the idiosyncratic deah flexibility versus...

Organizational Dynamics, Vol. 29, No. 4, pp. 260-273. 2001© 2001 Elsevier Science, Inc.www .organizational-dynamics.com

ISSN 0090-2616/01/$-see frontmatterPII S0090-2616(01)00032-8

The Idiosyncratic Deah

Flexibility versus Fairness?DENISE M. ROUSSEAU

In Arlie Russell Hochschild's book TimeBind, a manager at Amerco, Vicky King,

discovers some "half hidden" practices thatindicate just how differently individualworkers are often treated.

Two "high potential" men had askedtheir supervisor for a year off totravel around the world and do un-derwater photography of coral reefs."I want them back," their supervisorhad explained sheepishly, "so wegave them an 'educational' leave"(p. 79).

This discovery led Vicky to begin collectingother exceptions, which she referred to as"coral reefs." She turned up a worker whocleared his calendar from 11 a.m. until 1 p.m.to do real estate deals. (He didn't ask hisboss, who knew, but didn't complain be-cause of the volume of work accomplishedduring the remainder of the day.) As the listof exceptions grew, Vicky positioned herselfto begin negotiating more flexibility in thework schedules she and other Amerco staffadhered to.

This incident reveals two important as-pects of the dynamics of typical employmentarrangements. Different "deals" exist for dif-ferent people, even though they do compa-

rable work. Moreover, workers themselvesare seeking out {and often getting) greaterflexibility, negotiating arrangements thatbetter meet their personal needs while con-tributing effectively to the firm.

This article deals with an increasingly sig-nificant organizahonal practice, "the idiosyn-cratic deal." This individualized arrangementbetween valued workers and their employersis the product of a negotiation. It results fromthree intersecting trends. The demand forknowledge workers with distinctive compe-tencies in a hypercompetitive market placemeans workers hni>e greater power to negotiateemployment conditions suited to their tastesand preferences. The weakening, if not demise,of the job security-based model of organiza-tional careers, once supported by unionismand/or legal requirements, leads to kssstandardized conditions of employment.Lastly, expanded choices that people havein the market place have led to ever-greaterdiversified products and services, creatingrising expectations for customization that ex-tend to the workplace.

This article describes how idiosyncraticdeals arise, their potential benefits and thechallenges they pose to trust and fairnessin employment. It addresses the questionof how an organization can have both flex-ibility and fairness in relations with itsworkforce.

Thanks to Carole McCoy for word processing and to Cathy Senderling for editing this manuscript. TaiGyu Kim provided helpful comments on an earlier draft of this article.

260 ORGANIZATIONAL DYNAMICS

Denise M. Rousseau is the H. J. Heinz II Pro-

fessor of Organizational Behavior and Public

Policy at Carnegie Meilon University's Heinz

School of Public Policy and the Graduate

School of Indusfrial Adminlsfration. Her re-

search focuses on the changing employment

relationship and psychological contracts al

work. She has authored over 90 articles and

books. Her 1995 book Psychological Contracts

in Organizations: Understanding Written and

Unwritten Agreements won fhe Academy of

Management's best book award. As the mother

of identical twin daughters, her first-hand expe-

rience with trying to nnanage idiosyncratic deals

has alerted her fo the challenges of being both

flexible and fair.

THE IDIOSYNCRATIC DEAL:WHAT IT IS AND WHY NOW

Idiosyncratic deals are manifest in the differ-ent ways an employer treats one workercompared with others. These idiosyncraticdeals are related to, yet distinct from, the"psychological contract" each worker haswith his or her employer. A psychologicalcontract refers to individual beliefs regard-ing the exchange relationship between them-selves and the organization. Because eachindividual has his or her own subjective ex-perience of the employment relationship,two people doing ostensibly fhe same job canstill have somewhat different perspectiveson it. One worker might think she owes eighthours a day, period. But her counterpartmight think staying a little later now andthen is also reasonable if work needs to beconducted. Each worker has her own psy-chological contract. Yet this difference in un-derstanding doesn't mean that an idiosyn-cratic deal exists, because their employermight still treat both workers the same. Anidiosyncratic deal refers to those features ofemployment that the individual worker re-ceives that differ from what workers in sim-ilar roles receive. In our example, if theworker who occasionally stayed later cameto be more trusted and relied upon by herboss, and was given greater latitude and flex-ibility when she requested, an idiosyncraticdeal is in the making. It's the difference intreatment, not the difference in perception,which defines the idiosyncratic deal. Idio-syncratic deals arise when workers negotiatedifferent treatment from their employersthan that received by comparable others.Two engineers in their twenties each de-scribe how their special treatment cameabout;

I received an opportunity to go tothe field . . . high profile . . . includesextra allowances and travel, notavailable to everyone. 1 asked for it,and hinted that I might not stay if Ididn't get it.

I was a skilled employee very ambi-

SPRING 2001 261

TABLE 1 EXAMPLES OF IDIOSYNCRATIC DEALS

TRADITFONALVeterans have more choice in their job duties than newer workersPay Secrecy: Salary compression ("or odrlier hires making less than recruits hired on tight labor market

Motive: seninritjf {h'rl<, nmrkct-drivcuCONTEMPORARY

Designer negotiates educational leaveManager shifts to work from home two days a week after birth of childStockbroker spends each afternoon on own trades with employer's blessingAccountant reduces hours from 40 to 24 to increase volunteer activities

; to irtiiiii lujliiablc n>arker

tious and sought recognition and re-ward for my accomplishments. Mostother employees were either not asambitious, more quiet, or not asskilled.

Over time, such arrangements can lead towidely divergent psychological contractsamong workers in a firm. Unless idiosyn-cratic deals are managed properly, their pro-liferation can undermine trust and coopera-tion at work.

Idiosyncrasy can be as objective as dif-ferent pay for the same work, or as subjectiveas the support and flexibility one supervisorprovides some workers and not others. Awell-known example is the salary compres-sion that occurs when people hired duringa tight labor market are paid more thanothers hired the year before. Salary com-pression often results in pay secrecy, wheredifferences in compensation might rouseanger and resentment if they were madepublic.

Idiosyncrasy can also mean that peoplein ostensibly the same role evolve very dif-ferent duties and responsibilities. When 1was a young industrial psychologist work-ing at Pacific Gas & Electric, I was responsi-ble for analyzing job analyses conducted online and repair crews. One of the first thingsI learned was not to rely on the job analysisdata froni veteran workers (20 years or moreon the job). Veterans tended to have uniquecombinations of activities (some worked

more with a clipboard and seldom climbed apole or went down a manhole). In contrast,workers on the job 5 to 10 years tended toperform a similar set of tasks. Veteranstended to do what they liked or were goodat, whereas others performed a more repre-sentative set of tasks required by the job.Although such a deal was probably accept-able in an organization where lifetime em-ployment promised that younger peoplewould eventually get the same perks as didveterans, it is a question whether such apractice would have the same response to-day.

One distinction between the idiosyn-cratic practices of the past and what we ob-serve today (Table 1) is motive. Tradition-ally, idiosyncratic deals were directlyattributable to long-standing relationshipswith an employer—seniority's perks—or tofluctuations in compensation because ofmarket factors affecting entire cohorts. Sucharrangements tended to apply to groups ofpeople sharing a common feature: time onjob or date of hire. More recent idiosyncraticdeals are often person-specific and encom-pass features of employment beyond payand duties to include hours, location, travel,skill development, and mobility. The phe-nomenon this article addresses encompassesmore widespread and divergent arrange-ments across many individuals. It creates anew source of flexibility and innovation inthe workplace, while raising concerns re-garding fairness and consistency.


An Important Distinction:Idiosyncratic Deals Aren't Politics

At one level, the notion of "different strokesfor different folks" sn:iacks of politics andfavoritism. Indeed, in traditional bureau-cratic organizations of strong unions and de-tailed rules governing pay and promotion,the only way people could access differentemployment conditions tended to bethrough relationships. The cronyism widelyseen to dominate Asian countries such asIndonesia and China had its counterparts inwestern business culture, as in the GeneralMotors Corp. of the 1960s and '70s. JohnDeLorean in his book On a Clear Day You CanSee Genera! Motors describes the politickingbehind GM's practice of "nonobvious pro-motion." Here, a senior executive would pro-mote a junior person several levels down thehierarchy to be his (typically male) subordi-nate. In bypassing more senior and experi-enced people, the executive's new subordi-nate became indebted to him because of thenonearned promotion. Such political ar-rangements are not the idiosyncratic deal de-scribed here. Our focus is on the terms ofemployment initiated because of particularqualities of the worker rather than the polit-ical needs of employers.

Unlike political acts serving one person'sself-interest, idiosyncratic contracts have le-gitimacy derived from fulfilling the func-tional needs of workers and the firm. Onestriking feature of this rise in idiosyncraticdeals through worker power is that it seemsto be less biased by traditional sources ofpolitical power in firms, such as gender andrace. In their systematic and detailed surveyof participation by the U.S. workforce. Free-man and Rogers (1999) found that genderand race were far less important in shapingindividual clout and opportunities for nego-tiation on the job than was a person's occu-pation (p. 19).

Although widespread, the idiosyncraticarrangement is often like an iceberg, most ofwhich is invisible below the waterline. Itsexistence is seldom made public and reflectslocal arrangements between workers and

managers. As in many cases of pay secrecy,the idiosyncratic deal arises out of legitimateneed to recruit in a competitive marketplace,yet risks creating a sense of inequity amongthose receiving less. With ever-greater pres-sures toward customization, companies willneed to become savvier in creating flexiblearrangements.

THE DYNAMICS BEHINDIDIOSYNCRATIC DEALS

The Zone of Negotiability

The key mechanism driving idiosyncraticdeals is the increasing negotiability of termsof employment. More and more conditionsof employment are subject to a bargainingprocess. Relative to other nations, few con-ditions of employment are specified a prioriin the United States. The dearth of prespeci-fied conditions of employn:Tent has arisen forseveral reasons: the erosion of job securityamong blue collar and white collar workerssince the 1980s, the decline of unionization,and the relative absence of legally guaran-teed conditions of employment. (For in-stance, mandatory social security exists formany in the United States, but not healthinsurance or job property rights, unlikeFrance or Belgium.) Such trends are also ev-ident in other first world nations (e.g..United Kingdom and New Zealand).

In a recent book Psychological Contracts inEmployment: Cross-National Perspectives, mycolleagues and I examined the employmentpractices of 13 democratic nations. We ob-served that one of the most fundamental dif-ferences among them was the extent towhich terms and conditions are negotiable(see Figure 1). Countries with a high degreeof negotiability in en^ployment, such as theUnited States, New Zealand and UnitedKingdom, had relatively few labor statutesspecifying conditions of employment, leav-ing more up to individual workers and en:\-ployers to determine. In contrast, countriessuch as France and Belgium had more pre-specified conditions and less individual flex-

SPRING 2001 263

FIGURE 1 FRAMEWORK FORSOCIETY, FIRM, AND INDIVIDUAL

EFFECTS ON PSYCHOLOGICALCONTRACT

Individual

Resource VAvailability .'

Society

..'Legitimacy'..•'•, Constraints f

Market Power

Firm

J p»C Zone of Negotiability"'

T """ """",•• Psychological '

Contract.- Individual's view.

_,-' Psychologtcal 'xContract ].

• Rim'a view. ••-

ibility. Countries such as India, Australia,Israel, Hong Kong, Netherlands, Singapore,and Mexico are somewhere in between. Welabeled this difference the "zone of negotia-bility."

Zone of negotiability refers to the condi-tions of employment available for negotia-tion by workers and their employer. Everycountry and every company sets a zone ofnegotiability through the constraints andguarantees it has, which establish certainconditions of employment (e.g., wage rates,retirement benefits, termination practices) orcustoms {e.g., strict separation between workand nonwork time characteristic of many Eu-ropean countries). The zone of negotiabilityis shaped by a number of factors. Govern-ment regulation is perhaps the most power-ful. In many countries with traditional indus-trial relations systems involving collectivebargaining, the vast majority of employmentterms are virtually identical for workers inthe same job type or occupational family.Moreover, not everyone tries to negotiate.The leverage individuals have to make theirown idiosyncratic deals is based on predis-position (i.e., willingness to negotiate), cre-dentials, occupation, status, and marketabil-ity. Whether employers are willing toprovide unique or varied employment con-ditions to individual workers is a function ofsuch factors as industry norms, corporate

culture, and strategic choices. For instance,an arts organization might be more inclinedto be flexible than a heavy manufacturingfirm is.

Societal factors play a role in whetherindividuals are likely to negotiate. One par-ticularly important factor is societal tolerancefor unequal outconiies. The Japanese saying"the nail that sticks up gets hit" essentially isan injunction to adhere to group norms andavoid behaving in ways that would createdifferences between one's self and one'speers. Some deviant behavior is tolerated inAustralia, but not the "tall poppy" who ispaid considerably more than others. Simi-larly, Dutch society values "being normal,"meaning that a high performer works hardwithout demanding particular attention orspecial compensation. These cultural differ-ences often are reinforced by law, mandatinghighly standardized employment arrange-ments in countries such as Australia, Bel-gium, Netherlands, and France.

Mergers and acquisitions often make theidiosyncratic treatment of individuals partic-ularly salient, when one organization with amore standardized or egalitarian systemjoins forces (and administrative structures)with a firm that is less so. Notable differencesin how American and top German execu-tives were compensated created front-pagenews in the acquisition of the AmericanChrysler by Germany's Daimler-Benz. Jur-gen Hubbert, head of the Mercedes unit ofthe newly merged firm, stated that hewouldn't want to be paid as highly as anAmerican manager is in Detroit because ofthe social repercussions back in Germany."In the small town where I live. . . aftersomeone had said I made $20 million. . .they'd destroy my house" (quoted in Jen-kins, 1999, YJall Street journal, p. A23). Toler-ance for highly disparate treatment of peoplewithin firms is linked to both a broader zoneof negotiability and greater idiosyncrasy inemployment arrangements.

It's also not just about pay. Sensitivityregarding visible differences in treatment isone reason why employers often underpayhigh performers relative to their contribution


TABLE 2 IDIOSYNCRATICDEALS ARE MORE

COMMONPLACE FOR:

Highly marketable workersWorkers willing to negotiateWorkers with business and market knowledgeSmall firms and start-upsKnowledge-oriented firms

and overpay low performers. Giving seniorexecutives perks such as cars, houses, or clubmemberships is a means of rewarding highcontributors without ostensibly wideningthe pay gap. Such practices alert us to theiniportance of examining the entire bundle ofinducements and compensations that work-ers receive if we want to understand not onlythe nature of their employment compensa-tion but also how differential rewards areallocated.

Worker and Firm FactorsContributing to Idiosyncratic Deals

Qualities associated with both individualworkers and particular firms make idiosyn-cratic deals more commonplace (Table 2).The changing nature of firms and workershas altered to some extent the balance ofpower between the two.

Greater Contribution of Workers toValue of Business

With the rise of knowledge work, the valueof nonhuman assets as factors of productionhas declined. Although control over nonhu-man assets (e.g., the physical plant of a fac-tory, the patents and client lists of technol-ogy or service-oriented firms) can give anemployer power, other valuable assets canreside in the unique capabilities of members'collective skills—which are difficult for em-ployers to control. The manager in a consult-ing practice who quits to take a job with arival firm—and brings a majority of thefirm's employees with him—illustrates thedifficulty of controlling residual assets where

a firm's central production function involvesknowledge work. Accommodating a valuedworker's preferences is easier to justify whenhis or her contributions are readily apparent.

Greater Sharing of Business andFinancial Information

Workers are in a better position to createidiosyncratic deals when they have access tofinancial information regarding the firm andthe conipetence to know how to use thatinformation. Dissemination of financial in-formation is increasingly commonplace inthe knowledge economy, as firms seek toalign worker motivation with the financialgoals of the firm. Putting more financial in-formation into the hands of workers alsoenhances the bargaining position of valuedperformers.

Mobility

Knowledge workers increasingly see them-selves as an asset in which they and theiremployers invest to reap tangible benefits inthe marketplace. This perspective has in-creasing legitimacy to both workers andemployers as market forces erode many tra-ditional employment practices. Seniority-based practices make jobs more valuable toworkers over time. They motivate workers tocontribute more than the present value oftheir compensation in anticipation of higherwages over time. Without the traditionalguarantee seniority systems provided, work-ers who are making contributions to thefirm's long-term performance and successhave less reason to believe they will benefitfrom that contribution. They are more likelyto demand a reward noxo. The decliningvalue of a job because of erosion of senioritypractices is amplified by the disadvantagethat long-term employment in a single firmcan have for some workers, where "too-long-a-stay" in a single firm signals lack of up-to-date skills and marketability ("dead wood").Mobility also pressures workers to differen-tiate themselves from each other in terms ofdeveloping distinctive competencies and

SPRING 200! 265

generating options for themselves to pursuepersonal and career goals.

Efforts to negotiate customized arrange-ments occur both at the time of hire {ex ante)as well as on the job over time (ex post),particularly among highly mobile workers.In recent interviews with high technologyfirms in Pittsburgh, 1 have found that thoseworkers who held sizeable proportions ofownership in the firm were typically thosewhom their employer referred to as "criticalworkers." Critical workers often include se-nior executives responsible for growing thebusiness, but also sales people and designersmaking significant bottom-line contribu-tions. While senior executives might bargainfor an ownership share at hire, sales andtechnology people tend to access ownershipafter they are hired, when the organization'sdependence on their contribution for finan-cial success becomes apparent: "One salesperson here is responsible for BO/o of last year'srevenue—giving him stock helps keep him."

Diversity and the Democratizationof Taste

The global marketplace is one of expandedchoices and mass customization, with roomfor self-expression in ideas and tastes. Just aspeople exercise individual tastes and prefer-ences in buying behavior and in their non-work life generally, parallel expectations ex-ist that individuals should be able to expressthemselves in their work life and in condi-tions of employment. Preference for flexibil-ity is evident in the popularity of expandedchoice in cafeteria-style benefits, flexibleschedules, geographically distributed work,and customized career development plans.Firms offering such an array of choices are asdiverse as Coca-Cola Co., Bankers TrustCorp., Cap Cemini, and Carnegie MellonUniversity.

When the Job or the Organizationis New

Newness is another force motivating idio-syncratic arrangements. Start-ups have

266 ORCANIZATIONAL DYNAMICS

fewer rules and established practices thanolder firms do. Similarly, new jobs in an ex-isting firm have fewer specific requirementsor constraints than do established positions.Idiosyncratic deals are characteristic of newsituations because there are fewer standardpractices in place and more latitude for indi-viduals to shape the situations in which theyfind themselves. The first person in a joboften defines its scope. A newly hired pro-grammer in a high tech firm saw that therewere no training manuals to help recruitslearn the system. Volunteering to write one,he became a programmer/training managerfor this start up, shaping the kinds of expec-tations his replacement faced down the road.The growth of start-ups and reorganizationscreates the prototypical environment for id-iosyncratic deals.

The start-up explosion of dot.com com-panies in 1999 through 2000 created a host ofidiosyncratic jobs among new hires—andchanged the demands of labor force partici-pants along the way. Even the hiring andretention practices in established firms wereaffected. To recruit against dot.com compa-nies in the early months of 2000, MicrosoftCorp, boosted its incentive packages andperks. In the words of one recruit, the com-pany "really did pay attention to what Iwanted to work on" (R. Buckman, "Tryingto Stay 'Cool' in the Eyes of Recruits," V\!aUStreet Journal, 5 April 2000, p. Bl). Thiscustomization is the basis of idiosyncraticdeals.

CHALLENGES FOR HR:FLEXIBILITY VERSUS FAIRNESS

The proliferation of idiosyncratic arrange-ments creates opportunities and challengesfor both line managers and human resource(HR) professionals. Idiosyncratic arrange-ments give individual nrianagers greater lat-itude in motivating their employees. Manag-ers, in particular founders of small firms,often prefer to retain control over conditionsof employment. Nonetheless, as organiza-tions increase in size, widespread inconsis-tency in HR practices erodes trust and moti-

vation. The field of human resourcemanagement has emerged in the last 70 yearsin large part out of recognition that system-atic and consistent treatment of the work-force is critical to promote fairness, cooper-ation, and efficiency. The dilemma is thatwhile consistency creates a sense of proce-dural justice, some degree of local flexibilityis needed to adapt in changing circum-stances. When local managers are free tochoose from a broad repertoire of means tomotivate their workers they do more suc-cessfully than if they are overburdened byrules. This tension between consistency andflexibility is not a problem to solve but a factto be nianaged.

Practices Promoting EffectiveIdiosyncratic Deals

Reward contribution, not mobility. To cre-ate fairness in achieving both consistencyand flexibility, it is important that there beclear criteria for allocating benefits and in-ducements. Consistent research evidence in-dicates that mobility-based rewards are seenas less fair than performance-based rewards.Although mobility is highly correlated withcompetence, many equally competent peo-ple are less likely to leave because they aremore committed to the firm or have dualcareer constraints. Employers who providespecial retention inducements to those whothreaten to leave need to factor in 1) themobile worker's performance relative to co-workers, and 2) the impact of any specialtreatment on peers. A performance appraisalsystem that people trust is critical to makingthis work. (In the process of making an id-iosyncratic deal, don't forget the shy/quiet/less demanding people who may be goodperformers but haven't asked for specialtreatment. Are there ways to improve theirexperiences at work that are overlooked be-cause no one has asked or complained?)

Identify up front the standardized and posi-tion-based features of the employment pack-age. Most employment relationships containa mix of features (Fig. 2). First, certain fea-

FiGURE 2 FEATURES OF THEEMPLOYMENT EXCHANGE

tures may be offered to all workers (standard-ized, e.g., health care benefits). Second, someare available only to certain groups of work-ers [position-based, e.g., wage rates for union-ized workers or professionals). Third, somefeatures are unique to particular individuals(idiosyncratic). Moreover, some features areoff the table and cannot be negotiated be-cause they are required by the nature of thework (e.g., security clearance for certainjobs), organizational culture (e.g., perform-ing as team players and not individual con-tributors), or law (e.g., contributions to gov-ernment-required pension fund). While eachfeature can be stipulated to some extent exante, idiosyncratic features often proliferateonce people are on the job, build trust rela-tionships with managers and become valuedperformers. (Note that al! features canchange, although of course the process ofrevising the terms of an existing employmentexchange is complicated.) Not only is it im-portant to address the dynamics associatedwith idiosyncratic arrangements, but atten-tion should also be given to the relative mixamong the three features employers provideto workers.

The ratios among these three sets of in-ducements provide important messages toworkers regarding the type of employer theywork for and its motivations toward them. Ifeverything is subject to a bargaining process,it signals that the employment relationship ismore a transaction, merely an economic ex-change, and undermines the sense of rela-tionship and identification. When employers

SPRING 2001 267

and workers play "Let's make a deal" on aregular basis, any idiosyncratic arrangementis more political than functional. It is frus-trating for both employers and workerswhen the only way to get a raise, a newcomputer, or time off—basic features in em-ployment—is bargain with the boss. A keyprescription is to ensure that important in-ducements and supports are automaticallyprovided by the firm as a means of attractingand retaining quality people and of signalingthe quality of the employment relationship.

Consider whether the type of feature isone on w-hich people prefer to deal withmanagers directly as individuals (e.g., workschedules). Some issues affect people as agroup and are better addressed at the groupor organizational level (e.g., health andsafety, benefits packages). When benefits areaccessed as a group, employees prefer planswhere they can choose among alternatives.Position-based differences work best if thereare relatively few such distinctions and thebasis of these are clearly grounded in thework, credentials, and experience required.

Where consistency matters. There are twofeatures in idiosyncratic deal making whereconsistency is critical. The first is in the strictupholding of duties, responsibilities and de-liverables. To avoid the negative aspects ofidiosyncratic arrangements it is importantfor employee and employer to agree onclearly specified responsibilities and out-comes associated with a position. If not, id-iosyncratic deals can erode the legitimatestandards that make workers accountableand promote shared expectations within thefirm. Moreover, it is important that accom-modations such as flexible hours do not in-terfere with these performance require-ments. Many critical role requirements are sotaken for granted that both managers andworkers forget to address them in negotiat-ing idiosyncratic arrangements. Coordinat-ing one's work with co-workers, clients, andothers, keeping people informed, and main-taining regular contact with key stakeholdersremain important even if the conventionalways to accomplish these are less feasible

with an alternative work arrangement. As anaccountant who shifted to work part-time,much of it at home, reports:

1 learned to rely on regular e-mailupdates to make sure that out ofsight was not out of mind. AlthoughI miss the coffee break conversa-tions, I always work in the office onMonday, when most meetings areheld.

The second consistency requirement is thatany idiosyncratic arrangement passes a "val-ues test." The difference between legitimateand politically motivated reasons for accom-modation is whether its underlying motiva-tion is in line with the firm's stated corevalues. Giving someone flexibility or a betteroffice merely because he or she complainsmore or can make trouble exemplifies virtu-ally no firm's cherished values. In contrast,responding to a valued worker's request forgreater control over assignn\ents can signalthe priority the firm places on developingand rewarding its people. The acid test iswhether the reason for the accommodation isone that managers can comfortably publi-cize.

Make no deals that cannot he shared. Manyidiosyncratic arrangements arise because in-dividuals have a need or an opportunity thataccommodating would help both the workerand the firm. But indiscriminant use of thispractice leads to conflict and coordinationproblems. Selective use of idiosyncratic ar-rangements means that any accommodationis assessed in terms of the employer's corevalues. Arrangements that are consistentwith values are more readily shared thanthose that are not. In an arrangement thatcould be called "You can have it hut don't tellanybody," an auditor who wanted to preparehimself to transfer to the tax practice, got hismanager to give him assignments specifi-cally targeted to develop these skills. Hisco-workers continued to take on the routine


activities that were the mainstay of the au-diting practice. Two co-workers figured outthat the auditor didn't get the same bread-and-butter jobs, and when he was trans-ferred to tax, they quit the company in dis-gust. Promoting developmental assignmentsthat create career opportunities is a com-monly recommended strategy for managerswho coach and mentor. Had the managerused developmental assignments as a gen-eral practice for high performers (not limitedit to a favored subordinate) and conveyedthis to his staff, the subordinates' reactions totheir colleague's promotion would havebeen much different. Such an idiosyncraticdeal could provide both flexibility and fair-ness when treated as a source of innovation,addressing a general problem, or shared op-portunity. Note that if the reasons behind aspecial arrangement are confidential (be-cause of illness or sensitive personal mat-ters), the practice is better formulated as ageneral policy where confidentiality is guar-anteed (e.g., medical leaves).

Assess and provide necessary job-relatedsupports on a regular basis. Don't alwaysexpect that people will ask for what theyneed. It is better if the employer asks first tosignal organizational support. Open-doorpolicies are not enough to avoid a sense ofinjustice. Workers with market power aremore likely to use an open door policy thanare those without it, and they are often morelikely to assert their interests. In contrast,how often do we hear "If I have to ask / don'twant it." An office worker who had gotten adesktop computer from his boss encourageda co-worker to ask their boss for one forherself. The annoyed co-worker refused, say-ing, "I am not going to beg." A better way ofmanaging this situation would be if the co-worker and her manager had the kind ofongoing interactions that made it likely theboss would inquire what was needed tomake the person's job easier. It is importantto actively seeking out less assertive subor-dinates to understand their personal and job-related needs.

Be open about the possibility for flexibilityand experimentation. In a hyper-competi-tive marketplace innovative firms are em-ployers of choice. Accommodations make iteasier to recruit, retain and n:iotivate askilled, mobile, and diverse workforce. Fromthe prospective of idiosyncratic arrange-ments, perhaps the most salient feature isinforn:\al work accomn^odations to nonworklife. Family is the typical domain, but it alsocan refer to other nonwork interests. Nottypically formally sanctioned, these are thebehaviors workers use to adjust their usualwork patterns in an attempt to resolve dailyinstances of family to work conflict, withoutusing formal work-family programs. Theseforms of everyday work flexibility can bemore important than the more publicizedformal practices such as mommy or daddytracks.

Keep track of accommodations as sources offuture innovation and policy change, as wellas to promote equity and fairness. Think of itthis way: "They almost always find out." Thehead of a research and development (R&D)unit faced a high-powered scienhst who hadreceived an offer doubling his salary. "Icould afford to pay you this, but I cannotafford to pay everybody this. I would prefer tohave you stay, but if you really want thisoffer, you should take it." Among the highlycohesive group of scientists, information wasshared freely. The head made a habit of writ-ing down any special arrangements that hemade with individual researchers, knowingthat others would soon request somethingcomparable. By keeping track of accommo-dations, the R&D head had developed expe-rience regarding what sort of arrangementshe could afford to make and still maintain asense of fairness.

Be prepared to leant by evaluating, redesign-ing, and terminating idiosyncratic arrange-ments. Some arrangements may not workout well for either the firm or the worker. Itis important to build milestones into idiosyn-cratic arrangements so that their progressand consequences can be evaluated. Workers

SPRING 2001 269

TABLE 3 STRATEGIES FOR CREATING IDIOSYNCRATIC DEALS THAT WORK

• specify up front the employment arrangement's terms: the standard, position-based and critical requirements(off-the-table).

• Use idiosyncratic arranj^ements as a source of innovation in workplace flexibility.• Where workers are interdependent with others, require supportive relations with coworkers as a basis for

accommodations.• Assess and provide necessary job-related supports on a regular basis.• Keep track of accommodations as both source of future innovation and policy change, as well as equity.

who negotiate shortened workweeks orwork-at-home arrangements should havethe opportunity to review the arrangementsregularly with key stakeholders (co-workers,clients, etc.} to assess their impact. Framing itas "experimental" can make it easier to makeadjustments, cueing the parties involved thatits conditions are not writ in stone. Don'tforget to share the results of these experi-ments with others to help identify whatworks and what doesn't.

Managing the cycle of flexibility and consis-tency. There is no quick fix to resolve thetension between flexibility and consistency.It is an ongoing dynanriic that can be n:ian-aged {Table 3). Differences in market powerand personal needs lead individual workersto seek out idiosyncratic arrangements.These can become cues stimulating others toseek similar benefits for themselves. Overtime, one person's idiosyncratic deal can be-come a widely shared feature of the firm'sHR system. The tension between flexibilityand fairness creates a dynamic that tendstoward broader equality to legitimate prac-tices and promote cooperation and cohesion.A climate of justice is necessary to sustaineffective collective action.

Conditions Promoting IdiosyncraticDeals That Work

The difference between politicking and effec-tively managed idiosyncratic deals lies in thekinds of conditions that make for good rela-tionships and business agreements in thefirst place. These include parties who trusteach other, who each have power, choice andgood information about their own and eachothers' interests, and who operate in an en-vironment where there are sanctions for op-portunism. Putting in place a number of spe-cific features makes for more effectiveidiosyncratic deals (Table 4):

First and foremost, a high quality rela-tionship needs to exist between the workerand manager, where each trusts and under-stands the interests of the other. Because id-iosyncratic arrangements and accommoda-tions arise through negotiation, a qualityrelationship creates a problem solving pro-cess out of what would otherwise be merebargaining.

Responsibilities and role requirementsneed to be well understood and agreed to,because these provide a framework in whichproblem solving can be conducted to meetboth the worker's and the firm's needs. Such

TABLE 4 CONDITIONS PROMOTING IDIOSYNCRATIC DEALS THAT WORK

High quality relationship exists between worker and managerResponsibilities and role requirements are well-understood and agreed toPerformance criteria are clear and well-specifiedWorkers trust the performance appraisal process.Shared understanding regarding performance criteria among coworkersCoworkers have mutually supportive relationsCoworkers trust the managerConvey legitimate reasons where job duties limit flexibilityIdiosyncratic deals are viewed as a source of innovation that can be shared and adopted by rest of firm


conditions are more likely to be the casewhere performance criteria are clear andwell specified.

Because justice is to some extent in theeye of the beholder, it is important that co-workers trust the performance appraisal pro-cess that leads to an individual being iden-tified as a valuable worker. Sharedunderstanding regarding performance crite-ria among co-workers is also important, sothat those seeking similar accommodationsare held accountable to the same standards.Co-workers will monitor each other's treat-ment by managers where they already be-lieve that favoritism exists. Mistrust signalsthe need to be on the lookout for injustice.Where co-workers have mutually supportiverelations it is easier for them to more openlyshare arrangements and to avoid coordina-tion problems that accommodations inscheduling and other employment featurescan create. Managers who have worked tobuild a trust relationship with all workers,not a few, will be in a better position toprovide accommodation and flexibility.

When flexibility is difficult to achieveacross the board because of job-related rea-sons, the legitimate basis of such differencesneeds to be made clear. Don't assume thatpeople know the reasons. One hospital'sdress code specified that clinical caregiverscould not have multiple pierced ears (whilemanagers had no dress code). Only when anurse was assigned to a management taskforce did she learn that the reason was tomanage relations with the hospital's elderlyclientele. In such circumstances it may benecessary to make formal distinction in rolesand titles to legitimate differences in treat-ment, but the reasons need to be announcedand reiterated.

Finally, idiosyncratic deals can beviewed as a source of innovation to beshared with others. The need for alternativeways to motivate workers to stay and toperform well has led to more experimenta-tion rega rd ing incentives and induce-ments—including new forms of compensa-tion, flexible work schedules, and other workpractices. The "coral reefs" Hochschild de-

scribes in Amerco in the opening of this ar-ticle are examples of local experimentationsupervisors often engage in. Periodic reviewof these can provide insight into ways forredesigning employment arrangementsmore broadly within the firm.

Consequences of Poorly ManagedIdiosyncratic Arrangements

The delicate balance between flexibility andinjustice is evident in the misapplication ofidiosyncratic arrangements in the workplace.Six symptoms are indicative of dysfunctionalidiosyncratic arrangements:

• Employees place little trust in the wayrewards are allocated. First, and foremost, lowlevels of trust regarding reward distribution,and, relatedly, the performance appraisaland compensation process, signal that peo-ple believe the employment relationship in-volves unfair deals, favoritism, and specialtreatment.

• People performing essentially the samework equally well do not have equal access tofiexibility. Consider the common occurrencein professional firms such as law and ac-counting, where women professionals cantake family leave but not their male counter-parts. Such obvious disparities create inevi-table resentment.

• Worker ability to negotiate an idiosyn-cratic arrangement depends on who is the man-ager. A supportive manager who tends totrust his or her staff might provide manyopporturuties for flexibility and customiza-tion in the course of motivating and devel-oping people, while a less supportive coun-terpart finds that "one size fits all" is easier toadminister. Where managers have been ef-fectively trained and rewarded for coachingand mentoring their subordinates, such dif-ferences in style are less likely to occur.

• Status differences are evident in opportu-nities for idiosyncratic arrangements. Hochs-child describes the double standard of trust:"The only people I ever hear of getting part-time jobs are the women n:\anagers, not sec-retaries" (p. 139). Later, a secretary unsuc-cessfully attempts to cut back her work

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hours and take a pay cut. Although sup-ported by formal company policy, the pro-posed arrangement wasn't permitted by hersupervisor. Human resource managementsystems are needed that promote appropri-ate flexibility across the firm.

• Workers compete with each other for spe-cial treatment. When one professor negotiateda reduced teaching load (and a reduction insalary) a colleague went to demand a re-duced teaching load too (unaware of the re-duction in salary that went with it). Peoplereact negatively to cues that others have anidiosyncratic arrangement where they do notfeel fairly treated in the first place.

• The organization's culture promotes thebelief that everything has to be bargained for.Over-reliance on market thinking in allocat-ing resources to employees can erode em-ployee trust in the employer and co-workers.Internal competition for promotion is stan-dard in many firms. But when this internalmarket extends to other resources such aspay, job quality, supports for doing thework, and perks, employees compete witheach other on the very employment condi-tions that bind them together in other firms.One legendary business school dean, believ-ing that competitive markets should applyinternally, has been described as having "150faculty and 147 different deals." Raises, re-duced teaching loads, and developmentalleaves were given to faculty who came intohis office with job offers. The loyal worker(and frequently those with dual-career or

other family constraints on mobility) oftenfelt overworked and underpaid by compar-ison. Rewards exclusively based on "marketvalue" can quickly become incentives for dis-loyalty and opportunism.

CONCLUSIONWorkers have long desired greater participa-tion in determining their employment ar-rangements and in what happens in theworkplace. Idiosyncratic arrangements ne-gotiated between workers and employers area form of participation. This desire for avoice where one's Interests are affected isparticularly high in the U.S., where privateemployers have more influence over em-ployee well being than do employers in otherindustrialized countries. Because workersare valued and mobile, they are in a positionto demand more varied and expandedchoices in employment arrangements. Thetrend toward greater flexibility in conditionsof employment is likely to continue as longas the forces increasing worker power in em-ployment do. But both workers and firmshave a lot to learn about how to make suchflexibility work well for all parties. Idiosyn-cratic arrangements can provide ways fororganizations to identify innovations thatcould be more broadly beneficial. Creatingwidely shared practices out of local innova-tions is a source of organic and adaptiveorganizational change.


SELECTED BIBLIOGRAPHY

Arlie Russell Hochschild's book Time Bind:When Work Becomes Home and Home BecomesWork (New York: Metropolitan, 1997) pro-vides a detailed account of how one com-pany and its employees responded to thepressures for greater workplace flexibility.How individual psychological contracts areformed and affect worker behavior is de-scribed in Denise M. Rousseau, PsychologicalContracts in Organizations: Understaj^dingWritten and Unwritten Agreement (NewburyPark, CA: Sage, 1995). A highly readablestudy of participation in the American work-place is Richard B. Freeman and Joel Roger'sWhat Workers Want (jointly published byIthaca: ILR Press and New York: RussellSage, 1999). How the zone of negotiability inemployment relahons differs and is chang-ing across nations is addressed by organiza-tional researchers from 13 countries inPsychological Contracts in Employment: Cross-

National Perspectives, edited by Denise M.Rousseau and Rene Schalk (Newbury Park,CA: Sage, 2000), also the source of Figure 1.The changing nature of a firm's dependenceon its workforce is described in Carrie R.Leana and Denise M. Rousseau, RelationalWealth: the Advantages of Stability in a Chang-ing Economy (New York: Oxford, 2000). Thechanging role that human resource manag-ers play in a more market-oriented, negotia-tion-prone workplace is discussed in "TheBoundaryless Human Resource Function:Building Agency and Community in theNew Economic Era," which appeared in Or-ganizational Dynamics (Spring, 1999, 7-18),authored by Denise M. Rousseau and Mi-chael B. Arthur. For a fascinating descriptionof the politicking behind dysfunctional indi-vidual deals see John Z. De Lorean, On aClear Day You Can See General Motors (GrossePointe, MI: Wright Enterprises, 1979).

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