Psychological Contract
What is the psychological contract?
The psychological contract refers to
the unwritten, intangible agreement between an employee and their employer that
describes the informal commitments, expectations and understandings that
make up their relationship. The psychological contract shouldn’t be confused
with a written employment contract – they are two very separate things.
(Enright, J. undated)
The term 'psychological contract' refers to individuals’
expectations, beliefs, ambitions and obligations, as perceived by the employer
and the worker.
(cipd.org, 2023)
Why is the psychological contract important?
When it comes down to it, a written employment contract that a
team member has with their company does not have a great deal of influence
on their day-to-day experience of work.
In reality, that contract is something you sign on your first
day and then probably don’t see much of during the rest of your time at the
business. Unless the employee and employer end up in a legal dispute, that
contract might well just stay in a filing cabinet at the back of the office.
When it comes to how an employee acts, works, and behaves, what
holds far more influence is the perceived fairness of the
psychological contract they have with their employer.
Try to think of the psychological contract as a relationship,
just like any personal relationship you have in your own life.
If you have a friend that consistently lets you down, demands
more of you than they ever give back or often leaves you feeling taken
advantage of, then it’s very easy for that relationship to turn sour. While it
might suit one person, the other feels like they have a raw deal – and rightly
so.
On the other hand, a friendship where that support flows both
ways feels worthwhile and valuable to each side.
A
psychological contract between an employee and an employer works exactly the
same way – for that relationship to flourish in the long term, both sides have
to feel that it is balanced and their contribution is fair.
(Enright, J. undated)
The significance of psychological contract
The quality of the psychological contract heavily influences how employees behave from day to day. When workers perceive that their contributions to the organisation and what they receive back from the employer are balanced, and fair, there can be positive outcomes. For example, workers who perform better, demonstrate more extra-role behaviours, and indicate a higher level of commitment to the organisation.
The psychological contract is based on employees’ sense of fairness and trust, and their belief that the employer is honouring the 'deal' between them. A violation (or breach) of the psychological contract by the employer can have sudden and powerful consequences for people and organisations. It can lead to negatively affecting job satisfaction, commitment, performance, and increase turnover intentions.
(Enright, J. undated)
Conclusion
At the end of the day, the psychological contract is the
responsibility of both the employee and the employer. Both have separate
responsibilities to guard against potential breaches. For the employer,
it is about making sure not to give the wrong perception to an employee and to
make sure promises are upheld. For the employee, it is about managing
their expectations so that difficult situations or adverse personal
circumstances are not seen as negatively impacting productivity and are not
seen as a worker “acting out”.
(Stevenson, M. 2018)
My Opinion
I strongly believe that
psychological contract is more effective than employment legal contract. But there are many instances that both the parties are getting disappointed. Since it is unwritten agreement and no one can blame each other.
Eg-1 Employer side - Offering a paid course and requesting an employee to work for a certain number of years, but he/she is forced to leave when there is a good package is offered by another organization.
Eg-2 Employee side - Requesting an employee to complete a course on his own cost and come back for a promotion, but once it is completed giving some excuses not to promote him.
References
cipd.org, (2023). What is the psychological contract? [online].
Available from https://www.cipd.org/en/knowledge/factsheets/psychological-factsheet/.
[Accessed on 11 August 2023].
Enright, J. (undated).
What is the psychological contract?. [online]. Available from https://www.charliehr.com/blog/what-is-the-psychological-contract/.
[Accessed on 11 August 2023].
(Stevenson,
M. 2018). The Importance of the Psychological Contract. [online]. Available
from https://www.hrexchangenetwork.com/employee-engagement/articles/the-importance-of-the-psychological-contract.
[Accessed on 11 August 2023].
the psychological contract is the responsibility of both the employee and the employer. Both have separate responsibilities to guard against potential breaches. For the employer, it is about making sure not to give the wrong perception to an employee and to make sure promises are upheld. For the employee, it is difficult situations or negative personal circumstances that do not adversely affect productivity and an employee manages expectations well.
ReplyDeleteYes, psychological contracts will not work for permanent employees, but they may work for crowd workers.
ReplyDeleteThis will result in an increasingly inefficient workforce whose objectives no longer correspond to the organization they work for. The main cause of disappointment tends to be that middle managers are protective of their status and security in the eyes of their superiors, and this can introduce conflicts of interest when they are required to fulfill their obligations to their subordinates.
ReplyDeleteThe psychological contract is an agreement, unwritten but understood, that outlines the expectations, beliefs, ambitions, and obligations that characterize the relationship between employer and employee.
ReplyDeleteLooking at the significance of the psychological contract you shared, while the employment contract may be strong under legal circumstances, it is actually the psychological contract that has more power in the day-to-day operations. Employees may inadvertently comply with the employment contract if the psychological contract is strong enough.
ReplyDeleteIt is most important part of organization as the term 'psychological contract' refers to individuals' expectations, beliefs, ambitions and obligations, as perceived by the employer and the worker. The concept emerged in the early 1960s, drawing on insights from psychology and organizational behavior.
ReplyDelete