The Psychological Contract: An Essential Element in Recruitment Success

Why the Psychological Contract Matters in Recruitment

You've applied for a fantastic opportunity, passed all the interviews, technical assessments, and psychometric tests. You’re confident, excited about the role, and can already see yourself making a meaningful impact on the business. The final step? A meeting with senior leadership—the divisional manager, executive director, or even the CEO. You’re impressed with the company's growth, global exposure, and the team culture that promises pizza Fridays and an open-door policy. By the end of the conversation, you’re sold. The handshake seals the deal, and the leader reassures you, "Looking forward to working with you, my door is always open."

Fast forward to day one. After carefully planning your commute, figuring out the perfect outfit, and prepping yourself to make a great impression, you walk in to be greeted by… confusion. The receptionist doesn’t know who you are, the HR learner is equally puzzled, and after a few calls, your new manager arrives to check you in. Your desk still holds the previous occupant’s belongings, and the relaxed atmosphere you were promised? It’s nowhere to be found.

Suddenly, that initial excitement begins to fade. Your first team meeting reveals not the exciting company developments you were expecting, but instead a breakdown of miscommunications and frustrations. There’s no pizza either. You start to wonder—what happened to the "open door" policy? And why do you already feel like you made a mistake?

This scenario highlights something critical yet often overlooked in recruitment: the psychological contract.

What is the Psychological Contract?

The psychological contract refers to the unwritten set of expectations between an employer and an employee. It’s not about the legal terms in your employment contract, but rather the unspoken, often intangible promises that guide your working relationship. These expectations shape how each party perceives their mutual obligations, creating a sense of trust, respect, and fairness.

Throughout my career working with employers, candidates, and assignees across various sectors, I’ve seen first-hand how a positive psychological contract fosters longevity, stability, and growth. When the psychological contract is strong, it creates a sense of security and trust, benefiting both parties. When it’s broken, it can lead to disengagement, low morale, and even high turnover.

How the Psychological Contract Impacts Recruitment and Retention

In recruitment—whether internal or through external agencies—the focus often revolves around visible aspects like job descriptions, salaries, and qualifications. However, the psychological contract plays an equally significant role in employee engagement, retention, and organizational success. Here’s why it matters:

• Employee Engagement: When employees feel that their expectations are being met, they’re more engaged, productive, and aligned with the company’s goals. A breach in this contract can quickly drain that enthusiasm.
• Retention: Hiring new employees is costly. A broken psychological contract can lead to early attrition, as employees who feel their expectations aren’t met are more likely to leave.
• Company Reputation: In today’s transparent world, word spreads quickly. A company known for failing to deliver on promises will struggle to attract top talent, making recruitment harder in the long run.

The Role of Recruiters in Shaping the Psychological Contract

As an internal recruiter, the company’s reputation, culture, and employee relationships are crucial. Companies that deliver on promises of growth and recognition generally have positive psychological contracts. But when there’s a gap between what’s promised and what’s delivered, employees may feel misled or undervalued.

For external recruiters, the psychological contract involves a three-way relationship between the employer, the recruiter, and the candidate. Transparency and clear communication are essential to align expectations on all sides. Misrepresentation of a company’s culture, values, or opportunities can lead to mismatches, early attrition, or disengagement.

How to Build and Maintain a Strong Psychological Contract

To ensure a positive psychological contract in recruitment, I recommend focusing on these three key steps:

1. Set Clear Expectations from the Start: Be transparent from the first interaction. Ensure candidates have a realistic understanding of the role, company culture, opportunities, and what success looks like.
2. Follow Through on Promises: Deliver on what was promised during recruitment. Whether it’s providing feedback by a certain date or offering development opportunities, consistency builds trust.
3. Maintain Meaningful Communication: Keep the dialogue open. Regular check-ins with employees and candidates help address any gaps in expectations and ensure both sides stay aligned.

The psychological contract is not static; it evolves as the employee’s journey progresses. Regularly reviewing and adjusting expectations ensures a long-lasting, positive relationship.

In Conclusion

The psychological contract is a crucial, often overlooked element in recruitment and employee retention. Whether you’re recruiting internally or through an external agency, understanding and honouring this implicit contract can be the difference between hiring someone who thrives or someone who disengages and moves on. In today’s competitive landscape, focusing on the psychological contract isn’t just good practice—it’s smart business.

In the end, ensuring that the excitement and enthusiasm of day one last far beyond the handshake is key to building a thriving, engaged workforce