There are different behavioural constructs in an organisation, e. g. psychological contract (PC), Leader-Member-Exchange (LMX), social exchange, perceived organisational support (POS), trust and organisational commitment (Shore, 2003). As new markets, competitors, and technologies begin to emerge, organisations need a workforce that is highly committed and motivated to remain competitive and profitable. This motivation and commitment are a direct result of leadership within the organisation and the psychological contract that is formed between the employee and the organisation.
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The result of a sound psychological contract is a high level of commitment and organisational support. The psychological contract has implications for employee performance/behaviour (absence, lateness, productivity, turnover, etc. ) and their attitudes (commitment and satisfaction). Leadership within the organisation must manage and understand the psychological contract in order to enhance staff morale and thus organisational performance.
The psychological contract offers a framework for managing the ‘soft’ issues of performance, focusing on people and highlighting the relationship between employees and the organisation and its management. Crossman reasoned that the psychological contracted is rooted in three principal constructs -the relationship itself, trust and commitment. There is an interaction between the trust and commitment constructs and they contribute to the construction and reconstruction of the psychological contract. These constructs influence each other and the contract as a whole.
Changes in needs or motives may alter trust, which might in turn influence commitment. Likewise, changes in levels of trust and commitment may alter the expectations of the relationship. According to Crossman a prerequisite for the contract to flourish there is a need for reciprocity of trust and commitment and the perception of equality of contribution (Crossman, date unknown). The constructs of trust, commitment and the psychological contract will be discussed within the context of the model as seen in Appendix B.