HR Daily discusses the importance of forming successful employer/employee relationships.  

In an era of constant change, an employer's capacity to adapt, succeed or survive hinges on the quality of employer/employee relationships, or the "psychological contract", according to a corporate psychologist.

"The psychological contract defines the 'essence' of the employment relationship," says Colin Beames in his book, Transforming Organisational Human Capital.

"It serves to bind individuals and organisations together and regulate their behaviour, making possible the achievement of organisational goals."

And it's a "powerful determinant", he says, of the behaviour and attitudes of workers.

"The quality of these employer/employee relationships... significantly impacts on both performance and retention."

Employees, Beames says, are more willing to accept change - such as downsizing, restructuring or the implementation of new initiatives - if their relationships with their employers are "healthy".

How the psychological contract is formed
Every relationship has a psychological contract, Beames says.

In business, he says, it can be defined as the set of expectations - based on stated or implied promises and understandings - that operate between employers and their staff. It is neither a written nor legal document, but "nevertheless 'real'".

The contract is established from the moment the organisation "promotes itself" (in a job advertisement, for instance) and develops progressively through every phase of the employment relationship, Beames says.

It is formed through what is written (from job ads through to HR policies), said or unsaid (by managers and colleagues), implied and observed, and is influenced by:

• the salary package;
• other financial and non-financial benefits;
• job security and career development;
• recognition of ontribution;
• workplace safety;
• the resources and training provided;
• managerial support; and
• promotion opportunities.

The "health" of the psychological contract, Beames says, depends on the employee's perception of the "delivery of the deal".

If they feel that their expectations aren't being met, he says, they're likely to become disengaged.

The cost of getting it wrong
Beames notes that while employers can increase the job satisfaction and engagement of workers by making and keeping promises, they can't be expected to fulfil every expectation.

There must be a "trade-off", or balance, he says, between meeting employee expectations and achieving business goals.

It is essential, therefore, that the psychological contract, or workforce strategy, is consciously linked to the business strategy, he says. A failure to do so can lead to excessive turnover.

For example, if the psychological contract places too much emphasis on remuneration based on short-term performance in an industry that relies on the development of long-term client relationships, those relationships will suffer and output will be restricted.

If employee salaries are stymied as a result, Beames says, talented workers are likely to leave and pursue other opportunities.

But even if workers manage to achieve outstanding results in these circumstances there is still a big chance they'll flee, he notes.

When a psychological contract is built almost entirely on short-term economic factors, he says, attachment tends to be tenuous.

Recruitment phase critical
The responsibility for managing the psychological contract is spread between executives, HR personnel and line managers, Beames says.

How they engage with the recruitment process, he says, is particularly critical.

"It is important that candidates are moved... from one part of the recruitment and selection process to the next, without them uncoupling or disengaging," he says.

Managers, he says, must maintain intermittent contact with recruits and provide them with regular debriefs and updates.

"The goal is to unite parties into a longer term relationship," he says. "However, the relationship is fragile in these early stages, and simple violations of the script or conventions are sufficient to terminate it."

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