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- Emphasizes a fair and equitable exchange between employees and organizations. It acknowledges both monetary and non-monetary aspects of the employment relationship, such as work-life balance, professional development, and job security. This contract type aims to foster mutual commitment, trust, and a sense of well-being for both parties.
www.aihr.com/blog/psychological-contract/
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.
A psychological contract breach is a subjective experience referred to the perception of one of the parties that the other has failed to adequately fulfill its obligations and promises. Breaches have been systematically connected to employees’ attitudes and behaviors that hamper the employment relationship.
- 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
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.
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 · Adeptly navigating psychological contracts is pivotal for cultivating a healthy and effective workplace. As the term psychological contract describes, these agreements play a crucial role in shaping interactions between employees and employers, directly impacting job satisfaction and organizational performance.
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We highlight the practical implications of research to date on psychological contracts and end with directions for future research to include the need for greater attention given to ideological currency, employee health, polycontextual approaches, the role of psychological needs, and post-breach/violation.
