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The psychological contract is key to the relationship between employees and employers. It shapes the culture of an organization and affects how people work together. It outlines what employees expect and what employers must do. Recent studies have shown how important this contract is for employee health. A study with 3,870 employees in Germany ...
- 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
There are many ways that HR, managers, and business leaders can work together to create an effective, positive psychological contract between the employer and employee. 1. Ensure that there is open and honest communication. Creating a line of open and honest communication from the start is integral to creating an effective psychological ...
May 21, 2024 · The Psychological Contract is an unwritten, implicit agreement or understanding between an employer and an employee regarding the expectations, perceptions, and obligations each party has towards the other in the workplace. It encompasses the non-tangible aspects of the employment relationship, such as trust, loyalty, and mutual expectations ...
The psychological contract is an agreement, unwritten but understood, that outlines the expectations, beliefs, ambitions, and obligations that characterize the relationship between employer and employee. From day one, it influences how employees behave. And, it’s built on the actions that everyone at the company takes (a byproduct of ...
Nov 17, 2005 · A second important reason for analysing key terms embedded in the definition of the psychological contract is that it helps map out the territory of the psychological contract helping to identify, for example, the kind of cognitions that can be considered as part of or outside of the psychological contract.
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The Psychological Contract represents, in a basic sense, the obligations, rights, rewards, etc., that an employee believes he/she is 'owed' by his/her employer, in return for the employee's work and loyalty. This notion applies to a group of employees or a workforce, just as it may be seen applying to a single employee.
