The Influence of Labelling and Social Exchange on Group Cohesion of IT-Contract Employees

Employee turnover in IT sector remains one of the most persistent challenges facing organizations. IT services organizations have been contracting their employees to support the global client requirements. There is an increasing trend in using IT contract employees in organizations, both at the service provider side and in the client organizations. With the increasing presence of contract employees, their interaction with employee co-workers could have impact on the group performance and turnover intentions. In this article, drawing on the categorization and labelling theories, we argue that the practices followed in client organizations to identify the contract employees by using distinct signifiers, such as different badging, Email ID prefixes, work location assigned to contract employees etc., will evoke a set of cognitions, which can have a negative influence on the group cohesion. We also propose that the quality of social exchange between the employee co-workers and contractors, and the quality of social exchange between the line manager and contract employee can attenuate the negative influence on group cohesiveness. The proposed conceptual framework is important in terms of understanding the relationship between contractors and employee co-workers from a managerial perspective.