The power of the unwritten contract

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The "psychological contract" is a well-known concept in organisational development. It's one of the few unwritten contracts within an organisation, yet it yields incredible power to help an organisation succeed or fail.

If it could be written down, the psychological contract would read something like: "This contract outlines what you believe you have been promised by your organisation and what you believe you have promised in return."

And according to Leighton Abbott, a senior consultant with employee engagement survey specialists JRA, this psychological contract plays a very strong role in employee engagement.

"Highly engaged employees feel that their organisation has delivered what it promised when the employee joined, or perhaps was promoted to a new role, and in return the employee is probably putting more of themselves into their work," Abbott says.

So a fulfilled psychological contract benefits both parties. Understanding this contract can also be a powerful employment branding tool.

Jonny Wyles from HainesAttract, one of the 2011 JRA Best Workplaces Survey sponsors, says: "Great talent gravitates to great workplaces so the more successful an organisation is at making sure it delivers what it promises its employees, the stronger its workplace and therefore the potential of its employment brand."

Good employment branding should start with what an organisation really stands for - its values, goals and culture - then the "promises" that are made through employment branding are more likely to be what employees actually experience.

However, the reverse may also be true. Employment branding can over-promise and under-deliver if it's not managed properly and as soon as an employee's experience doesn't match what was promised, people can become disengaged or leave.

So maybe it's time to dig out and dust off all the psychological contracts in your workplace and ensure all the promises are being kept, on both sides.

JRA is running the 2011 JRA Best Workplaces Survey in association with the Herald and sponsored by the New Zealand Chambers of Commerce, Kiwibank and HainesAttract. The survey runs from June 1 to August 31. Registrations are now being taken.

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