How ‘psychological contracts’ drive employee disengagement

When people take a job, there’s a set of material obligations that both parties agree to: salary, benefits, vacation time, nondisclosure of trade secrets, perhaps a performance bonus, and so on.

But decades of research show that employees also create a “psychological contract” that governs their expectations about things like job responsibilities, advancement, work-life balance and training opportunities.

And here lies the problem: This contract is in the employee’s head. It’s not something that the employer explicitly discussed, much less negotiated, when the person was hired.

In hiring interviews, it’s not uncommon for employers to offer vague generalities, as in “We believe in developing our people,” or “This place is a meritocracy,” rather than make specific commitments. So the “contract” ends up being based on incorrect assumptions the employee made about the company and the job, as well as misinterpretations of things said in the interview.

Multiple studies, based on interviews with employees, show that misaligned expectations trigger disengagement. When employees feel that the organization has reneged on its commitments, they either reduce their level of effort as a way to “balance the books,” or they leave.

Make it explicit

The solution? Drag the psychological contract out into the open.

Have a full and frank discussion with job applicants about relational expectations – how they expect you to treat them and how you expect to be treated in return. You can’t reduce these to a set of hard-and-fast commitments, nor do you need to. Rather, the goal is to create rules of engagement that both parties accept.

Here’s a partial list of some key issues you might address, including some language for expressing the employer position.

Work-life

“We respect our employees’ need for a fulfilling private life, but we work hard here. A person in your position would likely work 45 to 60 hours per week. What are your thoughts on that?”

Promotions

“Growth companies like ours are all about creating opportunities and we’d love to see you advance. That said, in your role, the expectation is that if you quickly distinguish yourself as a high-potential employee, you’d be considered for a promotion after about two years. How reasonable does that sound to you?”

Job descriptions

“We laid out clear job tasks for you, but business conditions change and as we see an employee’s strengths and weaknesses, it’s not uncommon for us to change the job descriptions to meet unexpected needs. How comfortable are you with that?”

Salary increases

“We’ve hired you at a competitive salary for your experience level. Assuming the company is performing adequately, you can expect cost-of-living increases. If you achieve your goal of getting promoted, obviously you’ll receive a larger increase. How does that fit with your expectations?”

Teamwork

“This job involves relationships of inter-dependence with your team and with other departments. We believe in conflict over ideas, not personalities. We’ll expect you to give and receive feedback with a high level of emotional intelligence. What’s your reaction to that?”

Notice that each statement is followed by an open-ended question. Such questions encourage a thoughtful response, and invite candidates to raise related issues that they want to discuss. This approach will give you a good read on whether you and the candidate are aligned.

And once the applicant is hired, check in and recalibrate expectations regularly, especially during times of change, crisis or uncertainty.

This blog entry is adapted from the Rapid Learning module “The Psychological Contract: When New Hires Don’t Stick Around.” If you’re a Rapid Learning customer, you can watch the video here. If you’re not, but would like to see this video (or any of our other programs), request a demo and we’ll get you access.

The blog post and Rapid Learning video module are based on the following research study: Parzefall, M.R., & Coyle-Shapiro, J. A. (2011). Making sense of psychological contract breach. Journal of Managerial Psychology, 26(1), 12-27.