Your questions answered, Inside Track, August 2010
I've heard people in my organisation talk about psychological contracts, what exactly are they and are they important?
A psychological contract is an informal agreement: the perceived (but mostly unarticulated) ‘expectations’ an employee and the organisation have of each other. A great example of this is the so called military covenant, but psychological contracts are everywhere.
It is important to get them out in the open, because they:
- Set the healthy dynamics for the relationship
- Clarify the understanding between employees and the organisation
- Create the practical mechanisms for alignment, integration and commitment of people to the organisation and its success
- Are usually more influential than the formal contract in affecting how employees behave from day to day (in a good way).
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