Employers fall short on employee peace of mind

Employers are oblivious they hold a second contract with employees that has nothing to do with finances, and it’s costing them staff.A psychological contract, the employee’s perception of their employers’ obligations in the employment relationship, is equally as important as a written contract in ensuring employee satisfaction and staff retention but is being ignored by employers.
When employees believe their psychological contract is not being fulfilled they will often distrust their employer, have lower job satisfaction, be less committed to work and are likely to seek new employment.
Dr Ezaz Ahmed from UniSA’s School of Management says employers need to recognise psychological contracts if they want productive staff.
“Employers are not aware that they not only have to fulfil their written contracts, but the psychological contracts as well which is not explicitly explained to the employee, it’s implied,” he says.
Dr Ahmed says it’s this intangibility that makes psychological contracts difficult for employers to address.
“Since the psychological contract is not explicitly written down, it can take any shape or form – it’s about individuals’ perceptions.
“Employees might think they are going to be promoted after three years, seeing that others are getting promoted after two years, so it’s about implied promises,” says Dr Ahmed.
With employee dissatisfaction on the rise and a shift towards a more casual, contract-based work environment, Dr Ahmed says psychological contracts are more important than ever.
“In the context of the Asia-Pacific region and Australia in particular, more research is needed to understand psychological contracts. The more psychological contracts we have breached the greater the number of dissatisfied employees which is difficult for employers to manage,” he says.
Employers should only make promises they can deliver on and keep staff informed about external pressures, such as drops in sales and increasing costs, if they want to effectively manage psychological contracts, says Dr Ahmed.