Importance of Psychological Contract
- Thanh An Cao
- Aug 28, 2015
- 2 min read
According to Rousseau and McLean Parks (1993), psychological contract is important to reduce uncertainly in social relation, define the role of organization and employees, and decentralize power relationships.
Psychological contract is very important for the business, which plays an important role to improve human capital management in workplace. It also can raise productivity and focus better on performance and skills of workforce to gain the competitive advantages, effort and achievement of people (CIPD, 2015). Psychological contract has been built and developed base on the communication between the parties. A good communications will make the parties understand each other as well as expectations, obligations and promises, from that the organization can manage people better and effort them to improve the skills and knowledge of people at work which can increase productivity, performances and gain competitive advantages.
Michael (2012) suggests psychological contract can help organizations to “engage people at work”, “understand and predict how people behave” and “align people better to customers and strategic goals”.
It is very important for any organization to engage people at work by letting people know what it expects and understand people expect, therefore the organization and people can make agreements to know what they have to do for each other. Besides, psychological contract drives and shapes the extent of people to let them use and develop their talent and skills to contribute and achieve the organization’s goals that is a key success for any organization. Moreover, psychological contract can allow organizations to understand and predict how people behave at work from that the organizations can align them better to customers and strategic goals. Therefore, it will be easy to engage people at work to achieve the strategic goals underlying psychological contract (Michael, 2012).
References
CIPD. The psychological contract. Available at: http://www.cipd.co.uk/hr-resources/factsheets/psychological-contract.aspx. Accessed on 28 August 2015.
Micheal Wellin (2012). Managing the Psychological Contract: Using the Personal Deal to Increase Business Performance. Gower Publishing, Ltd.
Rousseau, D.M., & McLean Parks, J. (1993). The contracts of individuals and organizations. Research in Organizational Behavior, 15, 1–43.
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