Psychological Contract in the 21st Century

1301 Words6 Pages
‘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


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
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Joe, 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, 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
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