Psychological Contracts

6.2.3 ASSESSMENT 3 – MAJOR ASSIGNMENT

You need to write an essay related to the development of an employee’s psychological contract. This essay is designed to widen your knowledge of this particular facet of the employer-employee relationship. Hence, you are required to widely research the concept of psychological contracts and write an essay that discusses the construct. Details of what is required within this assignment will be discussed in class.

A psychological contract expresses the combination of beliefs and mutual understandings shared by an individual and an employer with regard to the expectations of one another in the workplace. It can be described as the set of reciprocal but not necessarily articulated expectations that exist between individual employees and their employers (Maunder, 1998). Although it is possible to examine a psychological contract in a “snapshot” in time, it is important to understand that is “organic” i.e. developmental and “living”. A snapshot taken in the first months of an employment relationship will be very different from one taken in the same relationship several years later. As defined by Schein:

‘The notion of a psychological contract implies that there is an unwritten set of expectations operating at all times between every member of an organization and the various managers and others in that organization.’ (Schein, 1965, p156)

This statement has been further modified by Rousseau and Wade-Benzoni who stated that:

‘Psychological contracts refer to beliefs that individuals hold regarding promises made or implied, accepted and relied upon between themselves and another. Because psychological contracts represent how people interpret promises and commitments, both parties in the same employment relationship (employer and employee) can have different views regarding specific terms’ (Rousseau, Wade-Benzoni, p467)

Psychological contracts differ from conventional employment contracts in that they may contain thousands of items; both parties may have different expectations, since some matters may have been explicitly discussed and others only inferred; and they change as the individual's and the organization's expectations change. As Spindler comments:

‘Every day we create relationships by means other than formal contracts... As individuals form relationships they necessarily bring their accumulated experiences and developed personalities with them. In ways unknown to them, what they expect from the relationship reflects the sum total of their conscious and unconscious learning to date.’ (Spindler, 1994, p328)

The creation of a strong working psychological contract is dependant on the commitment and effectiveness of the employee within in the organisation. The extent to which their own expectations of what the organization will provide for them and what they owe the organisation in return must match the organisation’s expectations of what it will give and get in return (Schein, 1965).