IMPORTANCE OF THE PSYCHOLOGICAL CONTRACT FOR AN ORGANISATION

 Solid human resource practices are essential to become a most successful organization. There are key characteristics of Human Resource Management one of the key characteristic is a psychological contract.

What is Psychological contract?

Basically, the psychological contract expresses that combination of beliefs of an individual, and his employer about what they expect of each other. This event can be described as the set of reciprocal, but unstated expectations that exist between employees and their employers. As defined by (Schein, 1965): ‘The notion of a psychological contract implies that there is an unwritten set of expectations operating at all times between every member of an organization and the various managers and others in that organization.’

Figure 1: Exploring the psychological contract (Stevenson, 2018)

Impact of Psychological contract breach on employee behavior

Employees who have suffered a breach of a psychological contract have adopted a deviant behavior in the workplace, or a voluntary behavior which runs counter to the organization's policies and expectations. This event is especially true for those who view their relationship with the organization as more transactional ("empowered" employees who focus more on the benefits they derive from the employment relationship) than relational ("caring" employees who give more importance to their relationship with the company, the organization and its members). Authorized people experiencing a breach of a psychological contract tend to "equalize" with the organization by adopting deviant behaviors such as laxity, rumors, and initial conflicts that negatively affect the productivity and well-being of their employees. (Teng-Calleja, 2013)

Figure 2: The Psychological Contract - more important than the written one (CultureCounter, n.d.)

How to avoid psychological contract breach

It is essential that organizations be cautious about promises made to potential employees. Applicants must have a realistic view of the position and an organization to clarify expectations and establish transparent and reliable parameters and conditions of employment (such as salaries and benefits, the work environment and growth opportunities, among others). Companies must be honest and transparent in describing the work and the company and must remain true to their commitments.

Conclusions

This world is changing at a faster pace from day to day, but one factor remains the same. People want and need to be appreciated by their employer. Strong psychological contracts create a win-win-win situation for the employee, manager, and organization. It is everyone's responsibility to ensure that happens. It's not an easy adventure - but an adventure worth the trip

Reference

Armstrong, M., 2006. A Handbook of Human Resource Management Practice. 10th ed. London: Kogan Page Business Books.

CultureCounter, n.d. Beautifully designed workplace posters with psychology, creativity and design at its core. [Online] Available at: https://www.pinterest.com/pin/540150549028131353/.

Stevenson, M., 2018. The Importance of the Psychological Contract. [Online] Available at: https://www.hrexchangenetwork.com/employee-engagement/articles/the-importance-of-the-psychological-contract [Accessed 28 october 2019].

Teng-Calleja, M., 2013. business.inquirer.net. [Online] Available at: https://business.inquirer.net/141205/impact-of-psychological-contract-breach-on-employee-behavior [Accessed 29 October 2019].