Defining the psychological contract – expectations, assumptions and promises
‘What is the psychological contract?’ I hear you ask. Well now, in short, the psychological contract is the unwritten, often unspoken, expectations that exist between an employee and their employer. So it’s not a written employment contract. No, it’s more difficult to pin down than that, it’s more subjective than that. Like I say, it won’t even be written or talked about anywhere. But…it will be assumed. Often by both parties. And assumptions really matter.
Many writers on the topic have wondered how an organisation even has a psychological contract with its employees? The organisation isn’t a living being so it won’t, but probably the organisational psychological contract is threaded through the values of an organisation and the culture – ‘the way that people that people do things around here’, as culture writer Ben Schneider said. So the organisation’s assumptions are that you’ll behave in a way that’s consistent with its values and culture.
The employee psychological contract
Mainly what I want to talk about today though is the employee psychological contract – which is highly subjective, open to change and entirely individual. And specifically, what I want to talk about is what the pandemic has done to people’s psychological contracts, what this means about being an employer and what you can do about it – both as an individual employee and also as a manager or as a people professional, responsible for representing the organisation.
Disclaimer alert, 21 years ago, I submitted my doctoral thesis (my PhD final submission) to the University of Surrey’s Department of Psychology and its title was ‘The Nature of the Psychological Contract at Work’. So I’m going to do my best to avoid (a) being triggered by the trauma of my PhD oral exams where I got some of my findings back to front…I think I styled it out tho and no one really noticed and (b) going down geeky rabbit holes. So I’ll do my best to keep it practical and relevant.
How has the psychological contract time and again over the past 50 years?
Over the years, researchers on the topic of the psychological contract have regularly observed large scale shifts in the general expectations of workers as regards their places of work. Of course, this varies around the world and for simplicity, I’m going to focus here on the UK, although in many cases, there are similar patterns that can be seen in the US and Europe at least.
Looking back in the UK, there was a big shift in the psychological contract during the 1970s and 1980s (partly due to a series of economic recessions) with a transition from the ‘job for life’ expectation (like my employer is going to make sure that if I want to stay here, I’ll be able to from the day I start work to the day I retire) to more of a multi-job/multi-employer model. The net of that was that employees had to become more self-directed, self-sufficient and less dependent on employers for safety and security, as organisations became hungrier for hiring the best talent. And that’s a big psychological shift. And a big shift in the psychological contract.
During the early part of the 1990s, there was another recession in the UK and another shift in the psychological contract, again towards even greater self-sufficiency and with more fluid careers becoming an option, people wouldn’t just employer-hop, they started to sector-hop more widely.
The mid-00s saw a global recession due to the financial crisis of 2008 which changed everything again, including employees’ expectations of their employers. Once again, seemingly out of nowhere, great ripples were sent out from the financial sector where swathes of people lost their jobs, manufacturing decreased and people had to find a way through the turmoil and fallout with less and less support from their employers.
Has the pandemic changed things again?
With all that change affecting workers and their expectations about work and their employers over several decades, has the pandemic really made a dent in what people now expect from organisations?
In a word, yes. Because the pandemic recession, which is still happening of course, has enabled more distance working and homeworking than ever before. It has led to the revival of a word last seen at the end of WWII: furlough. And it has been profoundly unsettling, because of its unprecedented nature…governments and employers are in uncharted territory and no one has a map. Or a compass. Or a clue.
How has the employee psychological contract changed post-pandemic?
What has changed, then, on the employee side – how have employee expectations shifted as a result of the pandemic and the recession which has followed in its wake? Bear in mind that I said earlier that psychological contracts are highly individual and also dynamic, so the truth is, you need to understand each employee’sexpectations, wants and needs rather than making sweeping judgements about generations or big groups of workers. That said though, some themes are emerging, and they are, in no particular order:
- Employees want more control – over where they work and when they work. There is an expectation that as long as they get their work done, they should be allowed to do that more on their own terms than ever before. That’s partly been the result of greater tech enablement of work for some people and partly because workers feel now more than ever that they need to look out for themselves and not assume their employer has got their back. Employees now expect to be trusted because for the past 2 years, many people have been asked to work with less supervisory involvement than ever before, so they feel that trust has been earned.
- On that note, employees now also expect their well-being and mental health to be taken seriously as well as their personal circumstance. Mental health and well-being is now, rightly, a major agenda point as people now put self-care higher on the priority list after the past 2 years.
- Thirdly, despite tech and home-based working, managing through a screen and so on (and perhaps because of it), employees now expect to be understood, to have a voice, to be heard and to be seen.
- Despite the apparent looser connection that employees feel with their employer, there is still an expectation that their employer will provide stability and security to some extent, that it will reward fairly, and that it will respect boundaries.
So that’s the landscape. But tensions arise when the new expectations of employees aren’t matched by what the organisation can deliver or what it expects. Trust has been eroded on both sides and that creates rocky foundations and some degree of over-vigilance around motivations and behaviour from both parties.
In organisations and sectors with a more traditional view of work, organisations haven’t been able to shift quickly enough and have lost people as a result. Some organisations haven’t taken individual needs or well-being seriously enough for workers, which has led to the psychological contract being undermined or even starting to fragment.
How can you manage your own psychological contract with your employer?
What can you do as an employee in this context? How can you get the psychological contract on the table and working as you would want?
- Speak up – talk to your line manager (which is closest you’ll get to an organisation-level psychological contract after all…your manager is your most accessible representative of your organisation). If work isn’t working for you. If you’re not being seen, heard, understood or accommodated, then explain what, from your POV, would need to change in order for you to be engaged and motivated again.
- Talk to others – understand what’s happening for other people. Social support networks are so vital for our mental health and there’s no question that connecting with people has been made more tricky during the pandemic coz it’s been harder to get face to face. That way, you also get to understand what other people are expecting and doing around reimagining their work and that might build your confidence to get some more control in your own role.
What can you do as a manager or as a people professional?
- Take mental health and well-being seriously. If someone flags that they are struggling. Or if a colleague notices that someone isn’t ok, do something, don’t be a bystander. Show your support, offer options as appropriate, connect as a human.
- When someone makes a case for more flexible working or wants to flag a change in life circumstances, apply that same principle – listen to understand and then reflect on what you’ve heard before responding.
- Communicate communicate communicate – if there’s one thing we’ve learned about trust during the pandemic, it’s that a lack of communication can erode it very quickly. So be open if you don’t know the answer. Be as transparent as possible about policy-setting and decision-making, rather than keeping things behind closed doors for too long.
- Respect work/life boundaries and lead by example. Don’t be texting or emailing people in the evenings or at the weekend unless you’ve got a specific one-off agreement with that person. And even then, I would seriously challenge whether you need to be contacting people outside of working hours. We all need the opportunity to switch off from work.
- Assume positive intent – there’s very few people actively trying to abuse the system. As long as work is done to the required quality level in the required time frame, does it really matter how and where that work is completed? So trust people before they’ve earned your trust and unless you have evidence to the contrary, keep trusting.
Avoiding the great resignation – get the psychological contract on the table…now!
The pandemic has been seismic in its impact on all our lives. And it will continue to affect us for decades to come. The new psychological contract (or should I say the ‘new normal’ psychological contract? Errr, no, I should not) is still emerging, but themes are definitely starting to take shape. If you’re an employee, a manager, a people professional or a senior leader, keep the psychological contract in mind. Or rather, don’t just keep it in mind! Get it out on the table, with respect and sensitivity and discuss what’s going on for your people, person by person, so that no one is left with unmet expectations or broken promises. Do that, and you might just avoid the brunt of the great resignation. Till next time, stay strong.
