An increasing amount of literature detailing the existence of a “psychological contract” is being published and the “concept has emerged into common usage” (Latornell, J 2007) in recent years. The psychological contract is a “two way exchange of perceived promises and obligations” (Guest D 2002) which are not expressly written in an employee’s employment contract. The psychological contract does exist within the work place and can have wide ranging effects on business both positive and negative.
The psychological contract as a concept varies slightly depending on the literature and the time it was written. “The term was first introduced in the early 1960’s, originally by Argyris followed then by Levison et al and finally by Schein” (Sparrow, P et al 2003). Argus did not qualify the term and concept of the psychological contract in great detail it was only until Levison’s literature, that the concept was studied in its own right. Levison et al described the psychological contract as the “mutual expectations between the organisation and the employee”. Some expectations are more conscious than others: for example, expectations with respect to salary, but other are more unconscious and are only revealed indirectly, for instance longer term promotion prospects”( Levison, H et al 1962). An example is, within the employment contract an employee will have an expectation of wage as it is clearly defined within he or she’s contract, but a general consensus of employees would find that most (employees) believe career progression would follow hard work, loyalty and competency. However the later is not expressly written in their contract therefore this is an assumption made by the employee and is part of the psychological contract but this may not be reciprocated by the employer. Schein’s opinion deferred slightly as he believed “all the elements of the contract are implicit as the contract is an unwritten set of expectations” (Sparrow, P et al 2003) all of which are...