HRM and Psychological Contract

Role of HRM in Psychological Contract 

“Human resource management is defined as a strategic and coherent approach to the management of an organization’s most valued assets – the people working there, who individually and collectively contribute to the achievement of its objectives.” (Armstrong, 2008, p. 5)

Employee relation is the main force to achieve organizational goal. Managing employees is one of the main function of HRM. One organization cannot have positive employee relation without building a positive psychological contract. In other words employee relation is highly connected to the psychological contract (Armstrong, 2010  ). 

To retain employees, the organization should be their ‘employer of choice’.  An organization can only retain its employees if it builds a positive psychological contract with its employees. Further, Developing a Positive psychological contract is considered as a component of talent management strategy (Armstrong, 2008).  Building a positive relationship with the employees is one of the core feature of HRM and Such employment relationship can be built through the psychological contract which specifically focuses on employee satisfaction. A satisfied employee will be more committed to the organization and will live up to its company’s values. Which in turn will motivates the employees to achieve organizational goals (Anggraenil , Dwiatmnadja and Yuniawan, 2017) .

Psychological contract starts with the employee at the initial stage of recruitment itself. This is termed as pre-entry requirements (Tomprou and Nikolaou, 2011). This initially starts at the time of recruitment and at the induction stage. Psychological contract is an HR practice area which impacts the relationship between employee and employer in an organization. HR function has to maintain and improve the employment relationship by developing a positive psychological contract. managing a positive psychological contract is very much crucial to gain the best performance out of the employee (Armstrong, 2010). 

Armstrong (2010) says HRM practices such as, learning and training opportunities, Rewarding and promotions, ensuring job security and removing discrimination will contribute to positive psychological contract. Further, Guest and Conway (2002) states that the management of psychological contract is the core task of HR since a positive psychological contract will result in positive outcome and relationship.

References

Anggraenil,A ., Dwiatmnadja,C and Yuniawan,A.  (2017) the role of psychological contract on employee commitment and organisational citizenship behaviour: A study of Indonesian young entrepreneurs in management action. SA Journal of Industrial Psychology, 43(1), pp. 1-9 [online]. Available at < https://doi.org > (Accessed on 20^th April 2019)

Armstrong, M (2008) strategic human resource management: a guide to action. 4^th ed. London, Kegan Paage.

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

Guest, D and Conway, N (2002) Communicating the psychological contract: an employee perspective, Human Resource Management Journal, 12 (2), pp. 22–39.

Tomprou,M and Nikolaou,L. (2011) A model of psychological contract creation upon organizational entry. Career Development International, 16(4), pp. 343-357.