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Why do you think it is important for organizational change agents to understand psychological contract theory?
Psychological contract theory plays a significant role in employment related concerns of organizations namely relationships, communication and society. It was introduced in 1960 by Chris Argyis and Edgar Schein in their organization and behavioral theories (Holbeche, 2006). Psychological contract theory focuses on both way relationship between an employee and employer which refers to the way employer treats their subordinates or followers and the zeal with which employees carry on their tasks (Christeen, 2009). Though the concept seems simple but it gets complex in association with change management and large scale organizations. This theory is still getting explored hence is dynamic and fluctuating in nature. This is not a process or tool rather a philosophy. Thus, psychological contract can be defined as a dynamic and reciprocal relationship which exist between employer and one or multiple employees and is not any form of physical contract or legal document (Baptiste, 2008).
