Psychological contracts are an individual’s belief in the reciprocal obligation between employees and the organization – essentially what the employee believes the organization owes them and what they owe the organization in return. These beliefs about mutual obligations help employees informally deal with ambiguous work situations not covered by the formal written contract. In this talk we will give a practical definition of Psychological Contract and analyze its connection with Leadership. We will also try and give practical hints on how to make the Contract clear and explicit, and avoid typical pitfalls that lead to unwanted consequences on both sides.
Psychological contracts are an
individual’s belief in the
reciprocal obligation between
employees and the organization.
A balance between how the
employee is treated by the
employer and what the employee
puts into the job.
1. Mutual transparency
2. Expectation alignment
3. Mutual fairness
The goal of a Psychological Contract
is to deal with ambiguous work
situations not covered by the formal
...do the hard
You are the role proponent. As
such you hold information about
contractual offer and company
Feel responsible when it comes to
start talking about and defining the
Contract. No one else will do it for
Transparency helps to kick-start
a virtuous circle within the
The employee will trust and be open
towards the employer.
Making the employee aware of facts
will enable her to objectively judge
the Psychological Contract.
The employee has the right to
know what the company is
expecting from her.
Setting expectations right on both
sides enables quality
communication and ultimately
It also avoids misunderstandings
about roles and responsibilities.
The employee must feel safe in
accepting the Psychological
It’s tempting to distort facts in the
hope that people will absorb the
problem when it looms larger than
Acknowledge that people have right
to know and complain.
Simply be objective and honest.
Your goal is to remove from the
employee any doubt that he’s not
doing the right thing.
Different seniority (self awareness)
requires different Contract negotiation.
Avoid talking about it doesn’t
mean you don’t have a Contract.
It actually means you have two
You end up with two similar but
different Contracts where you hold
one version, the employee holds
One part doesn’t know how the
other’s Contract “looks like”.
With an implicit Contract you avoid
some friction earlier only to face
greater troubles later
by an implicit
Both parts are.
In the long run, the misalignment will
cause the employee to be unhappy
and the employer to experience
degraded work output at a constant
Now what can I
#1. Already start defining the Contract
during the interview and onboarding
#2. Avoid defining roles and
expectations by contractual job title
#3. Do not assume seniority is related
to years of experience
#4. Keep reviewing the Contract,
especially when roles change
#5. Do not assume people know what’s
in your head
#6. If you are in doubt whether
something is trivial to say explicitly, say
#7. Do not leave any violation of the
Psychological Contract unchecked