relationship between the psychological contract and employee motivation

School of Management (PG)

ü Is there a clearly identifiable relationship between the psychological contract and employee motivation?

At present, due to the dynamic changes in the organisations, the psychologists have interpreted the psychological contract in various views. In addition, it is possible that psychological contract is one of the significant factors for the organisations because it creates the sense of exchanging values and beliefs between employees and employers. Besides, employee motivation could be enhanced by exchanging the obligations between individuals and organisations. This essay will describe that there are strongly relationships between psychological contract and employee motivation. Psychological contract has been defined in different views over a period of times. At the early stage, the concept of psychological contract is to comprehend exchange the ‘role of subjective’ and ‘interaction’ between individuals and organisations (Argyris,1960;Levinson et al.,1962; Schein,1965,1978). Another interpretation of psychological contract focuses on the exchanging between the individual’s belief and promissory or reciprocal obligations in the organisations (Rousseau,1995). This theory tends to understand the needs of individual employee rather than organisations. However, Guest (1998) argued that ‘employer perspective’ should be included in the psychological contract because it can help employees and employers have clearly understanding on the mutual obligations as a ‘two-way exchange’ (Guest,2004). In addition, ‘contractual’ needs to be concerned on both parties, not only employees (Boxall and Purcell,2003). Thus, psychological contract can be described as “sets of expectations about reciprocal arrangements and exchanges” (Sparrow,1996). As a result, employee expects to obtain the balance between perceived obligations, such as pay and career development, and work performance (Westwood et al.,2001). It can be said that

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