Neglecting the ‘psychological contract’ can trigger employee disengagement

One of your employees — a good one — is showing signs of disengagement. She’s been with the company for 20 months, she’s shown intelligence and ability, and you had high hopes she’d be managerial material one day. But recently she seems bored in meetings, she’s missing deadlines, and occasionally comes in late or leaves a little early.

You call her into your office and ask what’s going on. “I guess I just expected more out of this job,” she says. “I thought I’d have gotten a promotion by now. And maybe a healthy raise. And more learning opportunities, for sure.”

You sit back, aghast. You never promised these things. Why would she think she had them coming?

Here’s why: This employee has created a “psychological contract” that guides her expectations about the job.

It’s about expectations

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

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

Here’s the problem, though: Most employers never explicitly discuss the psychological contract with prospective hires. 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” often ends up being based on an employee’s incorrect assumptions and misinterpretations.

The specter of disengagement

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

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

The first time to do this is during the recruitment process. Have a frank discussion with job applicants about “relational” expectations – how they expect you to treat them and vice versa. You don’t need to reduce these to a set of hard-and-fast commitments. Rather, the goal is to create rules of engagement that both parties accept.

Key issues

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

Work-life

We respect our employees’ need for a fulfilling private life, but we work hard. You would likely work 45 to 50 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. In your role, the expectation is that if you distinguish yourself as a high-potential employee, you’d be considered for a promotion after about two years. How does that sound?

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. How comfortable are you with that?

Salary increases

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

Teamwork

We believe in conflict over ideas, not personalities. We’ll expect you to give and receive feedback from managers and colleagues with a high level of emotional intelligence. What’s your reaction to that?

Notice that each statement is followed by an open-ended question. Open-ended questions force 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 on the psychological contract.

And once the person is hired, check in and recalibrate expectations regularly.

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 in part on the following scholarly article: Parzefall, M.R., & Coyle-Shapiro, J. A. (2011). Making sense of psychological contract breach. Journal of Managerial Psychology, 26(1), 12-27.