Employment Relationship and Psychological Contract

Importance of Psychological Contract in Employment Relationship

Source: https://www.maphr.com/hr-exchange/the-importance-of-the-psychological-contract/

Armstrong (2010) explains Employee relation as a combination of managing employment relationship and developing a positive psychological contract. The Term employment relationship is deeply connected to the term psychological contract. Psychological contract answers two fundamental questions of employment relationship.  That is ‘what should I expect from the organization?’ and ‘what should I contribute in return to the organization?’

The employment relationship factors covered by psychological contract on the employees view are:

• The way employees are treated by the organization (impartiality, equality and consistency)
• Job security
• Opportunity to exhibit skill or ability
• Career expectations and growth and development of skills
• Participation and influence
• Organizational Trust and confidence on promises given

The employment relationship factors covered by psychological contract on the employers view are:

•         Skills of the employee
•          Efforts
•         Compliance
•          Commitment and responsibility
•          Loyalty

Source: https://slideplayer.com/slide/1563060/

The nature of employment relationship undergoes continuous changes due to the development in economic and social environment in which an organization operate. Psychological contract plays a crucial role in understanding the contemporary employment relationship. To maintain a employee relation, the employer needs to understand the expectations of the employee and vice versa in order to build a positive employment relationship (Patrick, 2008).  Psychological contract creates a mental model of employment relationship. Psychological contract and employment contract are strongly connected. A breach in psychological contract can cause damage to the employment relationship (Savarimuthu and Rachael, 2017).

It is very much important to focus on the employer- employee relationship for the growth of the organization. At the end, employee should be loyal to the organization and the organization should satisfy employees’ needs and provide job security. As new trends rise each day, loyalty on one organization is going out of date. Therefore, psychological contract becomes the interest areas to build an employment relationship. Further, psychological contract represent the employee’s and employer’s belief and expectations on employment relationship. When the expectations are not fulfilled it created a doubt on the employment relationship and resulting in employee intending to leave the organization or a reduction in performance (Kataria, 2015)

References

Armstrong, M. (2010) Armstrong’s essential Human resource management practice: A guide to people management. 1^st ed. United States, Kogan Page.

Kataria,H. (2015) Impact of psychological contract on employee-employer relationship and organizational performance. The International Journal of Business & Management, 3(8), pp. 234-240.

Patrick,H (2008) psychological contract and employment relationship. The ICFAI University Journal of Organizational Behavior, 7(1), pp. 1-11.

Savarimuthu, A and Rachael,A, J. (2017) Psychological contract - a conceptual framework. International Journal of Management, 8(5), pp.101-108