Essay About Psychologycal Contracts And Psychological Contracts

Psychologycal Contracts – A Key To Motivating Staff
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Psychological Contracts — A Key to Motivating Staff
Raising motivation levels and ensuring commitment are two of the key success factors
when managing people at work. Increasingly managers, whether consciously or not, are
turning to the psychological contract as a way to retain and motivate key staff. In a
recent CIPD survey, 9 out of 10 HR managers agreed it was a useful tool when managing
and recruiting staff, while over one third said they used the concept of the psychological
contract in their everyday work.
What exactly is the psychological contract? It is basically the unspoken contract between
the organisation and the job holder. It encapsulates the expectations of both sides as to
what each expects the employment contract to deliver. Although informal and often
unspoken of directly, the matching of expectations at this level will often lead to an
increased sense of happiness among employees as well as delivering real results. The
psychological contract is something which begins at the recruitment phase, with
expectations being delivered on or not following this. As recruiting and retaining high
quality employees is a key function of management, over promising and under delivering
on the psychological contract can be a vital source of demotivation among the workforce.
These early experiences in an organisation can have a major effect on how the employee
perceives the organisation they have joined. When the experience is positive, job
satisfaction levels, commitment and morale are all boosted, thus leading to a greater
sense of loyalty to the organisation. Also, employees who are given an effective
induction become more productive more quickly as well as being more creative within
their role. Therefore, the first impressions created by an employer form a lasting
impression on any new recruit, particularly in terms of how they evaluate how their
expectations are being matched by their employer.
Some of the questions which employers might consider in establishing a psychological
contract with a new employee include:
What are your expectations from me as your manager?
What do you see as your role in relation to those you will interact with in your job?
What do you think will give you the greatest sense of meaning in your role?
Do you understand our culture and how does this fit with your values?
What would it take for you to walk the extra mile for your employer?
What elements of work give you the greatest satisfaction?
The literature differentiates between two elements of the psychological contract which
include transactional and relational parts. The transactional element equates most closely
to the formal, written contract, specifying a rate of pay and possible bonuses for services
provided. The relational element however relates to the emotional and social exchange
between both parties. Relational elements centre around trust, loyalty and the
interpersonal exchange between manager and staff. In a changing working environment,
where job security and a stable environment are more difficult to sustain, it is this aspect
of the psychological contract which is the most challenging to manage. Research in the
United States now suggests that the psychological contract has changed in terms of it’s
relational element, whereby it’s importance, particularly in terms of perceptions of
fairness and job satisfaction, has risen. Employees perceive their employment
relationship whereby the behaviours of the employer are rated in terms of fairness and
equity relative to the stated contract, but in particular, the psychological contract.
Although these obligations may be poorly defined, both parties expect the other to fulfill
their side of the unspoken bargain. When these needs are not