the psychological contract

the theory of psychological contracts in organizational employment - and wider 'psychological contracting' in relationships, communications and societies

'The Psychological Contract' is an increasingly relevant aspect of workplace relationships and wider human behaviour.

Descriptions and definitions of the Psychological Contract first emerged in the 1960s, notably in the work of organizational and behavioural theorists Chris Argyris and Edgar Schein. Many other experts have contributed ideas to the subject since then, and continue to do so, either specifically focusing on the the Psychological Contract, or approaching it from a particular perspective, of which there are many. The Psychological Contract is a deep and varied concept and is open to a wide range of interpretations and theoretical studies.

Primarily, the Psychological Contract refers to the relationship between an employer and its employees, and specifically concerns mutual expectations of inputs and outcomes.

The Psychological Contract is usually seen from the standpoint or feelings of employees, although a full appreciation requires it to be understood from both sides.

Simply, in an employment context, the Psychological Contract is the fairness or balance (typically as perceived by the employee) between:

• how the employee is treated by the employer, and
• what the employee puts into the job.

The words 'employees' or 'staff' or 'workforce' are equally appropriate in the above description.

At a deeper level the concept becomes increasingly complex and significant in work and management - especially in change management and in large organizations.

Interestingly the theory and principles of the Psychological Contract can also be applied beyond the employment situation to human relationships and wider society.

Unlike many traditional theories of management and behaviour, the Psychological Contract and its surrounding ideas are still quite fluid; they are yet to be fully defined and understood, and are far from widely recognised and used in organizations.

The concept of 'psychological contracting' is even less well understood in other parts of society where people and organisations connect, despite its significance and potential usefulness. Hopefully what follows will encourage you to advance the appreciation and application of its important principles, in whatever way makes sense to you. It is a hugely fertile and potentially beneficial area of study.

At the heart of the Psychological Contract is a philosophy - not a process or a tool or a formula. This reflects its deeply significant, changing and dynamic nature.

The way we define and manage the Psychological Contract, and how we understand and apply its underpinning principles in our relationships - inside and outside of work - essentially defines our humanity.

Respect, compassion, trust, empathy, fairness, objectivity - qualities like these characterize the Psychological Contract, just as they characterize a civilized outlook to life as a whole.

Please note that both UK-English and US-English spellings may appear for certain terms on this website, for example organization/organisation, behavior/behaviour, etc. When using these materials please adapt the spellings to suit your own situation.

HR

Evaluation of HRD function performance

If you are responsible for HR functions and services to internal and/or external customers, you might find it useful to go beyond Kirkpatrick's evaluation of training and learning, and to evaluate also satisfaction among staff/customers with HR department's overall performance. The parameters for such an evaluation ultimately depend on what your HR function is responsible for - in other words, evaluate according to expectations.

Like anything else, evaluating customer satisfaction must first begin with a clear appreciation of (internal) customers' expectations. Expectations - agreed, stated, published or otherwise - provide the basis for evaluating all types of customer satisfaction.

If people have expectations which go beyond HR department's stated and actual responsibilities, then the matter must be pursued because it will almost certainly offer an opportunity to add value to HR's activities, and to add value and competitive advantage to your organisation as a whole. In this fast changing world, HR is increasingly the department which is most likely to see and respond to new opportunities for the support and development of the your people - so respond, understand, and do what you can to meet new demands when you see them.

If you are keen to know how well HR department is meeting people's expectations, a questionnaire, and/or some group discussions will shed light on the situation.

Here are some example questions. Effectively you should be asking people to say how well HR or HRD department has done the following:

• helped me to identify, understand, identify and prioritise my personal development needs and wishes, in terms of: skills, knowledge, experience and attitude (or personal well-being, or emotional maturity, or mood, or mind-set, or any other suitable term meaning mental approach, which people will respond to)
• helped me to understand my own preferred learning style and learning methods for acquiring new skills, knowledge and attitudinal capabilities
• helped me to identify and obtain effective learning and development that suits my preferred style and circumstances
• helped me to measure my development, and for the measurement to be clear to my boss and others in the organisation who should know about my capabilities
• provided tools and systems to encourage and facilitate my personal development
• and particularly helped to optimise the relationship between me and my boss relating to assisting my own personal development and well-being
• provided a working environment that protects me from discrimination and harassment of any sort
• provided the opportunity for me to voice my grievances if I have any, (in private, to a suitably trained person in the company whom I trust) and then if I so wish for proper consideration and response to be given to them by the company
• provided the opportunity for me to receive counselling and advice in the event that I need private and supportive help of this type, again from a suitably trained person in the company whom I trust
• ensured that disciplinary processes are clear and fair, and include the right of appeal
• ensured that recruitment and promotion of staff are managed fairly and transparently
• ensuring that systems and activities exist to keep all staff informed of company plans, performance, etc., (as normally included in a Team Briefing system)
• (if you dare...) ensuring that people are paid and rewarded fairly in relation to other company employees, and separately, paid and rewarded fairly when compared to market norms (your CEO will not like this question, but if you have a problem in this area it's best to know about it...)
• (and for managers) helped me to ensure the development needs of my staff are identified and supported

This is not an exhaustive list - just some examples. Many of the examples contain elements which should under typical large company circumstances be broken down to create more and smaller questions about more specific aspects of HR support and services.

If you work in HR, or run an HR department, and consider that some of these issues and expectations fall outside your remit, then consider who else is responsible for them.

I repeat, in this fast changing world, HR is increasingly the department which is most likely to see and respond to new opportunities for the support and development of the your people - so respond, understand, and do what you can to meet new demands when you see them. In doing so you will add value to your people and your organisation - and your department.

Job Motivation

Adams' equity theory

j Stacey Adams - equity theory on job motivation

John Stacey Adams, a workplace and behavioural psychologist, put forward his Equity Theory on job motivation in 1963. There are similarities with Charles Handy's extension and interpretation of previous simpler theories of Maslow, Herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of their relationship with their work, and thereby their employer. However, awareness and cognizance of the wider situation - and crucially comparison - feature more strongly in Equity Theory than in many other earlier motivational models.

The Adams' Equity Theory model therefore extends beyond the individual self, and incorporates influence and comparison of other people's situations - for example colleagues and friends - in forming a comparative view and awareness of Equity, which commonly manifests as a sense of what is fair.

When people feel fairly or advantageously treated they are more likely to be motivated; when they feel unfairly treated they are highly prone to feelings of disaffection and demotivation. The way that people measure this sense of fairness is at the heart of Equity Theory.

Equity, and thereby the motivational situation we might seek to assess using the model, is not dependent on the extent to which a person believes reward exceeds effort, nor even necessarily on the belief that reward exceeds effort at all. Rather, Equity, and the sense of fairness which commonly underpins motivation, is dependent on the comparison a person makes between his or here reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar situation.

Adams' equity theory

Adams called personal efforts and rewards and other similar 'give and take' issues at work respectively 'inputs' and 'outputs'.

Inputs are logically what we give or put into our work. Outputs are everything we take out in return.

These terms help emphasise that what people put into their work includes many factors besides working hours, and that what people receive from their work includes many things aside from money.

Adams used the term 'referent' others to describe the reference points or people with whom we compare our own situation, which is the pivotal part of the theory.

Adams Equity Theory goes beyond - and is quite different from merely assessing effort and reward. Equity Theory adds a crucial additional perspective of comparison with 'referent' others (people we consider in a similar situation).

Equity theory thus helps explain why pay and conditions alone do not determine motivation.

In terms of how the theory applies to work and management, we each seek a fair balance between what we put into our job and what we get out of it. But how do we decide what is afair balance?

The answer lies in Equity Theory. Importantly we arrive at our measure of fairness - Equity - by comparing our balance of effort and reward, and other factors of give and take - the ratio of input and output - with the balance or ratio enjoyed by other people, whom we deem to be relevant reference points or examples ('referent' others).

Crucially this means that Equity does not depend on our input-to-output ratio alone - it depends on our comparison between our ratio and the ratio of others.

We form perceptions of what constitutes a fair ratio (a balance or trade) of inputs and outputs by comparing our own situation with other 'referents' (reference points or examples) in the market place as we see it.

In practice this helps to explain why people are so strongly affected by the situations (and views and gossip) of colleagues, friends, partners etc., in establishing their own personal sense of fairness or equity in their work situations.

Adams' Equity Theory is therefore a far more complex and sophisticated motivational model than merely assessing effort (inputs) and reward (outputs).

The actual sense of equity or fairness (or inequity or unfairness) within Equity Theory is arrived at only after incorporating a comparison between our own input and output ratio with the input and output ratios that we see or believe to be experienced or enjoyed by others in similar situations.

This comparative aspect of Equity Theory provides a far more fluid and dynamic appreciation of motivation than typically arises in motivational theories and models based on individual circumstance alone.

For example, Equity Theory explains why people can be happy and motivated by their situation one day, and yet with no change to their terms and working conditions can be made very unhappy and demotivated, if they learn for example that a colleague (or worse an entire group) is enjoying a better reward-to-effort ratio.

It also explains why giving one person a promotion or pay-rise can have a demotivating effect on others.

Note also, importantly, that what matters is the ratio, not the amount of effort or reward per se. This explains for example why and how full-time employees will compare their situations and input-to-output ratios with part-time colleagues, who very probably earn less, however it is the ratio of input-to-output - reward-to-effort - which counts, and if the part-timer is perceived to enjoy a more advantageous ratio, then so this will have a negative effect on the full-timer's sense of Equity, and with it, their personal motivation.

Remember also that words like efforts and rewards, or work and pay, are an over-simplification - hence Adams' use of the terms inputs and outputs, which more aptly cover all aspects of what a person gives, sacrifices, tolerates, invests, etc., into their work situation, and all aspects of what a person receives and benefits from in their work and wider career, as they see it.

Marketing

A fundamental aspect of modern marketing

First, here's something that is fast becoming the most fundamental aspects of marketing to get right, especially if you want to build a truly sustainable high quality organisation (of any size) in the modern age:

Ensure the ethics and philosophy of your organisation are good and sound. This might seem a bit tangential to marketing and business, and rather difficult to measure, nevertheless...

Price is no longer the king, if it ever was. Value no longer rules, if ever it did. Quality of service and product is not the deciding factor.

Today what truly matters is ethical and philosophical quality - from the bottom to the top - in every respect - across every dimension of the organisation.

Modern consumers, business buyers, staff and suppliers too, are today more interested than ever before in corporate integrity, which is defined by the organisation's ethics and philosophy.

Good sound ethics and philosophy enable and encourage people to make 'right and good' decisions, and to do right and good things. It's about humanity and morality; care and compassion; being good and fair.

Profit is okay, but not greed; reward is fine, but not avarice; trade is obviously essential, but exploitation is not.

Psychological Contract theory is helpful towards understanding and developing fair balanced philosophy, especially in meeting the complex needs of staff, customers and the organization.

People naturally identify and align with these philosophical values. The best staff, suppliers, and customers naturally gravitate towards organisations with strong philosophical qualities.

Putting a good clear ethical philosophy in place, and communicating it wide and far lets people know that your organisation always strives to do the right thing. It's powerful because it appeals to people's deepest feelings. Corporate integrity, based on right and good ethical philosophy, transcends all else.

And so, strong ethics and good philosophy are the fundamentals on which all good organisations and businesses are now built.

People might not ask or talk about this much: the terminology is after all not fashionable 'marketing-speak', nor does it correlate obviously to financial performance, but be assured; everyone is becoming more aware of the deeper responsibilities of corporations and businesses in relation to humanity, and morality, the natural world, the weak and the poor, and the future of the planet.

Witness the antagonism growing towards certain multi-nationals. People don't rail against successful corporations - they rail against corporations which put profit ahead of people; growth ahead of of society and communities; technology and production ahead of the natural world; market domination ahead of compassion for humankind. None of this is right and good, and these organisations are on borrowed time.

People increasingly prefer to buy from, deal with, and work for, ethical, right-minded organisations. And whether an organisation is ethical and right-minded is becoming increasingly transparent for all to see.

So be one.

Aside from which - when you get your philosophy right, everything else naturally anchors to it. Strategies, processes, attitudes, relationships, trading arrangements, all sorts of difficult decisions - even directors salaries and share options dare we suggest.

And it need not be complicated. The ultimate corporate reference point is: "Is it right and good?... How does this (idea, initiative, decision, etc) stack up against our ethical philosophy?"

Organisations are complex things, and they become more and more complicated every day. A good ethical philosophy provides everyone with a natural, reliable reference point, for the tiniest detail up to the biggest strategic decision.

So as you start to write your marketing plan, be it for a new start-up, a huge corporation, or a little department within one, make sure you put a 'right and good' ethical philosophy in place before you do anything else, and watch everything grow from there.

Strategy Realisation

How effective is your Strategy Realisation?

There are simple ways to judge whether your strategy realisation process is working:

Obviously look for business results and progress on the delivery of targets and KPI's (Key Performance Indicators).

You need also to look for signs that your people have really got the corporate message and have taken it to heart.

A well known story illustrates the point:

A group of US Senators were visiting NASA at the time when funding was under threat. One Senator asked a man cleaning the floor "So what are you doing here?" The man answered, "I'm here putting a man on the Moon!"

How closely do your people identify and associate their own roles with your organizational purpose?

Do your people really know what your corporate aims are, and if so do they see and agree with how they fit into the scheme?

Sadly in many organizations the vast majority of staff do not understand the corporate aims, let alone see themselves as an integral part of the effort.

Strategy realisation will not happen without the people being an enthusiastic part of the effort. All to easy to say; another thing entirely to make happen.

The 'Man on the Moon' statement is a real benchmark of the process quality for turning any strategy into action - whether for a team, a department or a corporation.

Every single person must know what they are doing, why they are doing it, and above all, must be fully committed to doing what they are doing.

If your methods enable every single person to know what they are doing, and why, and to be emotionally committed to it, then the process of turning strategy into action is probably working.

Ask yourself some of these questions and you will begin to see how to make your own strategies happen.

Context.........it changes everything!

The outdoors tea-break exercise (different perspectives, context, relativity, perception vs 'reality', and how most things change according to situation)

The nature of anything - especially feelings, relationships and communications - changes according to situation and context.

This is vitally important in understanding ourselves, others, and the way that human systems operate, in which subjective views are commonly more dominant than objective facts, figures and evidence.

Perceptions among people, especially given group effects, has a huge effect on systemic and organizational behaviour.

Here is a simple and pleasing demonstration of how something can change when experienced in a new context, particularly when the warmer spring season approaches

When next facilitating or teaching a group, take your tea/coffee break outside, and ask people if their tea/coffee tastes different, compared to how it normally tastes indoors.

The demonstration is clearest if first people pour the drink and take a few sips indoors, and then walk outside, so as to compare the indoor and outdoor taste.

Strangely the taste is quite different, sometimes remarkably different. This is probably due to the fresh air being smelled and tasted along with the drink. I am open to better explanations. The effect also works with cold drinks. And picnic lunches, if you've time.

In some situations the exercise will work better by not warning people of the reason for going outside, other than to get some fresh air and a leg-stretch, both of which are good for groups anyway.

Taste is not the only characteristic altered, for example, in cold weather the drink cools far quicker. Small and insignificant though it is, the drink experience and memory is altered by the different outside environment. The indoor cup of tea or coffee is perceived to be different because of the outdoor context and situation.

Everything in life - especially concerning human attitude - alters according to context.

Meeting Agendas a must !

4 Elements of a Top Notch Meeting Agenda

Meetings run better with a plan. Everyone knows a meeting agenda should have a subject and list the topics to discuss. This is a good starting point, but a great agenda will also establish a goal, keep the meeting on track on help you plan next steps.

Here are 4 must-have elements of a top-notch meeting agenda:

1 Objective

What do you want to accomplish? Is it to make a decision? Plan a project? Assign tasks? Make a clear goal and state it at the beginning of your agenda. From the moment they arrive, people have a clear idea of what’s going to be done.

2 Space for action items

List each topic you’ll discuss in the meeting. After each topic, leave a bit of blank space with the title “Action Items”. This gives each attendee space to organization their responsibilities, and encourages them to seek out tasks to fill their space.

3 Time allotted

Include the time allotted to each topic. When calculating, allow time for questions and delegating related tasks. An allotted time gives attendees an idea of how the meeting with flow, and gives you a reason to steer people back if the conversation goes off topic.

4 Review period

Allow for a short review period at the end of the meeting. Use this time to assess if the objective was achieved and review assigned tasks. This is a good way to end the meeting, make sure everyone is clear on their tasks and let people ask final questions.