Psychological contract

A psychological contract is individual’s personal belief in mutual commitment (Robinson, 1996). The concept was further developed by the scholar Rousseau (2000) ^[1] in contemporary research, and it refers to the relationship between employees and the organisation they are working for. Organisations set up the expectations of their members/workers in the form of contracts (work descriptions). There are two basic types of contracts: one of them is the traditional employment or player’s contract (in the case of sports teams), which is written down, and the other type is the unwritten, informal psychological contract concluded between the members and the organisation (leader), determining their relationship (Sass, 2005).

The work of Coyle-Shapiro and Parzefall (2008) gives us an insight into the historical development of the psychological contract. The excellent article can be read under the following link in English:

http://eprints.lse.ac.uk/26866/1/Psychological_contracts_(LSERO).pdf

It has been already mentioned in the introductory chapter that the concept of the psychological contract is defined by Robinson and Rousseau (1994) in the following way: the perceived mutual obligations that characterize the employee’s relationship with his/her employer, where the psychological contract contains all the beliefs concerning what the employer and the employee are obliged to provide and what they are entitled to expect from one another. There are different types of psychological contracts. The following section describes the frameworks on these types suggested by Rousseau, Shore and Barksdale.

Rousseau (1990, 1995) identified the following four types of psychological contracts on the basis of the dimensions of time frame and tangibility: a transactional, a transitional, a balanced and a relational psychological contract.

• A transactional psychological contract comprises specific and detailed rules that are to be followed by employees, which means that individual decisions may not be made in situations to which they are applicable. In these cases, neither employers nor employees find it important to make new members become more committed ones (Mező, Kovács, 1999).
• A relational psychological contract puts more emphasis on the freedom of members as individual solutions are important too. This type of contract is characterised by a great extent of flexibility and the ability to change to suit new situations (Mező, Kovács, 1999). Members are loyal to each other and mutually take care of one another, which enables them to put extra effort into their work in order to achieve goals. Relational contracts help employees internalise certain goals, those of their organisations, for themselves. This situation enables them to identify with their organisation and strengthens their commitment too.
• A transitional psychological contract is characterised by insecurity in general, which means that the future of a member is unpredictable leading to low confidence; additionally goals are undefined as well. Members have little information about the organisation and the changes occurring there, which does not help them to consider their future to be predictable and secure.
• A balanced psychological contract requires members to be able to undertake well-defined tasks, enabling them to develop their skills (while such organisations also provide courses and trainings for their employees), which is also advantageous for the organisation. Individuals are employed for a long period of time, which offers them future perspective and improves their commitment in this way too.

Table 1: The types of psychological contract identified by Rousseau (1995)

The second typology of psychological contracts was established by Shore and Barksdale (1998) (Janssens et. al, 2003). Based on the degree of balance and the level of obligations, they identified four types of contracts.

1. Mutual high obligations: this is a balanced type of psychological contract, and it is characterised by high levels of mutual commitment between members, creating the employees’ affective involvement, which also maintains their intention to stay.
2. Mutual low obligations: although this is a balanced type of psychological contract too, there are low levels of commitment between parties. Members are not involved emotionally.

The remaining two types are not balanced:

3. Employee over-obligation: it is an imbalanced state when an employee is much more committed to an organisation than it is required, making the relationship asymmetrical. Such organisations do not wish to maintain relationships with individuals.
4. Employee under-obligation: this is the direct opposite of the previous type. An employer is more obliged than an employee, who does not want to be a member of the organisation, making the relationship imbalanced.

As a matter of fact, only the first type creates optimal working conditions, also improving the performance of organisations (see Janssens, Sels, Van Den Brande, 2003).

There is another widely-discussed topic in the research on psychological contracts, namely the consequences of the violation of such contracts (Turnley et al, 2003). According to the scholars dealing with this question, such violations affect the attitude and behaviour of members in a negative way: these occurrences diminish members’ satisfaction and trust, increase staff turnover, creating a negative atmosphere within the organisation.

There are other researchers who also studies the effects of psychological contract violations (Lemire, Saba, 2005). The ones examining the cases of such violations at state-owned and private organisations concluded that these occurrences might lead to a decrease in mutual trust and affective commitment, as well as to the fall of organisations. In such cases, members consider what is going on at the organisation and weigh the current situation in order to make appropriate decisions after looking at organisational and locational factors carefully. Behaviour types following such situations are to be described later.

Sharpe (2003) describes the components of psychological contracts from the perspective of the changes in working conditions. According to Sharpe, a psychological contract consists of the following key components: the environment, culture, the basics of reward, the components of motivation, the conditions of promotion, the delegation of tasks, mobility within the organisation, status, opportunities for personal development, responsibility, trust, and attachment (commitment).

To conclude, we can see that psychological contracts in general aim to develop organisational commitment, which is mainly based on the existence of trust (between an organisation and its members) and satisfaction (that of an employee/member).