Psychological Contract

Features

The psychological and behavioral processes associated with the psychological contract are shaped by six characteristic features.

• 1.
  Voluntariness—Psychological contracts motivate people to fulfill their commitments because they are based on the exchange of promises the individual has freely participated in.
• 2.
  Perceived Mutuality—An individual's psychological contract reflects his or her own understanding of the commitments made with another. Individuals act on that subjective understanding as if it were mutual, regardless of whether that is the case in reality.
• 3.
  Incompleteness—Initial psychological contracts tend to be incomplete and need to be elaborated out over time. Because of bounded rationality, neither worker nor employer can recall all relevant details to be shared with another. Moreover, changing circumstances mean that not all contingencies can be foreseen. As a result, psychological contracts tend to become more fully detailed over the course of the employment relationship.
• 4.
  Multiple Contract Makers—A variety of information sources shape how workers interpret their psychological contract with an employer. Employers are represented by several parties, including the top management team, human resource representatives, and in particular, a worker's immediate superior, often the most influential agent in shaping employee psychological contracts. Informal sources, such as coworkers and one's social network at work, can influence how individuals interpret both the terms of their psychological contract, as well as the extent to which it has been fulfilled. Human resource practices such as performance appraisal systems often signal promised benefits and required contributions.
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• 5.
  Reliance Losses—When a party relies on the psychological contract as a guide to action, losses result if the other party fails to fulfill its anticipated commitments. Losses mean that benefits a party has relied upon failed to materialize and are the basic reason why psychological contract violation and change generate adverse reactions, including anger, outrage, termination, and withdrawal of support. Efforts that both workers and employer take to manage their psychological contract with the other typically focus both on fulfilling commitments as well as on managing losses when commitments are difficult to keep.
• 6.
  Automatic Processes—Over time, a psychological contract becomes an enduring mental model of the employment relationship. This mental model provides a stable understanding of what to expect in the future and guides effective action. Having a psychological contract as a mental model of the employment relationship helps employer and worker function despite having incomplete information regarding the other party's intentions or expectations. Subsequent information tends to be interpreted in light of the preexisting psychological contract. For the most part, this is functional because new performance demands can be incorporated into existing understandings of one's work role. But when existing psychological contracts are in conflict with new employment conditions, a more elaborate change process is required.

Types

Psychological contracts can take many forms depending on the nature of the worker's job, the employer's human resource strategy, and the motives the worker has in contracting with a particular employer. Promises can be very limited in nature, as in the case of the simple economic transaction temporary work entails, or, promises workers and employer make to each other can involve a host of relational commitments, including loyalty and mutual concern. Though the myriad details of a psychological contract can be as unique as each individual, general patterns differentiate how workers and employers behave toward each other.

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