The Psychological Contract

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Critically evaluate the utility of the psychological contract for understanding the contemporary employment relationship. (2500 Words) Introduction Up until the 1990’s the psychological contract didn’t get a lot of research literature, whereas more recently it has become increasingly popular, and vast in both volume and critique. It is suggested that this blossoming of research is because of fundamental changes in the workplace, commonly referred to as the ‘new deal’ (Sparrow 1999). The traditional idea of having a “job for life” is no more, people now transfer across their careers to suit themselves, and it is not uncommon to see a graduate working in a field far from that of their study, ultimately leading to a growth in employee…show more content…
At the two furthest ends of the spectrum MacNeil (1985) identifies the two types of contract that underpin the employment relationship, transactional and relational. A transactional contract is a means to an end view, it denotes an attitude of ‘money comes first’, working in order to get paid and receive other work benefits. They aren’t concerned with being a ‘good organisational citizen’ or going the extra mile to stand out. Their only concerns are being paid and receiving their holidays. It is a contract based on fairly specifiable obligations. A relational contract is a fairly traditional working partnership between the employee and employer. It can often include a relationship that includes affective involvement or attachment that can commit the employer to providing more than ‘purely remunerative support to the individual with investments such as training, personal and career development, and provision of job security’ (Millward & Brewerton 2000) (Rousseau 1995) argues that transactional and relational aspects are present in most employment contracts and that it is the length of time that the employment is expected to last that usually identifies relational from transactional contracts, with short term

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