Psychological Contract

The Psychological Contract An individuals 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

SHARING INFORMATION AND NEGOTIATING ROLE CLARITY AND COMMITMENT STABILITY Pinch Choice point DISRUPTION OF SHARED EXPECTATIONS Crunch Choice point Planned termination Planned renegotiation Ambiguity, uncertainty Resentment, anxiety Renegotiation under duress (new contract) Return to the way things used to be (misunderstanding) Resentful termination Ignore Managing Psychological Contracts

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 –Traditional Contract Security for commitment –New Contract? Fair pay Fair treatment Opportunity to develop –Younger generations? Work-outside balance Excitement Community Higher purpose Increasing Employee Commitment –3 dimensions of commitment Affective Normative Continuance –Increasing commitment Herzbergs Theory Clear mission, vision, and values Fairness Communication (Listening) Management style Managing expectations