Through the course of this article let’s understand what psychological contracts are and who they bear a relation with employee engagement and how we can manage them.

 

What constitutes psychology contracts?

 

Psychological contracts are essentially complex as a wide variety of factors decide what they are. Culture, history and social context are some of the factor that go into the making of Psychological contracts.

Psychological contracts in an organizational setting can be understood as a written and unwritten agreements between the employer and the employee. A lot of tangible and intangible aspects are involved. The employee views it as a promise by the employee in return to the commitment by the employee.

Psychological contracts can be broken up into relationship contracts and transactional contracts. Relationship contracts can revolve around aspects like job security, ethics etc. provided/practiced by the organization. Transactional contract may include aspects like compensation and benefits, career prospects etc.

 

The diversity and changing aspects of psychological contracts

 

Due to the varied experiences undergone by the employee and the cultural, historical and societal factors specific to the employee bring about diversity in the psychological contract. Essentially these contracts may vary by race, gender, nation, religion, culture, language etc.

Now it is very easy to understand that any change in the trends and perspectives of the contributing factors directly contribute to the change in the psychological contract by the employee. Organizations must be aware of this fact and ensure that they are in line with the aspirations of the employees. As more organizations are relying on the right talent to lead the growth, attracting and retaining the best employees is vital.

 

Psychology contracts and organizational performance

 

One can intuitively understand that employee engagement is directly dependent on the satisfactory fulfillment of the psychological contract experienced by him or her. Engaged employees ensure high organizational performance, a very desirable outcome by the organization. If the employee is not satisfied he can affect the performance of fellow employees and may quit eventually.

Hence, organizations must pay due attention to the psychological contracts experienced by the employees.

 

Knowing employee psychology contracts

 

How can the organization understand the psychological contract by an employee? Organizations must understand what kind of culture they would like to maintain. Align it with prospective and current employees. This ensures the right fit.

Successful organizations can also try to understand what is contributing to their success, why its employees are productive and why they like to be employed by the organization. Organization can then tend to attract employees with similar psychological contracts ensuring fit.

It is important to note that organizations must attract the top talent and hence organizations need to maintain segments of employees with different psychology contracts. The relationship contracts may remain same across different segments but the transactional contracts may vary.

Various data points like job applications, exit interviews, engagement questionnaires, organization effectiveness survey etc. and provide a view of the psychological contracts carried by the prospective and current employees. Changing aspects of the psychological contracts can also be captured in this way.

 

Change management & psychological contracts

 

The employees of an organization will set up psychological contracts with the employer over the course of their employment. When a new change is initiated by the organization, the employees feel threatened at the psychological contract level. Successful change initiatives require from the employer to ensure that the employees clearly understand the impact the change brings to the psychological contact. The communication channels between the employee and the employer must clearly carry the information effectively. Any problem here will directly affect the change initiatives success.

Successful change management and clarity in the psychological contracts held by the employees will help the employer to keep workplace negativity under check.

- Sandeep Devarapalli

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