‘What is the psychological contract? ’ Examine to what extent it is applicable in the 21st century. Name: Lin, Lina Linda Tutor’s name:Catherine Tsai Date:11/08/2011 Word count:963. Psychological Contract is an abstract contract that affects both employers and employees, a subtle contract without speaking or writing, contains assumptions and expectations from each party towards the other (Rousseau 1989). Compared to the past centuries, people tend to change jobs frequently and pay more attention to employees’ rights. It is a critical element in human resource management and plays a big role in modern society.
This essay has been organized in the following way. At first, this essay will define the psychological contract meaning and show a general description regard to the influence of psychological contract in the current situation. Then, a profound significance of psychological contract in strategic training practices will be examined. In contrast, a negative effect of psychological contract will be discussed by using an example from Chinese employees among Macao between 2005 and 2007. A comparison will be made of two key aspects: breach and fulfillment.
The final section will evaluate the extent of psychological contract applicability in the 21st century. Psychological contract plays a key role in the 21st century. People’s lives today are richer and more colorful, especially much easier to communicate with each other by using high technology. The poor are struggling to meet a higher living standard, the rich are eager to pursue a high-grade life. Among people’s interaction, psychological contract becomes quite important in human resource management, it affects both employers and employees and might have a decisive influence on the result.
Psychological contracts are defined as “employees’ perceptions of what they owe to their employers and what their employers owe to them” (Robinson 1996:574). Where the psychological contract is accepted by employees, the company would gain a great response and brilliant outcomes from the employees. However, where the contract is refused by employees, without good feedbacks, the well-organized performance might suddenly disappear. Employees’ attitude such as faith, satisfaction, dedication and motivation rely heavily on a harmonious and accepted psychological contract.
In the 21st century, the rapid development of psychological contract in strategic training practice has been widely focused. The significance and importance of psychological contracts in human resource management have been elevated. It has been argued that “strategic training practices can send strong messages to individuals regarding what an organization expects of them and what they can expect in return”. (Anvari, R. et al. 2011:2189). Rousseau and Wade-Benzoni (1994) pointed out that strategic training practices are used as a good way for information transfer, shaping terms of the psychological contracts.
It is quite useful when companies made excellent strategic training practices, the connection and relationship between employers and employees would be easy to build effectively and efficiently. In this way, companies could not only save more time on addressing emotional and psychological problems but also gained more motivation from employees to concentrate on work. In the meanwhile, a well-organized commitment could be built up. Both employees and employers would dedicate to work. The psychological contract which is accepted as fair and balanced by employees could be a competitive advantage of a company.
However, it might also cause critical problems if it is regarded as unfair or broken by employees. Research shows that psychological contract breach might lower employees’ job satisfaction and organizational commitment (Knight and Kennedy 2005). Furthermore, the employees’ emotions might be affected by show anger or frustration to employers. For example, many Chinese workers worked in Macao in 2005 to 2007, there is a research focuses on how the Chinese employees in Macao react when the psychological contract breach showed up. Joe, M. C. et al. 2011) demonstrated that employees would engage more organizational undesirable behaviors when they noticed the mutual exchange relationship has changed or disrupted. In addition, a series of problems would come while there is a psychological contract breach in the company. Psychological contracts affect companies on both positive and negative sides. It is true that companies focus on building good psychological contracts between employers and employees by developing their strategic training practices to fulfill their goals successfully.
On the contrary, Sim (1994) stated in his research that, “A balanced psychological contract is necessary for a continuing, harmonious relationship between the employee and the organization. However, the violation of the psychological contract can signal to the participants that the parties no longer share (or have never shared)a common set of values or goals. ” From what he suggested, the negative effect is a tough problem when the contract breaks. However, as Conway, N. et al. (2011:267) notes “The greater effects of breach on employment outcomes” would be an effectively help if that could be in advance noticed and paid attention to.
It might lead to an outstanding fulfillment. Therefore, psychological contract should be continue to improve and develop in the 21st century. This paper has defined the psychological contract as an abstract agreement without spoken or written between employers and employees. It also explained the importance of psychological contracts’ applicability in the 21st century. It has been shown that, although in some situations an accepted psychological contract would lead to higher satisfaction and commitment from employees, this is not always the case.
There has been claimed that violation and undesirable behaviors might occur when the psychological contract has broken. Huang, T. P. (2011) argued that psychological contracts might affect the employees’ job satisfaction, organizational commitment and motivation to a large extent. It appears that psychological contract is extremely important in the modern society. Consequently, it could be suggested that companies’ human resource management should concentrate on how to build a better psychological contract between participants.
Clearly, this essay has only outlined the definition of psychological contracts and the breach-fulfillment results. There are many aspects would benefit from more study, one possible field for further research would be to investigate why people rely on psychological contracts such heavily in the 21st century. References: Anvari, R. , Amin, S. M. , Ismail, W. K. W. , Norulkamar, U. , Ahmad, U. and Seliman, S. (2011). Mediating effects of affective organizational commitment and psychological contract in the relationship between strategic training practices and knowledge sharing.
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