Critical Analysis of the Psychological Contract

Topics: Employment, Contract, Breach of contract Pages: 8 (2812 words) Published: November 7, 2010
Using your placement, you are required to critically analyse the nature of the psychological contract within the workplace and use 2-3 other themes and topics from the module to demonstrate the links between different concepts and issues. This essay intends to examine the psychological contract and its use at Delcam Plc. It is also going to look in depth at the way in which Delcam approaches the work-life balance, the relationship between managing the work-life balance and the psychological contract and finally the outcomes of satisfying the work-life balance. Delcam is a CADCAM software supplier selling mainly in to the manufacturing industry so the focus of this essay is going to be on the employees at Delcam with an engineering background that are in jobs such as sales executive, application engineer and product manager.

Rousseau and Greller (in Conway and Briner, 2005: 22) define the psychological contract as ‘individual beliefs, shaped by the organization, regarding terms of an exchange agreement between the individual and their organization.’ Dissimilarly Herriot and Pemberton (1997: 45) in Conway and Briner, 2005: 22) state that the ‘perceptions of both parties’ of their relational obligations are included in the psychological contract. Although some theories, like Herriot and Pemberton’s suggest that the psychological contract is a two way concept representing both the employee’s and the employer’s perspectives, the majority of work that has been done focuses on the individual’s perspective and therefore this work is going to focus on this also. Nonetheless the psychological contract is still an exchange of some sort between the employer and employee, Conway and Briner (2005: 30) put forward that once positive exchanges between employer and employee become consistent or repeated then a psychological contract is created. However it could be suggested that if these exchanges are not defined, it could lead to an employer violating the psychological contract without realising, especially if they are not aware of the existence of the psychological contract or how to manage it effectively.

Shore and Tetrick (in Lester and Kickul, 2001: 11) believe that ‘an individual often expects, seeks out, and creates a psychological contract as a means for understanding and representing’ the relationship that they have with their employer. Therefore if an employer such as Delcam sought to understand the psychological contract and what the employee expects of them then this could reduce the likelihood of violation or breach of the contract. The consequences of violation have been found to range from a decrease in employee trust and job satisfaction to a reduction in valuable contributions and even exit of the firm altogether (Robinson, Rousseau and Morrison cited in Morrison and Robinson, 1997: 227). Although this uses resources it may be worth investing in as it could be argued that, especially in the current economic climate, employees should be viewed as a valuable resource and commitment from them is crucial.

Following many writings on the psychological contract, in particular Rousseau’s 1989 article, many writers now agree that the psychological contract is defined by implicit and explicit promises (Conway and Briner, 2005: 26). Promises are built upon obligations which employees feel have been promised to them. There has been much discussion on the type of promises covered by the psychological contract. Although most theorists have their own interpretations and details of what is included in the psychological contract a lot of research agrees or builds on Rousseau’s findings (1990). After looking in to both what employees think is expected of them by employers and what employees think they had promised in return Rousseau summarised the following:

|Employer Obligations |Employee Obligations | |Promotion...
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