psychological employment contract
the link between an employee and his
employer is far more complex than what
stated on the contract both parties have
a whole set of unwritten expectations
that they consider to be part of the
deal and to not meet these expectations
can turn into a source of conflict that
has been professor Danny’s Rousseau’s
field of research for about thirty years
now she calls it the psychological
contract graphic and I’ll had the chance
to meet her after her conference at La
Jolla la flesche to find out more and to
ask her what she thinks about what could
be considered as a case study
the battle between traders on JBL and
the societal back then is resolved
thanks for joining us on exotic Anna
today is a legend in Asia during la
semaine de management and you are here
to talk about your field of study which
is psychological contract could you
define briefly what is the psychological
contract for people who are not familiar
with your work yes a psychological
contract is a deal in the mind it’s a
person an individual’s understanding of
what they will say in an employment
situation what they owe an employer and
what they can expect in return from that
employer over time so it’s basically a
belief about what the deal is between
it’s a person in another unsaid rules
between the firm and the employee often
it’s based on unsaid rules but it also
comes from what’s written in the
handbook what are the common practices
what’s the incentive system the
seniority seem to bring rewards to
people which would be sort of a signal
that oh if you reward seniority you’re
going to keep me until I gain those
benefits from seniority so people can
interpret a commitment and obligation
on the part of the employer if they do
certain things in return and that would
be a psychological contract what are the
main differences between a psychological
contract in the US and overseas more
specifically maybe in France well that’s
always been an interesting question in
my mind I have long studied and observed
an employment situation in France and
thought about it relative to North
America I think it I’ll say in the
context of France
my sense is there’s more parties to the
psychological contract than there might
be certainly in the United States and by
which I mean you have the employer and
the employee
and maybe the supervisor representing
the employer but you also have the state
and the role of unions and other players
in the market and in the labor market
and then the labor institutions that
means then not only is creating the
contract and people’s understanding
somewhat complicated because it’s
multiple parties but also change is much
more difficult because there’s need more
need for alignment across different
contract makers far fewer contract
makers in the u.s. even in unionized
companies the deal does fundamentally
rest to a great extent on the
interaction people have with their
immediate manager in what he or she
represents as the company you’ve been
studying this psychological contract for
about 30 years what has changed since
the 80s well well a lot has changed yes
so a lot has changed it used to be way
back when that we could pretty much
summarize when we did interviews or
surveys or focus groups we could pretty
much summarize the mix of contracts that
would exist in a set of companies or
with a group of employees or managers in
an executive program we could pretty
much summarize the kinds of
deels that they believed were part of
their employment arrangements in two
types it’s a transaction you know fair
day’s work fair day’s pay
totally arm’s length arrangement or it’s
a relationship and you join and you have
a long-term future more like a marriage
in in terms of how the people who are
party to the psychological contract
that’s a relationship have open-ended
expectations are more willing to do
broad and different things over time and
expect a lot more in return especially
expecting that their needs will be met
even when they change today there’s much
more heterogeneity and what that means
is I mean there are people walking
around in organizations who’ve got a
deal that’s a hybrid partly it’s about
short term deliverables but they also
expect to stay in the organization for
the foreseeable future and they’re
willing to make an investment in the
organization for the future you say well
how did that Hybrid come to be and very
often it’s because the organization is
investing in developing people to have
certain kinds of competencies that
they’re willing to pay them to develop
and they want to be able to use over
time people know it’s not forever but
the investment in their competencies
signals to somebody well they’re
probably not going to fire me tomorrow
that and so therefore you have a sense
of well the markets shaping the kind of
relation kind of arrangement I have with
the company but it’s not an unstable
relationship it’s one that will continue
and it as long as you have some possible
future people are much more willing to
commit do more respond to the needs of
the other party than if they think
there’s no future
how about the future what what
evolutions can we expect in the next
year’s for a psychological contract well
in addition to the hybrid version you
know that there we’re going to see more
mix and match between kind of kind of
longer term arrangements and short term
deliverables and the need to adjust one
of the things that we see a lot this is
both in the US as well as in the other
place where I do a good deal of research
which is China we’re starting to see
more contracts that are I guess I would
say bottom-up kind of contracts so the
old relational contract came in
companies from well we have seniority
and we have pay that goes up over time
and you have job ladders you follow and
there are some practices that sent a
very clear signal to people about what
they should do and what they would get
if they indeed performed as was they
were expected to today because there’s a
lot more uncertainty inside
organizations and strategies change or
we can say a lot of companies strategies
drift there between strategies people
are uncertain what’s really the case
top management hasn’t necessarily
articulated a clear idea may not have a
clear idea that what we often then see
are circumstances in which people in
their own jobs start making sense of
well how do I make this work for me what
do I need to do to be a little more
secure to get the assignments I want
because maybe I can’t stay here forever
but that assignment is interesting to me
or it’ll build my skills and so in
effect people are constructing their own
understandings of what the exchange is
which would mean that two or three
individuals working in you know in the
same area might have somewhat different
understandings of the deal because
they’re creating them out of their own
preferred ways of working or their own
longer-term interests so rather than be
top down their bottom up and what this
leads the employer to have to do is to
negotiate with individuals not in a
group form but as
individuals with different interests in
trying to make sure that the people they
have inside the organization are
actually producing the work or
accomplishing the task the employer
cares about because they’ve left so many
things unmanaged so you have to create
individual deals that’s be the core idea
one last question then is also all of
your other what you said makes me think
a little bit of the about the calculus
which are both parties fighting over
responsibilities that are in this like
illogical contract unwritten rules
what’s your take on that case well I
think one of the issues with the suction
is the unanticipated effects of building
a very powerful incentive system whose
kind of potentially logical down the
road implications have not been fought
through one of the strongest sources of
beliefs about what I should do in my
role or what’s expected of me
in my psychological contract is indeed
the formal reward or incentive system
and in an organization that offers
mostly financial incentives and maybe
not a lot else to bind the person to
bind the employees to the company those
incentive schemes become not big drivers
and in effect the organization might say
we wanted one thing and we got another
but they designed that system to produce
something other than what they say they
wanted they designed the system not not
the individual in this case so there is
a culpability showing all the importance
of this psychological contract Denise
Russell thank you so much for joining us
on Jagannatha thank you for your time