The new psychological contract

According to the CIPD, the traditional employee psychological contract is generally described as an offer of commitment by the employee in return for job security provided by the employer  – or in some cases the legendary ‘job for life’.  An employee joined an organisation and stayed for many years, working his or her way up the hierarchy.

The recession of the early 1990s and the continuing impact of globalisation are alleged to have destroyed the basis of this traditional deal since job security is no longer on offer. Very few organisations claim to offer careers for life any more. Organisations are flatter and need more flexibility, which means they cannot offer long-term career advancement in return for loyalty, organisational commitment, and good performance, which used to be part of the psychological contract.

A new psychological contract has emerged.  Employees still want job security, that much hasn’t changed.  What has changed is that now security comes from being employable rather than being employed.  Employees today offer high productivity and commitment while with their employer.  By contrast, employers offer an improved employability: employees can develop and practise skills in demand while employed, which gives them a better chance to find a new job when the current employer no longer requires them.

Responsibility for career management has moved from the company to the individual: modern employees do their own career management. Success is now seen as achieving personal goals, rather than attaining the lofty heights of an organisation’s hierarchical structure.  Although responsibility now rests with the employee to manage their own individual careers, the reality is that most employees do not do this.  Research suggests that most people rely on luck or random opportunity for their career development, as few as 25% do any actual planning.  Those who practice career development need to create their own opportunities to suit their own personal preferences.  This may involve working long hours, seeking guideance from more experienced employees and building strong network relationships.

However, studies show that most individuals are not very good at career self-management.  The common lack of personal drive in this area is possibly why organisations that offer career development support to their employees are popular with potential recruits.  A company that supports the development of its employees will garnish respect, because it is seen to attend to employee needs, and not just the needs of top management.  As a result, company driven career management encourages commitment, motivation, performance and reduces turnover, all good outcomes for the company.

Is this new psychological contract alive and well in your organisation?