Psychological Contract

A psychological contract refers to the unspoken expectations and beliefs between an employee and their employer. It encompasses what each side expects to give and receive, such as job responsibilities, work environment, recognition, or support. Unlike formal agreements, these are based on mutual understanding and trust. When these expectations are met, it fosters engagement and loyalty. If they are broken or unmet, it can lead to dissatisfaction, distrust, or disengagement. Essentially, it’s the mental agreement about the relationship’s nature, shaping how employees and employers interact beyond contractual terms.