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The psychological contract challenges managers.

Managers and administrators or employers in the private and public sector have the responsibility of managing more than one 'contract" in order to carry out or facilitate their-organizational goals. These contracts include:

the regulatory contract;

the union bargaining agreement or

the individual labor contract;

the psychological contract.

The regulatory contract is the statutory and common law obligations of employers owed to their employees.

Federal examples: the federal Occupational Health and Safety Act requires that employers provide employees a reasonably safe work environment; Title VII of the Civil Rights Act of 1964, as amended, mandates that employers not discriminate because of race, color, religion, sex, or national origin; the Age Discrimination in Employment Act prohibits employer discrimination based on age; the Fair Labor Standards Act of 1938, as amended, covers minimum wages, overtime pay, equal pay for equal work, and child labor standards.

State statutory and common-law obligations require that the employer be covered by state workers' compensation and unemployment insurance laws. Recently, the Michigan Handicappers Civil Rights Act was amended, strengthening protection for the handicapped in the workplace.

These declarations of federal and state policy impact employees in all public and private organizations and the effective administration of these policies is a critical responsibility of managers and administrators at all levels.

The collective bargaining agreement or the individual labor contract covers wages, hours and conditions of employment for a given time frame.

Through collective bargaining, unions seek to obtain such objectives as:

* improving wages, fringe benefits, working conditions;

* protecting members' job interests; establishing effective grievance procedures that include arbitration as the terminal step.

Collective bargaining is seen by some as simply a mutual problem-solving process for employment problems.

Negotiating and administering a bargaining agreement or an individual labor contract, like handling a regulatory contract, is a critical and obvious responsibility of managers and administrators. Psychological Contracts

A psychological contract (PC), unlike regulatory and labor contracts, is less obvious and, therefore, often overlooked. This omission is the focus of this essay.

These contracts imply an unwritten act of expectations operating at all times between each employee of an organization and its managers or administrators. The currency of the PC is unique. It is not traditional compensation. Rather, it involves intangibles such as respect, freedom from harassment, recognition, continuous and updated communications, opportunities-to-grow and develop, and an opportunity for the employee to utilize personal talents and creativity. The existence of the PC precludes money as the prime motivator for high-quality performance.

Because every employment relationship includes an implied PC, the thesis advanced here is that employees expect PCs to be honored just as other contracts are. Of course, the contractual obligations are mutual. To the extent that the employee's PC is honored, the employer has the fight to expect both high-quality work and high productivity. This is the exchange, the quid pro quo. Productivity, thus, is a state of mind.

When an employee perceives that his or her PC is being honored, it is more likely that the employee's performance is optimal. Conversely, if an employee perceives that his or her contract is being violated or halfheartedly honored, the employee's performance is at the low end of the range.

The PC is not static: it is dynamic. It is an evolving set of mutual expectations where the actions of the manager influence the behavior of the employee, and the actions of the employee influence the behavior of the manager.

The term manager as used here includes the hierarchy of management from the chief executive to the immediate line supervisor-the employees expectations are shaped by the managers with whom they have the closest and most continuous interaction. The interaction is continuous, beginning when the employee is initially employed and ending only upon retirement or termination. It is the interaction between manager and employee that shapes all expectations. As a result, the substance of the PC is as unique as the participants involved.
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Title Annotation:Management Matters; part 1
Author:Kruger, Daniel H.
Publication:Modern Casting
Date:Sep 1, 1991
Previous Article:Newest division promotes EPC.
Next Article:1991-1992 American Foundrymen's Society, Inc. Chapter officers and directors.

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