Introduction and History
The concept of the psychological contract traces back to the early works of organisational and social psychologists in the 1960s. Argyris (1960) and Levinson et al. (1962) were among the early pioneers to describe the unspoken expectations between an employer and an employee, which eventually came to be known as the psychological contract.
Definitions
The psychological contract refers to the unwritten set of expectations and obligations between an employer and an employee. Unlike the formal, written employment contract, the psychological contract captures the informal agreement encompassing mutual beliefs, perceptions, promises, and responsibilities.
Practical Examples and Case Studies
An example of the psychological contract at work can be seen at Google. While the company offers exceptional perks, it also expects its employees to adopt a flexible approach towards work and maintain a high level of innovation and productivity. This mutual understanding, albeit unwritten, forms the psychological contract between Google and its employees.
Academic Insights
Denise Rousseau’s work significantly advanced the psychological contract theory. She identified two types of contracts: transactional (short-term, economic obligations) and relational (long-term, socio-emotional obligations). Studies show that violations of the psychological contract can lead to job dissatisfaction, decreased motivation, and increased turnover.
Critical Analysis
The psychological contract offers a unique lens to understand the relationship between employees and organisations. However, its subjective and intangible nature makes it challenging to measure and manage. Plus, discrepancies in understanding or communication can lead to perceived contract breaches, impacting employee engagement and performance.
Future Outlook
In an era where remote working and fluid organisational structures are becoming the norm, the psychological contract’s importance is escalating. As work-life boundaries blur, leaders need to pay careful attention to managing these unwritten expectations and ensuring that the psychological contract aligns with organisational objectives.
Conclusions
The psychological contract, though unseen, plays a crucial role in shaping the dynamics between leaders and team members. It is an essential construct that leaders should recognise and manage to build a highly engaged, motivated, and performing team.
Further Reading and Resources
Book: “Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements” by Denise M. Rousseau
Article: “Understanding the Psychological Contract: A Direction for the Future” by Julia Richardson and Thomas Kern (Management Research Review)
Watch: The happy secret to better work | Shawn Achor, a TED Talk discussing the correlation between happiness and productivity.
Listen: WorkLife with Adam Grant, a podcast exploring work dynamics and organizational behavior.
