What's the big idea? Psychological contract

Try this on your partner: 'Darling, I think you're in breach of our psychological contract,' and it will go one of two ways. The better way is that you suddenly realise you don't have the deal you thought you did. (Don't ask about the other way.) So it is in business.

by Nigel Nicholson
Last Updated: 09 Oct 2013

Managers assume their staff will go the extra mile, if asked to, on the strength of their loyalty, goodwill and sense of responsibility. Staff assume that if they do what they are asked they will be rewarded, if not now then later.

The idea has been around a long time that nested within the formal employment contract is an informal one around rights, responsibilities, fairness and contribution; and also that people's expectations and beliefs about such things are often painfully misaligned, especially when the parties differ in power and status.

We have got better at recognising such disjunctions - people speak out more - though in a climate of austerity the more vulnerable employees will be more fearful and less open. It is truly a test of an organisation's culture and the health of its relationships how readily mismatches can be brought into the open and reconciled. Just like at home!

- Nigel Nicholson is professor of organisational behaviour at the London Business School

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Want to encourage more female leaders? Openly highlight their achievements

A study shows that publicly praising women not only increases their willingness to lead, their...

Message to Davos: Don't blame lack of trust on 'society'

The reason people don't trust you is probably much closer to home, says public relations...

Dame Cilla Snowball: Life after being CEO

One year on from stepping back as boss of Britain's largest advertising agency, Dame Cilla...

How to change people's minds when they refuse to listen

Research into climate change deniers shows how behavioural science can break down intransigence.

"Paying women equally would cripple our economy"

The brutal fact: underpaid women sustain British business, says HR chief Helen Jamieson.

Why you're terrible at recruitment (and can AI help?)

The short version is you're full of biases and your hiring processes are badly designed....