1. Psychological Contract
Psychology 445

2. The Psychological Contract
“An individual’s implicit belief in mutual obligations (expectations) between that person and another party” (Rousseau, 1989)
Based on employees’ and employers’ perceptions of obligations
Unspoken
Continually shifting

3. Types of Psychological Contracts
Transactional
Short time frames
Specific obligations (e.g., financial)
Relational
Longer time frames
Diffuse obligations
Socio-emotional based (e.g., commitment, affiliation)

4. Fulfilling/Violating Psychological Contracts
Fulfilling psychological contracts is associated with increased trust and cooperation (e.g., Conway & Briner, 2002).
Violating psychological contracts is associated with increased anger, frustration, and intentions to quit (Robinson & Rousseau, 1994).
Typical violations
Training
Compensation
Promotion
Job Security
People
When violated, contracts become more transactional and less relational

5. Managing Psychological Contracts
Planned
termination
SHARING INFORMATION
AND
NEGOTIATING
Renegotiation
under duress
(new contract)
ROLE CLARITY
AND
COMMITMENT
Return to
the way things
used to be
(misunderstanding)
Resentful
termination
Planned
renegotiation
Crunch
Choice point
STABILITY
Ignore
Pinch
Choice point
Resentment,
anxiety
DISRUPTION OF
SHARED EXPECTATIONS
Ambiguity,
uncertainty

6. Why is this Useful to Know?
Changing nature of the workplace:
More part-time and temporary contracts
Flexible job descriptions
Doing more with less (downsizing)
Constantly changing service standards
Constantly changing technology
Changing attitudes about work.

7. Application Contract Content Traditional Contract New Contract?
Security for commitment
New Contract?
Fair pay
Fair treatment
Opportunity to develop
Younger generations?
Work-outside balance
Excitement
Community
Higher purpose
Increasing Employee Commitment
3 dimensions of commitment
Affective
Normative
Continuance
Increasing commitment
Herzberg’s Theory
Clear mission, vision, and values
Fairness
Communication (Listening)
Management style
Managing expectations