Who's next? Me. What would you like? Today I'd like to try the psychological contract.
Oh, not many people ask for that. Take a seat, I'll bring it to your table. I'll sit over there, it looks quiet. Right, well, thanks for joining me for episode number five of Management Café, where we can consume some evergreen theories and models from our main menu, and also consider today's specials, those movements and trends that surround organizations today.
If we haven't met before, hello, good to meet you, my name is Pilar Orti, and in this Management Café, I'd like to share the evolving role of the manager in organizations today, mainly looking at what sometimes is referred to as soft skills, those skills that have to do with interacting with others and which, far from being soft, they are very, very hard. So today I've ordered the psychological contract. If you want to see what else is on the menu, then head over to virtualnotdistance.com slash podcasts, where you will find the other episodes of Management Café, as well as those for 21st Century Work Life, and Virtual Not Distance is the sponsor of this podcast. So have a look at our website and see whether we can help you and your team transition from working regularly in the office together to operating more like a virtual team.
In today's episode, I do look at a phenomenon that affects all of us, whether we're working in a co-located way or in a remote fashion, so I hope whatever you're set up, that this will be of use to you. And a final bit before settling in for our coffee, if you just want to subscribe to this podcast, then you can do so via your podcast app, or if you want to receive an email with the new episodes, then head over to managementcafepodcast.com. Here it is, your psychological contract. I hope it's all right.
I don't make them that often. I'm sure it will be great. Thanks. When we first join an organization, we develop expectations of what our relationship is going to be like with our colleagues, with the organization as a whole, and our manager or team leader.
And this is referred to as the psychological contract. It's all the terms and conditions that we think we are agreeing to that are not explicitly laid out in our written contract, if we have one. So the psychological contract is our interpretation of what we agree to give, and what we hope to receive, which is why it's so much fun to talk about, but it's so complex to deal with at work. The psychological contract can easily be broken if we don't address some of these assumptions early on.
Expectations can start to form during recruitment, when candidates start to imagine what it would be like to work with the organization. And what makes this even more challenging is that these expectations can also be shaped by our previous experiences at work, and even by the experience of our family life, of our parents at work. So why it's important to think about this is that a breach in the psychological contract, when we perceive that this is being broken, this can lead to people no longer wanting to go the extra mile. Well, why should I?
I'm not getting what I thought I was promised. And that it's worse if it actually leads to destructive behavior at work. So remember that this is all about perceptions of what we're promised when we start a job, not about what has actually been said. And the reason why I wanted to talk about this is that in an era where there is ongoing change around work systems and organizational structures, our expectations are constantly having to be adjusted.
And if we're not careful, if we don't maintain an ongoing dialogue with our people and involve them in the decisions that affect them, if we don't constantly check in to make sure that the way of working still makes sense to them, then we lose people's desire to do a good job. So being aware of the existence of the psychological contract can help us to understand what the effects of change may be and why people who have always proved to be really engaged at work, well, maybe we might see the performance go down in response to change, even beyond the expected dip in performance that usually accompanies change, unfortunately. So this can happen in places that we don't think about, in places where to us it doesn't make sense. So imagine, for example, that your organization is going through big structural change.
We can see this at the moment, for example, in organizations moving to a more self-organized way of working, away from the traditional command and control, in order to be more nimble and adaptable. So at some point, your organization might decide to move all the way to a self-managed structure, where everyone has the responsibility to look after the business and after the working processes. And people might now be being asked to be more involved in decision-making and to be more uncountable than they were under the more hierarchical structure, where most accountability lied at the management level. To the people instigating and driving this change, this might seem like a perfect opportunity for employees to be happier, to take more control of their destiny, to have more autonomy and to stop just doing what they're told by the managers.
However, imagine that you joined the company at the team member level, with no management responsibilities, expecting a traditional working model, because this is what you saw while you were growing up, this is what you've experienced before, when managers look after the process and the business. If this is what you're expecting, your expectations will be shattered. And even though your physical contract isn't anywhere, we will not change our organizational model during your time with us, you might have well assumed this to be the case. So now, to find yourself having to look at company accounts to make decisions in your team, as part of moving to a self-management model, that won't have been part of your expectations.
You know, your previous jobs, you've done your job and left management to the managers, and you never expected to have to take on any of those bits of work. So that might be a breach in the psychological contract, and that might mean that your behavior changes at work, and in some cases, it might mean that you leave. I'll give you another example, that of having the opportunity to work from home. So maybe you're joining a company that says they offer flexible working, and during your interview and your induction, you find out about all the ways in which you can request to work different hours, or where you can request to work from different locations, but you know that your job will be mainly office-based, and that's really what you're expecting.
But one day, the company realizes that they're spending way too much money on real estate, and decide that from now on, some teams will be required to work from home. The office begins to be quieter. You find yourself working from your kitchen table when you always saw yourself as someone who goes to work in the mornings. Once more, no one explicitly said to you, this will be a job where you come into the office every day and mingle with other people.
However, that was your assumption when you joined, and now your psychological contract has been broken. One more much shorter example. Your company advertises itself as having an open culture, as being innovative, as actively recruiting millennials. So Sandy, a young, dynamic, bright graduate, joins your company after a thorough recruitment process.
And on the first day, during her coffee break, she sits at her computer, opens Facebook, and she finds that the site is being blocked. You get a picture. Now, the best way of managing the psychological contract is to ensure ongoing open communication so that people can gradually change their expectations bit by bit, rather than someone experiencing a big breach. So it's important to find ways for people to voice their expectations, whether they're in the form of transactions or relations.
So it might help to understand that psychological contracts tend to be relational and or transactional. And people with different personalities will tend to go towards one or the other. So some people might be looking to receive economic contributions from the organization or tangible rewards in return for working beyond the limit and doing long hours, for example. On the other hand, other people, usually those with highly conscientious personalities or those with high self-esteem, they will form a psychological contract around a social focus in a more dynamic way and a broader, less tangible focus.
And unfortunately, well, I say unfortunately, but probably it's just part of human nature and how we enter into relationships. It seems like employees very often experience contract breach. Pay increases, promotions, the type of work we end up doing, the training or the feedback we receive. These are all areas where our expectations might not be met, even if we feel we have delivered our end of the unspoken deal.
Plus, a common cause of breach is a poor quality relationship with a supervisor or manager, which is why this people's stuff is so important to you. And all this matters because a breach in a psychological contract can result in behavior which can be bad for the organization. Enroll performance can decrease, so that performance that's got to do with our expected tasks and responsibilities. Our organizational citizenship behavior can decrease, and that is those times when we go out of our way to help others or the organization.
And there might even be retaliation, some kind of destructive behavior, however subtle. Plus, yes, there's more, a breach of the psychological contract can lead to higher intentions of leaving the job, lower trust levels, lower job satisfaction, and just a lower overall commitment to the organization. There are some good news, however. Even when the psychological contract is broken, and this is all about perception, remember, there are conditions which lead to less negative consequences.
There are conditions that lead to people experiencing less negative emotions as a result of the breach. And these are support from the leader, either perceived or real, and also if there is mutual dependence between the person and the leader, so we both know we need each other to do our jobs, and if there is trust, liking, and respect. So, although all this may be quite broad and feel a bit abstract, it does highlight the need for ongoing communication and the need to understand what people expect to get in return from what they think they are expected to give. The more we can help them shape the psychological contract as we go along, and the more this perception mirrors reality, the less problems we'll have in the future.
And the more of these conversations we have, the sooner we can notice that the psychological contract has been broken, so we can be on the lookout for changes in behavior in our team. Now, as this phenomenon is right at the core of being human, regardless of how or where you're working with others, I hope you can see that it will affect both co-located and remote teams. And as this non-location-specific way of working is my specialty, let me highlight something to look out for if you're making the transition from office space to virtual team or to some kind of remote setup. Working in a non-location-specific way often comes with an assumption that you will have more autonomy over your work.
So, I know someone who started working for a completely virtual company, and he was totally obsessive about working for them. He loved it. He worked mainly from late morning to late night. And then one day, the team was told they had to start logging on at 9am, 9 in the morning.
Well, that was the beginning of the end for my friend. Why? Well, there was no need for doing this. They weren't client-facing.
They weren't going into a building that could only be open to 6 o'clock. You get the picture. The initial assumption of my friend was that because it was a purely virtual company, they would have control over their schedules, and suddenly, they were all expected to start at the same time. As we move to more mobile ways of working, there can well be expectations that this is going to be a more autonomous way of working.
So, if you have good reasons for this not to be the case, spell them out and manage expectations. Well, I've almost finished my coffee, so it may be time for me to leave you with a little challenge today. What is your own psychological contract with your organization, or with the leaders of the organization? Have you perceived any breaches lately?
And if so, are they real or perceived? And how have those affected your own behavior? And let's take a challenge further. Do you know what your people expect from you in return for their own hard work?
Excuse me, do you think you could leave this table now? Um, I'm sorry, I'm not quite ready to go. Yes, but other people will need the table. You're expected to leave after you finish your coffee.
Oh, am I? You see, I thought paying for my coffee entitled me to stay at the table for a while. Anyway, sorry for the interruption. Now, before we go, if you fancy on the cup, let me recommend a book to keep you company.
How about the classic by Marcus Buckingham and Kurt Kaufman? First, break all the rules. It's based on a large study of managers in organizations carried out by Gulloch some years ago now, and the book looks at recruiting and developing talent. And it does so in a slightly provocative way, and I say slightly because the book is still concerned with a traditional way of managing, but it's full of stories and case studies, and it's structured in short, sharp chapters, so it does make for an interesting read.
So, right, I'm going to leave you, but do make sure you tell me what you thought of this episode by commenting on the blog at managementcafepodcast.com, and there you can find the script for this episode, and you can also subscribe by email. And if you want to check out other podcasts and blog posts about the future of work and managing virtual teams, then head over to virtualnotdistant.com, and there, through the contact form, you can get in touch if you have any questions or any thoughts. Well, I hope you enjoy your day, and I'll see you soon.