As per the meaning of the term, psychological contract, it is the implicit contract of understandings between the organization and the workers as they relate to both the expectations of the employees and the obligations of the employer (Emott, 2006). When employees are being selected for the leadership programme the psychological contract is bound to be affected in some way. Guest (2004) takes an even wider view of the contract in such situations where new bonds are being formed and firmly recommends that the full understanding of the psychological contract should incorporate fairness to both parties and mutual trust.
This was difficult to achieve in this case because the takeover was still fresh and managers and employees from both the companies had little time to create implicit bonds. As Hendry and Jenkins (1997) suggest since the contract is implicit, it is difficult to judge how it will be impacted with changes in the company, but at the same time, it is important to consider the psychological contract before any change is announced to the workers. Impact on the Psychological ContractThe first case of employees who wanted to and have been selected is easy to explain in terms of the psychological contract.
For some reason, they considered themselves capable and deserving enough to be made a part of the talent and leadership program and the company thought the same therefore there is no conflict between them. It does not come as a surprise to the employee; rather it comes as a reward or even as an expected entitlement. This situation would validate the belief of the employee in his/her own abilities as well as improve the strength of the psychological contract (Rousseau, 1995). Guest (2004) mentions issues of power, trust, and fairness as the central forces in making the psychological contract and all these issues reflect positively in this situation.
The company displayed its trust in the employee; the employee expected the trust to be shown and that employees can be further expected to act at a higher performance level than before. The employee can be expected to show a greater amount of commitment to the company, be more satisfied with the new position and have a stronger intention of staying on with the company despite all the changes which were coming. However, there is one case in which the psychological contract might be affected negatively i. e.
if the employee considers inclusion in the program to be only a reward for their previous performance.
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