Psychological Contract

The Psychological Contract

• “An individual’s implicit belief in mutual
obligations (expectations) between that
person and another party” (Rousseau,
1989)
– Based on employees’ and employers’
perceptions of obligations
• Unspoken
• Continually shifting
 Types of Psychological Contracts

• Transactional
– Short time frames
– Specific obligations (e.g., financial)
• Relational
– Longer time frames
– Diffuse obligations
• Socio-emotional based (e.g., commitment,
affiliation)
 Fulfilling/Violating Psychological
Contracts
• Fulfilling psychological contracts is associated with
increased trust and cooperation (e.g., Conway & Briner,
2002).
• Violating psychological contracts is associated with
increased anger, frustration, and intentions to quit
(Robinson & Rousseau, 1994).
– Typical violations
• Training
• Compensation
• Promotion
• Job Security
• People
• When violated, contracts become more transactional and
less relational
 Managing Psychological Contracts
Planned
SHARING INFORMATION termination
Renegotiation
under duress AND
(new contract) NEGOTIATING

Return to ROLE CLARITY

Resentful the way things AND
termination used to be COMMITMENT
(misunderstanding) Planned
renegotiation

STABILITY
Crunch
Choice point Ignore

Pinch
Resentment, Choice point
anxiety

Ambiguity, DISRUPTION
uncertainty OF
SHARED EXPECTATIONS
 Why is this Useful to Know?
• Changing nature of the workplace:
– More part-time and temporary contracts
– Flexible job descriptions
– Doing more with less (downsizing)
– Constantly changing service standards
– Constantly changing technology
– Changing attitudes about work.
 Application
• Contract Content • Increasing Employee
– Traditional Contract Commitment
• Security for commitment – 3 dimensions of commitment
• Affective
– New Contract? • Normative
• Fair pay • Continuance
• Fair treatment
• Opportunity to develop – Increasing commitment
• Herzberg’s Theory
– Younger generations? • Clear mission, vision, and values
• Work-outside balance • Fairness
• Excitement • Communication (Listening)
• Community • Management style
• Higher purpose • Managing expectations