The Psychological Contract

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Organisational Behaviour: Theory and Practice.|
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Question; It can be argued that the state of the relationship between the actors within an organisation influences its ability to achieve its goals. The employment relationship is arguably one of the more significant relationships that occur in an organisation particularly the psycho-social component. Critically evaluate the so called theory of the the psychological contract, does it provide a valid, reliable and predictable explanation that may contribute to an understanding of the organisational success and failure?| |

Date |
4/24/2013|
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University of Hertfordshire,
Business school.
Department of Human Resource Management.

According to Cullinane and Dundon (2006) there has been a lot of interest in the concept of the psychological contract by researchers. This interest has grown progressively over the last 10 years. Although this concept first originated outside HRM, it has become a device for analysing and explaining HRM. Furthermore, the concept of the psychological contract has been helpful in understanding organisational behaviour and employment relationship that exist between the employer and employees in an organisation (Cullinane and Dundon, 2006).

In spite of the wide interest and wealth of literature concerning the psychological contract, there still is no one accepted definition (Anderson and Schalk, 1998). The definitions are in various perspectives as to what the psychological contract is meant to do and what it is, also the importance of implicit responsibilities of the employer and employee and other emphasise on the importance of understanding what the employee expectations are from the organisation. (Rousseau and Tijoriwala, 1998; Atkinson et al, 2003).

This research will be looking at the role of the psychological contract in the organisation. Furthermore we will trace the origin of the psychological contract and also clarify some of the major theoretical contributions that have provided the knowledge and understanding of the concept. Consequently, major unresolved theoretical issues will be addressed. And in conclusion there are some suggestion for future in-depth study about the psychological contract.

Researchers have been aware of the concept of psychological contract over a century ago. The psychological contract developed in two phases from 1958 to 1988 and 1989 onwards (Barling and Cooper, 2008). The major developments that have steered its use as an analytical framework has been provided by Rousseau. According to Cullinane and Dundon (2006) interest in the psychological contract as a management theory was driven in the 1990s by researchers in order to search for a recent and more innovative people management practice in the midst of economic downturn.

Argyris (1960) is the first to coin the term psychological contract, however the employment relationship as an idea of exchange can be traced back to the work of Barnard (1938) and March and Simon (1958). The theory of equilibrium of Barnard (1938) posit that employees continuous engagement depends on adequate rewards from the organisation. There is an idea of the reciprocal exchange underlying the organisation-employee relationship. This has been elaborated by March and Simon (1958) in their inducement-contributions model. They argue that employees tend to be more satisfied when more inducement is offered by the organisation compared to what they have to give in return. The organisation feels that the employee needs to contribute more to the organisation in order to get incentives from the organisation, which in turn needs to be striking enough to draw out contributions from the employee. The research by March and Simon (1958) is seldom accepted in the concept of the psychological...
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