1 2 Contents Psychological contract .................................................................................................................................. 3 Contract Requirements ................................................................................................................................. 3 Development................................................................................................................................................. 4 Contract Reassurance ................................................................................................................................... 5 Leadership ..................................................................................................................................................... 5 References .................................................................................................................................................... 7 3 Psychological contract In today’s labor industry, it is important that management reconsider their managing skills. Many employees consider long term employment based on company culture and management behavior and attitude overall. In the human resources, a term called psychological contract is used to explain how employees have set of unwritten expectations of employee relations from an organization management that are distinct from the formal and written contract. This contract brings the two parties together with same beliefs, common grounds, and informal arrangements. The psychological contract should develop and evolve consistently based on the communication between management and employee to better serve both parties. This will allow a stronger bond between the two parties and will have a positive company culture. Management expectations are a key factor for employee behavior so that there will be no wrong perceptions of work needed to be done. In addition, employees should also have their own set of expectations from management. For instance, employees should discuss difficult situations or adverse personal problem that affect productivity. Breaching the psychological contract can have server damage done to relationship between employee and employer leading to disengagement and reduced productivity. Contract Requirements Fairness is an important factor to the psychological contract. Employees need to feel that they are being treated fairly to sustain a healthy psychological contract. Generally, employees can define the contract requirements by the primary purpose and role to fill in on expectations in the workplace that are intangible or can be easily modified based mutual agreement between a leader and an employee. This is very important especially in workplaces 4 that are very new and need consistent agreement and arrangement to meet the need of both parties. Some of the common agreements are those in with expectations from employer to employee is to work hard for a promotion or pay raise that cannot be defined or is too broad to be defined in legal clause. The contract requirement should include daily influence from management to employees in order to keep both parties in line with the overall object of the contract. By doing so, both the employer and employee will have a great set of communication and team building attitude that will enhance a better workplace. Development One of the most important factors of psychological contract is employee development. Employee development should consist of activities that are initiated by organization that will trigger self-motivation of willingness and eagerness to learn and succussed during their careers. Managers should assist and provide continues training for employees for a continues growth. An effective performance management system should be put in place which gives high priority for employee development. Leaders should Identify and conduct necessary training for employees. Proper planned training agendas would help employees to obtain the necessary capabilities needed for the job. With that being said, it is a must for management to have a career path set for every position in order to comply with a psychological contract. Identify poor performing employees and acquire a performance improvement plan so that everyone can be effectively guided and lead to become good performers. Lastly, leadership should recognize the importance of tools to be available to remove obstacles for employee especially for the non-performance employees that have external factors that affect their productivity levels. 5 Contract Reassurance The contract between an employee and employer should be to an extent that the mind and heart of the employee is captured by an organization. Therefore, the employee will meet his contract by performing beyond optimal levels. The contract should give reassurance to the employees by giving them energy, involvement, and positive interaction that in which employees are motivated at workplace. For this, employee contribution will have a strong impact on organizational effectiveness when they feel that their managers are interested in their development. Leaders and HR professionals should be in the main influencers when it comes to setting expectations. It is important to take control of letting employees know what is anticipated of them or what they can assume from leadership or HR. Many studies have demonstrated that hiring, selection, training, development, and job security are important for enhancing employee engagement. Thus, front line managers should see the importance and the need of investment in psychological contract reassurance by providing the best set of acknowledgment to the contract. Leadership In the psychological contract, leadership are the ones who suffer or benefit from the consequences tied to the success or failure of the contract. Leadership has little control or make-up of the contract as employee usually formulate a contract. This contract is in terms of a favor for a favor bases mostly consisting of employees needs and wants in order to perform a job with a sense of being important to the organization. It is important for management at all levels to focus on obeying the terms of contract as breaking the contract can formulate a negative impact of current employees view of the company in which can result in affecting new 6 hires beliefs. Management along with the human resources team must also accomplish their own expectations and behavior. This can take an enormous impression on the psychological contract. As long as there is positive feedback on work or intellectual stimulation, it can increase an employee’s positive formulation of the psychological contract not to mention a positive impact on their performance and employee engagement. 7 References Cheng, Y. (1AD, January 1). The effect of psychological contract combined with stress and health on employees' management behavior. Frontiers. Retrieved October 3, 2022, from https://www.frontiersin.org/articles/10.3389/fpsyg.2021.667302/full Stevenson, M. (2018, October 30). Psychological contracts and leadership. HR Exchange Network. Retrieved October 3, 2022, from https://www.hrexchangenetwork.com/hrtalent-management/news/psychological-contracts-and-leadership What is a psychological contract? Human Resources Degrees. (2018, October 30). Retrieved October 3, 2022, from https://www.humanresourcesmba.net/faq/what-is-a-psychological-contract/
