As the end of the year approaches, the demands of many jobs will bring higher levels of stress for workers. These challenges can cause employees to miss family gatherings, feel the holiday blues, and consider quiet quitting. Consequently, leaders must be mindful of employees’ struggles during the holiday season and how it affects their mental and physical health.
The end of the year is also typically a time when managers sit down with employees to conduct performance reviews. Whether you’re a leader in the public or private sector, this year you’d be wise to address one topic in particular during performance conversations: the
psychological contract.
What is a psychological contract?
A psychological contract refers to the set of beliefs about the expectations and obligations that employees and organizations have of one another. Whereas only some employees sign a formal written contract when they first join a new organization, all employees
develop a psychological contract. That is, we all hold expectations about what we should contribute at work (our time, effort, attitude, etc.) and expectations about what we should receive for our contributions (pay, benefits, support, etc.). As I’ve mentioned before, some employees define their psychological contract more narrowly, more transactionally, whereas others define their psychological contract more broadly, more relationally.
Regardless, when employees perceive that their organization has failed to meet their expectations, or has failed to meet one of its obligations, they experience what is called a “breach” of the psychological contract. Under certain circumstances, breach can lead to
psychological contract “violation,” which refers to the feelings of anger and betrayal. When employees experience psychological contract violation, they experience deep psychological distress, resentment, and a sense of injustice.
Who cares if a psychological contract is breached?
It may be tempting for leaders to think that a breach of the psychological contract is no big deal. After all, this is all in employees’ heads. But research shows that employees who feel their psychological contracts have been breached are less satisfied in their jobs, less committed to their employers, and more likely to withdraw, both mentally and physically. They are also less helpful to coworkers and perform worse on their job tasks. Managing violated expectations So, when and why are employees likely to feel that their psychological contracts have been violated, and what can leaders look out for? Here are a few recommendations that are supported by science.
First, violation is more likely when employees attribute breach to purposeful reneging. This occurs when an employee feels that her boss knowingly broke a promise or went back on their word. It doesn’t matter to employees whether the manager was unable or unwilling to fulfill their obligations. Employees just want their manager to make things right.
Second, violation is likely to occur when employees believe they were treated unfairly, whether by the organization as a whole (for example, they perceive unfair organizational procedures) or by their manager individually (for example, they felt disrespected). When negative or unexpected events prompt psychological contract violation, employees are more attentive to process issues, such as whether the employer’s procedures are unbiased, correctable, and applied consistently.
Finally, employees are likely to feel that their psychological contract has been violated when the breach contradicts the prevailing social contract. This social contract refers to the assumptions, beliefs, and norms about appropriate behavior within a particular setting, such as a specific unit or an entire organization. The basic idea here is that context matters: Behavior considered inappropriate in one context may be perfectly acceptable in another.
Conclusion
To all of the managers worrying about employee well-being, grappling with quiet quitting, and dreading upcoming performance reviews, I encourage you to discuss the expectations and obligations that you and your employees have of each other. Repairing or resetting the psychological contract can create a safer, healthier work environment, enhance commitment, and inspire performance. It’ll also help your team feel heard, secure, and supported. Those are gifts employees might appreciate.
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Article for MHP on psychological contracts
By: Shannon Taylor, Ph.D.
Fall 2022
Shannon G. Taylor is Director of Research and Learning for the Mental Hygiene Project and a professor of Management at the University of Central Florida, where he teaches and researches leadership and workplace culture. Follow him on LinkedIn or learn more at www.mentalhygieneproject.com.
