OVERVIEW OF PSYCHOLOGICAL CONTRACT CONSTRUCT!

Psychological contract has achieved considerable prominence in both academic and practitioner discourse over the past years. One reason for this shift is that it is regarded as a useful way of understanding and perhaps managing apparent changes to employment relationship brought about by new economic organisational circumstances such as foreign competition, downsizing, increased reliance on temporary workers, and demographic diversity.

Psychological contract is somewhat elusive and challenging to define, it is generally accepted that it is concerned with an individual’s subjective beliefs, shaped by the organisation, regarding the terms of an exchange relationship between the individual employee and the organisation. Scholars identified that psychological contract consists of implicit, unwritten beliefs and assumptions about how employees are expected to behaved and what responses they can expect from their employers. It was argued that what makes a psychological contract psychological as opposed to a legal contract is that the nature of exchange between employee and employer are not explicit and agreed; much of it is based on implicit understanding of the sorts of promises each has made to the other.

The psychological contract is promise based and overtime assumes the form of a mental schema or model, which like most schema is relatively stable and durable and a major feature of psychological contract is the concept of mutuality- that there is a common and agreed understanding of promises and obligations the respective parties have made to each other about work, pay, loyalty, commitment, flexibility, security and career development.