Differences Between Contracts of Employment and Psychological Contracts

UGB162 Introduction to Human Resource
Management & Learning and Talent
Development Assessment 2020

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
1) Key Differences Between Contracts of Employment and Psychological Contracts...............3
2) Three motivation content theories and their role in workplace...............................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Human resource management relates to the strategic business operations of effectively
managing the various distinct operations of all the employees and human resources that a
business organisation possesses in order for the business being able to operate successfully
within its operational industries and being capable of accomplishing the organisational goals and
objectives set by the business organisation. Human resource management function of a business
organisation involves various individual roles and responsibilities such as effectively recruitment
and selection of employees from the external environments, training and development, talent
management, maintaining motivation and job satisfaction amongst employees etc. (Rayner,
2018). This report analyses the differences between contract of employment and psychological
contracts within a given business organisation and evaluates the importance of psychological
contracts in businesses today. Further the report evaluates three main content motivational
theories to be used by business organisations.
MAIN BODY
1) Key Differences Between Contracts of Employment and Psychological Contracts
The basic interactions in a business organisation between the employee and the employer
are dictated by the professional relationship that exists between the employer and the employee
within the business organisation. The employment relationship is a contract that is mutually
created by two parties towards both parties voluntarily agreeing to make exchanges to some
promises. If the exchange agreements within the contract is fulfilled by both the interacting
parties, then they both stand to gain benefits from the created contract, and if not they both
parties stand to lose.
An employment contract is always created by mutual agreement between an employee
and the employer of a business organisation. The employment contract is created when the
employee has been selected for a specific post or job description within a business organisation
and has agreed to the terms and conditions of the given job position. Such employment contracts
may require extensive legal paperwork done by the business organisation or simply a word of
mouth interaction between the employer and the employee (Sandhya and Sulphey, 2020). The