Psychological contract

Descriptions and definitions of Psychological Contract (PC) first emerged in the 1960s, notably in works of organizational behavioural theorists Chris Argyris and Edgar Schein.

The PC is a deep varied concept and is open to a wide range of interpretations and theoretical studies. Primarily, the PC refers to the relationship between an employer and its employees. Simply, in an employment context, the PC is the fairness or balance (typically as perceived by the employee) between:

• how the employee is treated by the employer
• what the employee puts into the job.

The theory and principles of the PC can also be applied beyond the employment situation to human relationships and wider society.

At the heart of the PC is philosophy – not a process or a tool or a formula. Respect, compassion, trust, empathy, fairness, objectivity – qualities like these characterize the PC, just as they characterize a civilized outlook as a whole.

PC – definition and usage

In management, economics and HR, the PC is the actual – but unwritten – expectations of an employee or workforce to the employer. the PC represents the obligations, rights, rewards, etc. that an employee believes he/she “owed” by employers, in return for the employee’s work or loyalty.

The PC is quite different to a physical contract or document – it represents the notion of “relationship” or “trust” or “understanding” which can exist for one or a number of employees, instead of a tangible piece of paper or legal document whoch might be different from one employee to another.

Any definition of the PC sets a number of complex dimensions:

· There are a series of mutual obligations on both sides (which include, crucially, intangible factors that can be impossible to measure conventionally)

· The obligations are partly or whole subject to the perceptions of the two sides (even more complex: percetions are changeable, they create repeating cause/effect loops or vicious/virtuous circles, which are scientifically impossible to resolve)

· overall the PC itself has a very changeable nature (includes social and emotional factors that are not necessarily work-driven.)

· the PC is almost never written or formalized (almost always a purely imaginary framework or understanding, which leaders rarely prioritize as more real or manageable issues )

Work used to be a relatively simple matter or hours or piece-rate in return for wages. it is a lot more complicated now, and so inevitably are the nature and implication of the PC.