The Psychological Contract

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Critically evaluate the utility of the psychological contract for understanding the contemporary employment relationship. (2500 Words) Introduction
Up until the 1990’s the psychological contract didn’t get a lot of research literature, whereas more recently it has become increasingly popular, and vast in both volume and critique. It is suggested that this blossoming of research is because of fundamental changes in the workplace, commonly referred to as the ‘new deal’ (Sparrow 1999). The traditional idea of having a “job for life” is no more, people now transfer across their careers to suit themselves, and it is not uncommon to see a graduate working in a field far from that of their study, ultimately leading to a growth in employee empowerment. These changes also include a demand for increased flexibility, not only in the amount of hours, but also in the ways of working. An area that was once controlled by formal contracts has seen the emergence of a continuing HR discourse, predominantly with the concept of the psychological contract. In recent years it has become an influential tool used to help us understand the contemporary employment relationship, although it has it critiques. The aim of this essay is therefore to use the relevant academic literature to explore the many concepts involved in the employment relationship and the utility of the psychological contract. The second part of the essay will be used to critically evaluate these findings The evolution and types of psychological contract

The written employment contract that has controlled work place politics for many years is fairly recent, emerging after the industrial revolution. Historically, the master – servant relationship was not a formal contract, and not legally protected. There was a need for a formal employment contract to protect workers and specify the exchange relationship between the employer and employee, traditionally these contracts were shorted and easier to understand but have grown progressively longer to cover the vast legal obligations. (Frazier and Anita 1995) identified that a critical problem with the written contract is that it is restricted by the asymmetrical nature of the exchange relationship in employment. Employees are limited in terms of what they can expect and what they can specify as what they desire in return. Employees face a similar limitation in respect to the issue that they can’t control the quality of the effort supplied by their employees as a whole; and although it is possible to take away any underperformers, if the workforce begins to lower their standards as a whole, there can become issues for the employer. This can be adapted to Marx theory of structural antagonism, there is rarely true harmony between the worker and employer, the employer will want more effort and the employee will want more money. Most workers are fed up of their employers because of this constant inequality. Homo-economics states that all workers are bothered about is getting paid but more recently people have understood that people’s needs are further than just money, and other wants it is a way of life and contributes to their social identity. This has resulted in organisations becoming more interested in motivation of staff. Early research by Argyris (1960) observed organisations and saw that the relationship between manager and employees were not specified in their work contract and therefore identified ‘The Psychological Contract’. He described it as an underwritten agreement that exists between an individual and the organisation when undertaking terms of employment (Argyris 1960). It is different from the formal written contract of employment which usually only identifies duties and responsibilities in a generalised form. It is a taken for granted stance even though the term is not that familiar. Argyris conception was based on the exchange theory, if you are involved in a positive exchange and are provided with something by someone...
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