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Relevance of the Psychological Contract in a Global Context

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Discuss the relevance of the psychological contract in a global context

Psychological contracts are based on specific promises made by both parties and on generally accepted promises that are based on the general obligations of employers and employees. Even if an employer has not made specific promises in that regard, every employee will appreciate clarity, fairness and good communication. Every employer will appreciate employees dealing properly with confidential information and doing good work. In addition to general obligations, the psychological contract is further augmented with written agreements, such as employment contracts (Huiskamp & Schalk, 2002). It is the psychological contract that effectively tells employees what they can expect from their job and what they are required to do in order to meet their side of the bargain. A good psychological contract provides a sense of identity that offers recognition for employee contribution and conveys a feeling of security. A breach of the terms of the psychological contract can provoke a loss of trust and a sense of betrayal. The psychological contract is the glue which holds together the employment relationship (Pilbeam, S et. al, 1998). As such, existing empirical research demonstrates that contract breach is related to lower employer trust (Robinson, 1996), job satisfaction (Robinson and Rousseau, 1994), organisational commitment (Coyle-Shapiro and Kessler, 2000), intentions to remain (Turnley and Feldman, 1999), in-role and extra-role performance (Robinson, 1996; Robinson and Morrison, 1995).

Psychological contract
Psychological contracts are defined as the beliefs individuals hold regarding the terms and conditions of the exchange agreement between themselves and their organiza- tions (Rousseau, 1989). 'A set of unwritten reciprocal expectations between an individual employee and the…...

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