• Psychological contract: An employee’s perception of
his or her exchange relationship with an
organization: outcomes the organization has
promised to provide and contributions the employee
is obligated to make.
• Perceptual in nature:
– Subject to errors and biases
• Perceived relationship:
– Employees & organization
– Reciprocal promises & obligations
diagram below is a
helpful way to
illustrate some of the
crucial aspects and
Type of psychological contract
Narrow and specific
General and evolving
Advantages and Disadvantages
- When both parties honor the psychological contract, a bond of
loyalty is formed between the two.
- In this kind of working relationship, the ability to understand one
another as human beings can make a big difference.
• Open communication
- When trust has been established through the psychological
contract, it makes easier for both parties to exhibit openness
- When the terms of the psychological contract are honored, all
aspects of the working relationship should run more smoothy.
• There is no agreement, written of psychological
contract; hence it is doubtful whether it can be
considered a contract at all.
• Organisations consist of many different individuals have
specific expectations about their rights and obligations
those individuals and groups.
• Violation of the psychological contract carries a clear
view of a broken promise..
• It may be redundant and complicated concept. It goes
beyond with other psychological constructs such as job
satisfaction and organisational commitment.