The Pyschological Contract

the psychological contract - basic context and implications

In management and organizational theory many employee attitudes such as trust, faith, commitment, enthusiasm, and satisfaction depend heavily on a fair and balanced Psychological Contract.

Where the Contract is regarded by employees to be broken or unfair, these vital yet largely intangible ingredients of good organizational performance can evaporate very quickly.

Where the Psychological Contract is regarded by employees to be right and fair, these positive attitudes can thrive.

The traditionally dominant and advantageous position of an employer compared to its workforce (or indeed of any other authority in relation to its followers, 'customers', or members, etc) means that the quality of the Psychological Contract is determined by the organizational leadership rather than its followers. An individual worker, or perhaps a rebellious work-group could conceivably 'break' or abuse the Psychological Contract, but workers and followers under normal circumstances are almost always dependent on the organization's leadership for the quality of the Contract itself.

This last point is intriguing, because in organizations such as employee ownership corporations and cooperatives, a different constitutional business model applies, in which workers and potentially customers own the organization and can therefore to a major extent - via suitable representational and management mechanisms - determine the nature and quality of the Psychological Contract, and a lot more besides. We see a glimpse here possibly as to how organizations (and other relationships involving leadership authority or governance) might be run more fairly and sustainably in future times. We live in hope.

Intriguingly also, several factors within the Psychological Contract - for example employee satisfaction, tolerance, flexibility and well-being - are both causes and effects. Feelings and attitudes of employees are at the same time...