Modern-day Psychological Contract Concepts

Rousseau (1989, 1990) pioneered a revival approach on psychological contract in search of new and more effective HRM practices facing rapid economic restructuring and employee turnover dynamics. She used the term 'transactional psychological contracts' ( where employees no longer expect to keep a long-lasting relationship with the organisation based on loyalty and job security but tend to see their affiliation to the organisation is a transaction for the long hours of work they provided for the payment and the training they get) to describe the labour market flexibility and economic restructuring of the employment relationship (Dundon, 2006).

Maguire (2002) divides this relationship into three distinct levels (Figure 2.0), based on the values and expectations of each party will bring into the workplace.

Figure 2.0: Three-tier model of the psychological contract

Source: Maguire, 2002

Even though the transactional element of the contract will undoubtedly be taken into consideration by all members who entering a contract and focus more on specific financial exchanges which are typically short-term (D'Annunzio-Green and Francis, 2006),  this alone will not constitute the total of the relationship, though it often considered as such. The Career and Relational Aspect levels, shown in the model are not often openly discussed, they may implicitly be found in most cases. Yet career and relational aspects of a psychological contract are the defining points of a well established and long-standing relationship.

Video 1.0: Modern changes in the psychological employment contract

Source: National Foundation for Companies Management Academic Education

In the above video (Video 1.0) Denise Rousseau discusses the changes in the modern-day psychological contract and its future.