What is a psychological contract?
“A psychological contract is an informal agreement between an employer and a worker. It is an unwritten set of beliefs and expectations held by an individual and the employer about what they do for each other, according to “A Handbook of Human Resources Management Practice.” The psychological contract is present in all forms of employment including full-time, part-time, temporary and contract work. It provides a framework for understanding and managing employee behavior.” As explained in this article by Diane Chinn.
How can this concept benefit your organization?
Psychological contracts between team members are based on their perception of current team members and how they are perceived to be treated when compared to their team members. Productivity from an employee can suffer greatly, if the employee believes that more is expected from them, or that upper management is “playing favorites.” It is up to the managers and senior leaders to help nurture the psychological contracts between team members, to ensure that all employees have the correct attitude.
There are many additional benefits for having positive psychological contracts between team members:
The lack of holding employees accountable will often cause the business to fail. The business is relying on its employees to reach their individual goals so the business can reach its overall goals. When the employees understand the expectations as a team, and not just their individual expectation, the employees will start holding other team members responsible.
- Working Together/Helping Others
When employees are motivated to reach team goals, employees will start working together. The employees will start brain storming and problem solving as a team, and this will increase productivity. Every employee brings a different skill set and strengths to a team environment, and this gives employees the opportunity to share knowledge and experience that will help exceed expectations.
- Eliminating Resentment
Strong psychological contracts between team members also eliminate resentment. An individual employee will understand that their expectations are an important part of reaching a larger goal that impacts the company. The employee will understand the manager is not playing favorites, but is working towards a common goal.
A strong psychological contract between team members will increase productivity. Team members will become stronger individual employees by the sharing of ideas, past experiences, and working together to solve problems. Since employees will be holding each other accountable, they will work together to achieve these goals. Employees will also have a more positive attitude at work, and this is extremely important for a productive work environment.
- Company Culture
Psychological contracts are extremely important to the culture of a company. When employees have positive psychological contracts, they feel validated for the work that they are doing. Employees also get a better understanding of the importance of their work, and will begin to take more pride in their work. It will create a stronger team environment, and there will be a synergy effect of everyone working together towards one goal.
The most important aspect of psychological contracts is the actions of company leadership. It is up to the leadership to communicate team expectations, encourage team members to work together, and set the tone for the culture. It is critical for the business to succeed and it starts with communication.