From the Employment Contract to the Psychological Contract : An Essential Evolution in Professional Dynamics

By Tamara Morgado , Talent Agent | Managing Director, Geneva | Head of Legal, Compliance, Risk & Tax practice Switzerland | Lawyer Lincoln

The employment contract is the legal foundation of the relationship between employees and employers, defined by precise legal terms and detailed clauses. However, throughout my career as a lawyer - since 2005 -, I have found that the real stakes of these relationships often surpass the scope of these formal documents. The tangible emotions in labour court proceedings have reminded me of those felt during a divorce, revealing a profound human dimension in the world of work.

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The psychological contract, an overlooked dimension

Denise Rousseau, a professor at Carnegie Mellon University, introduced the concept of the psychological contract, describing the often implicit mutual expectations between an employee and their employer. These expectations include tangible elements like compensation, job security, and work-life balance, forming from the recruitment process and evolving over time. This invisible yet powerful contract plays a crucial role in the quality of the working relationship.

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Psychological safety at work

Amy Edmondson has highlighted the importance of psychological safety in teams, allowing members to speak freely, take risks, and learn from their mistakes without fear of negative judgment. This notion is essential for fostering innovation and employee engagement by creating a work environment where communication is open and based on trust.

Enhancing collaboration through mutual understanding

In my current practice, I see the importance of creating safe spaces for sharing constructive feedback. At @Lincoln, we value the implementation of practices that strengthen the culture of psychological safety, convinced that recognising and respecting the psychological contract is paramount for effective and lasting collaboration. Recruitment success relies on aligning values and expectations, preventing misunderstandings and potential conflicts.

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The evolution of professional relationships

The transition from the formal employment contract to the psychological contract reflects an evolution in professional relationships, highlighting the need to understand and address human and emotional needs at work. The current challenges of the working world require a holistic approach, recognising the importance of unspoken expectations and psychological safety for the well-being and performance of employees.

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Conclusion : towards a new era of work

The increasing importance of the psychological contract and psychological safety marks the transition to a new era in professional dynamics, where recognising human needs and creating a caring work environment have become priorities. Investing in understanding and respecting these intangible aspects is crucial for building enriching and lasting work relationships, promoting both professional and personal fulfillment for every individual. As professionals, recognising and valuing these unwritten contracts is key to successfully navigating the complexity of modern work relationships, thus contributing to a sustainable and authentic collective performance.