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A psychological contract is the unspoken trust between an organization and its workers. It covers things like job security, chances for growth, and work-life balance. These promises are vital for keeping employees happy and engaged.
- 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 · In this context, the "psychological contract" -- an unwritten pact that complements the economic arrangement between the employee and the company and defines the psychological commitment between the two parties -- has taken on critical importance, experts tell Universia Knowledge at Wharton. Human Resources. Management. Written By.
Employees who believe their psychological contract is fair (i.e., they receive as much as they give) are generally more motivated and committed to their work and the company’s wider goals and more likely to go above and beyond to perform.
What is a psychological contract? The term psychological contract refers to the often unspoken set of expectations and assumptions that two parties (employees and the organisation, its leaders and managers) have of each other about things like how they will behave and act.
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.
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6 days ago · The psychological contract is shaped by everything from communication and feedback to leadership style and the brand image that employees buy into. A strong psychological contract is largely dependent on how managers interact with their teams. Managers who give feedback, support professional development, and set clear, achievable goals help to ...
