Psychological contract

Consider the following situations either as a team member or a team leader

As a team member…

“I worked really hard, because I love what I do and feel a strong sense of ownership. I didn’t expect much, however, last week, my manager called and really appreciated my work and also gave me a few days off so I could take a break amidst all the work”

“I took the initiative to go beyond what my job expected of me and worked tirelessly on the presentation. However, my manager scarcely noticed the effort.”

“I’ve met all my goals, demonstrated a sense of ownership and taken on additional responsibility at each stage. To my dismay, the organisation did not consider giving me a promotion this year.” 

“While you’re at it, could you also do….” – An ambiguous request that makes me deviate from on going priorities for a disproportionate amount of time

As a team leader/manager…

“I’ve given Amy complete clarity and a realistic timeline, however, she has neither been able to deliver on time nor to the expected level of quality (despite promising to do so).” 

“Each time I’ve tried to help my team member, he has been rather defensive and resisted the help.”

Let’s put this in perspective. 

When we enter an employment relationship, we sign a contract with the organisation. When we are part of a team, there are certain expectations that are made explicit right at the beginning. However, often, the situations we struggle with most at the workplace are related to what is referred to as a ‘psychological contract’ between two individuals/entities. 

A psychological contract comprises mutual expectations between two individuals or between an organisation and the employee. These expectations could arise from explicit agreements/conversations as well as from unconscious motives of each individual (for instance “If I work hard, I must be recognized”). If you work in an environment where you constantly interact with clients, you will realise that you have also developed a psychological contract with each of your clients.

Now more than ever, organisations and leaders are beginning to realize that ‘maintaining’ this psychological contract is imperative to every critical outcome – productivity, employee engagement, retention, customer satisfaction and so on.  

How do individuals form psychological contracts and what leads to breach? 

Before we move to some of the causes, I would like you to think of responses to these simple questions 

  • Take five minutes and think about all the situations that have challenged you at the workplace within the last week
  • Of these situations, which ones would you classify as ‘breach’ of a psychological contract? 
  • What, according to you, could have led to this psychological contact ‘breach’?

I asked some friends and colleagues these questions, and also looked into some relevant research by psychologists Morrison and Robinson (1997).  

Here are some of the root causes of the breach/fulfillment of psychological contracts:

Reneging: The most obvious, and perhaps frequent cause for a psychological contract breach is that the organization has actually reneged on an employment contract. A retraction is likely to have occurred when

  • The organization is not performing as well as it did in the recent past, or when its performance is consistently below par
  • When the employee’s performance has been lower than expected 
  • When unrealistic promises have been made to the employee at the time of hiring or performance review/appraisal

Incongruence: Incongruence occurs when the employee holds beliefs and expectations that could differ from those held by the organization. There could be multiple reasons why this might happen – For instance:

  • An individual’s values and beliefsguiding his/her expectations (from the team leader/organisation) might be at odds with those of the organisation
  • Past experiences – If an employee has experienced fast track career growth in his/her previous organization, he may have similar expectations in the current organisation 
  • Organisational culture– An employee may form certain perceptions based on the organization’s culture. For example, if an organization offers a high amount of flexibility (in the form of flexible work hours, option to work from home, no formal dress code etc.), the employee may ‘assume’ flexibility on deadlines and performance. In such a situation, he/she may be taken aback if there was negative feedback on maintaining timelines and performance

This breach of psychological contract could at times lead to an individual experiencing intense emotions (also known as violation). In my personal experience as well as in some of the conversations I had, the four words that defined the feeling of violation are “IT’S JUST NOT FAIR!” which indicates that, the interpretation about psychological contract breach/violation seems heavily influenced by a perception of lack of fairness.

Research specifically attributes this to interpersonal fairness – for example, honesty, respect, consideration or inadequate explanation. There may be times when an outcome or process may be unfair for various reasons. At such times, ‘interpersonal fairness’ or honest and respectful communication could not just prevent breach, but also perhaps help build positive relationships at work. The display of interpersonal fairness seems to ‘signal’ to an employee that he/she is valued and respected.

In summary…

Engagement is probably one of the most critical yet elusive factors in the workplace. It’s hard to describe but we certainly all know it when we feel it or see it. People could go from totally pumped and engaged to seriously deflated and disengaged because of a breach of the psychological contract. This can occur in every type of organization, in every industry, and in every large and small work group. The secret to Engagement and success could then be as simple as always maintaining the Psychological Contract and focusing on fairness (particularly interpersonal fairness)




No Comments

Leave a reply