‘‘Psychological contract’ is defined as the implied obligations of parties in the employment relationship.’ Rousseau (1995)
A psychological contract measures employee performance, attitudes and the well being of employees. It has proved to be an important aspect of a work place. It looks at the seriousness of situations by both employers and employees by looking at the effect it has on worker behavioural patterns.
The process of forming a psychological contract is simply when in the selection process, along with the job descriptions, interviews give out an outline of what is to be expected by prospective employees. When selected the new employees would have to then look at what was discussed during selection process and see if it meets expectations. At the final stages of the selection process there is a firm agreement on the employment contract. An explicit written contract is signed, at the same time immediately an implicit and unwritten but equally important contract is generated. This is known as the psychological contract.
The psychological contract may have Strategic implications as individuals want to know whether or not employee interests are taken in to consideration and that too with respect. One may be that seeing the economic state by the effects of recession and high levels of un- employability the economic growth has come to a halt and people becoming redundant with employees are often less willing to move jobs, preferring their current job security to career development elsewhere. Staffs are also more interested in the long-term viability of their employers however with this implication it is likely to unbalance the psychological contract in favour of employers. Management styles is an implication due to various styles of management allowing to adopt these different styles, by giving opportunities to receive feedback on the flow of performance which is then interpreted by employees. Employers need make it...
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