The psychological contract has captured the attention of researchers as a
framework for understanding the employment relationship. In terms of research,
there has been an exponential growth in publications on the topic in the last 15 years
(following the publication of Rousseau’s 1989 article) giving the impression of a
relatively new concept. Its introduction can however be traced to the 1960s. The
concept developed in two main phases: its origins and early development covering the
period 1958 to 1988, and from 1989 onwards. This chapter begins with a review of
the initial phase in the development of the psychological contract highlighting the
commonalities and differences amongst the early contributors. We then review
Rousseau’s (1989) reconceptualization of the psychological contract, as this has been
very influential in guiding contemporary research. The two distinct phases in the
development of the psychological contract have given rise to a number of key debates
which we discuss prior to outlining an agenda for future research.
Historical Development of the Psychological Contract
In tracing the development of the psychological contract, we focus on the
seminal works of Argyris (1960), Levinson, Munden, Mandl and Solley (1962) and
Schein (1965). We also review the work of Blau (1964) and Gouldner (1960) as these
represent the foundational ideas of social exchange theory upon which subsequent
theorizing on the psychological contract draws.
framework for understanding the employment relationship. In terms of research,
there has been an exponential growth in publications on the topic in the last 15 years
(following the publication of Rousseau’s 1989 article) giving the impression of a
relatively new concept. Its introduction can however be traced to the 1960s. The
concept developed in two main phases: its origins and early development covering the
period 1958 to 1988, and from 1989 onwards. This chapter begins with a review of
the initial phase in the development of the psychological contract highlighting the
commonalities and differences amongst the early contributors. We then review
Rousseau’s (1989) reconceptualization of the psychological contract, as this has been
very influential in guiding contemporary research. The two distinct phases in the
development of the psychological contract have given rise to a number of key debates
which we discuss prior to outlining an agenda for future research.
Historical Development of the Psychological Contract
In tracing the development of the psychological contract, we focus on the
seminal works of Argyris (1960), Levinson, Munden, Mandl and Solley (1962) and
Schein (1965). We also review the work of Blau (1964) and Gouldner (1960) as these
represent the foundational ideas of social exchange theory upon which subsequent
theorizing on the psychological contract draws.
A psychological contract can be understood as a ‘deal’ between employer and employee concerning ‘the perception of the two parties, employer and employee, of what their mutual obligations are towards each other.
Psychological contracts are a set of ‘promises’ or ‘expectations’ that are exchanged between the parties in an employment relationship. These parties include employers, managers, individual employees, and their work colleagues. Unlike formal contracts of employment, they are often tacit or implicit. They tend to be invisible, assumed, unspoken, informal or at best only partially vocalized. Because of this, you have to make a determined effort to find out what they are.
The case of Design Fabrications illustrates some issues raised by the existence of a group psychological contract.
https://www.alchemyformanagers.co.uk/topics/6ixdhhPwDvZFjsZc.html
Classical early studies
Although Argyris (1960) was the first to coin the term psychological contract,
the idea of the employment relationship as an exchange can be traced to the writings
of Bernard (1938) and March and Simon (1958). Barnard’s (1938) theory of
equilibrium posits that employees’ continued participation depends upon adequate
rewards from the organization. Here lies the idea of a reciprocal exchange underlying
2
the employee-organization relationship. This was elaborated upon by March and
Simon (1958) in their inducements-contributions model. They argued that employees
are satisfied when there is a greater difference between the inducements offered by
the organization and the contributions they need to give in return. From the
organization’s perspective, employee contributions need to be sufficient enough to
generate inducements from the organization, which in turn need to be attractive
enough to elicit employee contributions. The work of March and Simon (1958) is
rarely acknowledged in the psychological contract literature (Conway & Briner, 2005)
but the idea of a reciprocal exchange bears a remarkable resemblance to a core tenet
of the psychological contract.
Argyris (1960) viewed the psychological contract as an implicit understanding
between a group of employees and their foreman, and argued that the relationship
could develop in such a way that employees would exchange higher productivity and
lower grievances in return for acceptable wages and job security (Taylor & Tekleab,
2004). Argyris (1960) believed that employees would perform at a higher level if the
organization did not interfere too much with the employee group’s norms and in
return employees would respect the right of the organization to evolve. The defining
characteristics of this first explicit conceptualization of the psychological contract
viewed it as an exchange of tangible, specific and primarily economic resources
agreed by the two parties that permitted the fulfillment of each party’s needs.
Subsequently, Levinson et al. (1962) introduced a more elaborate
conceptualization of the psychological contract that was heavily influenced by the
work of Menninger (1958). Menninger (1958) suggested that in addition to tangible
resources, contractual relationships also involve the exchange of intangibles.
Although Argyris (1960) was the first to coin the term psychological contract,
the idea of the employment relationship as an exchange can be traced to the writings
of Bernard (1938) and March and Simon (1958). Barnard’s (1938) theory of
equilibrium posits that employees’ continued participation depends upon adequate
rewards from the organization. Here lies the idea of a reciprocal exchange underlying
2
the employee-organization relationship. This was elaborated upon by March and
Simon (1958) in their inducements-contributions model. They argued that employees
are satisfied when there is a greater difference between the inducements offered by
the organization and the contributions they need to give in return. From the
organization’s perspective, employee contributions need to be sufficient enough to
generate inducements from the organization, which in turn need to be attractive
enough to elicit employee contributions. The work of March and Simon (1958) is
rarely acknowledged in the psychological contract literature (Conway & Briner, 2005)
but the idea of a reciprocal exchange bears a remarkable resemblance to a core tenet
of the psychological contract.
Argyris (1960) viewed the psychological contract as an implicit understanding
between a group of employees and their foreman, and argued that the relationship
could develop in such a way that employees would exchange higher productivity and
lower grievances in return for acceptable wages and job security (Taylor & Tekleab,
2004). Argyris (1960) believed that employees would perform at a higher level if the
organization did not interfere too much with the employee group’s norms and in
return employees would respect the right of the organization to evolve. The defining
characteristics of this first explicit conceptualization of the psychological contract
viewed it as an exchange of tangible, specific and primarily economic resources
agreed by the two parties that permitted the fulfillment of each party’s needs.
Subsequently, Levinson et al. (1962) introduced a more elaborate
conceptualization of the psychological contract that was heavily influenced by the
work of Menninger (1958). Menninger (1958) suggested that in addition to tangible
resources, contractual relationships also involve the exchange of intangibles.
Content
In light of the subjective nature of the psychological contract, researchers have
attempted to categorize psychological contract items (e.g., job security, interesting
work, career prospects, pay, training and developmental opportunities, autonomy in
job) in terms of two underlying dimensions: transactional and relational. The
distinction between the two draws upon the legal work of MacNeil (1974; 1980) and
also parallels Blau’s (1964) distinction between economic and social exchange .
New’ psychological contracts
New psychological contracts are potentially more unstable, since they can be more temporary or ad hoc. They assume a greater sense of ‘partnership’ between employer and employee, usually on the expectation of a less permanent period of salaried ‘employment’. There is a growing trend towards employment arrangements with ‘interim workers’, contract workers, portfolio or knowledge workers, or ‘interim managers’. Such people may work with an organisation for a limited period, or on an agency or freelance basis. The psychological contract of interim workers is even more complex, because it is negotiated – consciously or unconsciously – as a tripartite relationship between the placement agency, the temporary worker and the temporary ‘employer’.
References
Argyris, C. (1960). Understanding Organizational Behavior. Homewood, IL: Dorsey Press. Arnold, J. (1996).
The psychological contract: A concept in need of closer scrutiny? European Journal of Work and Organizational Psychology, 5: 511-520.
Aselage, J., & Eisenberger, R. (2003). Perceived organizational support and psychological contracts: a theoretical integration. Journal of Organizational Behavior, 24: 491-509.
Barnard, C.I. (1938). The functions of the executive. Cambridge, MA: Harvard. Blau, P. 1964. Exchange and power in social life. Wiley: New York.
Conway, N. & Briner, R.B. (2002). A Daily Diary Study Of Affective Responses To Psychological Contract Breach And Exceeded Promises, Journal of Organizational Behavior, 23: 287-302.
Conway, N & Briner, R.B (2005). Understanding psychological contracts at work: A critical evaluation of theory and research. Oxford, UK: Oxford University Press. Conway,
Good job Rasika. Well explained about employee relations.
ReplyDeleteThank you Thilina
Deletevery good article and interesting to read. Great work.
ReplyDeleteThank you Mufthas
DeleteAmazingly explained all the parts of the topic, Thank you
ReplyDeleteThank you Sameera
Deletevery good,well explained
ReplyDeleteThank you Lasitha
DeletePlease follow the Harvard reference and citation style.
ReplyDeleteTo earn good marks please refer to the assessment criteria.
Please don't forget the words limit of 350.
Thank you Dr Razi , Will act accordingly
DeletePhsycological contract is an unwritten agreements which are not legally bound with the employees. But that not emphasize as employees we do whatever we want and go beyond breaking the regular environment of the company.
ReplyDeletePsychological contracts should be initiated at the earliest phase which in the recruitment stage, a new employee should be physiologically connected to the organization from the interview itself. Thankyou for the informative article!
ReplyDeleteVery informative article! keep up the good work!
ReplyDeleteComprehensive account on psychological contract. Very detailed description. I don’t see any attempt to relate it to your banking sector literature as you have done successfully before.
ReplyDelete