Characteristics of Psychological Contract
A psychological contract refers to the unwritten, implicit agreements between employees and employers regarding mutual expectations in the workplace.
Unlike formal contracts, it includes perceptions of obligations, trust, and loyalty.
This dynamic agreement influences job satisfaction, motivation, and employee commitment, shaping the overall work culture.
Psychological contracts evolve over time-based on experiences, communication, and organizational changes, often dictating how employees perceive fairness and respect in their relationship with their employer.
The following are the 10 common characteristics of Psychological Contracts in the workplace:
Unwritten Nature
The psychological contract is not documented but is based on implied understandings between the employer and the employee.
These perceptions can vary from person to person, making the contract subjective and fluid.
Despite its informal nature, it strongly influences workplace relationships and employee behavior.
Mutual Expectations
Both employers and employees have expectations of each other, such as job security, fair treatment, and loyalty.
Employees may expect recognition, while employers anticipate commitment.
When these expectations are met, trust strengthens; when unmet, dissatisfaction can arise, affecting performance.
Dynamic and Evolving
A psychological contract evolves due to changes in roles, management styles, or organizational policies.
For instance, a promotion or company restructure can reshape employee perceptions, affecting their expectations.
Regular communication helps manage this evolution, reducing misunderstandings.
Perception-Based
Unlike formal contracts, the psychological contract is driven by personal perceptions rather than legal terms.
Employees may feel a breach if they believe promises have not been kept, even if the employer did not intend any breach.
Clear communication can prevent these perceived breaches.
Influences Employee Behavior
A positive psychological contract fosters employee engagement, motivation, and job satisfaction.
Conversely, a perceived breach can lead to disengagement, reduced productivity, and even higher turnover.
Organizations must ensure consistency between verbal promises and actions to maintain trust.
Emphasizes Fairness and Reciprocity
Employees expect fair treatment, recognition, and respect in exchange for their efforts and loyalty.
Similarly, employers expect dedication and high performance.
When fairness is perceived, employees feel valued and more inclined to contribute positively to the organization.
Affects Organizational Commitment
The strength of the psychological contract significantly impacts an employee’s commitment to the organization.
A strong contract encourages long-term loyalty, while a weak or broken contract may result in disengagement, absenteeism, or job hopping, impacting overall organizational stability.
Read More: Characteristics of Job Rotation
Non-Legal Obligations
Psychological contracts involve moral and ethical commitments rather than legal ones.
For example, an employee may expect professional development opportunities, which are not legally required but morally expected.
Meeting these non-legal obligations enhances trust and fosters a positive work environment.
Influences Leadership Perception
How leaders communicate, provide feedback, and fulfill promises directly affects employees’ perception of the psychological contract.
Effective leadership that respects these expectations strengthens employee trust and morale, whereas inconsistency or broken promises can harm the employer-employee relationship.
Can Be Breached
A breach occurs when one party perceives that the other has failed to fulfill their obligations.
For example, if an employee feels overlooked for a promotion promised verbally, they may feel betrayed.
Addressing breaches promptly through open communication and corrective actions helps restore trust.
Hence, these are the 10 major characteristics/ features of psychological contract in the organization.
Read Next: Characteristics of Employee Welfare
Siddhu holds a BIM degree and in his free time, he shares his knowledge through this website with the rest of the world.