The psychological contract: what is it and why it should never be broken

A psychological contract comprises the unwritten rules within an employment relationship. These include the right to safety, the resources needed to complete the role, job security, opportunities for development and organisational culture.

For many years this was quite straightforward, with employees generally travelling to a place of work where they were supplied with the tools to do their job within set hours. After which they travelled back home and had no further work interactions until they were next in the workplace. But lots has changed in a reasonably short space of time. Think improved technology, flexible working, the increased gig economy, Brexit and now, of course, coronavirus.

The latter brings with it its own list of potential opportunities for the psychological contract to be broken.  Whether it’s providing the correct equipment – from personal protective equipment to the humble office chair – choosing which staff to furlough or making redundancies.

But the psychological contract is a very important part of the employer/employee relationship. Here’s  why it’s important to uphold this unspoken agreement.

It maintains procedural justice

Procedural justice is about the employees’ perception of the fairness of an organisation’s processes and procedures.

This might include the process of selection for promotions, who receives pay awards, how recognition is shown, deciding on redundancies or, in recent weeks, deciding who should be furloughed, what working from home looks like, shift patterns and so on.

And deciding whether something is fair does not just come down to being satisfied with the outcome, but also with how that outcome was reached.

So, if the procedure or process towards the decision is aligned with the individual’s moral and ethical values and they perceive it to have been handled fairly and ethically, it will positively impact their satisfaction with the outcome.  Which has a knock-on positive effect on things such as their commitment to the organisation.

But where individuals perceive a situation as unfair or unethical, it can result in decreased satisfaction and commitment, and an increased desire to leave the organisation.

It protects interactional justice

Interactional justice relates to the more human aspects of work.  It is the effect of how people are treated on their perception of the outcome or process – for example with dignity, respect and open communication.

Interactional justice is related to the behaviour of the different levels of the organisations. If an employee thinks that something is unjust, it is likely that their dissatisfaction will be directed towards the perceived source of that injustice. So, if a company decision is poorly communicated by a manager and considered unjust by employees then their dissatisfaction will tend to be directed at the manager rather than the organisation.  Unfortunately for the manager!

And a perceived breach of interactional justice could negatively impact wellbeing, motivation and job satisfaction.

We can see that a breakdown of procedural or interactional justice is not ideal at the best of times.  But it’s potentially even more damaging during this period of quickly changing protocols and pressures (like working from your kitchen table or without proper resources) in, what are for many, very trying circumstances.

So, how can we uphold the unwritten rules of a psychological contract and ensure procedural justice and interactional justice remain intact?

Talk to your team

Like so many things, it’s all about communication.  Many employers are currently navigating uncharted waters.  Leaders aren’t expected to know all the answers off the top of their heads, but it’s important that your team knows the lines of communication are open. Update people on a regular basis and let them know when they can expect the next briefing. It will help staff feel included and respected while promoting trust and lowering levels of anxiety.

Be open and honest

Honesty helps you lead with integrity which in turn fosters trust. Explaining to your employees what is going on in an open and honest manner and providing the reasons behind decisions will help reduce adverse reactions and responses. After all honesty is the best policy, right?

Allow time for questions

Leaders who frequently ask for questions and input before making decisions can strengthen their interpersonal relationships as well as improving their problem-solving skills. And colleagues will feel respected and valued.

Understandably, for many organisations, there has been huge focus in recent weeks on the logistics of operating during the pandemic.  And this may have led to an ‘all hands to the pump’ approach with staff mucking in and making do.  But as the weeks pass and we move from crisis to new normal, it’s essential that both employers and employees acknowledge the need for a level of understanding and patience to manage the ongoing uncertainty. The psychological contract recognises the responsibilities from both parties in terms of behaviour and communication. And taking a moment to remind ourselves of its importance, and the potential impact when it’s broken, will support commitment and productivity levels long term.

We’d be interested to hear your thoughts, views and experiences on the psychological contract so please do get in touch if you feel able to share.