Psychological Contract

A psychological contract is a belief based on commitments, expressed or implied, regarding an exchange agreement between two parties, as commonly used between an individual and an employer. People typically are motivated to fulfill the commitments they have made to others, consistent with their own understanding of what those commitments entail. In employment, psychological contracts can vary considerably across workers and between firms. They can be as limited to highly economic or transactional terms, such as an hourly wage for a temporary worker who ships packages over the holidays, or as complex and broad as the generous support and mutual investment characteristic of high-involvement work. Employers in turn have their own psychological contracts with individual workers.