22400360_lThe Psychological Contract of Employment is a theory, model or construct which has reinvented itself over the years. Originally – pre-1980 – it stated that employee loyalty was rewarded with a job for life. Since the late 1990’s HR academics and psychologists have taken it over and the reality of late 20th century economics have taken effect as jobs for life, or the prospect of them have become a thing of the past.

Academics, such as the American Denise Rousseau, and the UK’s David Guest, and Jacqueline Coyle-Shapiro have completely redefined and reshaped the term for the post-industrial world. It is now a key part of the knowledge and tool kit of all HR professionals and should be for everyone responsible for the motivation and management people in an organisational setting.

  • Descriptions and definitions of the Psychological Contract (of Employment), vary in their emphasis although they do have common themes and directions. They create a useful patchwork which allow it to be visualized and easily understood.Everything which is not in the (written) contract of employment. Incidentally, cynics argue the written contact of employment is only every used when one party wants to terminate the relationship. (My paraphrasing of a memorable lecture by someone whose name I cannot recall!)


  • Others have said: It is the unwritten set of expectations of the employment relationship. From an employee perspective particularly this evolves constantly, and is heavily dependent upon perceptions of fairness. Damaged Psychological Contracts are slow and difficult to repair.  


Over the years I have created my own table to explain the Psychological Contract.


Employers expect Employees expect in return
Hard work

Upholding the company’s reputation

High levels of attendance and punctuality

Loyalty to the organisation

Working extra hours when required

Maintained and updated skills

Flexibility in dealing with workload and priorities

Courteousness to clients and colleagues


New Ideas

Pay commensurate with performance

Opportunities for training and development

Opportunities for promotion

Recognition for innovation or new ideas

Feedback on performance

Interesting tasks

An attractive benefits package

Respectful treatment

Reasonable job security

A pleasant and safe working environment


By way of an example, a commentator recently described the key points of the Psychological Contact of a well know High Street Coffee chain to be:

Reasonably hard working; getting paid as much as we can afford (not as little as we can get away with); good sense of humour; cosmopolitan atmosphere as a result of diverse employee backgrounds; enjoy delicious food ;investors in people, training and development via in-store trainer; start early and leave early; and most managers are promoted from within.

As a student of the 1970’s my key personal observation is that the Psychological Contract is consistent with the Norm of Reciprocity – the topic of my last blog. I also say that in many ways the Psychological Contract is an application and embellishment of it given the differing nature of the resources employers and employees exchange with one another within the Contract.

The Psychological Contract is also a key underpinning to the work that IPOWR undertakes, particularly regarding the way in which we acknowledge control the relationship between organisational goals and ambitions and the perception that they conflict with those of employees.

iPOWR shows how the essence of the Psychological Contract can be expressed within the scope, tone and language of an employee handbook. This will be the topic of the next blog written by my colleague Eve Godoy.

Further information on the Psychological Contract of Employment is available at:



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