Impact of Psychological Contract on Employees' Performance: A Review

Impact of Psychological Contract on Employees' Performance: A Review

Geeta Sachdeva
DOI: 10.4018/978-1-7998-0058-3.ch012
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The performance of employees defines the competitive advantage of the company in current ferocious competition, and it affects the long-standing growth of the company. If a company inspires its workforce merely by the means of financial contract, then the company will not be in the position to gain the effective and efficient performances from its employees. Because apart from this financial contract, psychological contract also upsets attitudes and performance of the employees at the workplace. The spirit of the firms is the employees, and the implementation of the psychological contract can effectually decrease the turnover rate of employees and consequently increase their efficiency at the workplace. In the current chapter, first of all an attempt has been made to elucidate the concept and development process of psychological contract. After that it is endeavored to highlight the positive impact of psychological contract on employees' performances such as job satisfaction, organizational commitment, job performance, organization citizenship behavior, and turnover intentions.
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Development Of The Psychological Contract

Generally, there are three phase under of psychological contract. The first phase is primarily the theoretic expansion of the notion (Kotter, 1973., Argyris, 1960 & Schein, 1965). These readings propose that workforces’ and employers anticipations make the psychological contract. Next phase starts with the redefinition of the concept given by Rousseau's. Rousseau (1989) suggests the contract is merely a worker's anticipations (Rousseau, 1989).Guzzo et. Al., (1994) and Sugalski, (1995) stated the role of psychological contract in employment. As per Rousseau (2004), there are some features of the psychological contract such as volunteer choice, joint accountability on the part of both employees and employers.

Key Terms in this Chapter

Job Satisfaction: It refers to the attitude and feelings people have about their work.

Organizational Citizenship Behavior: It is defined as the workers’ behavior & the workers’ own option to work outside the anticipations of an enterprise.

Transactional Psychological Contract: It is apprehensive about the structure of short-term economic issues.

Job Performance: The work-related activities expected of an employee and how well those activities were executed.

Organizational Commitment: It is the expressive attachment towards the organization.

Relational Psychological Contract: It covers both socio-emotional frankness structure.

Turnover Intentions: It is the process through which staff leave a business or organization and that business or organization replaces them.

Psychological Contract: It is an unrecorded contract that factually means a psychological contract between employer and employees without any formal letter contained anticipations.

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