Direccion Comercial

Managing the Psychological Contract
Using the Personal Deal to Increase Business Performance
Michael Wellin

Chapter 2

Current Use of the Psychological Contract

background to the Psychological contract
The term ‘psychological contract’ is something of a contradiction. If we have a contract with someone, this refers to a precise and legally binding arrangement we have with a person oran organisation involving the exchange of money for an object or a service. Examples of this are when we contract to buy a house, fly with an airline or sign up for a new credit card. This is completely different from something psychological which relates to our mind and therefore is intangible – such as the picture we have in our heads about an experience or a forthcoming event, or the feelingswe have towards another person. The psychological contract essentially refers to the mutual expectations people have of one another in a relationship, and how these expectations change and impact our behaviour over time. The term is currently used mainly to describe the expectations an employee has of the organisation and the expectations the organisation has of the employee. But the idea couldapply to any relationship; for example to a wife’s expectations of her husband and a husband’s expectations of his wife. We will look at the different academic definitions of the psychological contract later in this chapter. Much greater interest is now being shown in the psychological contract as demonstrated by the increasing number of hR journal articles, including those published in the UK by theChartered Institute of Personnel Development (CIPD). This chapter explores how the idea of the psychological contract has emerged, and the form it can take in practice. Specific examples will be given of psychological contracts in different business organisations. Later in the chapter we will explore the increasingly transient nature of psychological contracts as a result of pressures from bothemployees and organisations. The origins of the psychological contract go back thousands of years to the major world religions. One of the most important prayers in the Jewish faith for example, the amidah, refers to the mutual expectations, in essence

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m a n a g i n g t h e p s y c h o lo g i c a l c o n t r a c t

the psychological contract, between God and the Jewish people.1 Morerecently social and political philosophers such as hobbes and locke talked about a ‘social contract’ as an understanding between citizens and the state regarding reciprocal expectations, obligations and duties. The notion of the social contract between the individual citizen and the state continues to be fundamental to our lives in society today. For most of us in knowledge economies, the socialcontract is something we largely take for granted. As citizens we expect the state to provide us with things like a democratic process for electing a government, an equitable judicial system, an army and police to protect the country both externally and internally, and social services such as education, public transport, healthcare and recreational spaces. To sustain protection by the state and otherservices we, for our part, have an obligation to pay taxes, abide by the laws of the land, and exercise some control over how we express our feelings and desires so that we can live in reasonable harmony with others in the community. When this arrangement breaks down, as it appears to have done in Iraq, and not so many years ago almost did in northern ireland, then the stability of society isthreatened. At its core the social contract is about mutual expectations; things that the individual can expect from the state and things the state expects from the individual. Some of these expectations may be written down and enshrined in law, such as respect for others’ property, while others, such as expectations about the state’s provision of recreation facilities, are mostly implied rather...