The paper "Trust and the Psychological Contract" is a perfect example of management literature review. Trust is an essential factor in any relationship and hence it is an important aspect of the organizational relationship between the employees and the employer. Trust plays a big role in the psychological contract because the presence of trust between employee and the employer results in an honorable psychological contract. Basically, the psychological contract refers to a series of mutual expectations and needs arising from an organization which forms the individual relationship between the employee and the organization (Rousseau, 1995).
Therefore, a psychological contract elaborates the positive benefit which both parties will gain if each does his or her part and thus the relationship will be mutually beneficial. Failure of one party to carry out its obligation results to breach of the psychological contract and this can result to reduced team performance while upholding the promises/obligations in the psychological contract can result to high team performance because team members essentially feel motivated to perform (Bolino, 2008). Trust Theorist Aristotle hypothesized that relationships whose foundation trusts are more honest and trust helps in the development of human beings.
Trust can, therefore, be defined as the ability and willingness to meet individuals and relate freely with such individuals without any mistrust or suspicion (Aristotle, 2004). In an organization, trust forms the basis of an individual’ s personality and performance within an organization set up and trust is divided into three classes, namely: simple, blind and authentic trust. In a simple trust, there is no suspicion whatsoever, no scrutiny or justification while in a blind trust is where an individual has been betrayed but refuses to acknowledge the betrayal while authentic trust entails an individual being aware of the risks involved in trusting and willing to confront distrust and overcome it.
It is the authentic trust which leads to productive organizational relationships (Coyle-Shapiro, & Neuman, 2004). Psychological contract The definition of psychological contract first originated in the work of organizational and behavioral theorists, Chris Argyris and Edgar Schein in 1960s and from then, numerous theorists have come up with various definitions of the psychological contract. A psychological contract is an implicit understanding of the mutual responsibilities that an employee and his/her employing company own to one another.
The psychological contract is comparable to the formal, legal employment contract that indicates the formal obligations of employer and employee within the employment relationship (Herriot, 1997). Shields (2007) explains that a psychological contract fills in the gap that the formal legal employment contract to make up a more inclusive account of the entire range of mutual responsibilities between employer and employee. Rousseau (1995) on the other hand describes the psychological contract as individual beliefs that the organization shapes, in regard to the terms of an exchange arrangement between the employee and their organization.
These beliefs can result from factors like explicit promises made between an employee and his/her manager, interpretations of past exchange patterns as well as observations of others’ experiences. Transaction theory supports this argument because it upholds an exchange arrangement between parties. For instance, in an organization, employees may expect certain treatment from the organizational management in exchange for their job commitment (Shields, 2007).