Hack:
Psychological contract-Much used only in words but a necessity for change

I’m now considering myself as the CEO of “X”. As a concept, the Psychological Contract will continue to evolve and change, in both its effects and its definitions.

This complexity and dynamism is not surprising. The Psychological Contract combines the effects of at least two highly complicated systems:

    * an individual person's thoughts, and

    * an organization's behaviour towards that person.

Beyond this other complex systems are almost always involved:

    * the thoughts of fellow employees;

    * the thoughts and attitudes of leaders

    * the positions and needs of the organization's ownership;

    * the organization's behaviour towards fellow employees;

    * the organization's performance and strength (especially the employee perceptions of this);

    * the market in which the employer operates (again employee perceptions of this);

    * the wider economy and world in which the employee sees him/herself (again employee perceptions of these factors);

    * and perhaps most fundamentally of all, the constitutional or corporate structure of the organization concerned (notably the extent of separation/alignment between employees and the organization itself - ownership, purpose, rules, policies, equity, profit, performance, growth, reward, direction, etc - the extent to which the employees are genuine 'stakeholders').

Self-image is a very significant element in people's assessment of the Psychological Contract. An employee whose self-image is one of a detached remote worker (detached and remote from the ownership and direction of the organization) - a mere 'hired-hand' - will inevitably focus his/her thinking strongly on traditional employment expectations: pay, hours, advancement, job quality, etc., (it's a long list, referenced elsewhere on this page, and see Herzberg's theory for example).

People treated like 'hired-hands' naturally behave like 'hired-hands'.

An obvious question about the Psychological Contract in the modern world is:

If we change the fundamental relationship between the employee and the employer so that the employee is also an owner of the enterprise (or meaningfully empowered, in the case of state organizations), how does this alter the self-image, and consequentially the Psychological Contract?

We would not be changing (hypothetically) the terms and conditions of work. We instead (hypothetically) would change the relationship between the employee and employer at a far more fundamental level. This alters the self-image dramatically. The employee is now far more engaged and aligned with the organization, because he/she has a deep and meaningful interest in it.