Psychological Contract
Psychological contract
is an implicit and unwritten structure that explains the set of behavioral expectations
in between the employers and employees in an organization which is not included
in the employment contract (Armstrong, 2010) and expresses the expectation from
one another at a workplace (Armstrong, 2006).
The phrase
psychological contract represents “An individual's beliefs regarding the terms
and conditions of a reciprocal exchange agreement between that focal person and
another party” (Rousseau, 1989, p.123). These behavioral Expectations can be
explained as the employer’s expectation on employee to do their best for the
goodwill of the organization, to respect the values of the organization and to
be loyal. The employee’s expectation on employer would be to be treated
impartially and to be rewarded as per their contribution, for growth and
development of the employee and to get positive feedback regarding their
contributions (Armstrong, 2010).
The parties involved in
a psychological contract are the individual employee and the organization (Schein,
1980). As per the image given below, the factors under the water builds psychological contract.
(Source : http://www.recreateconsulting.co.uk)
Types of psychological contracts
Four types of
psychological contracts could be explained as below;
1. Transactional Contract - Short term contracts where the employees invest only a very little time,
emotion and commitment towards the organization. They do not intend to have a
long lasting relationship with the organization. Employees on such contract
require an immediate reward and their work will solely depend on the pay. It is said that, such contracts will require formal agreements by both parties (Savarimuthu
and Rachael, 2017).
2. Relational
/ Traditional Contract - Cullinane & Dundon (2006) explains traditional
psychological contract as an offer of obligation made by an employee in return
to the job security granted by the employer. It is related to the emotional and
value based exchange that occurs in an organization which exists over a long period
of time (Savarimuthu and Rachael, 2017).
3. Transitional Contract- It is a temporary time period, where the absence of commitment concerning
the future employment is exposed between the employer and the organization (Aggarwal and Bhargava, 2009).
4. Balanced Contract – It is a combination of transaction contract and traditional contract. Both the organization and the employee supports each other on their learning and growth. Employees are rewarded based on their performance and contribution to the firm’s progress (Savarimuthu and Rachael, 2017) and it contains a mutual risk among the employer and employee (Rousseau, 2004).
References
Aggarwal, U and
Bhargava, S (2009) Exploring psychological contract contents in India: the
employee and employer perspective. Journal of Indian Business Research,
1(4), pp. 238-251.
Armstrong, M. (2010) Armstrong’s
essential Human resource management practice: A guide to people management.
1st ed. United States, Kogan Page.
Cullinane, N and
Dundon, T (2006) The Psychological Contract: A Critical Review. International
Journal of Management Reviews, 8(2), pp. 113-129.
Recreate Consulting (2013)
the psychological contract – the written contract of employment [online].
Available at : <http://www.recreateconsulting.co.uk/ReCreate/2014/02/> . (Accessed on
24th April 2019)
Rousseau, D, M (1989) Psychological
and implied contracts in organizations. Employee Responsibilities and Rights
Journal, 2(2), pp. 121-138.
Rousseau, D, M. (2004) Psychological
contracts in the workplace: understanding the ties that motivate. Academy of
Management Executive, 18(1), pp.120-127.
Savarimuthu, A and
Rachael,A, J. (2017) Psychological contract - a conceptual framework. International
Journal of Management, 8(5), pp.101-108
Schein, E, H. (1980)
Organization Psychology. 1st ed. Englewood Cliffs, NJ: Prentice-Hall.
According to psychological contract theory, individual or in organizational context employees have a cognitive process or thinking structure about their exchange relationships in the organizations. It is basically the obligations in between the employee and the employer. Therefore it is a need now a days to have a connection or match or balance between both the parties expectations. As mentioned there should be a match between what employee provides, and what employer provides. Both of their expectations should meet in order to go for a goal as a team. When there is a mismatch between these two, it causes employee turnover (Samantha, Denise and Maria, 2015).
ReplyDeleteReference
Samantha, D.M., Denise, M. R. and Maria, T. (2015) Psychological Contract Theory. Sage Publications, 1(1), pp. 2-7.
Thank you for the comment. It is true that both the employee and employer expectations should be met equally in order to build a healthy relationship at work.
DeletePsychological contract is explained as the ‘set of reciprocal and unwritten expectations’, which explains the actions believed to be expected from employees and what they expect in return from their employer and reciprocally or equally, the actions believed to be expected from employers and what they expect in return from their employees (Armstrong, 2010).
Dissatisfaction on either side will cause a breach in psychological contract (Ahmed et al.,2016) .
According to Guest (2007), a psychological contract is concerned with the perceptions of both parties to the employment relationship, organization and individual, of the reciprocal promises and obligations implied in that relationship.
ReplyDeleteGuest,D. (2007). Human Resource Management: Towards a new psychological contract. Oxford: Oxford University Press.
When the psychological contract is not fulfilled by the employer, employees will show less organisational engagement and job satisfaction, as shown by the meta-analysis of Zhao et al. (2007). In that case how employers can ensure a smooth positive relationship?
ReplyDeletePsychological Contract can be defined as “unwritten set of expectation” between employer and employee. Psychological contract will be different since the employees and their desires and expectations are different also it is in state of flux. Therefore, establishing an effective two-way communication will positively impact the psychological contract. (Stevenson,M 2018)
ReplyDeleteSocial Exchange theory used as a base for developing the theory of Psychological contract. Where the social exchange theory emphasizing on achieving organizational goals by understanding employee motivation. (Aselage and Eisenberger, 2003)
ReplyDeleteReferences:
Aselage, J. and Eisenberger, R. (2003) Perceived organizational support and psychological contracts: A theoretical integration, Journal of Organizational Behavior, pp. 491–506.