THE PSYCHOLOGICAL CONTRACT

THE PSYCHOLOGICAL CONTRACT

DEFINED

A psychological contract is a set of unwritten

expectations that exist between individual employees
and their employers
 The Psychological
Contract
• “An individual’s implicit belief in mutual obligations
(expectations) between that person and another
party” (Rousseau, 1989)
– Based on employees’ and employers’
perceptions of obligations
• Unspoken
• Continually shifting
Types of Psychological Contracts

• Transactional
– Short time frames
– Specific obligations (e.g., financial)
• Relational
– Longer time frames
– Diffuse obligations
• Socio-emotional based (e.g.,
commitment, affiliation)
Fulfilling/Violating Psychological
Contracts

• Fulfilling psychological contracts is associated with

increased trust and cooperation (e.g., Conway & Briner,
2002).
• Violating psychological contracts is associated with
increased anger, frustration, and intentions to quit
(Robinson & Rousseau, 1994).
– Typical violations
• Training
• Compensation
• Promotion
• Job Security
• People
• When violated, contracts become more transactional and
less relational
 Why is this Useful to Know?
• Changing nature of the workplace:
– More part-time and temporary contracts
– Flexible job descriptions
– Doing more with less (downsizing)
– Constantly changing service standards
– Constantly changing technology
– Changing attitudes about work.
 OPERATIONAL MODEL OF THE PSYCHOLOGICAL
CONTRACT

Causes Content Consequences

Organizational culture Fairness Organizational

citizenship
HRM policy and practice
Organizational
Experience Trust commitment

Expectations Motivation

Alternatives The delivery of Satisfaction and

the deal well-being

Source: D E Guest, N Conway, R Briner and M Dickman (1996) The State of the Psychological Contract in Employment, London, Institute of
Personnel and Development

8
 Managing Psychological Contracts
Planned
Renegotiation
SHARING INFORMATION termination
(new contract) AND
NEGOTIATING

Return to ROLE CLARITY

Resentful the way things AND
termination used to be COMMITMENT
(misunderstanding) Planned
renegotiation

Crunch STABILITY
Choice point
Ignore

Pinch
Resentment, Choice point
anxiety

Ambiguity, DISRUPTION
uncertainty OF
SHARED EXPECTATIONS
 THE PSYCHOLOGICAL CONTRACT AND
THE EMPLOYMENT RELATIONSHIP

The psychological contract provides answers to the two

fundamental employment relationship questions which
individuals pose:
1.'What can I reasonably expect from the organization?‘
2.' What should I reasonably be expected to contribute in
return?'
 DEVELOPING A POSITIVE
PSYCHOLOGICAL CONTRACT

• Define expectations during recruitment and induction

programmes
• Communicate and agree expectations
• Adopt a policy of transparency on company policies and
procedures and on management’s proposals and
decisions
• Generally treat people as stakeholders, relying on
consensus and cooperation rather than control and
coercion