What is psychological contract? To what extent is psychological contract applicable in the 21st century?
Psychological contract, not written compared to legal contract, is mostly accepted by the two parties in the employment. In 21st century, since the nature of work has experienced a great change, psychological contract, which seems to have new content, is paid more attention to than before. It appears that a fair and positive psychological contract may contribute to success of a business. The first session of the essay will define what psychological contract is. The second session will discuss the changes of the psychological contract in 21st century, and the third will show how psychological contract is applicable
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In a global company, employees are even required to work around the world, far more beyond their expectation. This tendency occurred in the late 1980’s, and is more obvious when entering the 21st century. Hauw and Vos (2010) also demonstrate that Millennial generation (born after 1981) is more influenced by characteristics such as optimism and careerism when they grow up to acquire a job, not just by job security and payment. These young people are aware of increasing flexibility of jobs. As they are more likely to find alternative jobs, employees have more power to balance the relationships with employers. Employees can change work instead of lifelong employment if they consider they are unfairly treated. This new psychological contract is quite applicable in many competitive modern enterprises to develop the efficiency of human resources in the 21st century. It is widely accepted that a balanced and fair psychological contract can make business practices more effective. According to McGregor’s theory (1960), modern enlightened leaders are more likely to understand the theory of psychological contract and to develop a positive approach to achieve a fair psychological contract. For example, a number of high technology companies such as Facebook, You Tube have been established in this