Variously called ‘contracts’ or ‘psychological contracts’ or ’emotional contracts’, these expressions describe the process of agreeing with the other person what they should do and the expectations linked to the responsibility. It all basically means the same, whatever you call it. The point is that people cannot actually be held responsible for something to which they’ve not agreed. The point is also that everyone is more committed to delivering a responsibility if they’ve been through the process of agreeing to do it. This implies that they might have some feelings about the expectations attached, such as time-scale, resources, budget, etc., even purpose and method. You must give the other person the opportunity to discuss, question and suggest issues concerning expectations attached to a delegated task. This is essential to the contracting process.
Certain general responsibilities of course are effectively agreed implicitly within people’s job roles or job descriptions or employment contracts, but commonly particular tasks, projects, etc., that you need to delegate are not, in which case specific discussion must take place to establish proper agreement or ‘contract’ between you and the other person.
‘The Psychological Contract’ is an increasingly relevant aspect of workplace relationships and wider human behaviour.
Descriptions and definitions of the Psychological Contract first emerged in the 1960s, notably in the work of organizational and behavioural theorists Chris Argyris and Edgar Schein. Many other experts have contributed ideas to the subject since then, and continue to do so, either specifically focusing on the the Psychological Contract, or approaching it from a particular perspective, of which there are many. The Psychological Contract is a deep and varied concept and is open to a wide range of interpretations and theoretical studies.
Primarily, the Psychological Contract refers to the relationship between an employer and its employees, and specifically concerns mutual expectations of inputs and outcomes.
The Psychological Contract is usually seen from the standpoint or feelings of employees, although a full appreciation requires it to be understood from both sides.
Simply, in an employment context, the Psychological Contract is the fairness or balance (typically as perceived by the employee) between:
The words ’employees’ or ‘staff’ or ‘workforce’ are equally appropriate in the above description.
At a deeper level the concept becomes increasingly complex and significant in work and management – especially in change management and in large organizations.
Interestingly the theory and principles of the Psychological Contract can also be applied beyond the employment situation to human relationships and wider society.
Unlike many traditional theories of management and behaviour, the Psychological Contract and its surrounding ideas are still quite fluid; they are yet to be fully defined and understood, and are far from widely recognised and used in organizations.
The concept of ‘psychological contracting’ is even less well understood in other parts of society where people and organisations connect, despite its significance and potential usefulness. Hopefully what follows will encourage you to advance the appreciation and application of its important principles, in whatever way makes sense to you. It is a hugely fertile and potentially beneficial area of study.
At the heart of the Psychological Contract is a philosophy – not a process or a tool or a formula. This reflects its deeply significant, changing and dynamic nature.
The way we define and manage the Psychological Contract, and how we understand and apply its underpinning principles in our relationships – inside and outside of work – essentially defines our humanity.
Respect, compassion, trust, empathy, fairness, objectivity – qualities like these characterize the Psychological Contract, just as they characterize a civilized outlook to life as a whole.
Please note that both UK-English and US-English spellings may appear for certain terms on this website, for example organization/organisation, behavior/behaviour, etc. When using these materials please adapt the spellings to suit your own situation.
In management, economics and HR (human resources) the term ‘the Psychological Contract’ commonly and somewhat loosely refers to the actual – but unwritten – expectations of an employee or workforce towards the employer. The Psychological Contract represents, in a basic sense, the obligations, rights, rewards, etc., that an employee believes he/she is ‘owed’ by his/her employer, in return for the employee’s work and loyalty.
This notion applies to a group of employees or a workforce, just as it may be seen applying to a single employee.
This article refers to ‘the organization’ and ‘leaders’ and ‘leadership’, which broadly are the same thing in considering and describing the Psychological Contract. Leadership or ‘the leader’ is basically seen to represent the organization, and to reflect the aims and purposes of the owners of the organization. Leaders and leadership in this context refer to senior executive leaders or a chief executive, etc., not to team leaders or managers who (rightly) aspire to be leaders in the true sense of the word (covered under leadership, separately).
(Organizational aims and purpose at a fundamental constitutional level have potentially deep implications within the Psychological Contract which are addressed later, notably under additional perspectives.)
Where the term Psychological Contract is shown in books, articles, training materials, etc., it commonly appears as the Psychological Contract (capitalised first letters), but you might also see it in quote marks as the ‘psychological contract’, ‘The Psychological Contract’, or more modestly as the psychological contract, or sensible variations of these. Any is correct.
The common tendency to capitalise the first letters – Psychological Contract – as if it were a uniquely significant thing (a ‘proper noun’) like we do for names and important things like Planet Earth or the Big Bang or Wednesday. Personally I think the Psychological Contract is very significant and unique, but it’s a matter of personal choice.
Accordingly on this webpage, where the term applies to the employment situation, it is shown as the Psychological Contract, or the Contract. This also seeks to differentiate it from a more general sense of ‘psychological contracting’ or ‘contracts’ or ‘contracting’ in wider human communications, mutual understanding and relationships.
The concept of the Psychological Contract within business, work and employment is extremely flexible and very difficult (if not practically impossible) to measure in usual ways, as we might for example benchmark salaries and pay against market rates, or responsibilities with qualifications, etc.
It is rare for the plural form ‘Psychological Contracts’ to be used in relation to a single organization, even when applied to several employees, because the notion is of an understanding held by an individual or a group or people, unlike the existence of physical documents, as in the pluralized ’employment contracts’ of several employees.
The Psychological Contract is quite different to a physical contract or document – it represents the notion of ‘relationship’ or ‘trust’ or ‘understanding’ which can exist for one or a number of employees, instead of a tangible piece of paper or legal document which might be different from one employee to another.
The singular ‘Psychological Contract’ also embodies very well the sense of collective or systemic feelings which apply strongly in workforces. While each individual almost certainly holds his or her own view of what the Psychological Contract means at a personal level, in organizational terms the collective view and actions of a whole workgroup or workforce are usually far more significant, and in practice the main focus of leadership is towards a collective or group situation. This is particularly necessary in large organizations where scale effectively prevents consideration of the full complexities and implications of the Psychological Contract on a person-by-person basis.
That said, it is usual for the Psychological Contract to refer to one employee’s relationship with an employer, or to an entire workforce’s relationship with the employer.
The term ‘contracting’ (lower-case ‘c’) in the context of communications is not clearly defined yet, and does not normally refer to the Psychological Contract. As discussed later ‘contracting’ does specifically refer broadly to ‘agreeing mutual expectations’ within Transactional Analysis (a specialised therapeutic or coaching/counselling methodology), and conceivably within other forms of therapy too. (TA ‘contracting’ is specifically described within modern TA theory.)
The nature of the relationship in Transactional Analysis is somewhat different to that of employee and employer, although significantly the sense of agreeing mutual transparent expectations within Transactional Analysis is very similar in spirit and relevant to the Psychological Contract in employment.
The term ‘psychological contracting’ is not typically used in referring to the Psychological Contract in the workplace, but may arise in the context of therapy. It would be helpful to us all for this expression and its related theory, as an extension of the Transactional Analysis usage, to become more generally used in human communications and understanding. In life, relationships and communications generally operate on a very superficial level. Opportunities to explore, understand, explain and agree mutual expectations are largely ignored or neglected – mostly through fear or ignorance. It is a wonder that humans manage to cooperate at all given how differently two people, or two parties, can interpret a meaning, and yet be seemingly incapable of seeking or offering better transparency or clarity.
The Psychological Contract is becoming a powerful concept in the work context. Potentially it is even more more powerful when we consider and apply its principles more widely.
A basic definition of the Psychological Contract appears in Michael Armstrong’s excellent Handbook of Human Resource Management Practice (10th Ed., 2006): “…the employment relationship consists of a unique combination of beliefs held by an individual and his employer about what they expect of one another…”
Armstrong references Edgar Schein’s 1965 definition of the Psychological Contract, as being (somewhat more vaguely) an implication that: “…there is an unwritten set of expectations operating at all times between every member of an organization and the various managers and others in that organization…”
Armstrong highlights other references, within which these points are especially notable:
“…Because psychological contracts represent how people interpret promises and commitments, both parties in the same employment relationship can have different views…” (DM Rousseau and KA Wade-Benzoni, 1994)
“…a dynamic and reciprocal deal… New expectations are added over time as perceptions about the employer’s commitment evolve… concerned with the social and emotional aspects of the exchange…” (PR Sparrow, 1999)
Notice how those three definitions of the Psychological Contract cited by Armstrong progressively increase in their subtlety and sophistication.
Schein’s view reflects the early identification of the concept in the 1960s. Later Rousseau/Wade-Benzoni acknowledge the significance of different perceptions of employee and employer. Later still Sparrow recognises the dynamic quality, and the social and emotional factors. This is not to say the respective writers did not all in some way appreciate the depth of the concept; but it is a helpful illustration of the tendency for the conceptual thinking about the Psychological Contract to evolve, which in part reflects the increasing complexity of the essential employer/employee relationship.
The definition of the Psychological Contract on Wikipedia (April 2010) is: “A psychological contract 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 UK Chartered Institute of Personal Development, which takes a keen interest in the concept of the Psychological Contract, defines the concept as follows (as at April 2010, in a paper revised in January 2009): “…It [the Psychological Contract] has been defined as ‘…the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other’. These obligations will often be informal and imprecise: they may be inferred from actions or from what has happened in the past, as well as from statements made by the employer, for example during the recruitment process or in performance appraisals. Some obligations may be seen as ‘promises’ and others as ‘expectations’. The important thing is that they are believed by the employee to be part of the relationship with the employer…” The quoted extract in the above larger excerpt is referenced: ‘Guest, D E and Conway, N. (2002) Pressure at work and the psychological contract. London: CIPD’. Professor David Guest of Kings College London is a leading figure in modern thinking about the Psychological Contract. You will see his ideas and models commonly referenced if you research the subject in depth.
Within these referenced definitions you will see already that the concept is open to different interpretations, and has a number of complex dimensions, notably:
Work used to be a relatively simple matter of hours or piece-rate in return for wages. It is a lot more complicated now, and so inevitably are the nature and implications of the Psychological Contract.
At this point a couple of diagrams might be helpful..
Much of the theory surrounding Psychological Contracts is intangible and difficult to represent in absolute measurable terms. Diagrams can be helpful in understanding and explaining intangible concepts. Here are a couple of diagram interpretations, offered here as useful models in understanding Psychological Contracts.
Here is a Venn diagram representing quite a complex view of the Psychological Contract, significantly including external influences, which are often overlooked in attempting to appreciate and apply Psychological Contracts theory. Venn diagrams (devised c.1880 by British logician and philosopher John Venn, 1834-1923) are useful in representing all sorts of situations where two or more related areas interact or interrelate. The Venn diagram below provides a simple interpretation of the factors and influences operating in Psychological Contracts.
In the Psychological Contract Venn diagram:
vc = visible contract – the usual written employment contractual obligations on both sides to work safely and appropriately in return for a rate of pay or salary, usually holidays also, plus other employee rights of notice and duty of care.
pc = psychological contract – which is hidden, unspoken, unwritten, and takes account of the relationship references (r) between employee and market (which includes other external factors), also the employer’s relationship with the market (also r), and the visible contract (vc). Note that only the visible contract (vc) element is written and transparent. All the other sections are subject to perceptions until/unless clarified.
(For referencing purposes this diagram is an original interpretation of the Psychological Contracts concept and was published first on this website in May 2010.)
This Psychological Contracts ‘iceberg’ diagram below is a helpful way to illustrate some of the crucial aspects and influences within Psychological Contracts theory.
For team-builders and trainers, and leaders too, it’s also potentially a useful tool for explaining and exploring the concept and its personal meaning for people.
An iceberg is said to be 90% hidden beneath the water. This metaphor fits the Psychological Contract very well, in which most of the Contract perceptions are unwritten and hidden, consistent with its definition.
This is especially so for junior workers in old-fashioned ‘X-Theory’ autocratic organizations, where mutual expectations typically have little visibility and clarity. Here we might imagine that the iceberg is maybe 95% or 99% submerged.
By contrast the Psychological Contract between a more modern enlightened employer and its employees, especially senior mature experienced and successful staff, is likely to be much more clearly understood and visible, with deeper inputs and rewards, formally and mutually agreed. Here the iceberg might be only 60% or 70% submerged.
These percentage figures are not scientific – they merely explain the way the model works.
The iceberg metaphor extends conveniently so that the ‘sky’ and the ‘sea’ represent external and market pressures acting on employee and employer, affecting the balance, and the rise or fall of the iceberg.
As the iceberg rises with the success and experience of the employee, so does the contract value and written contractual expectations on both sides. Increasingly deeper inputs and rewards emerge from being hidden or confused perceptions below from the water-line, to become visible mutual contractual agreement above the water-line.
The process can also operate in reverse, although in a healthy situation the natural wish of both sides is for the iceberg to rise.
A quick key is shown with the diagram. A more detailed explanation is below the diagram.
Note that this diagram is an example of a very basic employee/employer relationship in which only work and pay are formally agreed and contracted. In reality a representation of the Psychological Contract for most modern work relationships would include several more mutual obligations with work and pay ‘above the water-line’, i.e., formally contracted and agreed.
Left side of iceberg = employee inputs (and employer needs).
Right side of iceberg = rewards given by employer (and employee needs).
Above the water level: factors mostly visible and agreed by both sides.
Work |Pay = visible written employment contract.
Black arrows = mostly visible and clear market influences on the work and pay.
Red arrows = iceberg rises with success and maturity, experience, etc., (bringing invisible perceived factors into the visible agreed contract).
Below the water level: factors mostly perceived differently by both sides, or hidden, and not agreed.
Left side of iceberg = examples of employee inputs, which equate to employer expectations – informal, perceived and unwritten.
Right side of iceberg = rewards examples and employee’s expectations.
Blue arrows = influences on employee and employer affecting perceptions, mostly invisible or misunderstood by the other side.
The left side of the iceberg represents the employee’s inputs. These are also the employer’s needs or expectations, which may be visible and contractually agreed, or informal, perceived, inferred, etc., and unwritten, or potential expectations depending on performance and opportunity, which not not necessarily apply to all employees/employers.
The right side represents typical examples of rewards given by the employer. These are also the employee expectations or needs, which again may be visible and contractually agreed, or perceived, inferred, imagined, etc., in which case they would generally be unwritten. As with the left-side employee inputs, the right side of the iceberg also includes potential inputs which are not necessarily applicable to all employees/employers.
In both cases ‘below the water-line’ factors are strongly a matter of perception until/unless brought out into the open and clarified. Perceptions from the employee’s standpoint are crucial, which tend to differ markedly from the employer’s perceptions, and also from the employer’s methods of assessing such factors. For example the employee may vastly over-estimate the value of his/her contribution to organizational performance. The employer may vastly under-estimate the stress or erosion of life balance that the job causes to the employee.
The examples of factors on the iceberg are not exhaustive, and the sequences are not intended to be matched or directly reciprocating. Many other factors can apply. I have referred already to the importance of encouraging open communications, without which a leader will never discover what the iceberg looks like, let alone how to manage it.
Above the water level – ‘work and pay’ – represents the basic employment contract – the traditional ‘fair day’s work for a fair day’s pay’. This loosely equates to the ‘vc’ segment in the Venn diagram. This visible employment contract is typically the written contractual obligations on both sides. The iceberg diagram shows the the most basic work and pay exchange. In reality most workers are formally responsible for other inputs and are formally entitled to benefits beyond pay alone, so in this respect the iceberg here represents a very basic situation.
The black arrows represent market influences on work and pay, especially including those that are specific to the employment situation, which are obvious, visible, and known, etc. These influences would include specifics such as market demand for and availability of people who can do the job concerned. This extends to market rates of pay and salary.
The red arrows represent the tendency for the iceberg to rise with success and maturity in the job, and to a degree also in the success and maturity of the employer organization. More mature experienced and high-achieving employees will tend to see their personal icebergs rising so that increasingly the hidden contractual factors become visible, and written into formal employment contracts, above the water-line, so to speak. Employees generally want the iceberg to rise. So do enlightened and progressive employers. They want the hidden unwritten aspects of the Psychological Contract which are below the surface to become applicable, and to be visible and formalised contractually. A rising iceberg signifies increasing employee contribution towards organizational performance, which is typically rewarded with increasingly deeper rewards and benefits.
Below the water-line – the metaphorical 90% of the iceberg which is under the surface. These are the hidden perceptions which strongly affect interpretation of the Psychological Contract, notably by the employee. These factors loosely equate to the ‘pc’ area of the Venn diagram. Where the Psychological Contract is very largely hidden perceptions and mutually unclear, then we can imagine the iceberg being more than 90% submerged. Where the Contract is healthier and clearer – for whatever reason – we can imagine the iceberg perhaps being only 60-70% submerged. Interestingly, in cooperatives and employee ownership organizations the iceberg model will tend to be (due to the nature of the employee ownership model) mostly out of the water, and perhaps even floating on top, as if by magic, which is a fascinating thought..
The sequential listing of factors shown below the water-line on both sides is not definitive or directly reciprocating (of equal values). The model provides a guide to the concept, not a scientific checklist of equally matched or balancing factors. That said, the diagram offers a broad indication of relative seriousness of the factors in both lists, with the deeper items representing the most serious potential inputs and rewards, which tend to be matched by deeper elements on the other side.
Use the framework to map your own situation, rather than attempting to fit your own situation into the specific examples given.
The blue arrows represent hidden factors influencing employee and employer and notably affecting their perceptions and attitudes to each other. These factors may be very visible to and clearly understood by one side but not to the other until/unless revealed and clarified in objective terms. Many hidden influences are not well understood by either side. Many of these factors change unpredictably, but many are relatively constant and can easily be clarified. Both sides may assume the other side already knows about these factors, or alternatively has not right to know about these factors. Some factors are hidden because they are difficult for anyone to understand or predict, but a great many others result simply from secrecy, borne of distrust or insecurity.
Some employers and leaders will wonder how on earth all these hidden and subjective factors can possibly be identified and balanced. In fact they can’t in absolute terms; but they can be made far more transparent and agreed if management philosophy and methods strive for good open positive cooperation between employer and employees.
A healthy Psychological Contract is one where both sides agree that a fair balance of give and take exists. This is impossible to achieve where there are lots of hidden perceptions, so the first aim is to encourage greater openness and mutual awareness. Given greater awareness most people tend to take a more positive approach to compromise and working agreements.
Various reference models help with this process, particularly the Johari Window, which is an excellent way to explore and expand mutual awareness.
Employers, leaders, team-builders, etc., wanting to explore the Psychological Contract with staff could invite people to sketch what they think their own icebergs look like. And then compare the results with how the leadership sees the iceberg, and also how the leadership imagines its people see the Psychological Contract. It would be interesting and helpful within such an exercise to attempt to label some of the external factors and pressures (the black and blue arrows) – especially the blue ones below the water line on both sides.
In management and organizational theory many employee attitudes such as trust, faith, commitment, enthusiasm, and satisfaction depend heavily on a fair and balanced Psychological Contract.
Where the Contract is regarded by employees to be broken or unfair, these vital yet largely intangible ingredients of good organizational performance can evaporate very quickly.
Where the Psychological Contract is regarded by employees to be right and fair, these positive attitudes can thrive.
The traditionally dominant and advantageous position of an employer compared to its workforce (or indeed of any other authority in relation to its followers, ‘customers’, or members, etc) means that the quality of the Psychological Contract is determined by the organizational leadership rather than its followers. An individual worker, or perhaps a rebellious work-group could conceivably ‘break’ or abuse the Psychological Contract, but workers and followers under normal circumstances are almost always dependent on the organization’s leadership for the quality of the Contract itself.
This last point is intriguing, because in organizations such as employee ownership corporations and cooperatives, a different constitutional business model applies, in which workers and potentially customers own the organization and can therefore to a major extent – via suitable representational and management mechanisms – determine the nature and quality of the Psychological Contract, and a lot more besides. We see a glimpse here possibly as to how organizations (and other relationships involving leadership authority or governance) might be run more fairly and sustainably in future times. We live in hope.
Intriguingly also, several factors within the Psychological Contract – for example employee satisfaction, tolerance, flexibility and well-being – are both causes and effects. Feelings and attitudes of employees are at the same time expectations (or outcomes or rewards), and also potential investments (or inputs or sacrifices).
This reflects the fact that employee’s feelings and attitudes act on two levels:
The simple message to employers from this – and a simple rule for managing this part of the Psychological Contract – is therefore to focus on helping employees to feel good and be happy, because this itself produces a healthier view of the Contract and other positive consequences. Less sensible employers who ignore the relevance of employee happiness – or the relevance of the Contract itself – invariably find that the Psychological Contract is viewed more negatively, and staff are generally less inclined to support and cooperate with the leadership.
Aside from this, a major reason for the increasing significance of, and challenges posed by, the Psychological Contract is the rapid acceleration of change in business and organised work. This modern dramatic acceleration of change in organisations, and its deepening severity, began quite recently; probably in the 1980s. Some leaders do not yet understand this sort of change well, or how to manage it.
Autocratic leaders, which we might define as ‘X-Theory’ in style, are probably less likely to appreciate the significance of the Psychological Contract and the benefits of strengthening it. Modern enlightened people-oriented leaders, which we might regard as Y-Theory in style, are more likely to understand the concept and to develop a positive approach to it. (See McGregor’s XY-Theory – it provides a helpful perspective.)
An old-style autocratic X-Theory leader might say: “I pay the wages, so I decide the contract…”
Here the Psychological Contract is unlikely to be particularly healthy, and could be an organizational threat or weakness.
An enlightened Y-Theory leader is more likely to take the view: “People work for many and various reasons; the more we understand and meet these needs, the better and more loyally our people will perform…”
Here the Psychological Contract is more likely to be fair and balanced, and is probably an organizational strength and even a competitive advantage.
The most enlightened and progressive leaders will inevitably now find themselves considering the deeper issues of employee ownership and representational leadership.
The nature, extent and complexity of the Psychological Contract are determined by the nature, extent and complexity of people’s needs at work.
Work needs are increasingly impacted by factors outside of work as well as those we naturally imagine arising inside work.
People’s lives today are richer, more varied, and far better informed and connected then ever. People are aware of more, they have more, and want more from life – and this outlook naturally expands their view of how work can help them achieve greater fulfilment.
Work itself has become far more richly diverse and complicated too. The working world is very different to a generation ago.
The employer/employee relationship – reflected in the Psychological Contract – has progressively grown in complexity, especially since workers have become more mobile and enabled by modern technology, and markets globalized. These changes began seriously in the 1980s. Prior to this many modern dimensions of work – such as mobile working, globalization, speed of change – were unusual, when now they are common.
Below the grid gives examples of how work has changed. The watershed might have been the 1980s, or maybe the 90s, it depends on your interpretation; but the point is that sometime around the last two decades of the 20th century the world of work changed more than it had changed since the Industrial Revolution, which incidentally was from about the late-1700s to mid-1800s.
Globalization and technology in the late 20th century shifted everything we knew about organized work onto an entirely different level – especially in terms of complexity, rate of change, connectivity and the mobility of people and activities.
There are also significant changes under way specifically involving attitudes to traditional corporations, markets and governance. Examples of extremely potent ‘community’ driven enterprises are emerging. Social connectivity and technological empowerment pose a real threat to old-style corporate models. Younger generations have seen the free market model and traditional capitalism fail, and fail young people particularly. Certain industries no longer need a massive hierarchical corporation to connect supply and demand.
The significance and complexity of Psychological Contract have grown in response to all of these effects, and given that the world of work will continue change in very big ways, so the significance and complexity of the Contract will grow even more.
|up to 1980s||after 1980s|
|work teams||virtual teams|
|line management||matrix management|
|customer service||call centres|
|in-house services||outsourcing and off-shoring|
|job for life||job for 2 years|
|a life’s work||a career for 10 years|
|onsite services||online services|
|few employee rights||many employee rights|
|low employee awareness||high employee awareness|
|employees isolated||employees connected|
|reliable pensions||unreliable pensions|
|other issues: equality, discrimination, training, qualifications, sharesave, pensions, buy-to-let, 4x4s, telephone, letters, mainframe computers and terminals, sub-contracting, employment contracts||other issues: life-balance, sabbaticals, lifelong-learning, employee ownership, community, social enterprise, email, social networking, mobile web, globalization, the psychological contract|
It is easy to understand given this dramatically shifted backdrop that people’s relationships with their employers have altered a great deal.
Just one of these factors would be sufficient alone to change substantially how employees relate to employers, and vice-versa – but all these features of work, and more besides, are now quite different to how they were a generation ago.
This new shape of organized work is a fundamental driver of the nature of the Psychological Contract, and also of its significance for employers, especially during economic growth and buoyancy, when employees have more choice and flexibility compared to the relative power of employers during periods of recession.
When considering the ‘before-and-after’ grid above in relation to the Psychological Contract the initial reaction can be to focus on the erosion of traditional outputs (benefits, rewards, etc) accruing to employees, such as job and career security, pensions, etc. Extending these issues, the tendency is to imagine that the changing nature of the Psychological Contract presents more of a challenge or threat to employees than employers.
This is not necessarily so. The shifting world of work (and life beyond work) presents some threats to employers, and erosions of the employee inputs traditionally taken for granted by employers. The changes in work and life that continue to re-shape the Psychological Contract have a two-way effect; they present risks and opportunities (and advantages and disadvantages) to employers and employees alike.
Notably, workers are increasingly mobile, flexible and adaptable – they no longer stay dutifully working for the same employer for as long as the employer needs them. Good workers can far more easily find alternative employment than twenty years ago. They are not limited to working in their local town, or region, or not even in the same country. In fact with modern technology geographical location is for many workers irrelevant, and will become more so.
Also consider the connectivity of workers today. In past times, trade unions were the vehicle for people-power. Instead, increasingly today the vehicle is the internet and modern social networking, which enable awareness and mobilisation of groups of people on an awesome level of sophistication and scale, the effects of which we are only beginning to witness.
Modern technology, which the younger generations understand and exploit infinitely better than older people, is fantastically liberating for employees. Historically workers relied on employers for access to technology. In the future, employers will progressively depend on employees for its optimisation.
Training and development was a big aspect of employer control. Employees depended on their employer to advance their learning and skills, and thereby their value in the employment market. This is no longer the case. Employees are progressively able to control their own learning and development, again through modern technology, and a new attitude of self-sufficiency is emerging, which we have never seen before.
Leaders were historically focused on retaining customers. Increasingly they will have to focus just as much on retaining staff. A new generation of workers has grown up with no expectation of a job for life. They seek variety and change, where their parents sought routine and security. Moreover they have access to, and control over, substantial modern technologies which will continue to evolve in favour of the individual, rather than the organization.
Leaders must therefore lead in a different way, if they are to retain the best people, and to develop better relationships and reputation among staff, customers and opinion-formers.
Interestingly there are still plenty of leaders (in business and wider governance) whose ideas of power and authority are a lot closer to the practices of the early industrialisation of work, than to the modern world. This may be so particularly in the UK, which is still dogged by old systems and attitudes of class and elitism. The signs are that much of this old thinking will be forced to change – and be reflected within the Psychological Contract – as people, at the level of employees, followers, citizens, customers, etc., become more empowered.
This is worthy of separate note and emphasis because it’s a big factor in organizations of all sorts.
Lack of leadership transparency results from one or a number of reasons:
First let’s put to one side those situations where a leadership intentionally withholds facts and operates secretively because it has something to hide. Achieving a healthy Psychological Contract will neither be an aim or a possibility for such employers.
More commonly in other situations, lack of transparency exists due to leadership negligence, fear or insecurity, or simply a lazy old-fashioned ‘X-Theory’ culture, all of which can be resolved with a bit of thought and effort, and which can produce dramatically positive results, because:
Leadership transparency has a huge influence on two major factors within the Psychological Contract and its effective management:
Where leadership is not transparent, employees have no reason to trust the employer, and according to human nature, will tend not to be open and trusting in return. As discussed elsewhere in this article, trust is crucial for a healthy Psychological Contract.
And where leadership fails to inform and explain itself openly and fully to employees, employees will form their own ideas instead, which tend not to be very accurate or comprehensive. Wrong perceptions, especially when we add misinformation, rumour, etc., thrive in an information vacuum. Faulty beliefs become hidden factors (among the blue arrows in the iceberg diagram) which influence the Psychological Contract very unhelpfully. Aside from this, ignorance and uncertainty make people feel threatened and vulnerable.
Lack of leadership transparency is a particularly daft failing where clear explanation of organizational position provides real objective justification for a particular organizational action or inflexibility.
Transparency helps to kick-start a ‘virtuous circle’ within the Psychological Contract, as well as giving employees reliable facts about their situation.
The ‘virtuous circle’ enables trust, openness and tolerance to develop. Reliable facts replace faulty assumptions and unhelpful perceptions.
Lack of transparency starts a ‘vicious circle’. Distrust fosters distrust. Secrecy fosters secrecy. Employer/employee communications will tend to be closed, not open. Fear and suspicion on both sides increase, particularly in employees, whose perception of the Contract worsens as a result, in turn increasing animosity and fear.
‘Virtuous and vicious circles’ within the Psychological Contract are explained in more detail later in this article.
Note that this advocation of transparency does not give leaders the right to unburden themselves constantly of the worries and pressures that typically come with the responsibility of leadership. Followers expect leaders to be transparent where people are helped by knowing, so that they can prepare and react constructively.
Transparency here refers to the easy and helpful availability of information about the organization. It’s similar to openness, discussed later, which is more concerned with honest two-way communications within an organization. These are not fixed definitions of transparency and openness; just an attempt here to explain two different aspects of organizational and management clarity.
Transparency tends to be a matter of leadership policy, style, by which clear facts about an organization’s position, activities and decisions are made available to its employees and ideally also to its customers. Openness tends to refer to the flow of communications in all directions within the organization, here especially the feelings, ideas and needs of employees. Good general levels of openness in communications may have no influence at all on improving leadership/organizational transparency, especially if the organization chooses not to be very transparent. Transparent organizations find it much easier to foster open communications.
Change management is a big challenge in today’s organizations, and it is very significant in the Psychological Contract.
Organizational change puts many different pressures on the Psychological Contract.
So does change outside of organizations – in society, the economy, and in individuals’ personal lives; for example ‘Life-Stage’ or ‘generational’ change – (see Erikson’s Life-Stages Theory).
Our ability to understand and manage organizational change increasingly depends on our ability to understand and manage the most important drivers within the Psychological Contract.
Nudge theory offers very helpful ways to understand how and why people think and respond to change-management.
These can vary considerably situation to situation. We need therefore to be able to identify and interpret the nature of change, and other factors impacting on the Psychological Contract, rather than merely referring to a checklist. People’s needs, and their perceptions of their needs, can change quickly, and tend to do so more when they are unhappy.
Organizational leaders naturally see change from their own standpoint. Crucially, to manage change more effectively leaders must now see change in terms of its effects on employees, and must understand how employees feel about it.
Managing change is often seen as merely a process – as in project management for example – but effective leadership style and behaviour – notably alongside a modern appreciation of the Psychological Contract – are also vital for successful change management.
Where a leader’s behaviour is sensitive to people’s feelings, change happens much easier. Where a leader forces change on people insensitively, and without proper consideration of the Psychological Contract, then problems usually arise.
These two approaches extend interestingly in different ways, which we can call a ‘virtuous circle’ or a ‘vicious circle’.
The extent to which change, or any situation, is ‘sold’ to people warrants careful consideration.
‘Selling’ here refers informally to the use of persuasion, influence or incentive, in causing someone or a group to do something they would probably not otherwise do, which commonly in management and business seeks to achieve the acceptance of a proposition or other sort of change.
When change has to be ‘sold’ to people, it’s normally because whoever is doing the selling suspects that people might not willingly accept the situation were it to more openly and objectively explained.
Persuasion can produce mutually positive outcomes in some situations – especially if the people being persuaded are comfortable and open to the approach – but persuasion which amounts to ‘selling’ change is often not helpful or constructive for those being persuaded, and may not actually produce a good outcome for the persuader either.
This particular effect is very significant within the Psychological Contract.
‘Selling’ change – especially unfairly or strongly – tends to produce a negative outcome for everyone.
This is a simple way to decide usually what is fair and what is unfair when ‘selling’ or persuading others to agree to or accept change:
Both of the above could be described as persuasion, but they are quite different approaches. Where there is a sense that change has to be ‘sold’ to people, it’s a sign that that the approach is probably not fair and could produce problems later.
For those preferring a more tangible perspective than fairness, we could substitute the notion of risk, or risk avoidance:
Methods of communicating change which involve distortion of deceit carry greater risk of conflict and negative outcomes than methods which explain the situation clearly, while offering motivation, support and encouragement, etc.
People need to know what lies ahead, and to be consulted and supported in dealing with it.
Leaders have a duty to give proper information and explanation to their followers. Leaders neglect a fundamental responsibility where they deceive people or distort facts, in the hope that people will somehow absorb the problem when it looms larger than promised, or worse where a leader takes the view that people have no right to know or to complain.
I’m not advocating negative thinking in assessing and communicating change. I’m advocating objectivity and honesty. People don’t like nasty surprises and they don’t like dishonesty, especially when it stems from authority trying to reduce resistance to change or to avoid obligations arising.
This is an important aspect of change management and of relationships generally, and because it involves trust at a deep level, it is very relevant to the Psychological Contract.
Usually where change is ‘sold’ to people the Psychological Contract is damaged.
Employers tend to minimise or ‘spin’ the negative effects of change. Doing so (initially) makes the change easier and quicker to manage, and reduces the difficulties for the leader, so in this respect it’s perhaps a natural human tendency, as well as a common organizational behaviour. The short term appeal of glossing over or otherwise distorting hard facts often encourages leaders to neglect deeper discussion and debate where it might be warranted.
‘Selling’ change is usually a short-term gain, with a long-term cost, plus interest.
Employees may be fooled initially when a leader ‘sells’ them a change without properly and honestly explaining its implications. They may even be enthused by the change. This all turns very bad indeed however when a change, ‘sold’ on a false premise, turns out to be worse than first presented. Employees feel bad because of the new unpleasant situation, but they feel even worse because they can now see they’ve been deceived, or fooled or conned.
Also, where change is ‘sold’ to people using strong persuasion or distortion or omission, they naturally struggle to cope as well as they might have done if they’d been given a fair chance to prepare.
Many changes are difficult and cannot be avoided of course. Always though, it is best to be open and honest with people. This gives people time to absorb and react. They feel good because they’ve been trusted and treated as adults, not children. They may even come up with helpful ideas and suggestions – they often do – which the leadership might not remotely have imagined possible. Most importantly by being open and honest with people – preferably involving them at the earliest possible stage – the essential relationship and trust within the Psychological Contract can be protected far more easily.
Nudge theory – a powerful change-management concept which emerged in the early 2000s – is potentially very useful in understanding and managing change, especially where resistance among people seems strong, and conventional approaches are failing, or causing conflict.
Empathy is the ability or process used in understanding the other person’s situation and feelings.
We normally characterize empathy as the behaviour of a single person, but in the Psychological Contract empathy must be an organizational capability – a cultural norm and expectation of leaders and managers in their dealings with people.
Empathy is crucial to trust, cooperation and openness, and it’s also crucial to mutual understanding. All of these elements are significant within the Psychological Contract, so empathy is too.
The nature of empathy is that people can see if it exists or not. Where it does not, building trust and cooperation is very difficult.
Where an employer lacks empathy, employees naturally are less inclined to trust and cooperate. A ‘vicious circle’ begins.
The nature of many organizations, and a traditional view of management, commonly puts the employees at the bottom of the management hierarchy. It’s partly human nature, perhaps reinforced by experiences of authority in childhood and schooling. It’s also the way that authority has been for thousands of years.
Having raised the point I should add that it might not always be like this. The world is changing in some very interesting ways. We are beginning to see authority in various contexts shifting back to followers, and separately due to similar forces (notably technological and connective empowerment of people), certain types of authorities are beginning to see and describe themselves as servants rather than leaders.
That said, authority in most businesses and organizations will continue for some while to see itself at the top of the pile.
The underlying attitude of this sort of authority tends to impose its views and to project its interpretations onto the people who are subject to the authority.
This attitude is very unhelpful for modern work and management, and especially for the Psychological Contract.
Where leadership has this attitude, it cascades down through management. This is a big obstacle to improving the quality of the Psychological Contract, because it is an obstacle to empathy.
Empathy is lacking where authority fails to truly understand and recognise the feelings, needs, views, etc., of its followers/employees.
Achieving a fair balanced Psychological Contract requires that important factors are understood, and seen to be understood. The more an employer demonstrates broad awareness of the employee situation, the more likely it becomes that mutual agreement – and a healthy Psychological Contract – can be established and maintained.
Many employers, especially businesses, accepted a generation ago that empathy is vital when dealing with customers – to build trust, and to know what customers truly feel, think and need. Businesses realise that customers’ needs change according to changes in the market and the wider world, and that these needs can be very complex and dynamic. They need to be understood by using empathy and building trust, and appropriate responses provided, or the relationship between supplier and customer is broken or lost altogether.
The analogy is significant.
Progressive employers are realising that exactly the same principles apply to the Psychological Contract with employees.
When an employee feels bad, he/she tends to look for someone to blame. We all behave like this at times, especially when our emotional reserves and self-image are low. When an employee looks for someone to blame he/she tends to put the employer high on the list. The perception of the employer worsens. The Psychological Contract stinks mostly because the employee feels bad.
Conversely, when an employee feels good and the self-image is strong, he/she tends to see the employer more positively. “I like my work (and my boss) because I feel good..” The Psychological Contract now smells of roses.
This is not new. This sort of loopy effect has always existed. It’s unavoidable within any proper appreciation of the Psychological Contract. These loops are not conventionally measurable, but they do exist and can be very significant.
Within the Psychological Contract many perceptions become an important part of the reality. A traditional X-Theoryemployer/leader might dismiss employee perceptions as not being real or relevant. The traditional autocratic view is “…To run a corporation we must deal in reality and not worry about perceptions…” However if the workforce believes (perceives) that the leadership is being heavy-handed, or greedy, or neglectful, or unethical, then this is the reality which the leadership needs to address, because such perceptions have a huge effect on the Psychological Contract. Perceptions are part of the reality and dismissing them doesn’t make them disappear.
We cannot manage every conceivable element in the Psychological Contract, especially when we try to imagine the detailed personal needs of large numbers of employees within a big organization.
Happily employees do not normally demand such attention to detail, provided they are satisfied that their major needs of trust and fairness are met.
Beyond a certain level of consultation and involvement, employees are generally accepting of decision-making by leaders. Employees have their own jobs to do and (ideally) enjoy doing them; many do not aspire to be leaders themselves, or to do the work of a leader, and so are happy to assume that leaders are making good decisions in good faith – particularly if, again, essential elements of trust and fairness are seen to exist.
What is it then within the Psychological Contract that sometimes causes relatively small factors to be big problems in some situations, but not in others?
An explanation can be seen in the ‘virtuous circles’ – or ‘vicious circles’ – that operate within the model.
Helpfully – for employers who have a positive approach to the Psychological Contract – people’s needs at work tend to reduce and simplify when the Psychological Contract is healthy. We see a ‘virtuous circle’ operating.
When people are happy at work they are more emotionally positive, resilient and flexible. These attitudes make it easier for people to adapt to and accept change, and to tolerate and be flexible in response to unexpected demands or irritations.
This is true in life generally, not just in work. To handle change – or any potentially negative effect – we need strong emotional reserves.
When people are happy and emotionally strong at work they are more likely to assist in the change process. This is extremely useful in big organizations, where change is usually ever-present and ongoing.
This ‘virtuous circle’ makes managing organizational change much easier, and it means that employees are less likely to react in a big negative way to a relatively minor incident or anomaly within the overall Psychological Contract.
Emotionally positive people tend to be resilient and flexible. They also tend to rationalize (explain to themselves and others) events in a positive way, even events that in other circumstances might be regarded as potentially threatening.
Positive attitude, mood, and frame of mind are very powerful in turning perceptions and opinions into helpful realities.
It is human nature for happy satisfied people to see the bright side of things, just as it is human nature for unhappy dissatisfied people to see the negative and to fear the worst.
Negative emotion is a very powerful driver of employees’ unhelpful needs and dependencies at work. Unhappy workers find plenty to be dissatisfied about; they demand more support and help; they need more managing; they feel worse about themselves, their work, their boss, their employer, their pay, and life as a whole. They also moan to colleagues, who will often moan back, and reinforce negative feelings. And so, unhappy employees are emotionally not able to be very tolerant or flexible when their employer needs them to be, which makes managing the Psychological Contract much more difficult. In terms of change management this can be disastrous to organizational performance, and in terms of the Psychological Contract, it stinks, because that’s how the employees feel about it. This is a ‘vicious circle’.
Try motivating people and providing brilliant service to your customers in that situation. It’s not easy.
Sadly and typically the vicious circle accelerates if managers and leaders then retaliate or exhibit negative emotions towards employees. We see this commonly in publicised industrial disputes, and you might be imagining now as you are reading this the sort of leaders and organizations who perform so incompetently in such situations. Temper tantrums and bullying regrettably enable many poor leaders to advance way beyond their true level of ability (see the Peter Principle, which partly explains how). The behaviour is not very sustainable however.
Transactional Analysis methodology is very useful in understanding aggressive confrontational leadership, and potentially also in rehabilitating leaders so afflicted, if they can be persuaded to attend therapy..
Openness of communications is crucial to within the Psychological Contract and to ‘virtuous and vicious circles’.
Open communications in an organization become ‘virtuous circles’. Closed communications become ‘vicious circles’.
Leadership generally determines and controls the level of organizational transparency, whereas openness of communications, or lack of, depends on wider issues of culture, processes, management methods and attitudes, etc.
Organizational/leadership transparency is quite simple to achieve where the leadership has a will to do so. Achieving openness of communications is usually a much bigger and more complex challenge.
Significantly within the Psychological Contract openness is the preparedness of employees to be open and honest about their feelings to their employer, which usually depends on the employer (and its management) being open and honest with the employees.
Openness of communications produces lots of other organizational benefits, but in terms of the Psychological Contract openness crucially influences trust and mutual awareness (between organization and employees, i.e., both sides of the Contract), and through the ‘virtual/vicious circle’ effect openness hugely influences the quality of the Psychological Contract.
Secretive distrustful employees are extremely difficult to manage. The organization has no real idea of what they want, nor what their priorities and concerns are. The employer may not even realise that a problem exists until it blows up into a major crisis.
Open communications between employer and employees are a strong indicator of a healthy Psychological Contract, and also of a capability to accommodate change. Open communications enable change to be managed, and problems to be resolved. The characteristic is both cause and effect – a ‘virtuous circle’. When openness is offered, encouraged and acted upon helpfully by the employer, employees themselves become more open, and also more accepting of change and other challenges.
Closed, secretive communication between employer and employees suggests the opposite – an unhealthy Psychological Contract – and this effect tends also to be self-fuelling – a ‘vicious circle’. Murphy’s Plough is a helpful and amusing analogy. This sort of behaviour is obviously very obstructive when trying to manage organizational change. Closed communications inevitably produce ‘blind’ arbitrary leadership decisions and changes from which people feel excluded. This creates fear and negativity among staff, which closes communications further and increases suspicion, resentment and resistance.
The ‘virtuous circles’ within the Psychological Contract offer a naturally efficient way to build tolerance, flexibility and adaptability and other positive characteristics among employees within the Psychological Contract.
The ‘vicious circles’ aspect reminds us that where a leader fails to foster positive attitudes and communications – or worse, displays distrust, aggression, animosity, etc – this causes employees generally to be less tolerant of anomalies, even small ones, within the Psychological Contract.
I repeat the point that leadership openness and transparency must not extend to leaders unburdening themselves of worries and pressures arising in the responsibility of leadership. Openness chiefly applies to the flow of honest constructive communications within an organization, especially enabling the building of mutual trust and awareness between leaders/managers and followers (for which the Johari Window is a very relevant and useful model).
There are for each of us many and various shifting external and/or relative reference factors and which influence our judgement as to what is right or fair or reasonable in our lives.
Many external references become internalised or personalised, affecting our ‘frame of reference’ and how we value and compare situations and especially alternative options.
Nudge theory is very useful in understanding how these external references and comparisons affect people’s thinking – and in discovering many other influences on people’s thinking, which otherwise often remain hidden and unknown.
Psychological Contracts depend heavily on relative factors. People cannot think about the Psychological Contract with their employer without reference to external and relative factors.
Adams’ Equity Theory provides a very helpful viewpoint of this.
For example how we perceive our market worth as an employee has a substantial influence on the value that we imagine our employer should place on us: A person who has secured an alternative job offer at a higher salary than his current employment will tend to expect more from his current employer than a person who has attended a dozen job interviews in the past year and received no job offer.
Here is a different example of how consideration of the psychological contract can greatly depend on external factors:
Imagine a banker’s attitude to his employer six months before the 2008 global financial crash. Employment was buoyant, bonuses were high, performance and stocks were booming. A senior banking employee would tend to feel bullish and confident. He/she would tend to feel that his/her job is safe, and that other jobs elsewhere are available. The market generally favoured employees. Largely a good performer could pick and choose where to work. Now contrast that with a time six months after the 2008 global financial crash. Banking job vacancies were relatively scarce. Redundancies were rife. Bonuses were slashed (for a while). Those in work are not so bullish or confident. It was no longer an employees’ market; it was an employer’s market. The external market had changed, and with it the employee’s perceptions, and reality, as to his/her relative value, and the relative value (and increasingly, security) offered by the employer. The employee in 2009 had a different interpretation of his/her Psychological Contract – specifically reduced expectations – than the same employee with the same employer before the 2008 crash. The employee is the same; the employer is the same; the financial and tangible package might be the same (it might even have worsened in terms of bonus and job security), and yet the employee in 2009 almost certainly would view the Psychological Contract as being more acceptable than it was in 2008. Of course perceptions can go down, as well as up..
The banker scenario is an obvious and extreme example, nevertheless external and relative factors are everywhere in everyone’s view of work, and in life outside work, and these factors are often hidden until we think or ask about them, and many can be very significant in influencing people’s feelings, perceptions and expectations.
Relative factors tend to be very difficult to measure.
Imagining a scientifically balanced formula for just a small set of ‘give and take’ (inputs and rewards) within the Psychological Contract is difficult enough. The notion of a mathematical model covering every possible exchanges, and allowing for external/relative factors, is even more mind-blowing.
We should instead aim to identify, understand and clarify the biggest external relative factors and then react to them fairly and realistically.
Pareto (80/20) analysis methods are useful in assessing the most important factors within a complex series of possibilities.
If we clarify the major confusions, fill the big information gaps, and satisfy people’s major needs, then the remaining smaller incidental or occasional issues – which will be countless in a large workforce – will generally take care of themselves through the ‘virtuous circle’ rule.
Remember that the Psychological Contract is not measurable or manageable in conventional ways. It needs approaching partly through tangible facts and logic, and partly through intuition, trust, and a level of pragmatism too. (I use the word pragmatism here not in its negative sense of rigidity or officiousness, rather in the sense of “dealing with matters according to their practical significance..”, as the OED puts it – which is what the Pareto Principle helps us to do.)
While not necessarily external, generational issues are very interesting relative factors, and often overlooked. This generational model offers a simple and entertaining angle. Erikson’s Life-Stage Theory offers a different and deeper perspective.
Our frame of reference changes quite markedly as we get older and pass through different life stages.
I am not suggesting that a detailed generational analysis be conducted of every employee’s unique situation in order to arrive at a properly balanced Psychological Contract. I am suggesting instead that generational issues can be influential factors within employee needs and feelings, and so they need some consideration. This is obvious in an ageing workforce, or a very young workforce, but it’s also worth consideration where distinctly different generational groups work together.
A practical example is that older people (see Erikson again) are commonly interested in helping younger people – passing on their knowledge, mentoring, for instance. Younger people value this sort of help. Isn’t it logical then to consider these generational capabilities and needs in the broad thinking about the Psychological Contract?
When considering age be mindful of the laws about ageism and age equality. Generational factors must not be a basis of discrimination, but they can and should be a basis of understanding people’s deeper needs and capabilities.
You will see many and various definitions of the Psychological Contract. It is a complex concept when examined beyond its most basic principle, and is dynamic when considered in any single situation: it’s not fixed or static – it contains forces and feelings which can fluctuate and be quite chaotic.
The basic principle – that people seek fair treatment at work – is simple. Complexities and dynamics however come to life as soon as the principle is seen in a practical context; essentially the Psychological Contract is driven by people’s feelings – therefore it’s an effect which cannot be measured or defined in fixed terms like a salary or a timesheet. We might more easily try to define love or fear, or life itself.
As a concept, the Psychological Contract will continue to evolve and change, in both its effects and its definitions.
This complexity and dynamism is not surprising. The Psychological Contract combines the effects of at least two highly complicated systems:
Beyond this other complex systems are almost always involved:
Basic descriptions of the Psychological Contract tend to simplify the concept as merely the addition of intangible input/reward factors (such as loyalty and effort/job security and satisfaction) to the traditional tangible pay/hours and other clear measurable mutual obligations found within a conventional contract of employment.
In modern times more advanced and sophisticated views of the Psychological Contract are emerging.
In a fuller practical sense, the Psychological Contract offers a way to interpret and improve the relationship between employer and employees, with consideration of:
And significantly, often overlooked:
We can see the Psychological Contract potentially extending to very deep considerations of the employee/employer relationship, especially in business organizations. This is beyond traditional appreciations of reward and emotional well-being. The Psychological Contract causes us to question the fundamental alignment of employee and employer – specifically in relation to ownership, representational leadership, profit-share, etc – and how this is structured within the constitutional rules and purpose of the organization.
This obviously suggests that the traditional model by which most businesses are run is not necessarily the best organizational structure for achieving a healthy Psychological Contract. The traditional model is probably fine for people who have no interest in their work beyond quite basic inputs and rewards, but it’s likely to be an inherently and increasingly strained arrangement for employees who want something deeper, and logically for employers too who seek a deep involvement and commitment from their people.
Traditionally, maintaining a healthy Psychological Contract is addressed by balancing employee inputs and rewards. This exchange typically happens on a constitutional foundation which places employees clearly and firmly outside of the ownership and the strategic leadership of the organization. In many situations, notably ‘X-Theory’ business corporations, this exclusion encourages and enables real and/or perceived vulnerability, disadvantage, unfairness, etc. The employee may (and generally does) feel disengaged, and not a real ‘part of the organization’.
Similar disengagement may be felt by employees of state organizations by virtue of exclusion from decision-making, especially where decisions undermine service quality. Where workers are disempowered at the most basic operating level, the Psychological Contract may need attention at a fundamental constitutional level, i.e., the rules and structure of the organization, which can only be changed by its ‘owner’ – the state, or other public authority.
Where an organization’s basic constitution and rules work against people’s core needs, the balancing of employee inputs and rewards almost inevitably becomes a battleground. Serious ‘vicious circles’ develop, reducing mutual trust and transparency. Crucially, people do not feel aligned with the organization. They work in spite of the organization, not truly for the organization. The wasted potential is considerable.
Self-image is a very significant element in people’s assessment of the Psychological Contract. An employee whose self-image is one of a detached remote worker (detached and remote from the ownership and direction of the organization) – a mere ‘hired-hand’ – will inevitably focus his/her thinking strongly on traditional employment expectations: pay, hours, advancement, job quality, etc., (it’s a long list, referenced elsewhere on this page, and see Herzberg’s theory for example).
People treated like ‘hired-hands’ naturally behave like ‘hired-hands’.
An obvious question about the Psychological Contract in the modern world is:
If we change the fundamental relationship between the employee and the employer so that the employee is also an owner of the enterprise (or meaningfully empowered, in the case of state organizations), how does this alter the self-image, and consequentially the Psychological Contract?
We would not be changing (hypothetically) the terms and conditions of work. We instead (hypothetically) would change the relationship between the employee and employer at a far more fundamental level. This alters the self-image dramatically. The employee is now far more engaged and aligned with the organization, because he/she has a deep and meaningful interest in it.
Further points about this:
As mentioned previously, the concept of ‘psychological contracting’ offers much potential for understanding and improving relationships outside of the traditional employer/employee context.
There is not yet a wide appreciation of ‘psychological contracts’ and ‘contracting’ in society and human behaviour outside of employee/employer relationships. There should be.
A specialised exception and example is the term ‘contracting’ within Transactional Analysis and specifically described within modern TA theory.
Here next, in summary, is how ‘contracting’ is regarded in Transactional Analysis. It’s not the same as the Psychological Contract in employment, but certain governing principles are very similar.
These principles are very helpful in understanding the Psychological Contract as it applies in employment, especially in human relationships and communications. This is because:
Eric Berne (1910-70), the founder of Transactional Analysis, very elegantly described a ‘contract’ (which for these purposes we could call a ‘psychological contract’) as “… an explicit bilateral commitment to a well-defined course of action…”
In his 1967 book about TA, I’m OK – You’re OK, Thomas Harris says of the ‘contract’ in Transactional Analysis: “…We use the word ‘contract’ as a statement of mutual expectations…”
This recognises that clarity of mutual expectations is vital for a good working relationship.
Eric Berne’s quote is cited by Ian Stewart and Vann Joines, in their 1987 book TA Today. Stewart and Joines significantly explain also that: “… in any relationship, the parties may exchange ulterior [hidden] messages. This is especially true where personal or organizational change is being sought…”
Stewart and Joines are referring here to the use of Transactional Analysis as a therapy or counselling methodology, but they might just as well be referring to modern organised work and employee management.
Stewart and Joines continue: “… such changes usually mean a challenge to someone’s frame of reference. Both practitioner [therapist] and client [patient] are likely to come into their working relationship with a covert agenda… One important function of a contract is to make the covert agenda explicit…”
Equate ‘therapist’ to an employer, and ‘patient’ to an employee or workforce.
In Transactional Analysis it is recognised that a good working relationship cannot exist without the therapist giving proper consideration to the patient’s ‘frame of reference’. This equates to an employer giving proper consideration to the employee’s frame of reference. Frame of reference here refers to the way someone sees themselves, and their life and world, including their work and employer.
When employees criticise managers and directors for ‘being in another world’, or ‘sitting in their ivory towers’ this is usually a strong indication that that organisational leaders are not giving and showing proper consideration for the employee’s ‘frame of reference’.
In Transactional Analysis, just as in work organisations, failing to consider someone’s ‘frame of reference’ tends to ensure that it is impossible to achieve a good working relationship.
The second key point in the Stewart-Joines quote is the reference to making the covert agenda explicit. In other words, both sides must be transparent about what they want and how they are thinking.
This is difficult in TA, and a lot more challenging in organisations, nevertheless, the likelihood of problems arising in the Psychological Contract increases with lack of transparency. Covert agendas – hidden or unknown motives and needs on both sides – in Transactional Analysis therapy and in organised work, tend to produce conflicts, misunderstandings, and mistrust, which all obviously undermine good working relationships.
Seeing this point more positively: transparency, openness, and exposure all foster trust, which in turn enables further transparency and clarity. Clarity is the basis of mutual understanding, which is the only viable foundation on which a strong Psychological Contract can be built.
Unfortunately the Psychological Contract is not yet a scientific tool or a process.
Given the growing power of technology – notably in gathering and interpreting highly complex data, in real time, across large groups of people – perhaps a feasible tool will be developed one day, but not for a while.
The dynamics and details of any substantial analysis of the Contract in an organizational context are too many and chaotic for scientific interpretation to be viable or practical. Aside from this there are always big difficulties in resolving self-perpetuating loop effects like the virtuous and vicious circles which feature strongly in the Contract. Additionally, as ever, measuring feelings and attitudes represents a further big obstacle to developing the concept onto a process or system. Certain vast systemic activities, such as managing a nation’s finances, or regulating a stock market, can just about be translated into a series of mathematical processes, but the Psychological Contract presents deeper complexities.
I have said already that successful management of the Psychological Contract is more of a philosphy than a process or tool, and it is in this spirit that it is best managed.
The Psychological Contract can be seen as a working model in the sense that it provides a guiding philosophy – essentially that of fairness – to the use of various organizational tools and processes, notably in human resources management, many of which are explained elsewhere on this website.
Fairness is fascinating – it is both a leadership driver (for leaders who decide so), and also a positive outcome and perception within the Psychological Contract.
The perception of fairness within the Psychological Contract is influenced by many factors, as we have seen.
There is nevertheless a fundamental and unavoidable correlation between perceived fairness and the organization’s balancing of the needs of:
Some organizations have flexibility and inclination to address the balance of these needs. Others have neither.
Naturally where the balance is set strongly in favour of shareholders, employees are less likely to perceive great fairness in the Psychological Contract. This has been largely the traditional shape of employment organizations and businesses since work itself became organized.
The Psychological Contract increasingly causes us to ask a big question:
Are there better ways to organize work, and especially business?
I refer to fundamental organization – structural, constitutional, regulatory, etc – deeper than organizational management.
Every organization can improve its relationship with its people, if its leadership has the will to do so, because so much of the relationship depends on simple trust, honesty and humanity, which by any normal reckoning cost absolutely nothing.More progressive organizational structures, in which the responsibilities and rewards of ownership and leadership are shared with employees, potentially customers too, face much easier and simpler challenges in developing and keeping a healthy Psychological Contract.
We can apply the theory and thinking about the Psychological Contract in a potentially far-reaching way:
The Psychological Contract offers insight and inspiration to explore and improve the very structure of businesses and other employment organizations.
Many existing conventional corporations are of course stuck with the model they have, for one reason or another, typically because the finances are too entrenched to unpick and re-structure, and/or because owners and leaders simply do not agree that there could be a better, fairer, way. Time will tell.
Newer businesses and businesses yet to be formed have a great deal more flexibility, and can consider different ways of structuring – such as mutuals, coperatives and partnerships – which are founded on fairer principles, and for which the Psychological Contract is largely self-balancing.
The constitution of any enterprise or activity (its rules of formation, ownership and purpose, etc) is conceivably the major influence upon fairness of the organization, and since fairness is at the heart of the Psychological Contract, addressing the constitution is for some situations the surest way to develop a Psychological Contract that is naturally balanced and healthy, and also likely to sustain itself with minimal intervention.
The Psychological Contract is fascinating for many reasons because it offers so many different perspectives.
It’s not a tool or a process. The Psychological Contract is a model and a philosophy which can guide us in the way we structure and manage organizations, and deal with employees within them.
At a basic level it helps us understand more about the ‘give and take’ that characterises working for an organization, and particularly leading an organization.
It is very useful in understanding why employees are ‘difficult to motivate’, or ‘difficult to manage’ – especially when this is an ongoing or widespread challenge.
The Psychological Contract helps leaders understand better how to align their people’s needs with those of the organization, which is a very elusive notion.
The concept also offers a powerful way to expand thinking and possibilities for people and work, in some distinctly separate and important ways:
At a deeper level the Psychological Contract questions the significance of fairness in the way organizations are run and established.
There is no single right way.
There are ways which are bound to fail, because in essence they become uncompetitive.
The world changes, and as it does, work and business changes too.
From the tone of this article, and the website surrounding it, you may gather that I am not a great fan of old-style business and management.
It seems to make an awful lot of money for a very few people, and provide a relatively unhappy and unfulfilled working life for a big proportion of everyone else.
Most people still live for the weekends and their annual holidays; many hate their work and are not truly connected to or aligned with their employer, which often is a bigger problem for the employer than it is to the staff.
Meanwhile many big businesses are making a mess of the world in all sorts of ways, because profits come first.
All the indications seem to be that there are better ways to do things.
The Psychological Contract gives us a guide to the answers.
Transactional Analysis is one of the most accessible theories of modern psychology. Transactional Analysis was founded by Eric Berne, and the famous ‘parent adult child’ theory is still being developed today. Transactional Analysis has wide applications in clinical, therapeutic, organizational and personal development, encompassing communications, management, personality, relationships and behaviour. Whether you’re in business, a parent, a social worker or interested in personal development, Eric Berne’s Transactional Analysis theories, and those of his followers, will enrich your dealings with people, and your understanding of yourself. This section covers the background to Transactional Analysis, and Transactional Analysis underpinning theory.
Throughout history, and from all standpoints: philosophy, medical science, religion; people have believed that each man and woman has a multiple nature.
In the early 20 th century, Sigmund Freud first established that the human psyche is multi-faceted, and that each of us has warring factions in our subconscious. Since then, new theories continue to be put forward, all concentrating on the essential conviction that each one of us has parts of our personality which surface and affect our behaviour according to different circumstances.
In 1951 Dr Wilder Penfield began a series of scientific experiments. Penfield proved, using conscious human subjects, by touching a part of the brain (the temporal cortex) with a weak electrical probe, that the brain could be caused to ‘play back’ certain past experiences, and the feelings associated with them. The patients ‘replayed’ these events and their feelings despite not normally being able to recall them using their conventional memories.
Penfield’s experiments went on over several years, and resulted in wide acceptance of the following conclusions:
In the 1950’s Eric Berne began to develop his theories of Transactional Analysis. He said that verbal communication, particularly face to face, is at the centre of human social relationships and psychoanalysis.
His starting-point was that when two people encounter each other, one of them will speak to the other. This he called the Transaction Stimulus. The reaction from the other person he called the Transaction Response.
The person sending the Stimulus is called the Agent. The person who responds is called the Respondent.
Transactional Analysis became the method of examining the transaction wherein: ‘I do something to you, and you do something back’.
Berne also said that each person is made up of three alter ego states:
This is our ingrained voice of authority, absorbed conditioning, learning and attitudes from when we were young. We were conditioned by our real parents, teachers, older people, next door neighbours, aunts and uncles, Father Christmas and Jack Frost. Our Parent is made up of a huge number of hidden and overt recorded playbacks. Typically embodied by phrases and attitudes starting with ‘how to’, ‘under no circumstances’, ‘always’ and ‘never forget’, ‘don’t lie, cheat, steal’, etc. Our parent is formed by external events and influences upon us as we grow through early childhood. We can change it, but this is easier said than done.
Our internal reaction and feelings to external events form the ‘Child’. This is the seeing, hearing, feeling, and emotional body of data within each of us. When anger or despair dominates reason, the Child is in control. Like our Parent we can change it, but it is no easier.
Our ‘Adult’ is our ability to think and determine action for ourselves, based on received data. The adult in us begins to form at around ten months old, and is the means by which we keep our Parent and Child under control. If we are to change our Parent or Child we must do so through our adult.
In other words:
When we communicate we are doing so from one of our own alter ego states, our Parent, Adult or Child. Our feelings at the time determine which one we use, and at any time something can trigger a shift from one state to another. When we respond, we are also doing this from one of the three states, and it is in the analysis of these stimuli and responses that the essence of Transactional Analysis lies.
At the core of Berne’s theory is the rule that effective transactions (ie successful communications) must be complementary. They must go back from the receiving ego state to the sending ego state. For example, if the stimulus is Parent to Child, the response must be Child to Parent, or the transaction is ‘crossed’, and there will be a problem between sender and receiver.
If a crossed transaction occurs, there is an ineffective communication. Worse still either or both parties will be upset. In order for the relationship to continue smoothly the agent or the respondent must rescue the situation with a complementary transaction.
In serious break-downs, there is no chance of immediately resuming a discussion about the original subject matter. Attention is focused on the relationship. The discussion can only continue constructively when and if the relationship is mended.
Here are some simple clues as to the ego state sending the signal. You will be able to see these clearly in others, and in yourself:
Physical – angry or impatient body-language and expressions, finger-pointing, patronising gestures,
Verbal – always, never, for once and for all, judgmental words, critical words, patronising language, posturing language.
N.B. beware of cultural differences in body-language or emphases that appear ‘Parental’.
Physical – emotionally sad expressions, despair, temper tantrums, whining voice, rolling eyes, shrugging shoulders, teasing, delight, laughter, speaking behind hand, raising hand to speak, squirming and giggling.
Verbal – baby talk, I wish, I dunno, I want, I’m gonna, I don’t care, oh no, not again, things never go right for me, worst day of my life, bigger, biggest, best, many superlatives, words to impress.
Physical – attentive, interested, straight-forward, tilted head, non-threatening and non-threatened.
Verbal – why, what, how, who, where and when, how much, in what way, comparative expressions, reasoned statements, true, false, probably, possibly, I think, I realise, I see, I believe, in my opinion.
And remember, when you are trying to identify ego states: words are only part of the story.
To analyse a transaction you need to see and feel what is being said as well.
There is no general rule as to the effectiveness of any ego state in any given situation (some people get results by being dictatorial (Parent to Child), or by having temper tantrums, (Child to Parent), but for a balanced approach to life, Adult to Adult is generally recommended.
Transactional Analysis is effectively a language within a language; a language of true meaning, feeling and motive. It can help you in every situation, firstly through being able to understand more clearly what is going on, and secondly, by virtue of this knowledge, we give ourselves choices of what ego states to adopt, which signals to send, and where to send them. This enables us to make the most of all our communications and therefore create, develop and maintain better relationships.
Transactional Analysis is a theory which operates as each of the following:
Transactional Analysis developed significantly beyond these Berne’s early theories, by Berne himself until his death in 1970, and since then by his followers and many current writers and experts. Transactional Analysis has been explored and enhanced in many different ways by these people, including: Ian Stewart and Vann Joines (their book ‘TA Today’ is widely regarded as a definitive modern interpretation); John Dusay, Aaron and Jacqui Schiff, Robert and Mary Goulding, Pat Crossman, Taibi Kahler, Abe Wagner, Ken Mellor and Eric Sigmund, Richard Erskine and Marityn Zalcman, Muriel James, Pam Levin, Anita Mountain and Julie Hay (specialists in organizational applications), Susannah Temple, Claude Steiner, Franklin Ernst, S Woollams and M Brown, Fanita English, P Clarkson, M M Holloway, Stephen Karpman and others.
Significantly, the original three Parent Adult Child components were sub-divided to form a new seven element model, principally during the 1980’s by Wagner, Joines and Mountain. This established Controlling and Nurturing aspects of the Parent mode, each with positive and negative aspects, and the Adapted and Free aspects of the Child mode, again each with positive an negative aspects, which essentially gives us the model to which most TA practitioners refer today:
Parent is now commonly represented as a circle with four quadrants:
Nurturing – Nurturing (positive) and Spoiling (negative).
Controlling – Structuring (positive) and Critical (negative).
Adult remains as a single entity, representing an ‘accounting’ function or mode, which can draw on the resources of both Parent and Child.
Child is now commonly represented as circle with four quadrants:
Adapted – Co-operative (positive) and Compliant/Resistant (negative).
Free – Spontaneous (positive) and Immature (negative).
Where previously Transactional Analysis suggested that effective communications were complementary (response echoing the path of the stimulus), and better still complementary adult to adult, the modern interpretation suggests that effective communications and relationships are based on complementary transactions to and from positive quadrants, and also, still, adult to adult. Stimulii and responses can come from any (or some) of these seven ego states, to any or some of the respondent’s seven ego states.
Transactional Analysis is a theory developed by Dr. Eric Berne in the 1950s. Originally trained in psychoanalysis, Berne wanted a theory which could be understood and available to everyone and began to develop what came to be called Transactional Analysis (TA). Transactional Analysis is a social psychology and a method to improve communication. The theory outlines how we have developed and treat ourselves, how we relate and communicate with others, and offers suggestions and interventions which will enable us to change and grow. Transactional Analysis is underpinned by the philosophy that:
Initially criticised by some as a simplistic model, Transactional Analysis is now gathering worldwide attention. It originally suffered much from the popularised writings in the 1960s. Also, summarised explanations, such as this, which can only touch on some of the concepts in Transactional Analysis, led their readers to believe that there was very little to it. Many did not appreciate the duration and complexity of the training.
Today there is greater understanding of Transactional Analysis. More and more people are taking the four to five year part-time training courses to qualify, and increasingly universities are accrediting these courses for masters degrees. Those taking training include psychiatrists, organizational and management consultants, teachers, social workers, designers, engineers and the clergy.
Today Transactional Analysis is used in psychotherapy, organisations, educational and religious settings. Books have been written for all ages, from children through to adults, by people all over the world. Transactional Analysis is truly an international theory relating to a diverse range of cultures.
Theoretical concepts within the Transactional Analysis world are constantly being challenged and developed making it a rich dynamic process. Berne died in July 1970 at the age of 60. However, Transactional Analysis has not stood still and continues to develop and change, paralleling the processes we encourage in ourselves and others.
The key concepts in Transactional Analysis are outlined below in the form of introductory information.
Transactional Analysis is a contractual approach. A contract is “an explicit bilateral commitment to a well-defined course of action” Berne E. (1966). Which means that all parties need to agree:
For example, we want the outside of our house painted, we need to find a person who will paint it and who will give us a quote for doing it. If we agree the quote, and we like him or her enough, we will no doubt employ them. We will agree a date and time, perhaps check they are insured, and choose the colour of the paint and off they go.
Sometimes contracts will be multi-handed with all parties to the contract having their own expectations. If these expectations are all congruent then fine, if not then discussing everyone’s expectations will lead to greater understanding and therefore to a clear contract.
Contracts need to be outlined in positive words i.e. what is wanted, rather than what is not wanted. Our minds tend to focus on the negative and so this encourages failure. For example, how many times do we look round when someone says to us “Don’t look now but…….” , the same is true when we set up contracts which start “I don’t want to do ………….. anymore”.
We have contracts about employment, how much will we be paid and when, what holidays we are due, what deductions there will be etc. In order to ensure placements are effective then different, but similar, details are required. Naturally, these details will vary dependent on the setting in which we work.
All parties need to state what are they are prepared to do. Are they able and willing to undertake what is being asked, is this appropriate? Does it fit within any statements of purpose and function? Is it legal? Do they have the competence to deliver this? Do they want to? What does each party want of the others?
In summary, contracts need to be: measurable, manageable and motivational. Measurable means that the goals need to be tangible. That each party involved in the contract will be able to say in advance how they will know when the goal has been achieved. The goal will be specific and behavioural and clearly defined. The contract will also need to be manageable and feasible for all those concerned.
‘Contracting’ in Transactional Analysis, and indeed many other aspects of TA, provide a helpful way to understand the Psychological Contract in employment and similar organizational relationships.
Berne devised the concept of ego states to help explain how we are made up, and how we relate to others. These are drawn as three stacked circles and they are one of the building blocks of Transactional Analysis. They categorise the ways we think, feel and behave and are called Parent, Adult, and Child. Each ego state is given a capital letter to denote the difference between actual parents, adults and children.
This is a set of feelings, thinking and behaviour that we have copied from our parents and significant others.
As we grow up we take in ideas, beliefs, feelings and behaviours from our parents and caretakers. If we live in an extended family then there are more people to learn and take in from. When we do this, it is called introjecting and it is just as if we take in the whole of the care giver. For example, we may notice that we are saying things just as our father, mother, grandmother may have done, even though, consciously, we don’t want to. We do this as we have lived with this person so long that we automatically reproduce certain things that were said to us, or treat others as we might have been treated.
The Adult ego state is about direct responses to the here and now. We deal with things that are going on today in ways that are not unhealthily influenced by our past.
The Adult ego state is about being spontaneous and aware with the capacity for intimacy. When in our Adult we are able to see people as they are, rather than what we project onto them. We ask for information rather than stay scared and rather than make assumptions. Taking the best from the past and using it appropriately in the present is an integration of the positive aspects of both our Parent and Child ego states. So this can be called the Integrating Adult. Integrating means that we are constantly updating ourselves through our every day experiences and using this to inform us.
In this structural model, the Integrating Adult ego state circle is placed in the middle to show how it needs to orchestrate between the Parent and the Child ego states. For example, the internal Parent ego state may beat up on the internal Child, saying “You are no good, look at what you did wrong again, you are useless”. The Child may then respond with “I am no good, look how useless I am, I never get anything right”. Many people hardly hear this kind of internal dialogue as it goes on so much they might just believe life is this way. An effective Integrating Adult ego state can intervene between the Parent and Child ego states. This might be done by stating that this kind of parenting is not helpful and asking if it is prepared to learn another way. Alternatively, the Integrating Adult ego state can just stop any negative dialogue and decide to develop another positive Parent ego state perhaps taken in from other people they have met over the years.
The Child ego state is a set of behaviours, thoughts and feelings which are replayed from our own childhood.
Perhaps the boss calls us into his or her office, we may immediately get a churning in our stomach and wonder what we have done wrong. If this were explored we might remember the time the head teacher called us in to tell us off. Of course, not everything in the Child ego state is negative. We might go into someone’s house and smell a lovely smell and remember our grandmother’s house when we were little, and all the same warm feelings we had at six year’s of age may come flooding back.
Both the Parent and Child ego states are constantly being updated. For example, we may meet someone who gives us the permission we needed as a child, and did not get, to be fun and joyous. We may well use that person in our imagination when we are stressed to counteract our old ways of thinking that we must work longer and longer hours to keep up with everything. We might ask ourselves “I wonder what X would say now”. Then on hearing the new permissions to relax and take some time out, do just that and then return to the work renewed and ready for the challenge. Subsequently, rather than beating up on ourselves for what we did or did not do, what tends to happen is we automatically start to give ourselves new permissions and take care of ourselves.
Alternatively, we might have had a traumatic experience yesterday which goes into the Child ego state as an archaic memory that hampers our growth. Positive experiences will also go into the Child ego state as archaic memories. The positive experiences can then be drawn on to remind us that positive things do happen.
The process of analysing personality in terms of ego states is called structural analysis. It is important to remember that ego states do not have an existence of their own, they are concepts to enable understanding. Therefore it is important to say “I want some fun” rather than “My Child wants some fun”. We may be in our Child ego state when we say this, but saying “I” reminds us to take responsibility for our actions.
The word contamination for many conjures up the idea of disease. For instance, we tend to use the word for when bacteria has gone into milk. Well, this is similar to the case with the contaminated Integrating Adult ego state. This occurs when we talk as if something is a fact or a reality when really this is a belief. Racism is an example of this. The Integrating Adult ego state is contaminated in this case by the Parent ego state. If we are white we might have lived with parents or significant others who said such things as “Black people take our jobs”. Growing up it is likely, that having no real experience to go by, we believed this. We might also have been told that Black people are aggressive. In our Child ego state may well lodge some scared feelings about Black people and in this ego state we may start to believe “All Black people are scary”. This would mean that there would be a double contamination of the Integrating Adult ego state. However, we would think that such statements were facts rather than beliefs and when this happens we say that this is Integrating Adult ego syntonic. That is, they fit with the Integrating Adult ego state and only those people outside of our situation and sometimes outside of our peer group or culture can see that, objectively, such beliefs are just that and therefore they can be changed.
Below is a modern interpretation of the Transactional Analysis descriptive model – called the Transactional Analysis OK Modes Model.
The OK Modes Model is a relatively recent (2010/11) development of the concept, and is a more sophisticated and usable representation of the traditional PAC Transactional Analysis model.
The concept and diagram are particularly helpful tools for understanding what happens in human communications – essentially one-to-one – and what makes these communications constructive or destructive; effective or ineffective.
The Transactional Analysis OK Modes Model has been developed by leading TA practitioners and thinkers Mountain Associates (of Desford, UK) and I am grateful for the help of Mountain Associates’ Anita Mountain and Chris Davidson in featuring their model in this article.
The OK Modes Model of Transactional Analysis shows how we communicate and/or behave with others.
The model consists of ten ‘Modes’ with a central ‘Mindful Process’.
The word Mode is used to differentiate the categories of behaviour from the structural ego state model mentioned previously.
In this context the term Mode dates back to 1975, notably in an article in the Transactional Analysis Journal by Nancy Porter (now Nancy Porter-Steele).
The Mountain Associates OK Modes Model provides a visual way of representing how we behave and interact with other people. The diagram below illustrates the concept.
The OK Modes Model is easier to understand when you see the OK Corral model after the OK Modes Model explanation below.
Miniature ‘OK Corral’ grids are incorporated into the diagram to emphasise that:
Of the ten different communication behaviour Modes:
The central circle element, upon which the full model is built, is in itself a representation of effective communication . When we are in the one of the four effective Modes shown around the circle we are responsive to the present situation.
Generally when something is said from an effective Mode the response from the other person is also likely to be from an effective Mode. Equally, where a communication comes from an ineffective Mode, the invitation is for the other person to respond from one of the ineffective Modes.
Note that of course in reality there are not simply four effective ways of behaving – these descriptors are intended as a broad impression or guide rather than definitive. Also some behaviours fall between (on a ‘continuum’) two or more of the Modes.
The central grid represents the OK Corral model , in which here the communication is ‘I’m OK, You are OK’ – i.e., put simply, from your ‘okay’ frame of mind to to the other person’s ‘okay’ frame of mind.
This central element of the OK Modes Model shows the four effective Modes. The centre ‘Mindful’ grid indicates that communication is ‘OK to OK’ in terms of the OK Corral , i.e., the person communicating is doing so from a position of feeling OK, and this communication is to the ‘OK’ position or feeling of the other person.
Here below is the Transactional Analysis OK Modes Model diagram fully presented, containing the central element with its four effective Modes, and the six ineffective Modes represented by ‘Not-OK’ miniature OK Corral grids (in red), relative to their effective counterparts (in green) within the central circle.
The four effective Modes are called:
The six ineffective Modes are called:
|Effective Modes||Ineffective Modes|
Modes are shown in green (effective) and red (ineffective) to help explain and use the model as a tool.
Particularly this enables us to imagine the flow of a communication exchange in a conversation, and so to understand what happened.
Effective communication comes from the green Modes, (like traffic lights, green equates to go-ahead).
Ineffective communication comes from the red Modes (like traffic lights, red means stop).
When we come from (communicate from) the green Modes we invite a positive response, and when we communicate from a red Mode, we invite a response from one of the red Modes.
The model is linked to the OK Corral , since another way of describing this model is is that an ‘OK to OK’ (I’m OK, you are OK) communication invites an OK to OK response, whereas a Not-OK communication invites a Not-OK response.
The adjectives used in the diagram here are not definitive. For example the term ‘Interfering’ could instead be described as ‘fussing’.
In some cases the Modes represent a ‘continuum’ – for instance a communication from a manager could be somewhere between Structuring and Supporting.
By effective, we mean that:
By ineffective, we mean that any/all of the following apply:
|Effective modesTo help you understand the TA OK Modes Model and to avoid having to keep scrolling back up the page, the diagram is repeated alongside the explanation below. It’s the same diagram.Note that the ineffective Modes are quite logical and easy to understand when seen as negative or unhelpful extremes of the correlating effective Modes. For example, being overly Supportive quite naturally equates to Interfering; Being overly Playful quite naturally equates to Recklessness.Mindful Process – Not a Mode, this is a requirement or condition enabling effective Modes to be accessed/used. When we are operating mindfully, we communicate ‘OK to OK’ messages. We operate appropriately in the here-and-now and have access to the positive aspects of the care and structure we have received in the past and the experiences we had in childhood. As this Mindful process is here-and-now, we are able to choose which of the effective Modes of behaviour to draw from, dependent on the situation. When we are stable in this Mindful process we respond appropriately rather than ‘flipping’ or switching (generally unconsciously) into an Ineffective Mode.Each of the effective Modes, dependent on the Mindful Process, communicate “I’m OK and You’re OK”.Structuring Mode – This is the boundary setting Mode, offering constructive criticism. In this Mode we are caring whilst firm.Supporting Mode – When in this Mode we are affirming and considerate.|
Co-creating Mode – From this Mode we develop ways to help us live and work with others.Playful Mode – This is the creative, fun loving, curious and energetic Mode. We can confront people playfully as a way of dealing with a difficult situation. This can diffuse a potential problem and get the message across.When working with others we can choose where we come from (communicate from).Effective communication happens when we are in a Mindful Process.If someone else invites us, because of how he/she communicates to us, to go into an ineffective (red) Mode, importantly, we don’t have to go there, we can instead ‘cross the transaction’ and come from (respond from) one of the green Modes.
|Ineffective modesThe ineffective (red) Modes all emanate from outdated experiences, which are not relevant or appropriate in the present.Criticizing Mode – communicates a “You’re not OK” message. When in this Mode you will believe that others cannot do things as well as you can, or perhaps only certain chosen people can. If you lead from this position you are unlikely to develop a loyal supportive team or culture.Inconsistent Mode – As a leader we might be inconsistent in our style – changing our behaviour in unpredictable and apparently random ways. This is not helpful for followers (or leaders).Interfering Mode – communicates a “You’re not OK” message. When in this Mode the person will often do things for others which they are capable of doing for themselves. People who find it difficult to delegate might be in this Mode.Over-adapted Mode – This expresses an “I’m not OK” or “I’m not OK and You’re Not OK” message. When in this Mode we over-adapt to others and tend to experience such emotions as depression or unrealistic fear and anxiety. When in this Mode we are unlikely to make good team members and will be highly stressed if we have to manage others.Oppositional Mode – Even when opposing others, we are not actually free to think for ourselves as we are reacting to them in the belief that we need to ‘resist’ them. It is important to be clear that this is not simply about being in disagreement, but a style of going against whatever others put forward.Reckless Mode – In this Mode we run wild with no boundaries. Here we express a “You’re not OK” message. At work we tend not to take responsibility for our actions and are unlikely to progress as we need a great deal of management in order to focus our energy and keep boundaries.|
It is helpful to be able to assess or diagnose which ego state in the structural model, or which mode in the descriptive model, somebody is in. In this way we can respond appropriately as well as ensure which mode we are addressing.
However, when we work with other staff or are relating with young people, we are responding on the behavioural level. It is not always possible, or appropriate, to be undertaking more in-depth types of diagnosis. I have outlined them here though so that an understanding of the complexity of the process can be achieved.
Words, tone, tempo of speech, expressions, postures, gestures, breathing, and muscle tone provide clues for diagnosing ego states.
Parent mode words typically contain value judgments, Adult words are clear and definable, and Free Child mode words are direct and spontaneous. For example, a person in Adapted Child mode may cry silently, whereas when in Free Child mode we are likely to make a lots of noise. “You” or “one” usually come from Parent. This can switch even mid-sentence. If we are leaning forward it is likely we are in the posture of the Parent mode, whereas if we are in Adult mode we tend to be erect.
These are indicators not guarantees. Assessment needs to be supported by other methods of diagnosis.
Observation of the kinds of transactions a person is having with others. For example, if eliciting a response from someone’s caretaking Parent it is likely that the stimulus is coming from Child, though not necessarily the Adapted Child mode. Our own responses to someone will often be a way of assessing which ego state or mode they are coming from.
The person’s past also provides important information. If, as a child we had feelings similar to those we are experiencing now, it is likely we are in Child ego state. If our mother or father behaved or talked in the same way that we are behaving or talking now then we are probably in a Parent ego state.
This occurs when we re-experience the past instead of just remembering it. This means that diagnosis is undertaken by self-examination. This is sometimes accurate and sometimes very inaccurate as the Child ego state may be afraid to allow our Adult to know what is going on.
In Transactional Analysis we call compliments and general ways of giving recognition strokes. This name came from research which indicated that babies require touching in order to survive and grow. It apparently makes no difference whether the touching induces pain or pleasure – it is still important. On the whole we prefer to receive negative strokes than no strokes at all, at least that way we know we exist and others know we exist.
We all have particular strokes we will accept and those we will reject. For example, if we have always been told we are clever, and our brother is creative, then we are likely to accept strokes for being clever, but not for being creative. From this frame of reference only one person in the family can be the creative one and so on.
Stroking can be physical, verbal or nonverbal. It is likely that the great variety of stroke needs and styles present in the world results from differences in wealth, cultural mores, and methods of parenting.
Claude Steiner suggests that, as children, we are all indoctrinated by our parents with five restrictive rules about stroking.
Together these five rules are the basis of what Steiner calls the stroke economy. By training children to obey these rules, says Steiner, parents ensure that “.. a situation in which strokes could be available in a limitless supply is transformed into a situation in which the supply is low and the price parents can extract for them is high.”
We therefore need to change the restrictive rules to unrestrictive ones:
Strokes can be positive or negative:
Strokes can be unconditional or conditional. An unconditional stroke is a stroke for being whereas a conditional stroke is a stroke for doing. For instance:
“I like you” – unconditional
“I like you when you smile” – conditional
As negative strokes these might be:
“I don’t like you” – negative unconditional
“I don’t like you when you’re sarcastic” – negative conditional
People often have a stroke filter. They only let in strokes which they think they are allowed to let in. For instance they allow themselves to receive strokes for being clever and keep out strokes for being good looking. One way to think about this to consider being out in the rain. The rain is the strokes that are available to us, both positive and negative. There is a hole in the umbrella and some of the strokes go through and we save them in a bucket to enjoy in lean times. Conversely we might use them negatively to reinforce the negative strokes we give to ourselves. Of course, some just bounce off the umbrella and we might not accept the good strokes that are coming our way. Some might come in but fall straight onto the floor.
Life positions are basic beliefs about self and others, which are used to justify decisions and behaviour.
When we are conceived we are hopefully at peace, waiting to emerge into the world once we have grown sufficiently to be able to survive in the outside of the womb. If nothing untoward happens we will emerge contented and relaxed. In this case we are likely to perceive the world from the perspective of I am OK and You are OK.
However, perhaps our mother had some traumatic experiences, or the birth was difficult or even life threatening. This experience is likely to have an effect on the way we experience the world, even at the somatic level. In which case we might emerge sensing that life is scary and might, for example, go into “I am not OK and You are not OK either”.
Let’s take it that the pregnancy went fine, and the birth was easy enough. What then? Well life experiences might reinforce our initial somatic level life position, or contradict it. If we were treated punitively, talked down to, and not held, we may begin to believe “I am not OK and You are OK”. This might be the only sense we can make of our experiences.
Let’s take another situation. Perhaps we were picked on and bullied as a child. We learnt that the way to get by was to bully others and that way we felt stronger and in control. Our behaviour then comes into the I am OK and You are not OK quadrant. Of course this may cover up our belief that we are really not OK, but nobody sees that. They just see our behaviour, and in fact we may have forgotten all about our negative feelings about ourselves as we have tried so hard to deny the pain of believing we are not OK.
These life positions are perceptions of the world. The reality is I just am and you just are, therefore how I view myself and others are just that “views” not fact. However, we tend to act as if they are a fact. Just like when somebody says “I can’t do this, I’m useless”. Rather than “I don’t know how to do this. Will you show me?” The latter is staying with the fact that they do not yet know how to do it, whilst the former links being useless with not being able to do something.
There are a number of ways of diagramming the life positions. Franklin Ernst drew the life positions in quadrants, which he called the OK Corral (1971). We have put these into red and green to show the effective and ineffective quadrants for communication and healthy relationships. By shading in the quadrants according to the amount of time we think we spend in each we can get an idea of the amount of time we spend in each. Ernst used the term ‘Corralogram’ for this method of self-assessment using the OK Corral matrix.
Berne talked about the life positions as existential positions, one of which we are more likely to go to under stress. This is significantly different to the concept Ernst uses, i.e. that we move around them all during the day. Whilst there is some truth in this we could agree with Berne that there will be one major position we go into under stress, with perhaps another position underneath this one. These positions can change as we develop and grow. The difference between Berne and Ernst is important.
Chris Davidson (1999) writes about the three dimensional model of Okayness. All of the previous diagrams talk as if there were only one other person in the equation, when in reality there are often more. For example, the behaviour of young people in gangs may say that they believe they are okay and perhaps other gangs in their neighbourhood are okay, but an individual or gang from another neighbourhood are not okay. We often do this at work as well. We find other people who we like and then we gossip and put other people down. We are therefore saying that we believe we are okay but those others are awful (underneath this there may be a belief that we are not okay either but we feel better by putting someone else down). In this way the two dimensional model of okayness i.e. that there are only two people involved, becomes three dimensional model where there can be three or more involved.
There is also the way in which we view life itself. If we consider that there is something wrong with us, and that others are not to be trusted and are not OK either, then the world would be a scary place and we are likely to experience life as tough and believe we will only be all right if we keep alert and on the look out for danger and difficulties.
The Transactional Analysis ‘Okay Corral’ can be linked to ‘blame’, for which Jim Davis TSTA developed this simple and helpful model. Commonly when emotions are triggered people adopt one of three attitudes relating to blame, which each correlate to a position on the Okay Corral:
None of these is a healthy position.
Instead the healthy position is, and the mindset should be: “It’s no-one’s fault, blame isn’t the issue – what matters is how we go forward and sort things out.” (I’m okay and you are okay – ‘happy’)
(With acknowledgements to Jim Davis TSTA)
The script is a life plan, made when we are growing up. It is like having the script of a play in front of us – we read the lines and decide what will happen in each act and how the play will end. The script is developed from our early decisions based upon our life experience. We may not realise that we have set ourselves a plan but we can often find this out if we ask ourselves what our favorite childhood story was, who was our favorite character in the story and who do we identify with. Then consider the beginning, middle and end of the story. How is this story reflected in our life today?
Another way of getting to what script is may be to think about what we believe will happen when we are in old age. Do we believe we will be alive at 80 or 90 years old, be healthy, happy, and contented? What do we think will be on the headstone for our grave? What would we like to be on it?
There are a number of different perspectives on ‘driver’ behaviour.
Mountain Associates use a model based upon Dr Taibi Kahler’s observations of clients in distress.
Dr Kahler noticed five sets of mutually exclusive behavioural cues.
Subsequently, for this discovery Dr Kahler received the 1977 Eric Berne Memorial Scientific Award.
Drivers in this context are behaviours that we move into when we start to be distressed.
Each driver is associated with a ‘personality type’.
Kahler noted that there were two variants for each driver:
When we notice the driver in ourselves or others we can recognise that we are in the early stages of distress. This will mean that we need to address our psychological needs so that we return to a ‘here-and-now’ mindful process.
Separately the book ‘Parlez-vous Personality? Process Communication for Coaches’, by Gérard Collignon, Pascal Legrand and John Parr, (2010 – Kahler Communications Europe), also offers more explanation about personality types within Transactional Analysis.
The way in which we structure time is likely to reflect the different hungers. We all structure time in a variety of ways:
Obtaining balance means ensuring that we have sufficient time for play and intimacy and if this does not occur then it would be beneficial to explore what we might be avoiding.
I am sure that every one of us must have been in the situation where we have said, “Why does this always keep happening to me” or “I always keep meeting people who hurt me and then go off and leave me”. Sometimes it may be that we like to help people and then it goes wrong as the person we were trying to help says that we didn’t do it well enough and that we got it wrong. We might think “Well, I was only trying to help” and feel got at.
When similar situations keep happening over and over again then the term Transactional Analysis uses for this is a game. A game is a familiar pattern of behaviour with a predictable outcome. Games are played outside Adult awareness and they are our best attempt to get our needs met – although of course we don’t.
Games are learned patterns of behaviour, and most people play a small number of favourite games with a range of different people and in varying intensities.
First Degree games are played in social circles generally lead to mild upsets not major traumas.
Second Degree games occur when the stakes may be higher. This usually occurs in more intimate circles, and ends up with an even greater negative payoff.
Third Degree games involve tissue damage and may end up in the jail, hospital or morgue.
Chris Davidson (2002) has argued that world politics can involve fourth degree games – where the outcomes involve whole communities, countries or even the world.
Games vary in the length of time that passes while they are being played. Some can take seconds or minutes while others take weeks months or even years. People play games for these reasons:
There are various ways to stop a game, including the use of different options than the one automatically used. We can:
Another way to think about this is to consider the game role we or the other person is likely to take. One way to discover this is to ask the following questions:
1. What keeps happening over and over again
2. How does it start?
3. What happens next?
4. And then what happens?
5. How does it end?
6. How do feel after it ends? (John James, 1973)
We can then consider the reason we might have taken up a particular role, where we might switch to, and then consider how to do things differently. We need to consider what our own responsibility is in this – if the situation is too violent for us to get involved what options to we have? We could call for help, get others to come with us to intervene and so on. We need to choose the appropriate assistance and take the action required.