Psychological contracts

1. The Psychological Contract

2. Objectives
 Define and understand the importance of the
psychological contract
 Examine the influences that affect workplace
expectations

3. PSYCHOLOGICAL CONTRACT
The psychological contract is
individual beliefs or
perceptions regarding the
terms of exchange between
the individual and
organization.

4. PSYCHOLOGICAL CONTRACT
 The perceptual and dynamic nature of the
contract makes it common that a violation will
occur

5. Types of Violations
 Inadvertent –divergent interpretations
 Disruption –impossible to fulfill the contract,
despite willingness to do so
 Breach of Contract – One side refuses to
fulfill the contract

6. Contract Makers’ Violations
Sources Violations
Recruiters • Unfamiliar with actual job
• Overpromise
Managers • Say one thing, do another
Co-workers • Failure to provide support
Mentors • Little follow-through
• Few interactions
Top management • Mixed messages

7. Broken Contracts
 Outrage, shock, resentment, anger
 Decreased trust and good faith
 Decreased job satisfaction
 Decreased productivity
 Decreased attendance
 Decreased commitment
 Turnover
Consequence

8. Managing the Psychological Contract
Provide realistic job expectations
Have frequent discussions of expectations
Check employee understanding
Give feedback
Be sensitive to individual differences
Check for changes in expectations