Psychological contract is a term that refers to a set of mutual expectations and obligations between workers of the organization and the organization. These expectations are about values and norms, desired behavior, job performance, compensation, promotion, applied principles of dealing with people, and indeed all aspects of the functioning of the organization and the people in it (i.e. the whole organizational culture).
Psychological contract significantly affects not only expectations but also the behavior of people. It is important, though nowhere written, the reference framework for workers and managers. The basic content of the psychological contract should be the principles of decency and fairness, mutual trust and performance agreements. Psychological contract leads to “citizenship in the organization,” to employee commitment and motivation.
In practice, it is important that the expectations and assumptions contained in the psychological contract are mutually balanced. If the requirements of both parties are in disproportion and expectations vary, the psychological contract doesn’t work as it should. This mainly reflects the precarious organizational climate and culture, and instead of motivation leads to lack of motivation and the relationship between workers and organizations can be disturbed. This obviously threatens organizational performance and results.
Use of the psychological contract in practice: Chief Human Resources Officer (CHRO) should be aware of the state of the psychological contract in the organization. This can be found, for example in satisfaction survey among employees. If the results are satisfactory, everything is fine. If not, it is necessary to align mutual expectations.