psychological contract in practice

psychological contract in practice

  • Submitted By: Hsgei-Uio
  • Date Submitted: 09/09/2014 11:56 AM
  • Category: Business
  • Words: 1157
  • Page: 5

As an increasing competition in the rapid changing business environment, it is significant for companies to search for new ways to maintain and enhance their performance. By using of psychological contract can be viewed as a possible solution for organization to react these changes. This essay focus on that whether it is easy in practice for organization explicitly defined the psychology contract?

Usually, the psychological contract refers to the ‘trust’ or ‘relationship’ or ‘understanding’ between the individual and organization (, 2014). The psychology contact is concerned with the perceptions of both employees and employers in the employment relationship, organization and individual, of the reciprocal promises and obligations implied in that relationship. It is perceptual complement of the written employment contract. These employee contracts help organizations to regulate their employees’ behavior on behalf of the companies. However, the psychological contract is quite different to a physical contract. The psychological contract represents the exchange relationship between the organization and individual employee rather than tangible piece of paper, such as legal employee contract.

The psychological contracts give employees the felling that they have ability to influence their own career in the organization (Maguire, 2003). This is because the employee as a party of the contract and have the rights to choose whether to carry out their obligation. Although the good psychological contracts may not always produce the good and desired performance, the bad psychological contracts will paly a demotivators role in the organization and lead to an lower commitment and high rate of turnover (Sparrow, 1996).

Through the definition of the psychological contract, it shows that the psychological contract could be different from one employee and another based on the perception of individual employees. In practice, such differences are driven by...

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