the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other'

1. PSYCHOLOGICAL CONTRACT
AND EFFECT ON MOTIVATION
AKSHAY ASHOK PANDE PP15031
TEJASWY PALAVALASA PP15032
AISHWARY MAHAJAN PP15033
ANKITA DAS PP15034
RITU RANJAN PP15035
SUNIL VARMA PP15036

2. PSYCHOLOGICAL CONTRACT
Definition
‘the perceptions of the
two parties, employee
and employer, of what
their mutual
obligations are
towards each other'
– informal and imprecise
– may be inferred
– based on mutual understanding
of fairness and trust

3. • Psychological
Contracts 'iceberg'
diagram below is a
helpful way to
illustrate some of the
crucial aspects and
influences within
Psychological
Contracts theory.

4. TYPES OF PSYCHOLOGICAL
CONTRACT
Transactional
Contracts:
 Short term
 Narrow and
specific
 Limited promises
and obligations
Relational
Contracts:
 Long term
 General and
evolving
 Extensive and
broad promises
and obligations

5. Managing Psychological
Contract
Organizations
•Realistic job previews
•Employee attitude surveys
•Team meetings & focus groups: two-way
communication
•Performance appraisals
•Performance management practices
•Equal opportunities
•Job security

6. Managing Psychological
Contract (continued)
Employees
• Clarify ambiguities
• Monitoring and vigilance
• Anticipate reactions to breach
• Being realistic about what they and the
organization can deliver
• Self-awareness of desired contributions and
rewards

7. Intrinsic
• Acceptance
• Curiosity
• Honour
• Independence
• Order
• Power
• Social Contact
• Social Status
Extrinsic
• Employee of the month
award
• Benefit package
• Bonuses
• Organized activities

8. Effect of psychological contract
on motivation
POSITIVE EFFECTS
• Loyalty
• Empathy
• Open communication
• Satisfaction

9. NEGATIVE EFFECT
• Deteriorating work quality
• Reduction in productivity
• Grievances
• Conflicts
• Miscommunication
• Lack of trust
• Job dissatisfaction

10. Affected Areas of Motivation due
to negative Psychological Contract
Job satisfaction Organisational
commitment
Job perfomance Goin extra mile Quitting

11. Conclusions
Even though the precise definition of
psychological contract is still missing and
there is no unanimous view of what is the
other party of the contract in addition to the
employee, the issue of psychological contract
is very interesting. In work life, the employees
expectations based on psychological contract
may affect more to his/her daily work that we
already understand.