Psychological Contract refers to the relationship between an employer and its employees, and specifically concerns mutual expectations of inputs and outcomes.
The Psychological Contract is usually seen from the standpoint or feelings of employees, although a full appreciation requires it to be understood from both sides.
Respect, compassion, trust, empathy, fairness, objectivity – qualities like these characterize the Psychological Contract, just as they characterize a civilized outlook to life as a whole.
This reflects the fact that employee’s feelings and attitudes act on two levels:
- Employee feelings and attitudes are strongly influenced by their treatment at work (an aspect of the Psychological Contract), while at the same time,
- Employee feelings and attitudes strongly influence how they see themselves and their relationship with the employer, and their behaviour towards the employer (also an aspect of the Psychological Contract).
Leadership transparency has a huge influence on two major factors within the Psychological Contract and its effective management:
- employee trust and openness towards the employer
- employee awareness of facts – enabling employee objectivity in judging the Psychological Contract
Empathy and the psychological contract
Empathy is the ability or process used in understanding the other person’s situation and feelings. In the Psychological Contract empathy must be an organizational capability – a cultural norm and expectation of leaders and managers in their dealings with people.
Empathy is crucial to trust, cooperation and openness, and it’s also crucial to mutual understanding. All of these elements are significant within the Psychological Contract.
The nature of empathy is that people can see if it exists or not. Where it does not, building trust and cooperation is very difficult.
Where an employer lacks empathy, employees naturally are less inclined to trust and cooperate. A vicious circle begins.
Emotionally positive people tend to be resilient and flexible. They also tend to rationalize (explain to themselves and others) events in a positive way, even events that in other circumstances might be regarded as potentially threatening.
Positive attitude, mood, and frame of mind are very powerful in turning perceptions and opinions into helpful realities.
It is human nature for happy satisfied people to see the bright side of things, just as it is human nature for unhappy dissatisfied people to see the negative and to fear the worst.
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