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368 THE PSYCHOLOGICAL CONTRACT

• These people have an inherent need to use their capacities and skills in a
mature and productive way.

• They seek to make their work more interesting, challenging, and meaningful.
• They thirst for a sense of pride and self-esteem.

The Psychological Contract

According to Schein, for these individuals to achieve these goals in the workplace,
and to obtain satisfaction from their work, depends to a large measure on two
conditions.

1. The degree in which their own expectations of what the organization will
provide them and what they owe the organization match what the organiza-
tion’s expectations are of what it will give and get.

2. (Assuming that there is an agreement on expectations) what is actually ex-
changed—money in exchange for time at work; social-need satisfaction and
security in exchange for work and loyalty; opportunities for self-actualization
and challenging work in exchange for high productivity, quality work, and
creative effort in the service of organizational goals; or various combinations
of these.

So here we have the essence of a Psychological Contract. And I can tell you
from experience that it works. I remember a time, back in the 1970s, when I was
requested to accept a new assignment, at the General Electric Company. My new
manager (someone whom I had known professionally and respected) invited me
to sit down with him and discuss our needs and expectations. He presented his
needs from my new position and what he expected. And he told me what he had
to offer for my fulfillment of these needs. He asked me what I felt that I had to
offer in this position and what I expected to get out of it. We negotiated a working
relationship that extended to me a greater than usual autonomy in return for my
acceptance of a new and challenging assignment. The relationship was based on
immediate trust and confidence in each one’s being able to deliver the goods—to
meet needs and expectations that were mutually agreed to. For me, it was the
best 2 years out of the 24 that I had at GE. For him, he knew that I would do
whatever it took to support the goals. Although he was my manager, it felt more
like we were partners.

Would this approach—the Psychological Contract—work today? Absolutely!
In today’s environment of greater respect for expert power and a period of low
unemployment, it is those managers that embrace this Psychological Contract
concept that will gain the trust and unreserved support of their subordinates. It