-deals are more likely to be based on particularistic and
abstract resources than on concrete and universal ones.
Previously, we postulated a stronger relationship of i-deals involving
particularistic resources to beliefs in a high quality employment relationship than found
for monetary i-deals. Part of the underlying dynamic of this relationship, we believe, is
that monetary arrangements are more likely to be made prior to employment, at a time
when successful negotiation of one’s preferences is likely to be attributed to market value
21
rather than to quality of the employer. Basing i-deals on market factors is more likely not
only at the time of hire, but also post-hire when workers bargain for salary increases.
Salary increases are more likely to be justified by market-related reasons than are
accommodations made to workers that support their personal growth or development.
Whereas market-based attributions predominate among workers with ex ante i-deals and
among workers with monetary-based i-deals regardless of timing, we expect that workers
will attribute their ex post non-monetary or particularistic i-deals to the quality of their
employment relationship.
Proposition 12: Ex post particularistic i-deals are more highly and positively
related to workers’ beliefs regarding the quality of their employment relationship
than are other ex post monetary or universalistic i-deals.
Employers may enter into i-deals as a means of courting subsequent reciprocity.
A reverberating network of obligations can arise as i-deals cultivate mutual support.
Workers may interpret i-deals variously, as signals of a high quality relationship with an
employer, or merely as indicators of how much power they wield individually.
Interpretations are likely to depend on the content of the i-deal, which itself reflects
worker and employer motives in creating the i-deal in the first place. Receipt of special
accommodations regarding preferred assignments and development activities is positively
related to recipient beliefs in a mutual commitment between themselves and their
employer regarding internal mobility and relational support (Rousseau, Ho, & Kim,
2003). Exchanging such resources necessitate an investment of time and effort on the part
of both parties, with a greater likelihood of activating schemas regarding the employment
exchange that impact each party’s beliefs regarding their relationship and each other. In
22
contrast, accommodations regarding pay and equipment have been found to have little
impact on beliefs regarding the employment relationship (Rousseau, Ho, & Kim, 2003).
Such resources can be provided with minimal interaction or on-going relationship
between the parties. The extent to which workers feel obligated to provide reciprocity can
vary with the i-deal’s content and the context in which it arises.
COWORKER RESPONSES TO I-DEALS: IS IT FAIR?
Thus far, our analysis has focused on arrangements between an employee and his
or her employers. However, this ignores a key stakeholder, coworkers. Because one’s
coworkers are likely to observe and form judgments about i-deals, it is important to
consider their assessment of and reaction to the i-deals about which they learn.
Comparisons between oneself and one’s coworkers are likely to be made especially
salient by i-deals. I-deals negotiated by any particular individual differ, by definition,
from those of his or her coworkers. (Note that where coworkers seek to match the
employment terms already received by a fellow worker with an idiosyncratic
arrangement, subsequent arrangements may no longer be idiosyncratic. Subsequent
matching arrangements are motivated by different factors (e.g., perceived equity) than
motivated the initial i-deal.)
Insofar as workers and their employers agree upon i-deals, these parties are
inclined to perceive them as fair. However, their nonstandard nature can lead involved
others, such as coworkers, to question their fairness (Greenberg et al., in press). In other
words, the fact that people are receiving differential treatment makes salient to observers
the potential for unfairness. Workers may ask, for example, if their colleague’s i-deal is
23
fairly deserved (as opposed to favoritism) and what message is being sent about the
fairness of the organization that engages in such arrangements (Greenberg, 1996).
In other words, third parties—coworkers, in particular—are likely to have
reactions to i-deals that differ from those of the principals. As in the case of any
observers, as opposed to actors, they are likely to have different perspectives because
they are not always privy to the same information (Jones & Nisbett, 1972). When only
the employer and the employee are likely to know the exact terms, others will learn about
these incompletely and inaccurately through rumor and innuendo. Moreover, they are
likely to be biased against perceiving these arrangements as fair if they were made in
secret, behind closed doors, raising suspicions that there is something to hide. Also,
because they are likely to be unfamiliar with the exact nature of the agreement,
coworkers are not in a good position to judge its ultimate fairness. Thus, one’s coworkers
and other third parties may be expected to look upon i-deals as a growth medium for
injustice, making them a potentially potent source of discord.
Nonetheless, coworkers need not necessarily judge i-deals to be unfair. We will
outline some of the key considerations involved in assessing the fairness of i-deals. These
are important insofar as repeated complaints about the unfairness of i-deals ultimately
may lead to their prohibition, thereby denying employers and employees a key benefit
and source of flexibility. In judging the fairness of i-deals, people are likely to consider
how those arrangements were made—the issue to which we now direct attention.
Opportunity for Choice: Do Others Have the Same Options?
I-deals are likely to be perceived as fair by third parties to the extent that they
believe they have opportunities to make similar arrangements themselves. Such is in
24
effect the case in cafeteria-style pay plans (Barringer & Milkovich, 1997), which may be
considered a standardized vehicle for creating customized employment terms. In such
programs, employees are permitted to select among a variety of benefit arrangements,
permitting them to make choices based on their individual needs. And, because these
benefits are limited by certain fixed cost parameters that are identical for all members of
a work group, cafeteria pay plans promote a sense of fairness. The procedure may be
considered distributively just insofar as it treats equals as equals; the organization cuts
deals that are no more attractive for one person than another. Cafeteria-style pay plans
also may be considered procedurally just in that they apply decision criteria consistently
to all employees, who are given a voice in determining their outcomes (Tremblay, Sire, &
Pelchat, 1998). Finally, such arrangements may be considered interactionally just insofar
as they communicate the organization’s carte blanche commitment to satisfying
employees’ needs in a dignified manner.
Strictly speaking, however, the standardized nature of cafeteria-style pay plans
does not allow them to be considered i-deals, which by their nature are exceptional. The
fairness of actual i-deals may be difficult to establish in the eyes of interested third
parties. For example, if John learns that his colleague, Mary, negotiated an i-deal that
provides greater flexibility in work assignments, he may feel unfairly treated to the extent
that he values such flexibility and believes he deserves it. However, such feelings may be
reduced somewhat if John were to believe that he could receive identical treatment by
asking for it, as would be the case where he perceived his relationships with both the
supervisor and the employer generally as positive and supportive.
25
Proposition 13: A coworker’s perceived fairness of a worker’s i-deal will be
positively related to the degree to which he or she believes it is possible to receive
equally desirable outcomes.
Such conditions would hold where a worker receives a unique accommodation as part of
a firm’s policy of flexible support where even workers who access no special benefits can
feel fairly treated knowing that if they needed such support it would be forthcoming.
Legitimate conditions for ex ante i-deals can differ from those for ex post ones.
Market factors tend to be legitimate considerations in ex ante negotiations, and third
parties may accept differences in employment conditions generated by labor market
factors at the time a higher paid colleague was hired (as in the case of salary
compression, Brown & Woodbury, 1998). However, reliance on market factors to
negotiate an ex post i-deal is more likely to generate adverse reactions on the part of
coworkers who see themselves as making comparable contributions to the firm.
Employers, though, are inclined to treat mobile workers more generously than their
equally competent but non-mobile peers (a phenomenon termed “selective rational
exploitation,” by Rusbelt and her associates; Rusbelt, Lowery, Hubbarb, & Maravankin,
1988; Rusbelt, Campbell, & Price, 1990)—a practice that can generate outrage and pursuit
of outside offers on the part of peers. We expect that coworkers will react more positively
to use of market factors as motivating an i-deal their employer grants to a new hire, than
they will if used to justify granting special accommodations to a current employee.
Proposition 14: Coworkers are likely to believe that market factors are a more
legitimate basis for creating ex ante i-deals than for creating ex post i-deals.
Does Anyone Gain or Lose?
26
One person’s special treatment can create costs for others, particularly when the
parties are interdependent. In zero-sum situations, where resources are constrained,
coworkers are more likely to experience a loss whenever a peer receives an i-deal. Time
off for one person, for example, may result in more work for others. A worker who gets a
raise because she received an outside offer reduces the pool of money available to give
raises to her peers. Negative consequences from i-deals in resource-constrained situations
are amplified by the tendency for human beings to be more sensitive to losses than they
are to gains (Kahneman & Tversky, 1979). Costs coworkers incur when a colleague
receives special treatment can be particularly salient.
Proposition 15: Third parties will perceive an i-deal as less fair when it results in
costs to themselves than if it is cost-neutral.
A person receiving an i-deal can engender a more positive response from
colleagues by taking steps to minimize their adverse impact. Such an individual also may
need to manage relations with colleagues so as to enhance their perceptions of fairness.
This is likely to involve offering an acceptable explanation to her peers as to why this
arrangement was merited. They also may take ostensible steps to help coworkers who
have been harmed by some way because of extra work or other demands their i-deals
create (e.g., by doing favors or providing them additional help when needed).
Costs are not necessarily fixed, but depend on whether they can be managed or
offset. There is a caveat, however. Sometimes, coworkers actually can benefit when a
peer receives an i-deal, such as when special treatment for one person may lead to similar
benefits to for others. Consider a university administrator’s account of circumstances in
which a faculty star was being wooed away by a more prestigious university: His
27
colleagues came and demanded that we take action…whatever it takes to keep him, no
teaching, twice the money…space, whatever. It’s the bragging rights they’re after, to be
able to say that they work with [that individual]. (Rousseau, in press).
In local hierarchies, status may be a thing of considerable value (the proverbial
“big fish in a small pond,” Frank, 1985). Moreover, while being at the bottom of a
hierarchy has negative consequences, lower status members of a prestigious social unit
can benefit from its standing and whatever other resources come with it (e.g. munificent
resources). Where members realize gains from being in a high status group (“bragging
rights”), being at the bottom is less of an issue.
Proposition 16: I-deals creating benefits for third parties are more likely to be
accepted as fair than those that offer no such benefits.
Proposition 17: I-deals based upon particularistic and abstract resources are more
likely to be viewed as fair by third parties than those based on concrete or
universal resources.
The meaning and benefits third parties associate with I-deals are the essence of
the distinctiveness of these otherwise unequal and procedurally inconsistent practices.
RESEARCH IMPLICATIONS
Through the lens of idiosyncratic arrangements, certain phenomena studied in
organizational behavior can take on new meanings. Those highlighted here signal the
potential research on i-deals to inform scholarship on the employment relationship
generally.
Psychological Contracts in Employment
28
Psychological contracts, beliefs individual have regarding this exchange
relationship (Rousseau, 1995), can take different forms due to the nature of the resources
workers exchange with employers, when those resources were offered (at hire or once on
the job). I-deals regarding development and training opportunities are positively related
to beliefs in both worker obligations to pursue career development with the employer as
well as the employer’s obligation to provide continuing opportunities. In contrast, those
I-deals associated with pay and resources have limited impact on psychological contract
beliefs (Rousseau, Ho, & Kim, 2003). We expect that i-deals pertaining to particularistic
resources will create a more relational psychological contract. In contrast, those dealing
with universal resources will engender a more transactional one between a worker and his
or her employer particularly if not supplemented with some particularistic resources.
However, where the compensation bundle combines a broad array of resources from each
category it is more likely that workers will interpret even their employment’s economic
features from a relational perspective, where particularistic resources involved came
about through idiosyncratic negotiation.
I-deals and broad array of resources they can entail provide an opportunity to
understand the exchange process whereby psychological contracts emerge. Moreover, i-
deals may constitute one way in which workers and employers flesh out what otherwise
are inherently incomplete contracts (Williamson, 1975).
A Fresh Look at (Some) Promotions
Certain promotions are likely to be a product of idiosyncratic arrangements.
Indeed, 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. In
29
a national sample of American workers, Permagit and Veum found that 56% received a
promotion at their current job, which can mean continuing to perform the same duties as
before but receiving a new title with more pay, or having one’s existing position up-
graded. A smaller portion of the sample involved the conventional understanding of a
promotion: filling a higher level position or taking over one’s supervisor’s job. Thus
many promotions do not entail the classic notion of a competitive tournament as
Rosenberg (1979) described. According to Permagit and Veum, there is no competition
in one-third of all promotions. 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 the skills, preferences, and aspirations of job
incumbents, similar to the dynamics underlying idiosyncratic job creation (Miner, 1987).
Compared with other types of promotion, position upgrades were more systematically
related to wage increases for both women and men. It is likely that the idiosyncratic
aspect of some promotions reflects ways in which individuals seek to expand their returns
(e.g., status, wages, or recognition) from doing much the same work.
Dyadic and Group Processes Associated with Leader-Member Exchange
Ex post i-deals are closely tied to the relationship workers have with their
immediate supervisor or manager—the representative of the firm with whom employees
interact most frequently following hire (Rousseau, 2001). This is particularly the case
where the resources involved are developmental (Rousseau & Kim, 2003). Idiosyncratic
arrangements may also shed light on the dynamics of leader-member exchange (LMX).
LMX theory predicts that within-group variation in a manager’s treatment of individual
workers is due to differences in trust and relationship quality that develop between a
30
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
provide 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. A
positive relationship between employee and supervisor is likely to make it easier to
propose an i-deal in the first place. Indeed, i-deals are unlikely to be proposed where the
relationship is poor, unless that the employee is able to negotiate with another agent of
the employer, such as a more senior manager or the human resource department.
Heterogeneity in Employment Conditions as a Characteristic of Work Groups
The theory of i-deals developed here suggests that within-group heterogeneity in
work experiences and reward allocations is neither merely noise associated with
differences in individual perceptions nor the effect of a worker’s pet relationship with a
boss. Systematic processes are at work whereby heterogeneity arises through ways in
which workers and employers craft their relationship to motivate both high contributions
to the firm and meet the needs of individuals. Yet, scholars have largely overlooked
heterogeneity among coworkers in the terms of their employment. For example, LMX
research has failed to investigate the impact of high LMX relations between a manager
and one subordinate upon that person’s peers. Moreover, justice research with its focus
on distributive, procedural and interactional fairness (see Greenberg, 1996, for a review)
largely focuses on forces of consistency, equity, and equality while downplaying
heterogeneity in the value and meanings individuals within a group associate with the
different resources they receive. Our theoretical framework suggests that scholars have
31
much to learn from investigating circumstances where within-group heterogeneity in
resource exchanges and employment conditions are seen by participants as legitimate and
where employers and firms experience positive outcomes.
Some resources by their very nature may need to be allocated differentially across
members of a work group—resources Messick (1993) labeled “lumpy.” Status, for
instance is difficult to divide and even more difficult to give to all. Allocation rules have
been found to vary by resource type (Parks et al., 1999). In particular, status and
love/affiliation/friendship resources have been found to generate wide disagreement on
how to allocate them (Parks et al., 1999). The impact of the nature of resources exchange
in employment has received relatively little attention, not only from the perspective of
allocation fairness but also in terms of meanings workers and employers attribute to
them.
PRACTICAL IMPLICATIONS
From a managerial perspective, little systematic attention has been given to
conditions under which differentiating between co-workers can be functional and
beneficial. I-deals offer employers a means of responding to competitive labor markets
and diverse worker needs and preferences. Their potential benefits are more likely to be
obtained where careful attention is paid to coworker concerns regarding justice. The
dysfunctional consequences of pay secrecy and other covert employment practices
underscore the need improved managerial learning and human resource practices that
make i-deals acceptable to coworkers while meeting needs of the individual worker and
his or her employer (Rousseau, 2001). A wise personnel manager once said, “make no
compensation decisions you wouldn’t post on the employee bulletin board.” When i-
32
deals are made, they are most effective in creating a sense of fairness where their
existence is openly communicated. It is likely that managers will be more willing to
publicly acknowledge i-deals that are based on values widely shared in the organization
(e.g., contribution, serious personal need, an opportunity for innovation or diversity;
Klein et al., 2000). The factors shaping coworkers reactions to i-deals, described above,
offer a framework for helping employers identify features of i-deals that give them
flexibility in accommodating individual workers while maintaining a sense of fairness on
the part of their peers.
I-deals provide a basis for employers to identify potentially useful innovations in
HR practice. The demand for alternative ways of motivating workers to stay and to
perform well encourages experimentation regarding innovative incentives and
inducements (Pfeffer, 1998; Cappelli, 2000). Both workers and employers can benefit
from looking to idiosyncratic arrangements as experiments, which if successful, can
provide broadly applicable ways of re-configuring the employment relationship.
CONCLUSION
Modern firms and those who work in them face a need to improvise in response to
change and complexity (Weick, 1996) and theories of behavior in organizations need to
recognize the potential for heterogeneity in employment relations among workers
ostensibly in the same positions. Improvisation challenges conventional management
practice and theory where consistently applied procedures and homogenization of
treatment play central roles. Though they may be more salient in highly competitive labor
markets, i-deals are widespread, forming the basis of many long standing yet often subtly
33
different forms of worker-employer relationships. I-deals provide a new lens through
which to see a myriad of details and nuances within the employment relationship.
34
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TABLE 1
I-Deals Compared with Alternative Person-Specific Bases for Employment Arrangements
Basis for Arrangement
Criterion I-Deals Politics/Favoritism Unauthorized
Allocation Negotiated by
employee
Endowment to employee Usurped by
employee
Basis Worker’s value to
firm and personal
need
Particular relationship Rule-breaking
Beneficiary Employee and
employer
Employee and powerful others
(e.g., managers)
Employee only
42
FIGURE 1
The Inverted-Pyramid Hierarchy of Terms of Employment
Standardized (all employees in the company)
Position-Based (subset of employees, e.g., incumbents of a certain job)
I-Deal (one individual
employee)