Psychological Contract, Development Leadership, Employee Engagement

Psychological Contract

The psychological contract refers to the unwritten set of expectations of the employment relationship as distinct from the formal, codified employment contract. Taken together, the psychological contract and the employment contract define the employer-employee relationship.

Originally developed by organizational scholar Denise Rousseau, the psychological contract includes informal arrangements, mutual beliefs, common ground and perceptions between the two parties.

The psychological contract develops and evolves constantly based on communication, or lack thereof, between the employee and the employer. Promises over promotion or salary increases, for example, may form part of the psychological contract.

Managing expectations is a key behavior for employers so that they don’t accidentally give employees the wrong perception of action which then doesn’t materialize. Employees should also manage expectations so that, for example, difficult situations or adverse personal circumstances that affect productivity aren’t seen by management as deviant.

Perceived breaches of the psychological contract can severely damage the relationship between employer and employee, leading to disengagement, reduced productivity and in some cases workplace deviance. Fairness is a significant part of the psychological contract, bound up in equity theory – employees need to perceive that they’re being treated fairly to sustain a healthy psychological contract.

Development Leadership

Leadership development refers to activities that improve the skills, abilities and confidence of leaders. Programmes vary massively in complexity, cost and style of teaching. Coaching and mentoring are two forms of development often used to guide and develop leaders.

According to Baldwin and Ford (1988), the success of leadership development is influenced heavily by the quality of the programme, level of support and acceptance from superiors, and the characteristics/learning style of the person being developed.

Some commentators differentiate between leadership development and leader development, the former being used when referring to development programmes focusing on collective leadership in an organization and the latter on individuals.

Leadership development is a common process in succession planning, which aims to produce high-calibre leaders to take over senior positions when they become vacant. High-performers are typically identified for these leadership development programmes, which may be longer-term and broader than programmes focusing on tighter end-goals.

Employee Engagement

Employee engagement is a workplace approach resulting in the right conditions for all members of an organization to give of their best each day, committed to their organization’s goals and values, motivated to contribute to organizational success, with an enhanced sense of their own well-being.

Front runners

It’s sometimes easy to assume that managers are the employees walking in front of the cart, pulling it along. However, it’s important to realise that engagement and commitment occurs at every level within the organisation, and any employee, whether manager or not, can love his/her job and company, and thus pull the cart forwards.

What’s most important for your organisation is that the overall balance of the cart favours those towards the front end. In addition to those engaged and committed employees, the employees that are engaged or committed also play a vital role in helping the cart move forward and certainly contribute to organisations. It’s vital for organisations that the cart keeps moving forward, and that those employees at the back are not causing the cart to come to a standstill. 


The dangers to your engaged and committed employees are the hidden obstacles that are encountered along the journey. Engaged and committed employees who are at the front of the cart inevitably encounter bumps along the way, and the danger comes when these bumps become frustrations. For example, excessive bureaucracy and procedures can become obstacles to engaged and committed employees. Perhaps a lack of resources is hindering and limiting the employees at the front of the cart.

In general, obstacles are perfectly normal. The trick is to use the energy of engaged and committed employees to sufficiently clear the obstacle so the cart can keep moving. If it becomes clear that the task of moving the obstacle is proving too hard for the employee, it is essential that the job is passed onto someone else. When employees are stuck with a frustrating task for too long, there runs the risk that they can go from leading the cart along its journey, to disrupting the journey.

The ideal situation

For organisations, the ideal arises when there are enough engaged and committed employees pulling the cart forward, and enough engaged or committed employees sit in the cart. Both the engaged or committed, and engaged and committed employees can offer each other support, and interchange positions. In a perfect scenario there would be no employees blocking the progress of the cart. The reality is however often different, but at the very least, organisations should ensure that the balance of employees favours the front of the cart.

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