Psychological Contracts

Psychological contracts at work are equally as important as formal contracts of employment, especially in times of change and economic upheaval.

The explicit deal, the one that says I’ll work X number of hours for you each week and you’ll pay me Y number of dollars, is underpinned by a kind of implicit deal in which the employee also expects job security, respect, career opportunities, that kind of thing. Job insecurity makes people examine that a lot more closely.

Neil Conway, School of Management and Organisational Psychology, Birkbeck College, London

Although everyone’s psychological contract is important, it’s particularly important to pay attention to those employees whom your company regards as highly talented, versatile and appreciated. This is because these are the people who will help you to adjust adroitly to changing market conditions and remain competitive. However, if they feel that you are treating them badly and unjustifiably, you are very likely to lose these key people.

Author: Bob MacKenzie

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