psychological contract and sucess by charles handy

Topics: Employment, Organization, Organizational studies Pages: 19 (1956 words) Published: April 20, 2014
The psychological contract

• A psychological contract is a set of unwritten expectations that exist between individual employees and their employers. This contract concerns the perceptions of both parties to the employment relationship, organization and individual, of the reciprocal promises and obligations implied in that relationship. • A psychological contract is a system of beliefs that contain the actions employees believe are expected of them and what response they expect in return from their employer and vice versa the actions employers believe are expected of them and what response they expect in return from their employees.

Jagoda Mrzygłocka-Chojnacka PhD

• The psychological contract underpins the employment relationship.


Employees may expect:
• to be treated fairly
• to be able to use their skills
• to be rewarded in accordance with their contribution.
• to know what is expected of them
• to be given feedback on how they are doing.
Employers may expect employees:
• to do their best on behalf of the organization – ‘to put themselves out for the company’
• to be committed to its values,
• to be compliant and loyal, and
• to enhance the image of the organization with its customers and suppliers.

Jagoda Mrzygłocka-Chojnacka PhD

The psychological contract


The psychological contract and the employment relationship

It may provide some indication of the answers to the two fundamental employment relationship questions:
• What can I reasonably expect from the organization?
• What should I reasonably be expected to contribute in return?

Jagoda Mrzygłocka-Chojnacka PhD

The psychological contract and the employment relationship
The psychological contract is seen as a metaphor that helps us make sense of our experience. The psychological contract is a way of interpreting the state of the employment relationship.


The psychological contract and the employment relationship

how they are treated in terms of fairness, equity and consistency; security of employment;
scope to demonstrate competence;
career expectations and the opportunity to develop skills;
involvement and influence;
trust in the management of the organization to keep their promises.

From the employer’s point of view, the psychological contract covers such aspects of the employment relationship as competence, effort, compliance, commitment and loyalty

Jagoda Mrzygłocka-Chojnacka PhD

The aspects of the employment relationship covered by the psychological contact will include from the employee’s point of view:


A psychological contract creates some emotions and attitudes which form and control behaviour.
A balanced psychological contract is necessary for a continuing, harmonious relationship between the employee and the organization. However, the violation of the psychological contract can signal to the participants that the parties no longer shared a common set of values or goals.

The concept draws attention to the fact that employee/employer expectations take the form of unarticulated assumptions. Disappointments on the part of management as well as employees may therefore be inevitable. These disappointments can be reduced if management notice that one of their key roles is to manage expectations, which means clarifying what they believe employees should achieve, what competences they should have and what values they should uphold. And this is a matter not just of articulating these requirements but of discussing and agreeing them with individuals and teams.

Jagoda Mrzygłocka-Chojnacka PhD

The significance of the psychological contract


Changes to the psychological contract

Imposed relationship

Mutual relationship

Permanent employment relationship

Variable employment relationship

Focus on promotion

Focus on lateral career development

Meeting job requirements

Add value

Emphasis on job security and loyalty to the...
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