The concept of the psychological contract (PC) is a crucial aspect of employee-employer relationships. The term `psychological contract` was first coined by Denise Rousseau in 1989, and it refers to the unwritten and implicit expectations that employees have about the employment relationship, including the promises made by the employer, the obligations and responsibilities of the employee, and the mutual trust and understanding between the parties.
In essence, the psychological contract is an unwritten set of expectations and obligations that exist between the employer and employee. While the legal contract between an employer and employee outlines specific job duties, pay, and benefits, the psychological contract is more about trust and the sense of commitment that employees have to their employer.
Psychological contracts can be categorized into two types: transactional and relational. Transactional contracts are based on the exchange of specific services in return for payment, whereas relational contracts are based on mutual trust, commitment, and loyalty. A relational contract expects mutual investment and a long-term relationship, where both parties have a vested interest in the other`s success.
One significant aspect of the psychological contract is that it is often implicit and not formally documented. Therefore, the employer may not be aware of the employee`s expectations, which can lead to misunderstandings, conflicts, and job dissatisfaction. Employers need to identify and understand employees` unwritten expectations to create a positive work atmosphere, foster employee loyalty and motivation, and ensure job satisfaction.
The psychological contract is essential to employee motivation and job satisfaction. When employees feel their expectations are met, it contributes to their sense of commitment, which can result in long-term employment and higher levels of job satisfaction. On the other hand, a broken psychological contract can lead to erosion of an employee`s commitment, job dissatisfaction, and eventual turnover.
In conclusion, understanding and managing the psychological contract can have a significant impact on the employer-employee relationship`s success. Employers who take the time to identify and meet employees` unwritten expectations can create a positive work environment that fosters employee loyalty, motivation, and job satisfaction. Therefore, employers must prioritize building a positive psychological contract with their employees to create a successful and rewarding work atmosphere.
