PSYCHOLOGICAL CONTRACT IN WORK PLACE

Within a workplace, there are certain expectations the employer and the employee require from each other. When these expectations have been clarified amongst each other, an agreement is met; this is therefore called a psychological contract.A Psychological Contract (PC) can therefore be defined as “the set of practical and emotional expectation of benefits that employer and employee can reasonably have of each other” . These expectations were described by Rousseau and parks in 1993 as: transactional  “high performance and flexibility” of employee which will be rewarded with high pay and employability; and relational in exchange of commitment, skills and loyalty for career progress and job security.

Traditionally individuals make their careers choices at the early age and stay in the same career till the retirement age, and by being loyal they expect job security and career progression  as well as training and development from the job, thereby adapting the relational contract of employment. 

Research shows that the recession in the 1990 and the effect of globalisation lead to the destruction of this traditional view. Due to Organisational restructuring, firms have to cut out hierarchy and replace it with flexibility and empowerment. Hence shifting the expectations of both parties, from relational to transactional contract. This could be linked to Hiltrop observation that “the PC that gave security, stability and predictability to the relationship between employees and employer has dramatically altered in the past two decades” 

(Adapted from: Baruch. Y 2004, Managing Career).

The table above also shows the way PC as evolve from what it was first to what we have now. For example in the aspect progress, an employee’s advancement in their career was traditionally dependent on how long they have worked with the organisation. In the new deal, employee’s progression is based on how much skills and knowledge they have been able to achieve.

In recent days, because employee’s career is no longer the responsibility of the organisation, individuals tend to move from one job to another in search of their career (Baruch, 2004). According to Handy since organisation now need expect and skilled staff, individual have to maintain and develop more skills and manage their career themselves so as to maintain a professional status. Employees now  wish for flexible working pattern, more opportunities for development, higher pay and autonomy  and in exchange, to offer long  working hours, variety skills and quick response to changes. Unlike before were promotion was a reward for loyalty and good performance, in recent time’s payment are now made on the basis of the contribution made to the company.

Potential implications for individual’s career:

Naturally the PC is an unspoken and unwritten promise. Research shows that the PC may be seen as been more influential than the official contract because it is believed to determine the behaviour of an employee, therefore when redeemed it has a positive effect and when broken it may have a bad effect.

A career can be defined as “the sequence of employment-related positions, roles, activities and experiences encountered by a person”. It is interesting to note that where PC is positive, it encourages the employees to give in their best and develop their career in the same organisation rather than changing careers inconsistently. This also leads to increased productivity on the part of the employee.

Connecting this to my career, I believe the new PC would enable me have better potentials to successes by allowing me develop myself through training, advancement of knowledge thus increasing my chances of moving up the career ladder. On the other hand, I think my moving up the ladder might come with some difficulties because as a woman I would be taking some time off work when pregnant and this might hinder my changes of fast progression.

As the Traditional career management is being replaced with self-reliance, I will be expecting autonomy in my career; but this might also come with a difficulty. Although organisations are believed to empower staffs and let them make their own decisions, argues that employees are still managed from a distance through the business culture.