According to (Guest et al., 1996), a positive psychological contract is something should be taken seriously because this is what drive a higher level of employee satisfaction, employment relationship and a commitment to the organisation and for the very same reason why organisation need to pursue progressive HRM practices. Leadership is a key factor in coordinating and aligning (Lewis, Packard and Lewis, 2011).

The aim of this coursework to unearth the relationship between styles of leadership in John Lewis and how it shapes HRM practices to generate Human Capital Advantage (HCA) and its effectiveness on employee’s psychological contract and motivation and commitment to their work and organisation.

LITERATURE REVIEW

Leadership

When we scrutinise transformation leadership, they also employ participative leadership style for decision making, they tend to create a sense of inclusiveness by share the problem with followers and seeking consensus before the final decision (Bass, 1985). However, with transactional leadership style, the final say remains with the leader and employees may not feel empowered and merely be motivated to participate because of extrinsic value and employment agreement (Piccolo and Colquitt, 2006).

Leader-member exchange theory (LMX) focuses on the two-way relationship between leaders and subordinates. This theory assumes that leaders and subordinates develop an exchange with each other (Deluga, 1998).However, it is a divergence from the common leadership theories because LMX focus on the relationship which can be affected by personal characteristics of leaders and followers rather than an emphasis on the characteristics of effective lea