Psychological Contracts

by Bob MacKenzie

Maintaining healthy psychological contracts

A healthy or positive psychological contract is

... a continuous image of the employment relationship that involves the ongoing management and adjustment of beliefs and commitments on both sides.

CIPD 2005: 8

In order to develop and maintain positive psychological contracts, managers need to customise or tailor employment policies and communication strategies for each key individual. Although desirable, it may not be possible to do this for everyone. So you will need to pay particular attention to those members of your team who are most valued or who have greatest potential to help you achieve your business goals.

Managing contracts during change

It’s vital to anticipate or spot the violations of psychological contracts that often happen as a result of sudden or unwelcome change.

Managers are important internal change agents and have a crucial role in obtaining employee buy-in to change. They must therefore take the temperature regularly to gauge what is going on around them in the hearts and minds of their staff and colleagues. They can then negotiate and adjust their own and their team members’ psychological contracts in order to maintain them or restore them to a healthy state.

It is the line, team or project managers who are probably best placed to find out what their team members expect from their work. They can then do their best either to satisfy these expectations or to explain clearly why they can’t, creating a greater willingness to accept change and to add value to the business.

Taking the initiative

One way to take the initiative in managing psychological contracts is to

... create unique and dynamic customised personal deals between people and teams by making them explicit and mutual.

Michael Wellin

Wherever it’s feasible, managers should do their best to convert as many as possible of the invisible, unspoken terms of every psychological contract into explicit understandings between them and their team.

They should also aim to review and renegotiate individual and group psychological contracts as necessary, so that they remain or become positive.

Key actions

In the absence of being able to guarantee ‘jobs-for-life’ or otherwise to satisfy expectations, specific actions that managers can take include helping employees to

  1. Achieve an acceptable work-life balance
  2. Understand how their organisation makes fair (if increasingly limited) job promotions
  3. Develop alternative careers if they feel stuck or plateaued
  4. Increase their chances of employment elsewhere by offering opportunities to develop new, marketable skills and experience. This enables people to build a career as portfolio workers.

Negotiating afresh

It’s often easiest to discuss and negotiate psychological contracts from scratch, at the point where you are recruiting and inducting a new member of your team. Then, once everyone understands how they work, you can review psychological contracts as a specific agenda item during regular supervision or appraisal sessions.

Warning note

Beware the danger of falling into the trap of micro-management. Try not to discuss psychological contracts any more often than is necessary. This way, your staff will feel that you are offering them plenty of room for discretion and initiative, and that you trust and value them.