The majority of employees currently believe their employer has breached some aspect of their employment agreement. This belief is often the result of psychological contracts. What employees think they owe their employers and what employees think their employers owe them is referred to as a psychological contract. Psychological contracts in the workplace immensely influence the way employees view their workplace environments. If an employee’s needs or wants are not met through a psychological contract, the employee becomes unhappy. This unhappiness is likely to influence the employee negatively, resulting in less productivity or even termination of employment.
An organization’s ability to recognize and comprehend the employees’ expectations of a psychological contract during the recruitment process will help the organization communicate the benefits being offered to and expectations of the employee.
Making Psychological Contracts Explicit During Recruitment
During the recruitment process, it is the responsibility of the hiring organization to clearly communicate the roles and responsibilities for the position being filled. To avoid turnover due to an employee’s perceived breach of a psychological contract, organizations should describe in detail their practices, and allow current employees to share information about their jobs and experiences. Organizations can also communicate their real commitments through literature, written company history, and even laminated mission statements made into card size carrying pieces.
Can Psychological Contracts Be Enforced?
Psychological contracts, unlike written or implicit contracts, are subject to broad interpretation. What one employee construes as a psychological contract may be seen differently by another. This makes the issue of psychological contracts even harder for organizations to manage. Because work situations are constantly changing, psychological contracts also change.
Organizations find themselves renegotiating and altering the terms of employment agreements and company policies to clarify these different circumstances. In doing so, organizations may become decreasingly willing or financially unable to abide by past commitments made to employees.
An example of how strong psychological contracts can be is found in an excerpt of a Dear Abby article:
“Several years ago, when the mills of American Rolling Mill Co. inMiddletown, Oh, were rolling, the company out of the goodness of its corporate heart began to give free turkeys to its employees at Thanksgiving. Then the company fell on hard times and in the early 1980’s decided to discontinue the distribution of some 15,000 turkeys as an economy measure. The steel workers union set up a howl and took the company to court. Believe it or not, the court took the position that through the company’s generous practice over a period of years, it did indeed owe the employees their Thanksgiving turkeys” (Rousseau, p. 2)
The employees in this case were under the impression that the gift of Thanksgiving turkeys were something owed to them by the company just like their weekly salary. It may be surprising to some organizations that the court agreed with their perceptions and granted them their turkeys.
In some ways the term “psychological contract” is deceiving to organizations because it implies that there is a binding covenant established through mutual agreement by both parties. But the psychological contracts of employees are neither voiced nor written until employees perceive them as having been breached.
Communication is Key
Communication is the key to maximizing management of psychological agreements. Employees should openly communicate their concerns, as well as their wants and needs directly to their superiors. Likewise, organizations should be upfront with company policies and immediately clarify any unrealistic expectations. One way to open up communication with employees to understand their wants, needs, and expectations is for organizations to distribute a questionnaire. The results of the completed questionnaires should be reviewed on an individual basis with employees. This is the time to make any necessary changes to the employees’ written contract.
Organizations can gain a clear understanding of their employees’ psychological contracts by offering a realistic view of their organization at the stage of recruitment, clearly defining the rights and benefits of employees, and opening the lines of effective communication. Organizations can maximize employee satisfaction by meeting the needs of the psychological contract.
By Shirley J. Caruso, M.A., Human Resource Development
Rousseau, Denise M 1994, ‘Psychological Contracts in Organizations; Understanding Written and Unwritten Agreements’ Sage Publications,Thousand Oaks,California.