Psychological Contract BOH4MO

What is a Psychological contract? Is a set of usually implicit expectations that employee/employers have of one another. These are usually not obvious until a “pinch” occurs.

What is a “pinch”? A pinch is a violation of an expectation. Unresolved pinches make create a climate for unionization, particularly if employees: 1) EMPLOYEES COLLECTIVELY EXPERIENCE THE PINCH 2) PERCEIVE THAT MANAGEMENT ARE DOING NOTHING ABOUT IT 3) FEEL THAT A UNION MIGHT MAKE THINGS BETTER

Why is this important in an organization? Effective management of person-job fit begins with the nature of the employment relationship itself. Work should provide a mutual and positive exchange of value between people and organizations. When the contract is unbalanced or broken, morale problems will easily develop.

Example In Japan where works had high job security and in return they would put in long work hours at the great personal sacrifice. However, when Japanese economy experienced difficulty and companies cut back on job protections, worker morale declined.

Contributions and Inducements Contributions are work activities, such as effort, time, creativity, and loyalty, that make the individual a valuable human resource. Inducements are things the organization gives to the individual in exchange for these contributions. For example, fringe benefits, training, opportunities for personal growth and advancement, and job security.