Originally written for and published by Forbes.com.
As we continue into the third year of living with the pandemic, most employers are aware that their employees are feeling burned out, overwhelmed and exhausted emotionally, mentally and physically. Employees and employers have been forced to deal with an immense amount of change during these past few years, from going remote to complete shifts in business strategy and overall direction.
This shifting work culture has felt unstable, to say the least, and it has shed more light on one specific area of the employee/employer relationship that in many cases has gone unaddressed for quite some time: the psychological contract.
The psychological contracts we hold with employees have likely been breached many times over, especially in the past few years, and this is extremely destabilizing for employees. As we reestablish what work looks like going forward, with new ways of connecting and future business priorities being established, we must consider renegotiating psychological contracts in the workplace to get back some of the stability that has eroded over the years.
What Is a Psychological Contract?
Originally coined by Denise Rousseau, a psychological contract is “an unwritten set of expectations between the employee and the employer. It includes informal arrangements, mutual beliefs, common ground and perceptions between the two parties.”
In other words, it’s an unofficial contract between employer and employee that determines much of the behavior seen in the workplace. It’s distinguishable from the written contract that an employee agrees to with their duties, pay rate, etc., and is more so the “fairness or balance” perceived by the employee around what they put into the job and how they are treated in return.
Below are a few examples of what a psychological contract may include:
- Virtual meeting behavior (camera on or off)
- How feedback is presented and how often
- Overtime or travel expectations
- Available development opportunities
- Pay increase or promotion expectations
- Work-life harmony prioritization
- Transparency
- Expectation to be treated with respect
These aspects, though not formally written in a contract, are typically understood between employer and employee based on informal conversions or commitments made by either party. When upheld, this mutually understood contract creates a sense of stability that can lead to employee retention and engagement. When there is uncertainty around the elements of the contract, however, and behavior outside the norm occurs, the contract is breached. If the psychological contract breach goes on for long periods of time without being addressed, employees will start to feel the ground beneath them waver, and feelings of resentment and frustration can easily start to emerge.
How Psychological Contracts Have Changed Over the Years
Technology and the digital age have changed many of the components of the psychological contract in the past decade — how work is accomplished, expectations around travel, meetings, office hours, etc. Most of these changes have occurred in line with society’s natural progress, making breaches in psychological contracts incremental and, possibly, harder to notice and/or perhaps easier to manage. However, over the past few years, new, major shifts have occurred at a rapid pace, making it difficult not to feel the effects of the breaches in the contract. Cue employee burnout.
Employee and employer expectations have drastically changed as a result of the pandemic, from hybrid and remote work to concerns around health and safety. With these changes in how we work and connect with one another, our employees’ sense of stability has become fragile. If we want to support our employees and ultimately see them succeed in the workplace, we must acknowledge that psychological contract breaches have been expedited, and we must shift to more sustainable expectations — an updated psychological contract.
How to Renegotiate a Psychological Contract
To bring back a sense of stability and help our employees feel less disoriented and more engaged, we can do four things regarding the psychological contracts we hold with them.
1. Be transparent and explicit. First, we must acknowledge that there is a psychological contract between the employer and employee. It can be helpful to define what it is if they are unaware and to not shy away from it. Psychological contracts are a normal, long-standing, working part of life and exist in many realms of our lives, and it’s okay to call them what they are. If your employees are clearly struggling with workplace expectations and staying engaged, set aside time to explicitly have this conversation.
2. Acknowledge where the contract has been breached. We must determine if we have breached the psychological contract with employees without knowing — or worse, without acknowledging it. This will look different for each employee, but it’s important you have a dialogue with them about their expectations that have gone unmet. Maybe it’s a string of layoffs that has left them worried about their job standing, an inability to give promised raises,
or a lack of work-life harmony being provided. Seek to understand each party’s part in the breach and work to create mutual understanding and respect for each other in these areas.
3. Set clear expectations moving forward. Whatever aspect of the psychological contract has been breached, engage in productive dialogue about why these things happened and how you intend to prevent them or adjust behavior in the future. It’s also important to establish a shared vision and objectives to ensure alignment going forward.
4. Agree on guiding principles. This is about how you will work to stay aligned and how you will communicate these unwritten expectations. You should mutually agree on a move-forward plan about how to check in about the validity of the contract and how it’s being upheld.
These psychological contract negotiations aren’t one-and-done. In fact, in order to avoid future employee burnout and increase employee buy-in long term, they should continuously flex with time and change with evolving circumstances. Renegotiating the psychological contract doesn’t have to be scary or taboo, but it ideally will instead become a normal part of the employee-employer relationship that has been missing for quite some time — a commitment between parties to communicate and adjust the terms of the psychological contract as circumstances and the workplace climate continue to change.
