To What Extent Is Psychological Contract Applicable in the 21st Century?

Topics: Employment, 21st century, Late-2000s recession Pages: 3 (954 words) Published: November 21, 2011
What is psychological contract? To what extent is psychological contract applicable in the 21st century?

Psychological contract, not written compared to legal contract, is mostly accepted by the two parties in the employment. In 21st century, since the nature of work has experienced a great change, psychological contract, which seems to have new content, is paid more attention to than before. It appears that a fair and positive psychological contract may contribute to success of a business. The first session of the essay will define what psychological contract is. The second session will discuss the changes of the psychological contract in 21st century, and the third will show how psychological contract is applicable in business in this new century. The following section will discuss why the psychological contract is not applicable in some situations. Psychological contract, first emerged in the 1960s, and became more popular among academic field following the economic recession in the early 1990s. It is primarily defined as a mutual relation and expectation between employers and employees, and also refers to obligation between two parties. Compared to legal contract of employment, psychological contract is informal, but may have more influence on employees’ daily behavior. The theory of the psychological contract is widely applied to human relationships and wider society, such as the relationship between employees and employers, or a supplier and its customers in recent years. (The psychological contract, n. d.) It is evident that psychological contract in 21st century differs from that of the previous period. Since modern technology (for example, internet and mobile phone) has been introduced and the structure of organization changed, Guest (1998) argues that the traditional relation of providing a secure job, a fair payment and reliable pensions in the entrepreneurs in return for loyalty and good performance is replaced. Employers and...
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