chapter  2
25 Pages

The psychological contract

In the introductory chapter we ended by mentioning that there has been a change in the ‘psychological contract’ at work. What exactly does this mean? In this chapter we will explain what is meant by the term ‘psychological contract’ and discuss how it is considered to regulate the employment relationship. We introduce some key mechanisms involved in this psychological contract and note some of the ways in which it is typically measured. We examine the overlap between the elements that are considered to form the basis of the psychological contract and the elements incorporated into the legal regulation of the employment relationship. We then present the essential elements of psychological contracting theory. This allows us to explain how psychological contracts are first formed and how they can be managed – or transformed. A number of elementary issues are introduced – such as the difference between there being a breach in this contract (or deal) or a more serious perceived violation. We end the chapter by examining the link between these perceptions and the emotional experience of them, arguing that the reactions that we as individuals will experience to changes in the employment relationship – and the challenges that these reactions will create for organizations – will vary depending on the intensity of our individual relationship with the organization.