Psychological Contract

A recent study shows that 25% of employees feel positively engaged with their employer while 60% are only passively engaged, and 15% feel disengaged on various reasons.

The above study shows the percentage of commitment or the psychological contract between employer and employee and how it will affect their relationship and the business directly in turn.

What is Psychological Contract:

Psychological contract can be defined as an unwritten mutual expectations of commitments from employee to employer and employee to employer. In other words psychological contract is an individual’s belief in the two way obligation between employees and the organization. It takes a strong hold when the employee believes that the employer owes them what they own in return to the employer.

Importance of Psychological Contract:

This has become increasingly a relevant aspect of workplace relationship expected between the employer and the employee. The mutual trust is otherwise an investment on the better outcome. Present day scenarios shows that both the employer and the employee do not want to get in to any personal relationship between them. A mutual business relationship alone prevails within the four walls of the jungle that – you work I pay and I work you pay. Other than this no one wants to foster any false relationships and stick to that. Loyalty becomes old fashion and the commitment to the work is directly proportional to the extra money. Morality in businesses is diminishing hazardously and the trust in people as well.

We need to look closely and rediscover this psychological contract since it will help to bring more benefits both to the employer and the employee. Most of the recent researches struck on that the organizations which has the high number of positively engaged employees will result in higher customer satisfaction.

In the current business situation, this mutual contract agreement cannot be ignored or taken for granted. With the express transform in today’s workplace, this contract can not be ignored or taken for granted.

Breach of contract:

When either of them is breached, employers will see negative emotions from the employee such as anger, betrayal, or sadness. It spoils the relationship between the two and when it comes out, most of the other employees will lose hope as well. Commitment from them will be go down drastically and the employee will not work over time, share ideas.

Conclusion:

To conclude, the psychological contract is the responsibility of both the employee and the employer. Even though both have different responsibilities, both should value this and try to stick to them. Rewriting or re-establishing the psychological contract could bring a sense of renewal and reinvigoration on both sides.