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- The fact the psychological contract is so easily changed means it is difficult to “enforce” and equally difficult on which to rely for guidance when it comes to the relationship between the employee and employer.
www.hrexchangenetwork.com/employee-engagement/articles/psychological-contract-the-pros-and-cons
Oct 15, 2024 · Grasping the concept of a psychological contract is key for anyone managing a team or running a business. When expectations are met, employees tend to be more engaged, productive, and loyal. However, if a psychological contract is broken, it can lead to dissatisfaction, low morale, and high turnover.
- The Definition
- The Pros
- The Cons
- The Impact on The Bottom Line
As editor, I have written about this form of ‘contract’ on occasion. Below is an excerpt from The Importance of the Psychological Contract. Vera Hillman, a former HR Exchange Network contributor, has also written about the concept. In her piece, The Psychological Contract: Relevance for Our Everyday Business Operations, Hillmann outlined what she c...
Having defined the psychological contract in greater detail, let us turn the focus now to the pros and cons.
Not-On-Paper
As previously mentioned, the psychological contract is not a physical contract; it’s not documented in any way. This makes it very difficult to execute. In fact, some say it is for this reason alone a PC cannot actually be defined as a contract.
Inconsistent
The psychological contract isinconsistent. Every single employee develops their own PC with the company. While these contracts may be similar across the board, they are still just as unique as each member of the company workforce.
Redundant
There are some that believe the concept of the psychological contract is redundant, even obsolete. Why? There are other ways to measure the employee-employer relationship. This includes employee engagement and pulse surveys.
Like it or not, the psychological contract is real and in force for every employee. Ignoring this fact can be a detriment to the company. Why? These contracts, while the responsibility of both parties, are not created by the employer, but the employee. Additionally, they can change those contracts on a whim and there is no notice required to the em...
- Mason Stevenson
Mar 23, 2011 · Today’s tough economic and labor conditions have shaken up the current model for employment. In this context, the "psychological contract" -- an unwritten pact that complements the economic ...
The concept of the Psychological Contract within business, work and employment is extremely flexible and very difficult (if not practically impossible) to measure in usual ways, as we might for example benchmark salaries and pay against market rates, or responsibilities with qualifications, etc.
Psychological contracts are key in shaping a company’s culture and keeping employees committed. These unspoken agreements outline what employers and employees expect from each other. As work changes, so do these contracts, showing how work and employee needs evolve.
The theory of the psychological contract shows as a key factor the perceived adequate performance of the contract between two parties involved, where subjectively one of the parties considers that the other has not adequately performed the obligations promised (Robinson, 1996).
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It's important to be aware of psychological contracts, and manage them at both the individual and organizational levels. Breaking the contract can cause decreased job satisfaction, reduced trust, and low staff retention.
