The Psychological Contract and Sri Lankan Workforce

 

 

What is a psychological contract?

A psychological contract is an unwritten and intangible agreement that exists between the individual employee and their employers that specifies unexpressed expectations, assumptions, and understandings that form the basis of their relationship.

The concept of psychological contract is initially developed by Schein (1965) and that definition was enriched by Rousseau and Wade-Benzoni (1994). It refers to beliefs people have regarding agreements they have made, relied on, and accepted with others, in the case of organizations, with individual employees and employers. It represents how individuals understand promises and commitments, therefore even when two people are involved in a working relationship they may have different perspectives on certain aspects. 

 

Video 1 

https://youtu.be/wEHnaSuDgA4

 

The psychological contract is more important than the employment contract.

According to Rousseau, (1995) It is important to distinguish between the psychological contract and the employment contract as they are two separate agreements. Although an employment contract is legally binding, it only provides a limited perspective on the relationship between an employee and an employer. On the other hand, a psychological contract includes daily expectations and promises made by both parties and how they are perceived. Employees may only refer to the employment contract during the initial signing and then not look at it again. However, the psychological contract and its perceived fairness have a significant impact on an employee's behavior, performance, and work (Robinson et al., 1994).

Although not legally binding, breaching the psychological contract can result in conflicts within an organization. Workplace bullying by managers has increased during periods of organizational change, which often occur due to breaches of psychological contracts according to scholars (Bal et al., 2019). Previous research has found that psychological contract violations can lead to feelings of unfair treatment, lack of rewards or appreciation, and negative impacts such as turnover intentions, employee dissatisfaction, increased stress, and conflicts. Ensuring psychological contracts are maintained without violations is crucial for improved job performance, a motivated workforce, and positive word-of-mouth (Zhao & Liden, 2016). Thus, the psychological contract might be more important than the employment contract.

The employment contract is more important than the psychological contract.

The professional agreement between an employer and employee is offered by the employment contract, which is both officially and legally binding. Koehler and Schwenker, (2017) state that this document specifies the expectations and regulations of the occupation, such as tasks, remuneration, perks, and measures for handling misconduct. According to Lindeboom and Montizaan, (2015) the presence of an employment agreement is crucial for enabling effective communication and setting expectations with employees, while also safeguarding the employer's interests. In addition, the work agreement outlines the specific disciplinary actions that may be enforced upon an employee in the event of a violation of the contract's conditions.

Figure 1: The psychological contract

Source: Working in the voluntary sector: Week 2: 4.3 - OpenLearn - Open University

 

The psychological contract in Sri Lankan context

Sri Lankan workplaces can be divided into two sectors in Sri Lanka.

1.  Government Sector

The government sector has provided several numbers of employment in one country.  Psychological contract breaches in government organizations can have significant implications for public service delivery and citizen satisfaction (Denhardt & Denhardt, 2011). Almost Civil servants’ psychological contracts do not work efficiently. Sometimes it will interfere with work. For example,

• Do not work extra hours.
• Strikes to get their benefits.
• Taking much time for completing small tasks.
• Do not concern about the customers.

               Figure 2: Government Sector staff                                              Figure 3:: Government sector staff

Here these types of organizations have barriers to changing the psychological contract because it has big roots in the organization’s culture. In terms of the consequences of psychological contract violations, research has found that they can lead to conflicts within the organization (Conway & Briner, 2002).

2.  Private Sector

T   The private sector of Sri Lanka almost has positive practices of phycological contracts. They use their phycological contracts for customer satisfaction, gain the reputation of the company, the direction of employee promotions, and overall profit of the company. The private sector practices employment contracts mainly than the phycological contract. However, phycological contracts are very important to make smooth operations in every organization.

Figure 4: : Private sector staff

Concerning these factors, the organization must build good psychological contracts otherwise it will gain a negative effect on the organization. (Rousseau, 1995).

 

Conclusion

The psychological contract has been created based on a set of beliefs, perceptions and unwritten reciprocal expectations that comprises what employees believe is expected of them, what response they anticipate receiving from their employer, and what behaviors employers believe are expected of their employees, what kind of response they anticipate from their employees. They aren't a part of their job description or legal contract, eventually, a psychological contract is established, and this behavior turns into an expectation. Psychological contracts are more important since it deals with individuals’ expectations and violation of a contract might cause demotivation, weak job performance and conflicts. On the other hand, it can be said that employment contracts are more important since they are legally binding written employment agreements. In Sri Lankan context, psychological contracts in public sector organizations do not work more effectively while in the private sector, both employment contracts and psychological contracts lead the operations of the organization.  

 

References

Bal, P. M., De Lange, A. H., Jansen, P. G., & Van der Velde, M. (2019). Psychological contract breach and job attitudes: A meta-analysis of age as a moderator. Journal of Organizational Behavior, 40(4), 389-404.

Conway, N., & Briner, R. (2002). Full-time versus part-time employees: Understanding the links between work status, the psychological contract, and attitudes. Journal of Vocational Behavior, 61(2), 279-301.

Denhardt, J. V., & Denhardt, R. B. (2011). The new public service: Serving, not steering. Routledge.

Enright, J. (2022) What is the psychological contract?, CharlieHR Blog | The Workspace. CharlieHR Blog | The Workspace. Available at: https://www.charliehr.com/blog/what-is-the-psychological-contract/ (Accessed: April 4, 2023).

Koehler, J. W., & Schwenker, B. (2017). Employment Contracts. In Employment Law Handbook (pp. 1-26). Wolters Kluwer Law & Business.

Lindeboom, M., & Montizaan, R. (2015). The importance of institutional and organizational characteristics for the use of flexible employment contracts in Europe. The International Journal of Human Resource Management, 26(8), 1022-1038.

Robinson, S. L., Kraatz, M. S., & Rousseau, D. M. (1994). Changing obligations and the psychological contract: A longitudinal study. Academy of Management Journal, 37(1), 137-152.

Rousseau, D. M. (1995). Psychological contracts in organizations: Understanding written and unwritten agreements. Sage Publications.

Rousseau, D. M., & Wade-Benzoni, K. A. (1994). Changing individual-organizational attachments: A two-way street. In K. S. Cameron & D. A. Whetten (Eds.), Developing Management Skills (3rd ed., pp. 321-344). HarperCollins College Publishers.

Schein, E H (1965) Organizational Psychology, Prentice-Hall, Englewood Cliffs, NJ

Zhao, H., & Liden, R. C. (2016). Enhancing employee proactive personality: The role of psychological contract breach and family-to-work conflict. Journal of Vocational Behavior, 92, 79-89.