Human Resource Management – A New Psychological Contract

A New Psychological Contract

We can think of the relationship between the employees and the employers in terms of a psychological contract, a description of what an employee expects to contribute in an employment relationship and what the employer will provide to employee in exchange of those contributions. Unlike a sales contract, the psychological contract is not formally put into writing. Instead it describes unspoken expectations that are widely held by employers and employees. In the traditional version of this psychological contract, firms expected their employees to contribute time, effort, skills, abilities and loyalty. In return, the organizations would provide job security and opportunities for promotion.

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In exchange for top performance and working longer hours without job security, employees want companies to provide flexible work schedules, effective work environments, more control over how they accomplish work, training and development opportunities, and financial incentives based on how the organization performs. Employees realize that companies cannot provide employment security, so they want employability. This means they want their company to provide training and job experiences to help ensure that they can find other employment opportunities.

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