A psychological contract includes the unwritten rules within an employment relationship. These include the right to security, the resources needed to fulfill the role, job security, development opportunities and organizational culture. The psychological contract developed by organizational scientist Denise Rousseau developed in the 1960s and relies heavily on knowledge of psychology and organizational behavior. Sometimes, due to many differences, the employee may disagree with certain terms of the contract. These differences can be cultural, generational or otherwise. Generational differences mean that there may be different views on rewards and recognition by the employer and employee. The perspectives of the two may not match, resulting in some differences. Coyle-Shapiro, J., & Parzefall, M. (2008) Psychological contracts.
In: Cooper, Cary L. and Barling, Julian, (eds.) The SAGE handbook of organizational behavior. SAGE Publications, London, United Kingdom, pp. 17-34. As long as both parties openly communicate each other`s expectations, the likelihood of the psychological contract being violated is very low. The contract not only improves the performance of employees or a team, but also increases the future of the company. These nuances are often not discussed when hiring international employees – as everyone assumes they have “common ground” of understanding. However, reality proves that the opposite is true. International teams can demonstrate high levels of dissatisfaction and underperformance without being able to identify the underlying reasons. Therefore, it is important to take even more into account the implications of the psychological contract when working with different cultures.
As it is not written, there is no “common ground” that has been formally agreed. During the recruitment process, two-way communication takes place, which involves the exchange of promises and thus affects the psychological contract. The psychological contract is different from a regular written contract between the employer and the employee. It is not a printed copy of the document, but a mental document that both the employer and the employee sign internally. Horizontal psychological contracts focus on social relationships between individuals who work together over a longer period of time outside of a formal hierarchical relationship. Sometimes the psychological contract between the manager and his immediate subordinate is present. The psychological contract offers flexibility and quick implementation of things that can take days or even weeks to approve and implement. The employee will endeavor to do specific work against which the employer must provide safety, recognition and everything that has been promised to the employee. Suazo, M.M. (2009).
The mediating role of the psychological termination of the contract in relation to the relationship between the psychological termination of the contract and work-related attitudes and behaviors. Journal of Managerial Psychology, 24, 136-160. In reality, this contract is something you sign on the first day and probably don`t see much for the rest of your time in the store. If the employee and employer do not enter into a dispute, this contract may well remain in a filing cabinet at the back of the office. The psychological contract should not be confused with a written employment contract – they are two very different things. An employment contract establishes the legally binding agreement between the two parties – but this contract alone offers a very narrow and reductive view of the employee-employer relationship as a whole. But the psychological contract is a very important part of the employer-employee relationship. Here`s why it`s important to stick to this tacit agreement. Without an effective two-way conversation, the contract between the employee and the employer (or even the employee and the employee) can become unbalanced and a “breach” can occur.
Violations and how they occur will be discussed later in the article. If the psychological contract is applied appropriately, companies are more likely to increase their overall performance and reduce the turnover rate of their employees. This makes the contract an effective tool to manage your organization. Try it and remember: what you put in it is what you get out of it! Research also provides evidence that many employees experience a psychological contract violation several years after starting work (Conway and Briner, 2005), and research shows that this violation negatively affects employee productivity and retention (Robinson, 1996). It is practically impossible to create a psychological contract. The psychological contract focuses more on the social relationship between the employer and the employee. However, psychological contracts govern more than the social relationship between employer and employee. Rousseau (2000) points out that disgruntled employees can even damage a company`s reputation – especially if they express themselves on social media (which they might do, whether your written contract forbids it or not).