The Psychological Contract between Employees

Beneath the Surface: exploring the Impact of Psychological Contract between Employees

The psychological contract between employers and employees is a key idea in human resource management (HRM) that affects a variety of organizational dynamics. Employee expectations about job stability, opportunity for professional progress, fair treatment, recognition, and meaningful work are all included in this unwritten agreement (Enright, 2020). Effective communication with employees and matching these expectations with organizational goals are made possible by HRM practices. The aspect of trust is fundamental to the psychological contract, and HRM is essential in establishing this trust through open discourse, fairness, and clear communication. HRM procedures also have an impact on how the psychological contract changes over time, influencing how employees view their connection with the company. HRM must, however, carefully balance keeping realistic commitments within the confines of the company with satisfying employees' expectations.

What is a Psychological Contract?

The workplace is a challenging environment where relationships, expectations, and agreements are intertwined, rather than just a physical site where tasks are accomplished. The psychological contract between workers and their bosses is a key component of these processes (Enright, 2020). Enright (2020) further explains that the psychological contract, in contrast to a formal, written agreement, is an unwritten system of mutually understood expectations, beliefs, and duties. Essentially, the tacit agreements between employers and employees are what the psychological contract represents. These pledges cover a wide range of topics, including fair treatment, acknowledgment, career progression possibilities, and meaningful employment. The psychological contract contains numerous subjective and ambiguous parts, even though some of them may be consistent with official employment agreements.

 

 

 Importance of Employee – Employer Psychological Contracts

 

Trust is one facet of the psychological contract. Workers believe that their company will uphold their end of the bargain by offering a positive work atmosphere, competitive pay, and possibilities for advancement. Employers, in turn, rely on workers to carry out their responsibilities with diligence, follow business guidelines, and favorably impact the objectives of the company. When this trust is betrayed, it may cause disengagement, emotions of betrayal, and eventually attrition (Stevenson, 2018).

 

Furthermore, the psychological contract is dynamic, changing over time in response to interactions, experiences, and organizational modifications. For example, employees' expectations may change when there is economic uncertainty because they may put job security above other considerations (Stevenson, 2018). Similar to this, when workers acquire knowledge and experience, they could look for chances to grow and have more freedom. Maximizing employee engagement and cultivating a healthy work culture need effective management of the psychological contract. Transparency in communication, control of expectations, and equity in all employee interactions are requirements for employers. Encouraging employees to contribute, give regular feedback, and provide opportunities for skill development are all critical to fostering a culture of trust and dedication.

Strategies to implement Psychological Contract between Employees

Clear Communication: Make sure that there is open and honest communication between the company and its staff. To create clarity and manage expectations, HR should effectively communicate company principles, expectations, policies, and perks to employees.

Align Policies and processes: Make sure that HR policies, processes, and procedures are in line with the company's commitments to its workers and its values. Make sure that HR procedures, including hiring, performance reviews, paying employees, and providing opportunity for growth, fulfill the commitments made to staff members by the company.

Employee Voice and Feedback: Put in place procedures that allow staff members to express their opinions, raise issues, and participate in decision-making. Consistently seek input from staff members using focus groups, survey forms, suggestion boxes, and public gatherings to show that their thoughts are respected and taken into account.

Rewards & Recognition: Put in place initiatives for employee achievements and contributions to be recognized and celebrated. By praising workers for their contributions, successes, and commitment to company principles, you can strengthen the Psychological Contract.

Invest in the Professional Development of Your Staff: Offer avenues for training, advancement, and development. Provide career advancement pathways, skill-building initiatives, training programs, and mentorship opportunities to support employees' personal and professional development goals.

Encourage Work-Life Balance: To assist employees in successfully juggling both their professional and personal lives, and to support work-life balance efforts. To enhance employee well-being, provide resources for stress management, wellness initiatives, parental leave policies, flexible work schedules, and telecommuting opportunities.

Balancing the Equilibrium

But preserving a sound psychological contract necessitates a careful equilibrium. Employers need to be careful not to over promise and under deliver because this damages employee trust and breeds dissatisfaction. Employees also need to set reasonable expectations and recognize that organizational limitations can prevent them from achieving all of their goals. 

Conclusion

In conclusion, a crucial component of organizational dynamics is the psychological contract that exists between employers and employees. It includes the unspoken commitments, assumptions, and expectations that would the working relationship between employers and employees. Organizations can create a win-win psychological contract that promotes long-term success by managing expectations, building trust, and encouraging open communication.

 

References

Jack Enright (2020) What is the psychological Contract. 23rd September (Online) https://www.charliehr.com/blog/what-is-the-psychological-contract/ [Accessed 7^th April 2024].

Mason Stevenson (2018) The Importance of the Psychological Contract.3^rd May (Online) https://www.hrexchangenetwork.com/employee-engagement/articles/the-importance-of-the-psychological-contract  [Accessed 7^th April 2024].

Shani Jay (2023) Importance of Psychological Contract in the workplace and types of Psychological Contracts. https://www.aihr.com/blog/psychological-contract/ [Accessed 7^th April].