Going beyond the employment contract | Human Resources Online
A psychological contract governs the relationship between an to help employers and HR professionals keep abreast of HR best practices. School of Human Resource Development. P.O BOX , Nairobi, Kenya. Abstract. A psychological contract underpins the employment relationship . To better capture the relationship between HRM practices and performance, researchers.
The Importance of the Psychological Contract
Workers who perceive as balanced in terms of the contributions they make to the organisation and what they receive back from the employer perform better, demonstrate more extra-role behaviours, and indicate a higher level of commitment to the organisation. Listen to our podcast on creating an authentic organisation.
This is why violation or breach of psychological contract by the employer can have sudden and powerful consequences for people and organisations, affecting job satisfaction, commitment, performance, and increasing turnover intentions. Read more in our report The changing contours of fairness.
Others may react by displaying proactive behaviours, treating the situation as an opportunity to learn, to offset loss of position and uncertainty.
To deal with contract repair successfully and avoid people leaving the organisation, individuals need to have the psychological and social resources, building resilience skills in advance.
Read a case study from Zurich Life about managing change in the employee proposition. Managers need to remember: Preventing breach in the first place is better than trying to repair the damage afterwards.The Psychological Contract
Where breach cannot be avoided, it may be better to spend time negotiating or renegotiating the deal, rather than focusing too much on delivery. Interventions aimed to build resilience skills will help individuals cope better with contract breaches. How is the modern employment relationship evolving?
The psychological contract is a dynamic concept that can be applied to understand varying employer-worker relationships. Yet, patterns and trends can be observed over time: However, employers should not underestimate the impact of individual differences: Changes affecting the expectations of workers include: In this changing context, employers have to pay attention to the key drivers of the employment deal, in order to be able to attract and retain key talent.
To aid this, the psychological contract offers a framework for monitoring employee attitudes and priorities on the dimensions influencing performance. How are employers responding to the changes? The recent recession has had a negative impact on employee attitudes, particularly in relation to job satisfaction and security. Current statistics on topics including job satisfaction, trust and fairness can be found in our Employee Outlook surveys.
Our own research shows that despite the modern employment deal being based on the promise of employability, employers are highly selective about offering development and career opportunities across their workforces.
Our report Attitudes to employability and talent shows that in three out of ten organisations, opportunities to enhance careers were only available to some workers based on the value they could offer the employer. Those in roles requiring high levels of skills, holders of degree-level qualifications, as well as individuals whose skills were hard to replace, were more likely to receive training and development opportunities and have a degree of autonomy in how they perform their jobs.
While such an instrumental approach to distributing opportunities is understandable, it does leave open the question of its long-term sustainability. With loyalty of employees undermined, organisations may find they are struggling to retain staff over time. Secondly, employers have to consider the type of deal they are offering to the groups of workers, who are not considered to represent key talent.
Psychological Contract | Factsheets | CIPD
Disgruntled employees present risk of increased operational costs associated with high turnover, as well as risk of reputational damage. The role of HR in managing the psychological contract The psychological contract is central to people performance and engagement at work.
The concept of the psychological contract was originally developed by Denise Rousseau. Rousseau is a H. Unlike a formal, codified employee contract, a psychological contract is an unwritten set of expectations between the employee and the employer. It includes informal arrangements, mutual beliefs, common ground and perceptions between the two parties.
Communication is a Key Element Since the contract itself is not formal and codified, it exists in a state of flux. It is constantly developing based on communication between the employer and the employee. While consistent communication positively impacts the psychological contract, it is worth noting a lack of communication can negatively impact the contract.
This includes conversations, voice tone, body language and even implication or inference between the two parties. Breaches and how they occur will be discussed later in the article. A balanced contract shows employees their employer values and respects them and finds their role within the company important to its success.
This leads to increases in productivity and a positive impact on the business itself. Every psychological contract is different because each employee is different. This can make a huge impact on both the employee and the employer. Individual psychological contracts allow the employee to see their value and role within the business. It also helps both sides avoid creating unrealistic expectations of one another. Want to know more about the psychological contract and how it can drive employee engagement?
It is, however, an area where an organization can leverage the employee-manager relationship by equipping and encouraging managers to discuss and address psychological contract expectations with employees.
Managers can help employees explore and, if necessary, modify their expectations, offsetting negative reactions when unrealistic expectations are not met. Such manager-employee discussions can be used to "re-recruit" top talent. HR can help managers by providing suggested questions to guide the discussion.
- Going beyond the employment contract
- Research units
- What is the psychological contract?
These questions might include: