Psychological Contract (PC) was original applied in the workplace in 1960. “Psychological Contract is an individual’s belief regarding the terms and conditions of a reciprocal exchange agreement between the focal person and another party” (Rousseau, 1989). It’s basically a belief about mutual expectations between employers and employees resulting in how they will behave at work and what they will get in return. However, employers’ and employees’ psychological contracts seems be affected by a variety of trends of restructuring, downsizing, increased reliance on temporary workers, demographic diversity, and foreign competition. Employers focus on loyalty, high profit, cheap labour while employees focus on welfare, bonus, entertainment which lead to reciprocal conflict and convergence. In the meantime, employers and employees will adjust their commitment and obligation depending on their fulfilment. This essay will focus on two vital factors that effect psychological contract change. First factor is different perception of psychological contract between employees and employers. Second is about breaches and violations in psychological contract.
Employees and employers may hold different views on the content of the psychological contract that may lead to a Psychological Contract changing. The reason why the phenomenon occurred is that employers and employees have different self-interest, obligation, perception, etc.
Employees have an individual philosophy and values causing different demand, which cannot be met by supervisors in one kind of psychological contract. In addition, they have personal understanding of promise received from their supervisors. Psychological contracts refer to employees' perceptions of what they owe to their employers and what their employers owe to them (Robinson, S. L., 1996). However, employees cannot make a good psychological balance between pay and receive. Furthermore, employees regularly consider that they pay more than receive, which will cause them to reduce their obligation in organization. At the same time, managers will decrease their responsibility to employees once they are dissatisfied with their workers. It seems that the higher employees’ perception is, the stronger sense of responsibility to parties and vice versa.
From the perspective of employers perception, supervisors may expect too much of subordinates. On one hand, employers will find the performance of subordinates cannot meet their requirement what they imagined originally. On the other hand, employers may not catch the key points that meet employers’ psychological demand. For instance, in the past, employees pay closer attention to material needs. They set a clear signal to supervisors what they expect to get when they complete their tasks. However, nowadays people have hybrid expectation that will be changed by the internal and external environmental change. They even not only consider material needs (high salary, insurance), but also focus on spiritual needs (individual training, sense of achievement).
From another point of view, who is perceived to be employer is confused. To be specific, the employers can be agents, supervisors, organizations who convey promise or future commitments to employees that can represent contract makers in organizations (Rousseau, 1995). Therefore employees may recognize that managers may not fully understand their interpretation of the psychological contract and may not distinguish what the psychological is. Because there are so many psychological contracts that employees will find difficult to perceive and obey it in