Psychological contracts and culture

A psychological contract is individual beliefs, shaped by the organization regarding terms of an exchange between individuals and their organisation. (Rousseau, 1995). Beliefs mean recent emphasis on implicit or explicit promises. The exchange is the gives and gets in return and the organization in this regards are Management, HR policies, practices and culture.

While employment contracts are written, explicit and legally binding, they don't tell us much about what people actually do at work because they don't include the job description. People usually don't want to be overly bureaucratic to search or ask for and read the job description. Therefore employment contracts have only a small influence on behavior, unless they are bound to influence of role, status and power.

Psychological contracts are usually unwritten and implicit and have no legal status. Still psychological contracts tell us most things about what people actually do at work. It is part of the introduction round where new hires get to know their team leads, colleagues and internal stakeholders that the "what and how we do things around here" are being primed and the conditions for possible future re-negotiations are settled. Therefore psychological contracts exert a large influence on behavior, feelings and attitudes.

The following illustration shows an example of tangible and untangible inputs and rewards in psychological contracts that drive behavior. The term work in this model means work provided of an employee given the contractual role, function and position for pay, meaning the contractual salary and compensation but without the benefits. What lays beyond these classic contractual terms refer to internal policies and culture and are parts of what drive psychological contracts.

Governance usually gives us a clear organization chart with the interconnections and communication lines of people within the organization or to peripheral service providers and stakeholders. Governance also calls for policies and processes to comply with, to make sure people can secure and back each other up, especially with complex topics or specific legal requirements. Still you might not have all relevant information on a formal map. That's because psychological contracts merit expectations and behavior.

Just as any child knows that Haka is part of New Zealands' rugby team as they go onto the playground and "greet" their opponents before the game starts, people should understand the companys' culture as they sign-up for a contract. You need to know that you are required to get your tongue out, make a grim face and act in a certain way in order to be part of the team. You'd be surprised by the professions and companies where you need to return a punch with a clout, be risk-taking and decent at the same time. Both Nurses and Accountants need to have such skills. In some companies and positions more than in others.

Psychological contracts and culture are deeply interconnected and leaders have great influence and power over both aspects. Transparency on roles and expectations with persona and JTBD can balance psychological contracts and culture, just as a better leadership distribution can balance power distribution and responsibility.

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