Changes used to happen slowly, now people deal with change daily. Globalization and technology have taken us to a new level of complexity, rate of change, connectivity and mobility. These changes in work and life have a two-way effect, presenting risks and opportunities, advantages and disadvantages, to employers and employees. How does this affect the psychological contract?
Changes used to happen slowly in business in the last century. They were anticipated and introduced gradually across the civilised world. People had time to assimilate them, learn to work with them and make the best use of new technology.
In today’s world, as the rate of change of the social, technical, economic and political landscape accelerates, people are expected to deal with change every day. New technology explodes onto the scene almost daily.
Towards the end of the millennium, and certainly in the new millennium, workers became more mobile and enabled by modern technology, speed of change accelerated and markets globalized.
The world of work has now changed more than it has changed since the Industrial Revolution. Globalization and technology have changed everything we were familiar with, taking us to a new level of complexity, rate of change, connectivity and mobility.
Social connectivity and technological empowerment has changed our relationship to old-style corporate models. The free market and traditional capitalism have been seen to fail, and work has changed forever.
People now work in call centres rather than factories, they work in virtual teams , many jobs are outsourced and offshored, everything is online, many people work from home, job for life no longer exists, people expect to have several short careers, lifelong learning is expected, there is a vast amount of employee legislation, pensions are no longer rock-solid. Everyone is connected by technology, employees have ownership, work life balance is taken seriously, there is more equal parenting, social networking is a key part of many people’s lives, social communities are important, and email changes everything.
Against this backdrop people’s relationships with their employers have altered significantly from a generation ago, and greatly affects what is known as the psychological contract.
What is the psychological contract?
According to Wikipedia the psychological contract is a concept developed by organizational scholar Denise Rousseau. It represents the mutual beliefs, perceptions, and informal obligations between an employer and an employee. It sets the dynamics for the relationship and defines the detailed practicality of the work to be done. It is distinguishable from the formal written contract of employment which, for the most part, only identifies mutual duties and responsibilities in a generalized form.
The Psychological contract reflects the realities of the situation as perceived by the parties, and may be more influential than the formal contract in affecting how employees behave from day to day. It effectively tells employees what they are required to do in order to meet their side of the bargain and what they can expect from their job.
The term ‘psychological contracts’ or ’emotional contracts’, describe the process of agreeing with the other person what they should do and the expectations linked to the responsibility. People can only be held responsible for something to which they have agreed, and will be more committed to delivering a responsibility if they’ve actively agreed to it. They might expect to be involved in discussions about time-scale, resources, budget, purpose and method.
Certain responsibilities are effectively agreed implicitly within people’s job descriptions or employment contracts. But tasks that you choose to delegate will not be, in which case specific discussion should take place to establish a proper agreement or ‘contract’ between you and the other person.
The changes in work and life have a two-way effect; they present risks and opportunities, advantages and disadvantages, to employers and employees.
Workers are increasingly mobile, flexible and adaptable – they no longer continue working for the same employer for as long as the employer needs them. Good workers can easily find alternative employment. They are not limited to working in their local town, or region, or not even in the same country. Geographical location is irrelevant, for many workers, and will become more so.
In past times, trade unions were the vehicle for people-power. Connectivity via the internet and modern social networking enables awareness and mobilisation of groups of people on a level of sophistication and scale we are only beginning to understand.
Workers used to rely on employers for access to technology, now employers will progressively depend on employees for its deployment.
Employees depended on their employer to advance their learning and skills, and therefore their value in the employment market. Now employees are able to control their own learning and development, and a sense of self-sufficiency is developing.
Managers historically focused on retaining customers. Now they will have to re-focus and concentrate just as much on retaining good staff, with the right skills.
A new generation of workers has been conditioned not to expect a job for life. They expect and accept variety and change, where previous generations expected routine and security. They have access to substantial new technologies which will continue to evolve in favour of the individual, rather than the organization.
Leaders now need to lead differently to retain the best people, and to develop better relationships and reputation among staff, customers and opinion-formers.