Create Workplace Happiness by keeping your side of the Psychological Contract


Today’s organizations are fighting the war for talents. Everyone wants to make sure that they attract the best ones. But to be honest majority of employers are happy to get any suitable candidate to apply for the job. At least this is the situation in many labor markets.

So what happens after successful recruitment and selection process when the job offer is made? Are we still ’flirting’ with the person whom we hired or do we see recruitment and work relations as a one night stand? Yes, work today in one organization isn’t marriage for life either. But do we honestly see a long relationship with the person whom we hired, whom we promised the Moon or maybe even more, and who, when joining our organization, realizes that the carriage is actually a pumpkin and the horses are mice?

Did I just get too edgy for you? Hope that I didn’t scare you away 🙂 I just wanted to make a point here when talking about the importance of psychological contract between employee and employer.

The psychological contract refers to the unwritten set of expectations of the employment relationship as distinct from the formal, codified employment contract. The psychological contract includes informal arrangements, mutual beliefs, common ground and perceptions between the two parties.

But is that really important? Yes! According to HRZone research has shown how employees whose expectations are met by their employer are happier at work and they reciprocate in kind. They demonstrate higher levels of commitment, they are more willing to ‘go the extra mile’ in their work.

So what exactly am I talking here about? I mean different practices and activities that we are doing in our organizations. For instance, let’s take one of my favorite topics: praise and recognition. When we have an employee, who is doing an excellent job but receives no feedback and praise for that, what do you think, what will happen? Will the person go the extra mile also tomorrow or will he stop doing what he was so great at?

It is really easy to break the psychological contract and to ruin the relationship between employee and employer. That is why it is really important to educate your managers. To make them understand the importance of their actions. This is also the reason why we at ISS are teaching our managers with the program called Service with a Human Touch where we are using (one of my favorite) quota:

Good performance if not noticed will go away.

Poor performance if not noticed is there to stay.

DecisionWise, a Management consulting firm, worked recently with a large company whose employee turnover rate was really high. The company wanted therefore to have a better understanding of their employee experience.  So they turned to DecisionWise who conducted interviews and surveys with 4,544 employees who had left. And here is what they found: typical turnover during employees’ first six months of employment was fairly minimal — less than 10 percent. This was the time when employees’ expectations were met. They were assigned a mentor, received training on how to perform their jobs and felt that their employer had laid out a clear set of expectations. But at about the nine-month mark, employees were leaving in droves. About after seven months, they began to see that the job they thought they had signed up for was not the job they would actually be doing. About half of the employees who left during the six-to-nine-month time frame indicated that the reason they left was that the job wasn’t meeting their expectations. They didn’t see a future. They realized they wouldn’t receive additional training once their new-hire phase ended. Further, they saw that the hours they had thought they would be working were different from those they were actually expected to work. Worst of all, the employees realized that what they were expected to do every day didn’t align with what they had been told they’d be doing when they accepted the job. As we dug further, we found that 60 percent of those who left felt that the training they received did not meet their expectations. That’s a big gap in expectations.

The results of the study show that the violation of the psychological contract has a significant impact on employee happiness. When people expectations are not met then they become unhappy and leave the organizations. But how to prevent that from happening? Here is what I would recommend:

Do not exaggerate in a job interview when talking about the job or your organization. Be honest, because the truth will come out anyways.

Promise only what you can deliver. You should not promise things that you can’t keep or that you do not have authority to offer.

Deliver what you have promised. When you are promising a work and life balance or development opportunities then do not retreat from your words after a candidate has accepted your job offer.

Be clear in your communication and promises so that everybody knows what to expect. For instance, send a written job offer with a value proposition.

Ask for a feedback from your people. You can ask for the feedback to the recruitment and selection process, to the training programs, to the induction program, etc. And after receiving the feedback make sure that you make the needed improvements as well.

Be honest and don’t hide! Everything around us changes and of course, there will be situations and cases where you need to make some changes to your programs and practices. So make the changes, but be then also honest do your people. Tell them about the changes and tell them also, why you need these changes.

Notice your people when they do a good job, give them feedback and don’t be afraid to recognize them.


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