In recent years, there exist many new types of economy in globalisation, and then it results in varying new types of job in which different job descriptions depending on different industries. More importantly, the role of employees is day by day appreciated as a core component in the development and the success of any organisational productivity and any company respectively. That is the reason why psychological contract needs to be invented in a new economy whilst loss of trade unions. Subsequently, this essay will not only clarify how the psychological contract is defined and how it is evaluated and applied in organisations in reality but also answer the question why a psychological contract is considered as so important in the management
…show more content…
Likewise, when the demands of employees have been provided, they are treated with all respects, their efforts are rewarded, so actually they perceive what their employers have delivered on the deals and they feel motivated, engaged and committed to their employers. As a result, certainly they will be inspired to work harder and harder to reciprocate their employer’s offers. In brief, Guest (2001) argued that “employees having a positive psychological contract is the existence of a larger number of fair and effective human resource management practises in the business”.
In contrast to a positive psychological contract, the problems come up with a negative psychological contract, leading to leave the business due to negative potential behaviours and attitudes. Accordingly, the implications of “the instability of the psychological contract and the considerable scope for misinterpretation” (Robinson and Rousseau, 1994) go along with multiple expectations from different parts of organisations will have “a cumulative impact on the employment relationship which, ultimately, may result in either employee resignation or dismissal” (Wilton, 2011) as well. Importantly, all of that reach closely to a lowered effort, degraded enthusiasm and motivation, reduced goodwill, more stressful, partly caused by over working hours without any incremental wage, the working condition is worse or unsafe and so on; thus, it brings in lowered productivity and lowered outputs