Friday, 6 September 2013

The Psychological Contract

OK. So who has heard of the psychological contract?

What I mean by psychological contract is our informal emotional connection with our work: those reciprocal obligations & commitments that help us to define our employee and organisational relationships. Our psychological contract is an emotional bond that binds us and our organisations in a healthy way. This bond helps us sustains our employment relationship over time.

A good psychological contract will mean we see a balance between our effort & what the organisation returns to us; in our eyes. This is an exchange relationship, based on our perception as an employee (so our employer may not agree with our view). It is also unusual in that it is our 'own' power in the workplace: the psychological contract is driven by each of us, as employees.

Now, like so many other things in our working environments, you can't see, touch or taste the psychological contract. It is implicit and covert; it is intangible. Because of its very nature, unless you are aware of its existence, it can be easily damaged. Small things can erode it, like allowing people to operate using unsafe practices ("they don't care about us here").

It is also very informal. It counterbalances the formal - and legal - Individual Employment Agreement (IEA or employment contract). Where the IEA is written, if we actually worked on a clause by clause basis, you could see that our working relationships would very quickly disintegrate. Relying solely on our legal obligations would not create healthy or trusting relationships in the workplace.

The psychological contract in some ways is the individual compadré of the collective organisational culture. They both have similar intangible aspects, and are both essential for good environments. Ignore both at your peril!

Over time, our psychological contract gets a bit battered through the wear and tear in the relationship. It is unusual these days for staff to continue with one company all the way to retirement, and to have a healthy psychological contract at the end of their employment.

So what happens when our psychological contract gets damaged? When we feel that the balance has swung too far to the employer's side and we start to feel used?

Remember that the employer is unlikely to agree with our view; or be able to see the breaches of our psychological contract from their perspective. Repeated breaches will mean we trust our employer less, our job satisfaction will erode and our performance will fall. This can then become a vicious cycle, where both parties end up relying clause by clause on the IEA.

Gottschalk (2013) feels that when this happens, it is important to look at "the underlying dynamic[s]" of the situation. She suggests that we - the employee and the employer - need to evaluate:
  • The valence (value) of the rewards from the employee's perspective
  • The health of the communication channels to discuss the psychological contract. If there are no mechanisms for psychological contract conversations, create them
  • Inter-party trust levels on "career support, behavioral consistency and integrity"
  • The expertise in creating employment relationship transparency
  • Performance feedback systems for both organisational and individual goals
  • If staff are encouraged to work to their strengths
It is rare that breaches are purposely caused or are driven by malice. It is usually created by the employer being unable to put themselves in the shoes of the employee; and from there it is fuelled by a lack - and sometimes a wilful lack - of shared understanding of each other's position.

If organisations can make employment a conversation with employees, everyone benefits. And each of us must remember that our own acts of leadership impact on our own and others' psychological wellbeing.



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