Hrm: Psychological Contract

Contents page Introduction Psychological contract The characteristics of a psychological contract are the mutual beliefs, informal obligations, perceptions of the employee and employer towards each other; the expectations an employee has of the organisation and the expectations the organisation has of the employee and the reciprocal promises in that relationship. This helps to set out the aims and objectives in the company for the work to be done professionally. The employee has different contents and outputs for the business as to the employer. The employee seeks for fairness followed by an output of behaviour, whilst the employer seeks for trust and performance _(Annette Sharpe, 2004)._ There can be informal and imprecise obligations regarding the psychological contract, these obligations can be referred from current events or actions from the past, as well as from employee statements. An example of where these obligations may occur is during the recruitment process or in performance appraisals (CIPD, 2008). The important aspect about the psychological contract is that the employee understands and believes the relationship between the employers and the employees. An example of a successful company using the psychological contract in the right meaning is ‘Prêt a Manager’ which is a sandwich company that opened in the London in 1986, by two college friends, Sinclair and Julian (Prêt a Manager, 2008). The expectations that the employees can expect from Prêt a Manager are getting paid as much as they can afford, invest in people training and development, and most managers are promoted from within. The expectations that Prêt a Manager has from the employees are hard working, good sense of humour, enjoy delicious food, and start early to leave early (Michael Wellin, 2008). Prêt a Manager has successfully managed to build a great relationship with their employees using an effective psychological contract, which is one of the reasons why for the success of

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