psychological contract

The psychological nature of a contract between an organization and its staff. This encompasses the implications and expectations that arise as a result of the relationship. Psychological contracts can take various forms:

• A coercive contract is one in which the relationship between an organization and its staff, or between an organization and its customers, is based on coercion. An example of this occurs if sections of the community are forced into using a monopoly or near-monopoly for an essential commodity or service (electricity, telecommunication, or fuel). It can occur with institutions, such as schools and colleges, where the students attend because they are required to do so by society.

• In an alienative contract the relationship between staff and the employing organization is negative. This traditionally applied to large sophisticated organizations, especially to staff working on production lines and in administrative hierarchies, in which they have very little control over the quality and output of work.

• A remunerative contract is one in which the relationship between staff and the employing organization is clearly drawn up in terms of money paid in return for the time spent at work. It is normally used when there is a low level of mutual identity between the staff and the organization.

• A calculative contract is one in which the staff have a low commitment to the goals of the employing organization and a high commitment to earnings and satisfaction. It is a key feature of the wage-work bargain for production and administrative staff. For those with professional and technical expertise, the calculative relationship is based on the ability to practise, the need to find an outlet for these skills, and individual drives to serve and become expert.

• In a normative contract the individual is highly committed to the objectives of the employing organization. This is usually found in religious organizations, political parties, and trade unions, and also occurs with some business organizations if the wage-work bargain is sound and the organization accepts a range of obligations and responsibilities to ensure that it is maintained. See also organizational commitment; protean career