Psychological Contract: Everyone Benefits

Psychological Contract

I have come across an interesting article talking about the psychological contract between employees and employers. The article was written by Denise M. Rousseau, published in 2004, and is called Psychological Contracts in the Workplace: Understanding the Ties That Motivate. The author talks about how psychological contracts benefit not only the organization, but also the employee. A psychological contract is an agreement about what workers will contribute to the company and what the company will do in return. There are three different types of psychological contracts: relational, transactional, and balanced.

Relational Psychological Contract

Relational psychological contracts rely on loyalty and stability between worker and employer. Workers in a rational psychological contract are more likely to work extra, stay loyal to the company through organizational changes, and help out colleagues. In addition, employers involved in a relational physical contract are willing to protect their employees from economic downturns.

Transactional Psychological Contract

Transactional psychological contracts are being applied when the contract is of limited time and only includes limited duties. Workers with this kind of contract are not as critical to the company as other employees and are likely to transfer to a different company once specific conditions of the contract are not satisfied. Overall, this kind of contract is rather used when employers only have a short-term interest in employees and do not plan long-term with them.

Balanced Psychological Contract

The balanced psychological contract is a combination of the relational and transactional contract. It combines the long-term- and mutual relationship-thinking of the relational contract with the transactional contract’s flexibility of negotiation and the performance of employees.


Six Fixtures of a Psychological Contract

In general, the psychological contract has six features. First, voluntary choice can be defined as employees voluntarily accepting the contract because both parties, employee and employer, have agreed to commitment and exchange of promises. Second, due to changing circumstances, psychological contracts are never complete and need to be adjusted over time. Third, due to multiple sources, such as management and human resource representatives, shaping the contract, contracts might be interpreted and formed differently. Fourth, both employee and employer should work on fulfilling their part of the contract in order to succeed and keep the contract alive. Fifth, the contract is an important part of the employment relationship as it tells both parties what to expect and helps everyone to keep working even with incomplete information about the other party’s plan. Last, the mutual agreement is a very important part of the psychological contract. It implies the commitments made between both parties are on a mutual basis and they both benefits and owe the same.


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