The
earliest idea of psychological contract dates back to a study conducted by
Argyris in 1960, in which the term “psychological work contract” was used to
describe the implicit relationship existing between a foreman and the employees
this was in charge of supervising. The concept was later developed by Levinson,
Price, Munden, Mandl and Solley (1962), who referred to the term “psychological
contract” to outline the set of mutual expectations the two parties involved in
the employment relationship might be at best just vaguely aware of, but which exerts
a controlling influence on their relationship. Ever since, several definitions
of psychological contract have been formulated by many academics and sociologists;
amongst these that of Schein (1965) who, drawing from Argyris and Levinson et
al studies, stressed the circumstance that this type of contract unrelentingly produces
effects throughout the employment relationship.
The
reason why the psychological contract has invariably aroused academics keen interest
lays in the fact that it is supposed to considerably influence and govern each
individual employment relationship. Albeit unwritten, the effects this contract
produces are pervasive and profound in that it essentially relies on the
employee and employer mutual trust and respect.
The
psychological contract is underpinned by a set of obligations and expectations,
which are habitually established by employees and employers only once the legal,
written contract of employment has been signed and the employee has actually started
to work with the new employer. Employees traditionally commenced establishing
and raising their expectations, which more strongly influence their behaviour
vis-à-vis their obligations, after having gained some experience in the new
workplace. As contended by Schein (1965), the psychological contract needs to
be constantly renegotiated, but this does not typically happen in the first
weeks or months of employment, but rather later on, once individuals become
acquainted with the new organizational environment and become fully aware of
the practices and culture driving the organization.
Up
till a few years ago, individuals chose their employer on the basis of companies’
reputation and, whether possible, according to the information obtained by
means of their relatives, friends, acquaintances and eventually media. The material
collected thanks to media, nonetheless, more often than not, was mostly financial-related
rather than concerned with the businesses working conditions, never mind with the
culture and HRM practices fostered and implemented within the organization.
Since
it was not difficult for individuals to imagine what their employer
expectations and their obligations in the workplace would have most likely been,
people essentially joined organizations having a rough idea of the employer side
of the psychological contract, but were utterly unable to establish their own expectations
before joining an organization.
Things
are working considerably differently nowadays. The growing number of social
media and professional networks available online enable employers to widely
introduce their organizations to potential candidates and talented individuals
so as to relatively easily woo and lure them. Social media and social networks like
LinkedIn, Glassdoor, Twitter, Google Plus and facebook, just to name a few of
them, enable employers to create company pages where these can post videos,
photos, stories, interviews and whatever else can help them to effectively
promote their employer brand. Glassdoor also enables employees to rate their
companies and express their thoughts about literally every aspect and feature
of their current or former employer. Potential candidates and applicants can then
easily access these reviews, which are clearly very helpful for them to pinpoint
which organization may suit them the most and can enable them to achieve their
ambitions and aspirations, before eventually applying for a job.
These
platforms offer newly graduates seeking their first job and experienced professionals
looking for a new challenge much more than just some pieces of information
about the companies these are interested in; it can be maintained that in many
ways social media provide potential candidates a real taste of what working with
a company, actively and effectively promoting its employer brand, might be.
Particularly punchy prove to be the videos recorded and the photos shot in the
workplace during company, CSR and work well events and initiatives, but even
more powerful are the comments posted by former and current employees of an
organization. Potential applicants want to listen to real stories told by
employees rather than craftily devised statements read by top managers and HR
professionals.
Social
media definitely offer employers great opportunities in terms of promoting
their employer brand; thanks to them organizations can in fact easily reach and
attract talented individuals in what can be nowadays regarded as the global
labour market. Company pages, and the different options employers choose to build
and develop these (videos, pictures, posts, animations, employee interviews and
so forth), enable employers to provide potential applicants (and sometimes
investors): an overview of the way things are done within their business (that
is to say of corporate culture), some details about what employers value the
most, an outline of the career and international mobility prospects offered by
employers and an overarching view of the businesses premises and offices layout.
The
tremendous advantages offered by social media and professional networks to
organizations which want to actively promote their employer brand are clearly
unparalleled, insofar as a considerable number of companies are nowadays intensely
competing in social media and professional networks to attract talented
individuals’ attention and hopefully applications. Employer branding can be
definitely regarded as a good practice but, whether not properly and most of
all honestly and transparently managed, it may also cause employers some
considerable drawbacks.
The
huge quantity of information collected by means of social media and
professional networks, whose power is indeed magnified by the videos and
pictures employed by organizations in their company pages so as to more
effectively convey the message, ultimately account for individuals creating
expectations even before applying for a job. Differently from what it actually
occurred in the past, nowadays candidates apply for a job having already
established a clear, broad set of expectations. These have learned from company
videos that after having entered the organization they will have: great career
prospects; the chance to travel around the world, thanks to the company
international mobility policy; access to competitive pay rates and significant flexible
benefits and perquisites; and the chance to grow and develop so as to meet
their ambitions and achieve their full potential.
Individual
expectations are created on the basis of the wealth of information gathered
online; notwithstanding, it is likely that these expectations will not be the
object of specific discussion and agreement with the employer at a later stage,
that is, during the talent acquisition phase. As suggested by Armstrong (2009),
nonetheless, the main problem with the psychological contract is that, being
unwritten, it is essentially based on assumptions and, worse still, on unarticulated
assumptions; whether these are not discussed and agreed between employer and
employee, the inevitable consequence is a later huge disappointment. When
preparing the content of their company pages, employers should hence adopt a
cautious approach so as to avert individuals misreading and overestimating
their proposition. It is hardly believable, for instance, that an organization
may offer to every employee, irrespective of his/her role, career prospects and
international mobility opportunities as depicted in the captivating videos
posted in its company pages; this clearly depends on a series of requirements
that each individual will be expected to meet (role, tenure, seniority, grade, skills,
etc.).
The
effects produced by an individual perception that the psychological contract
has been breached by his/her employer can be very harmful and long-lasting; by
reason of their pervasiveness these effects will be evident in every individual
action and behaviour. According to Sims (1994), the breach of the psychological
contract entails that the parties involved in the employment relationship no
longer share, or never indeed shared, an agreed set of values and objectives.
More often than not, the breach of the psychological contract is due to the
existence of the latter circumstance; this type of contract is in fact
essentially based on tacit agreements so that reciprocal expectations, whether
not appropriately discussed, are never clearly expressed.
Employees
typically create expectations on the basis of what they observe in the workplace
and consider fair. When an employee gets a promotion, the colleagues who
consider their level of contribution equal or even superior to that of the employee
who has been given the promotion establish expectations. Whether the videos
posted in a company page should showcase success stories only, this might
account for individuals creating excessive career expectations. Employers
should take extra care when divulging information about their companies’
practices and value proposition; the risk to raise unrealistic expectations is
very high and the consequences they may later suffer severe.
Social
media can prove to be a double-edged sword, they can in fact make or break an
organization employer brand. Inasmuch as these can effectually help employers
luring and attracting the best talent in the labour market, regardless of its
geographical boundaries, social media may also play against employers whether
the information disseminated are not accurate and do not provide a clear view
of the real circumstances. Yet disappointed individuals can indeed use social
media to denigrate their former employer and post comments outlining how their
initial expectations, created on the basis of the information divulged by the
organization in its company pages, vanished into thin air after having joined
the business.
When
managing their company employer branding activities, HR departments should thus
definitely avoid overselling and overstating; for instance, showcasing
opportunities and prospects which cannot be offered to everyone as if these are
the norm. It can be ultimately argued that by providing an excessively detailed
and overarching view of the value proposition and career prospects offered by
their organization, HR would essentially outline the best possible scenario;
individuals who later join cannot thus expect any better. Focusing more on corporate
culture, organizational climate and CSR initiatives, by contrast, would
definitely enable employers to still take newcomers unawares and provide them the
pleasant feeling that the employer they have joined is even capable to exceed
their expectations. Also in this case employees would indeed establish and
raise their expectations but if anything by reason of how things really are and
safe in the knowledge that to grow and develop within the business they have to
fulfil some specific criteria.
Employers
should invariably take heed of the psychological contract in that, as suggested
by Guest et al (1996), this deeply influences: individual commitment to the
organization, employee satisfaction and ultimately employee relations. A
positive psychological contract can be regarded as the precondition for
individuals going the extra mile, engage in discretionary behaviour and put discretionary
effort into their work.
The
circumstance nowadays individuals, by virtue of social media, are put in a
situation to establish expectations about their employment relationship before
actually joining an employer, should prompt HR professionals to take extra care
with the process individuals create expectations and the way these change over
time.
So
as to develop and maintain a positive psychological contract and completely
avert later disappointment, HR professionals should discuss and clearly define
candidates’ expectations during the acquisition and induction phases. Since
individual expectations are due to change with the passing of time, this
dialogue should be kept open and embedded in the performance management
practices of every organization as a crucial part of it. Yet organization
policies and procedures, especially those enabling managers to make decisions affecting
their staff, should be extremely clear and transparent (Armstrong, 2009).
The
psychological contract is underpinned by tacit assumptions and unwritten
expectations so that it can be by nature extremely easily misread. The employer
branding activity performed by organizations, thanks to the growing
pervasiveness of social media, albeit properly managed, can contribute to make
things worse; applicants may in fact misinterpret some of the information
provided by employers. To avert individuals creating unrealistic expectations
about their employment relationship communication is key (Guest and Conway,
2002). Since the very beginning, that is, during the acquisition and induction
phases, employers need to establish an open, transparent two-way communication
with individuals about their expectations and clearly state what they can
actually promise and what it is expected from them in exchange so as to also be
clear about the employer expectations. This communication channel should be
left open throughout the employment relationship in that individual
expectations are subject to change over time and with these the content of their
psychological contract. This clearly is a daunting task for employers and HR,
but definitely worth the efforts it entails whether the employer wants to effectually
promote its employer brand, attain sustained competitive edge and successfully
pursue its strategy by recruiting the appropriate talents and establishing with
them a relationship underpinned by a clear reciprocal understanding and trust.
