In the present dynamic environment, there is a significant change in the HR approach to managing the relationship between employees and employers. The psychological contract is used and plays an important role as a powerful instrument in order to measure factors influencing behavior and business performance in the workplace. This essay shows information about the definition of the psychological contract and its implications for management, leadership, and organizations. It also indicates the meaning of a psychological contract breach and its effects on employees.
The concept of the psychological contract had the origin in the 1960s and was developed by Denise Rousseau who is American academic (Jones 2017). It has attracted the substantial …show more content…
Transactional contracts involve specific exchanges relating to a narrow range of behaviors over a short term. These types of contracts tend to fulfill financial rewards such as profit sharing, allowances, compensation, and benefits in exchange for a variety of positive behaviors of employees (Devalapalli 2014). With a transactional contract, workers may expect financial and material exchanges for their work and have a short-term commitment to their obligations. For example, a salesman may expect to receive a spot bonus when they reach their sales targets for the week. This financial incentive motivates employees to perform well in a short period of time but it generally will not bring high performance in the long term. On the other hand, relational contracts refer to a long-term relationship with various opportunities and benefits in exchange for more extensive commitments to the organization (Rodrigo 2015). These contracts tend to be imprecise, uncertain and not only involve financial reward, but also rely on social-emotional exchanges based on trust, respect, and loyalty. It revolves around aspects like job security, ethics, recognition and so on. For instance, an employee who is loyal and works hard for 15 years in an organization will be provided a secure job, steady pay increases, and internal training and promotion opportunities. Besides, some …show more content…
A psychological contract breach is defined as an employee’s perception that their organization has failed to meet obligations associated with perceived mutual promises (Gakovic & Tetrick 2003). When the employees realize that there has been a breach of the psychological contract, the employment relationship can be adversely affected and they can experience different reactions, ranging from attitudinal to behavioral reactions toward the organization. It can result in the disaffection and demotivation of employees in the workplace (Jones 2017). For example, a worker who worked hard all year and stayed loyal to the organization expected to receive a Christmas bonus in order to buy his favorite iPhone X, but his received reward was just a membership card for gym club near the company. He lost his composure and became upset as a result of his breached psychological contract. In more serious cases, the psychological contract can lead to negative behaviors and sometimes deliberately malicious or deviant behavior. Individuals who experience psychological contract breach have the deviant tendency such as causing conflict, starting rumors and quitting the job that negatively affects productivity and work spirit of their co-workers (Calleja 2013). Breaches of the psychological contract also cause the lack of organization citizenship behavior in the
The concept of the psychological contract had the origin in the 1960s and was developed by Denise Rousseau who is American academic (Jones 2017). It has attracted the substantial …show more content…
Transactional contracts involve specific exchanges relating to a narrow range of behaviors over a short term. These types of contracts tend to fulfill financial rewards such as profit sharing, allowances, compensation, and benefits in exchange for a variety of positive behaviors of employees (Devalapalli 2014). With a transactional contract, workers may expect financial and material exchanges for their work and have a short-term commitment to their obligations. For example, a salesman may expect to receive a spot bonus when they reach their sales targets for the week. This financial incentive motivates employees to perform well in a short period of time but it generally will not bring high performance in the long term. On the other hand, relational contracts refer to a long-term relationship with various opportunities and benefits in exchange for more extensive commitments to the organization (Rodrigo 2015). These contracts tend to be imprecise, uncertain and not only involve financial reward, but also rely on social-emotional exchanges based on trust, respect, and loyalty. It revolves around aspects like job security, ethics, recognition and so on. For instance, an employee who is loyal and works hard for 15 years in an organization will be provided a secure job, steady pay increases, and internal training and promotion opportunities. Besides, some …show more content…
A psychological contract breach is defined as an employee’s perception that their organization has failed to meet obligations associated with perceived mutual promises (Gakovic & Tetrick 2003). When the employees realize that there has been a breach of the psychological contract, the employment relationship can be adversely affected and they can experience different reactions, ranging from attitudinal to behavioral reactions toward the organization. It can result in the disaffection and demotivation of employees in the workplace (Jones 2017). For example, a worker who worked hard all year and stayed loyal to the organization expected to receive a Christmas bonus in order to buy his favorite iPhone X, but his received reward was just a membership card for gym club near the company. He lost his composure and became upset as a result of his breached psychological contract. In more serious cases, the psychological contract can lead to negative behaviors and sometimes deliberately malicious or deviant behavior. Individuals who experience psychological contract breach have the deviant tendency such as causing conflict, starting rumors and quitting the job that negatively affects productivity and work spirit of their co-workers (Calleja 2013). Breaches of the psychological contract also cause the lack of organization citizenship behavior in the