If I put five HR Professionals in a room and asked them to define the Psychological Contract and its value, why would I expect to return later to find at least four different opinions?
What is the Psychological Contract?
As so often in HR, we have before us a term which has been created, in all good faith, to describe observations of human behaviour in employment that we cannot quite quantify, but can see are significant. “Engagement”, “Motivation”, “Job satisfaction“ and even “Leadership” are others. But just as we each have different experiences of the effects we’re describing in our own work-histories, so our personal definitions of the terms themselves vary from those of our peers,
….and often lead other managers, with less immediate interest in our apparently esoteric ponderings, to dismiss both terms and observations as: “HR Jargon”; sometimes ignoring them (and us) altogether.
What is the contract?
If, however, we look behind the infinite complexity of human relationships to and at work (including our own), we find, way back in evolutionary history, a behavioural trait we share with every other living creature: We avoid harm and seek-out advantage.
These two fundamental survival instincts are built into everything we do and two of the most basic tools of Business Management, “Management” and “Leadership”, rely directly upon them. “Management” is the delegated authority to control people or processes through the threat of “force majeure”. We do as we are told by our superiors because if we do not then (ultimately) harm will befall us: In an employment context, we will be dismissed: We avoid this harm by obedience. “Leadership” on the other hand appeals to us to recognise that following the direction offered or taken by someone else is to our advantage: So we appoint them as our leader because we perceive advantage to us in doing so, even though they may have done nothing to seek (or deserve) that status and the control over our actions it inherently bestows.
The qualities or values we perceive may be base or flawed; the leader may be able or merely charismatic, and the appointment of leadership cannot be bestowed by some third party, or indeed by a would-be leader themselves. It is entirely based on our perception that following this leader will serve us; that following will be to our advantage. For a time at least, the interests of the leader and we ourselves are shared, even if only in our perception. Our final objectives may be entirely different, but we follow because we perceive it is advantageous for us to do so.
Motivation and engagement
This same perception provides the source of our motivation to work diligently for an employer: The more we perceive our interests are shared, the more willing we are to follow in the direction they require. Maslow defined the basic hierarchy of needs we seek to satisfy but the relationships between them are not as simple as the pyramidal form in which they are often drawn suggests and it is through satisfying the “higher” needs such as belonging and self-realisation (once basic needs to survive are satisfied) that the strongest followings are created.
So under the most basic employment contract we may work only for pay to feed, clothe and house ourselves but if, beyond this, our aspirations to create, to belong, and/or to control are satisfied, that develops our loyalty, diligence and altruism toward the employer; duplicating the form of personal relationship existing between follower and leader: The more advantageous or expansive we perceive the shared interests to be, the more tightly our personal bond to their facilitator becomes.
In this context of the workplace the opportunities for Managers, Directors and other senior employees to satisfy the higher aspirations are also clearly greater; the bonds of shared interest are thus potentially tighter and more robust: Hence when the going gets tough and subordinates perceive no further advantage in “toeing the company line”, the ties for managers often remain durable; that divide of differing loyalty (employees now to “self”, managers still to employer) then becoming the cause of the “them and us” thinking which often makes industrial negotiations so difficult. It is also why sometimes more conflict can result from the loss of a designated parking place than from the reduction of an expected pay-rise. The loss of the parking space results in a perceived loss of personal status, whereas the reduced pay-rise is accepted as an unpopular but impersonal reflection of tough trading conditions.
Note, however, I use the word “perceived” above deliberately; not “seen” or “felt”. The perception, built upon those survival instincts coded in our genes, may not be conscious at all, but it is hugely powerful; acting directly on the emotional triggers protecting not only our conscious awareness of harm and advantage, of loss and gain, but on our sub-conscious perceptions of who we are.
(….And of the person we aspire to be).
The sharing of advantage which drives these psychological mechanisms is thus highly personal. It is created from within us solely from our perceptions. No matter what the employer offers in terms and conditions, or what statute offers us by way of security or duties of care, it is in the satisfaction of the implied terms of trust, confidence and fidelity alongside our other personal imperatives where the Psychological Contract is created. It is here where we commit ourselves to follow the interests of the employer.
This is not submission to our managers; nor the policies or procedures of our workplace; not even the collective demands of our colleagues, but to the gestalt formed by all of these; the whole greater than the sum of its parts: The organisation and the means by which it exists as a “living” entity.
Its objectives, in products or services, may be of little or no interest to us: We may have no use for the widgets it manufactures and we might share in none of the dividends paid from its profits, but its existence and well-being are of interest, on a continuum ranging from mere satisfaction of our need for sufficient money to provide the food we eat and clothes we wear, right up to facilitating our desire to create, or our aspiration to control the destiny of the business itself.
Why have a psychological contract?
Those interests are the foundation for the Psychological Contract we make with ourselves to pursue that employer’s benefit. Its terms are the satisfaction of those imperatives we may not even consciously be aware of in exchange for our commitment and loyalty; our “engagement”.
The syntax of the contract are our own thought processes, conscious and unconscious; its penalties those we determine in breach; its binding is strong and deep, but fragile. It can continue to tie us to dangerous, unpleasant and demanding work that others would not countenance for the whole of our working lives, but it can also be shattered by a single event or statement.
Shared Interests & Benefits
The bonds of shared interest are the drivers for the whole of our relationship to work and as HR Professionals these are also what we must seek to form, develop and strengthen with our employer’s other employees. Not just the lawful and compliant policies and procedures, terms and conditions and expressions of business ethics we should all create and exercise, but also how these things are practiced in relation to our employees as people, as individuals whose objectives will almost inherently not be shared with the business, but whose interests must be in order to motivate, engage, cooperate and commit their maximum productive effort to it.
The Psychological contract in Summary
The Psychological Contract therefore does exist; as an essential part of the whole complex of shared interest, a uniquely powerful and effective resource for the employer, when offered; for it is one made between each employee and themselves.
Peter Cunningham Chartered FCIPD CHSM DipM
 The Emergency or Military Services being obvious examples)
 A CEO being heard to express unethical intent as corporate policy, for instance.
About Peter – Following service as an Electronics Technician in the Royal Air Force, need for change and a series of personal developments led me to become an Ambulanceman, later peripherally involved with one of the country’s first paramedic schemes.
Twelve years of working with people, sometimes in life-changing crises, gave me a taste for running towards the flames rather than away from them and a transition to management eventually began my HR career; but the interest in science has never gone away and understanding the “works” behind the obvious in HR is what I both enjoy and seem to do best.
…along with playing guitar and watching my grandchildren grow.