Getting the balance right: the psychological contract at work

Welcome to this week’s Discuss HR, the HR blog written for and by members of Human Resources UK.

In the week of the Cheltenham Races it is rather apt we welcome back regular writer and Cheltenham resident John Hepworth (I am not casting aspersions on whether John gambles by the way!).  His post this week is particularly good, so rather than a long winded introduction, here it is! (Ed Scrivener)

Getting the balance right: the psychological contract at work

I have learnt over the years that getting ‘the psychological contract’ right comes down to a few basic principles. Most managers in my opinion forget these; but first, before I reveal my views, let me tell you a story.

All of my time in this wonderful profession of HR and HRD has been spent implementing the accepted methods of business in this area, i.e. the ‘psychometric approach’ to all-things people. Meaning? Well, for example: I made sure that all my managers had completed clear job descriptions and person specifications for a recruitment project; I then developed legally-compliant and company-attractive advertisements, or more likely instructed recruitment consultants to place the jobs for me. Equally, all my training and development plans had learning outcomes defined; I attempted to measure and evaluate their impacts; and any reward systems that I played with, I did the same – did they meet the needs of the organisation and the individual employee?

Lots of good, compliant stuff there (I hope!) – oh, and of course, I attempted to ensure that the line manager / employee relationship – their psychological contract -  remained sound and beneficial, for both them and the business (although how this was achieved I do not know now, as I hardly saw all my charges every day and usually only got involved when there was a dispute). And it is this relationship – “I have to work with this person” - that is the most crucial part of any job in management.

And yet, as I have shown above, we create business systems and processes that completely ignore and minimise the potential benefits that can be associated with such a rich psychological contract.

Guest (2007) noted that the psychological contract reflected “…the perceptions of both parties to the employment relationship (organisation and individual) of the reciprocal promises and obligations implied in that relationship.” Good start point; this built on Rousseau and Wade-Benzoni (1994) who believed “…psychological contracts refer to the beliefs that individuals hold regarding promises made…” When we come to managing people – or indeed before they even apply to work for us – it is where these expectations are NOT met that under-pin most of the disputes and issues that I have had to wrestle with over the years – forget about whether the contract of employment is legally-compliant.

In work, we all have expectations of the “mega-corp” or the SME that employs us (in short, what is reasonable to expect from them?). And we also make a judgement about what we can reasonably be expected to contribute in return (Guest et al, 1996). This has typically, in my view, led to organisations and legislators opting for systems based on a ‘psychometric’ approach as the dominant response, e.g.

It is reasonable to be treated fairly and with consistency – therefore, we have to have laws about discrimination and codes of conduct about ‘best practice’

It is reasonable to expect scope to demonstrate our competence – so, we introduce appraisal systems and career development plans

It is reasonable to expect involvement and influence on what you do – hence, the need for European Directives on involvement, consultation on redundancies, and so forth

Now, what I am alluding to is that companies often miss the first fundamental – the application of such systems by their managers. Witness, therefore, the experience of an unemployed graduate, completing an application form that ‘ticked’ all of the areas on the advertisement and being rejected because they lacked experience (i.e. the recruiting manager had got too many applications so had to make some judgement). Imagine the line manager presented with a competent and detailed short-listing methodology, who selects those for interview by closing their eyes and putting a pen on a name in the list. And see the managing director struggling to keep the business afloat who tells his staff of job cuts, selects the ones to leave and is then ‘stung’ with employment tribunal claims based on a lack of individual consultation.

Who is right or indeed offended in these circumstances? The line manager has an expectation that they should be able to run their business; they have after all provided employment for so many people over the years and it is their right to manage, is it not?

I guess my point is this: rather than develop leaders and managers to perform their tasks based on healthy psychological contracts, we teach them (and by and large it is taught in most cases) how to manage a balance sheet, how to measure performance, what to do about disciplining their staff when they cross that behavioural line. Surely there is another way to do things?

I am aware that many surveys still point to how poor we are in the U.K. at developing managers and leaders for the future. Both CIPD and Government point to a lack of leadership skills in this Recession as a ‘blocker’ to progress. Yet, if we take the psychological contract proposal seriously, I am convinced that we can make more healthy and authentic change; from the examples above, then, we could convert:

Fairness and consistency in what we all do as a matter for competitive advantage, rather than because a law or an HR process says we have to

Demonstration of competence as an opportunity and not a threat – so, let’s all learn and use coaches and mentors actively (and I do not necessarily mean those who have been trained as specialist coaches and mentors either)

Involvement and influence of employees as a matter of course and as a method for improving their own skills and attitudes, as well as offering management the source of countless ideas and innovations

Go figure, then. Next time you turn down an applicant, deep down have you done that on the basis of age, for instance, and called it something else in order to ‘comply’? Just think of the missed opportunity…

About the author

John helps organisations, especially in the SME sector, achieve competitive advantage.  He has a particular interest in translating strategic HR management into practice.  Typically, this has meant focusing his efforts on recruitment and selection, performance management and training and development activities.  John sees the challenge of matching the development of internal competencies with the externally driven demands of the market place as one of the key themes in developing organisational engagement, capability and performance.
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Discuss HR is the blog for Human Resources UK, the leading LinkedIn group for those involved with HR in the UK.  Next week’s Discuss HR will be published on Thursday 21^st March and will be written by Performance Consultant Una Doyle.

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