The psychological contract

The psychological contract refers to the unspoken expectations and beliefs between an employee and an employer about their mutual obligations. It’s the sense of trust and understanding that employees will be treated fairly, valued, and given opportunities in return for their effort and commitment. Unlike formal agreements or contracts, it’s based on perceptions and social norms. When these expectations are met, it fosters motivation and loyalty; if broken, it can lead to dissatisfaction and disengagement. Essentially, it’s the mental agreement shaping the ongoing relationship between workers and their organization.