Psychological Contract

Successful organizations understand that their best assets are their employees. For this reason, the employees are well treated and have their welfare well taken care of. On the other hand, employees working for organizations that look into their welfare perform better. They are also inclined to be job and result oriented. As such organizations and employers need to take care of their staff for the staff to perform at their maximum potential. This, in the long run, pays off for both the employers and their employees.

There are many different types of contracts that employers and their employees engage in at the start of a business relationship. The psychological Contract basically refers to the relationship between an employer and the employee. It touches on the mutual understanding of the work the employer needs to put in for the desired results to be realized (Luecke, 2003). On the other hand, it touches on the understanding of the employer in regard to the positive results got from the employee input. It is paramount for all employees to understand what is expected of them to ensure that their performance is at par with the employers’ expectations.

The dynamics of psychological contracts are between the people, not the individuals. They act to create the link between the individuals working in a particular environment to the larger group forming a department or section. In all workplaces, there are expectations for the employer and the employees. Both sides need to keep their respective end of the bargain to ensure that a neutral ground is formed. According to Burke, 2011, change is inevitable in the workplace. Employees in all ranks often change careers. This creates vacuums that need to be filled to ensure the smooth running of organizations. Since every individual has their own particular way of doing things, any new employee brings in an independent way of doing things. Dynamics in a once stable working environment can be changed once a new leader is introduced in a team.

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Expectations in a psychological contract are usually unspoken. It is possible for an employee to have a mental expectation of how their boss will be like long before they meet them. This is because there is an unspoken expectation from the employees on how their superiors should act like. There are also unspoken expectations that are required of the employees that have to be upheld for the workplace to run smoothly. The unspoken nature of the psychological contracts gives a sense of understanding between all the individuals involved in an office setup. This understanding paves the way for the individuals to work together in harmony creating effective group dynamism. As individuals, employees cannot really achieve much but together as a team, employees can achieve and surpass all the goals that they are given.

Since change is inevitable, there will always be the change of leadership in the leadership scene in any organization. New managers should take their time to understand the dynamics that had existed in the organization they are joining before effecting any changes. This is because the former managers may have had effective mechanisms that had kept the employees psychologically motivated to be associated with the organization. Any abrupt changes in the organizational management style would definitely align employees’ expectations (Nelson, 2005). Communication and management styles may also be affected tremendously by the change in leadership in an organization. Financial rewards and leadership commitment contribute to the overall effectiveness of the psychological contracts between employees and employers. Financial reward systems in an organization may act as a motivation for the employees to put in more effort in their work. When a new management comes to play, they may take this motivator away. The result would be an unmotivated team that lacks all the will to keep performing.

Psychological contracts are binding within the setup that they are used. According to Hiatt, employees find job satisfaction in many areas touching on the workplace. It would be entirely impossible to detach employee satisfaction from the treatment they receive at the workplace. It is the responsibility of all management in all organizations to understand the psychology of employees (Kotter, 1996). Once the management is well aware of the needs of their employees then they can implement policies that work for the employees. As much as different managers have different work ethics, it is paramount that all management understands their respective employees and their needs. Depending on the employees needs, the management can then come up with a suitable way of balancing their expectations to the motivators aimed at the employees.


The way employees are treated by their employer and the resultant input of the employee should be the measuring tools of the management to gauge the effectiveness of their psychological contracts. These types of contracts seem to be gaining popularity since all that a manager says to his employees is a testament to what he wants to get from them. Managers have the responsibility of motivating their staff in all areas. Casual interactions in the office can set an ample stage for understanding between the manager and the employees. Whatever the manager says within such set up is received expectantly by his staff. As such the manager has to be careful with his wording when addressing his staff. Communication parameters thus have to be put in place early enough to ensure the movement of information from the managers to the staff.

Change failures need to be addressed before they occur. Good managers form bonds with their employees and seem to understand and respect each other at the workplace. As a result of inevitable changes, management may change and this will initially send the staff into a panic mode. This would come as a direct result of the fact that the staff become uncertain of whom the replacement will be. To counter such an occurrence, the outgoing manager has the task of involving the staff early enough in the transition by preparing them for the changes. New managers should ensure they learn as much as they can from their predecessors to clearly understand what they are getting themselves into.

Some of the psychological contracts bind employees to their workplaces. Such contracts are essential in areas where written contracts cannot be practical (Cohen, 2006). Managers should posses the habit of constantly sharing notes on the development of individual sections to ensure that they are at par at all times. When changes occur at the workplace, the management left behind should then be in a position to introduce the incoming management to the previous management style. This ensures that there is a smooth transition from one manager to another. This would go along way into solving typical work-related issues facing troubled projects.

Management and staff alike should from the very beginning of their work relations table their needs and expectations from each other. Every institution has its role in the overall development of the results. As such the management should be on the forefront In the search of the correct way to handle staff in a way that will be fruitful to the organization and to the individuals alike. Psychological contracts should be honored as any other written contracts since they too involve the employees whose welfare is at the forefront of bringing success to the organization.