Basic Concepts & Definitions
History and Definitions of the Concept: The notion of the "psychological contract" was first coined by Argyris (1960) to refer to employer and employee expectations of the employment relationship, i.e. mutual obligations, values, expectations and aspirations that operate over and above the formal contract of employment. Since then there have been many attempts to develop and refine this concept. Historically, the concept can be viewed as an extension of philosophical concepts of social contract theory (Schein, 1980; Roehling, 1997). The social contract, which deals with the origins of the state, supposes that individuals voluntarily consent to belonging to an organised society, with attendant constraints and rights. Argyris (1960) used the concept to describe an implicit agreement between a group of employees and their supervisor. Other influential early writers such as Levinson, Price, Munden, and Solley (1962), used the concept to describe the set of expectations and obligations that individual employees spoke of when talking about their work experience. They identified a number of different types of employee expectations, held both consciously (for example expectations about job performance, security, and financial rewards) and unconsciously (for example being looked after by the employer). Roehling (1997) credits Levinson et al (1962) with explicitly recognising the dynamic relationship of the psychological contract: contracts evolve or change over time as a result of changing needs and relationships on both the employee's and the employer's side. Schein (1965) emphasised the importance of the psychological contract concept in understanding and managing behaviour in organisations. He argued that expectations may not be written into any formal agreement but operate powerfully as determinants of behaviour. For example, an employer may expect a worker not to harm the company's public image, and an employee may expect not to be made redundant after many years' service. Like Levinson et al (1962), Schein emphasised that the psychological contract will change over time. Recent developments in psychological contract theory are largely dominated by Rousseau (e.g. 1989; 1995; 2001). Rousseau argues the psychological contract is promise-based and, over time, takes the form of a mental model or schema which is relatively stable and durable. Rousseau (1989) explicitly distinguished between conceptualisations at the level of the individual and at the level of the relationship, focusing in her theory on individual employees' subjective beliefs about their employment relationship. Crucially, the employer and employee may not agree about what the contract actually involves, which can lead to feelings that promises have been broken, or, as it is generally termed, the psychological contract has been violated. Rousseau's conceptualisation of the psychological contract focuses on the employee's side of the contract, so can be termed a "one-way contract". Much recent work has focused on the employee's understanding of the explicit and implicit promises regarding the exchange of employee contributions (e.g. effort, loyalty, ability) for organisational inducements (e.g. pay, promotion, security) (Rousseau, 1995, Conway & Briner, 2002). The employer's perspective has received less attention. Rousseau also distinguished between "relational contracts" which implicitly depend on trust, loyalty and job security, and "transactional contracts" where employees do not expect a long lasting relationship with their employer or organisation, but instead view their employment as a transaction in which, for example, long hours and extra work are provided in exchange for high pay, and training and development (Rousseau & Wade-Benzoni, 1995). This will be considered further in section "State of the Body of Knowledge" below. It is important to recognise that researchers have used the concept of the psychological contract in a...
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