Phsycological Contract
The psychological contract in a changing work environment Annette Sharpe The Work Institute
Abstract This paper examines how organisation changes, driven by economic, social and technological changes at the macro level, have impacted on the psychological contract. Whilst criticised for being an ill-defined concept, it is usually taken to refer to 'the implicit relationship that exists between individuals and their employer concerning perceived mutual obligations and expectations '. Although its origins can be traced to 1960, the concept attracted minimal academic and practitioner interest until the last decade or so. Research evidence is discussed, which shows how the psychological contract is changing. It is generally agreed that, the ‘old’ contract offered steady financial rewards, security and career structure in return for loyalty, commitment and trust in the organisation. The ‘new’ or emerging contract emphasises ‘employability, which according to many researchers and practitioners compensates for the loss of traditional rewards. Evidence presented here suggests that employability is a redundant concept for all but the minority of the workforce. It also suggests that due to its complexity, diversity and fragility, the psychological contract cannot be managed in any simplistic, generic sense. It can be managed only at the individual level, an unrealistic expectation for the majority of organisations. Nevertheless, it is also suggested that the psychological contract is worth taking seriously if it is thought of in terms of the foundations upon which it is based. The paper discusses the concept in terms of the function it serves in providing a degree of predictability, security and control. It is also described as a reciprocal agreement through which parties to that agreement try to maintain balance between inputs and rewards. When conceptualised in these terms, its significance and the role that it plays in organisation life becomes clearer and it is no
Abstract This paper examines how organisation changes, driven by economic, social and technological changes at the macro level, have impacted on the psychological contract. Whilst criticised for being an ill-defined concept, it is usually taken to refer to 'the implicit relationship that exists between individuals and their employer concerning perceived mutual obligations and expectations '. Although its origins can be traced to 1960, the concept attracted minimal academic and practitioner interest until the last decade or so. Research evidence is discussed, which shows how the psychological contract is changing. It is generally agreed that, the ‘old’ contract offered steady financial rewards, security and career structure in return for loyalty, commitment and trust in the organisation. The ‘new’ or emerging contract emphasises ‘employability, which according to many researchers and practitioners compensates for the loss of traditional rewards. Evidence presented here suggests that employability is a redundant concept for all but the minority of the workforce. It also suggests that due to its complexity, diversity and fragility, the psychological contract cannot be managed in any simplistic, generic sense. It can be managed only at the individual level, an unrealistic expectation for the majority of organisations. Nevertheless, it is also suggested that the psychological contract is worth taking seriously if it is thought of in terms of the foundations upon which it is based. The paper discusses the concept in terms of the function it serves in providing a degree of predictability, security and control. It is also described as a reciprocal agreement through which parties to that agreement try to maintain balance between inputs and rewards. When conceptualised in these terms, its significance and the role that it plays in organisation life becomes clearer and it is no
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