Psychological Contracts: Key to Sustainable Leadership Development

This essay explores the crucial role of psychological contracts in fostering sustainable leadership within organizations. It defines psychological contracts as the perceived mutual obligations between employers and employees, distinct from formal employment contracts. The essay discusses how sustainable leaders leverage these contracts to enhance employee engagement, improve productivity, and promote long-term organizational success. It highlights the importance of balancing expectations, addressing potential breaches, and creating a fair and supportive work environment. By understanding and effectively managing psychological contracts, sustainable leaders can cultivate a positive organizational culture that benefits both employees and the company as a whole. The essay concludes that maintaining a balanced psychological contract is essential for driving productivity, profitability, and overall organizational well-being, while also cautioning against the negative consequences of contract breaches on employee morale and team performance. Desklib offers a wealth of similar resources for students.

Phycological contract can help
in developing sustainable
leadership in organization

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Psychological contract a refers to recognition of responsibility from both parties in terms
of communication and behaviour. It is the one which provide information and remind for
potential impact to support productivity level on long term. It is also set of implicitly and
explicitly which is given promises that includes entitlement and duty between employee and
employer. Sustainable leadership refers to a adopting of responsible approach which can have
high impact on action on society along with environment. This may include a stakeholder group,
natural system and operation within limit (Lam and et. al., 2021). It also refers to a source of
competitive advantage for the organisation which create a opportunity with innovation
improvement and competitive advantage on long-term success. In this essay, there is discussion
about the understanding of psychological contract which can be effective and help in developing
sustainable leadership within an organisation or a team.
MAIN BODY
Within an organisation psychological contract includes a believes obligation, ambitions,
individual expectations as perceived by employer and employees. This was the effective concept
help to understand the employment relationship (Aboramadan and et. al., 2021). Understanding
of psychological contract allow constantly evolving working relationship that are refines
according to communication and behaviour which goes on between employee and employer. In
this, employee work effectively and inputs things like ideas, effort and commitment and
sacrifices for the company where employer provide him some specific benefit. Individual should
not confuse with the psychological contract and written employment contract. They are two
different things where employment contract refers to legal and building argument between two
parties. Whereas, psychological contract provides better relationship with feeling each others
expectations within organisation without any legal agreement.
There are various aspects of psychological contract which can include opportunity for
promotion, jobs, security, employees reputation in society and opportunity to learn and improve.
It also include supportive manager and perception which can contribute in positively to society,
perceived fairness of pay along with perception of internal processes (Patiar and et. al., 2020).
This may also include expectation to go above and beyond and perceived fairness in parks and
benefit package. There is need to understand that psychological contract is different than written

employment contract and it does not have a deal of influence on experience of work.
Psychological contract can include the employee act, behaviour and work which can influence
the perceived fairness with their employer (Murtagh and et. al., 2020). It also establish a
relationship which can act like a personal relationship with in own life. Psychological contract is
highly important in any organisation or within a team. This can allow to create better relationship
and understanding which can help in increasing and enhancing the productivity of employees.
When employees get some contract with the employer that it they may get promoted for face
very supports unity in future which includes different benefit for the employee such type of
contract can refers to a psychological contract.
Sustainable leadership plays an important role in balancing psychological contract within
an organisation. Effective leaders are the one who perform the psychological contract in efficient
way that can allow employer and employee to establish a better relationship with each other.
This can enhance the productivity of the organisation and perform various operations more
effectively (Ybema and et. al., 2020). Sustainable leadership allow to effectively deal with the
psychological contract within an organisation and influence employee to establish better
relationship with each other. This can provide high benefit to the both party where employer get
high quality productivity and employee may get promotion or other perks and benefits. This is is
not a employment contract where physical signature is necessary. They done by making beliefs
and trust where psychological contract can be done by the leaders to establish a better
relationship for performing various activity of the organisation to improve the quality and
productivity (Gordon, 2020).
Psychological contract is highly effective and used by the sustainable leader within an
organisation. This is the one through which a sustainable leader influence their workers or
employee to improve their performance. This may also influence them to work effectively and a
increase their productivity that can be effective and helpful through achieving where is rewards
or other benefits. This may include sustainable leadership which help in involving planning and
Preparing of succession. This is the one where leader can groom successor for continuing their
reforms and help to stay longer with an organisation (Schulze and et. al., 2019). This can help to
increase their experience and learning these skills which are highly effective with an organisation
to improve the productivity and quality. Sustainable leader can also provide benefit to every
individual within their organisation. They should ensure that every individual or employee who

is working within the organisation should get benefited differently. Through using and
understanding of the psychological contract may allow to understand every employee
requirement that can helpful to influence and motivate them to work more effectively. This can
be effective and have the potential to improve employees performance and quality of their
service. This can also helpful and influence employees within an organisation to improve their
productivity more efficiently (Sandhya and et. al., 2020).
Show using the psychological contract a sustainable leader should maintain improvement
and also take care about the sustainability concept with an organisation (Diab-Bahman and et.
al., 2020). This can have high impact on taking care about society and environment. Reducing
the psychological contract, sustainable leadership provide an intrinsic reward with some offering
to external incentives that can help to motivate employee for performing their activity in future.
This system provide better opportunity for every individual and help to improve the productivity
of the organisation. It also encourage people to improve their skills and knowledge which can be
effectively used by them in personal or professional way (Karatepe and et. al., 2021).
Sustainable leadership plays an important role with the understanding of psychological
contract within an organisation. This can be effective and includes feelings of employees that
need to be appreciated effectively. Employee may face better treatment by the employer
according to their job quality (Avelar and et. al., 2019). Through understanding the
psychological contract which is highly effective and influence employee to perform well at the
organisation. This can be effective and help to improve the quality and productivity of the
organisational product. It can also impact various activities for operations within organisation.
Every individual should ensure that employee and employer have better relationship where they
may get information regarding others work. This can influence the business organisation to
improve their productivity through to include in employee for higher participation. Balanced
psychological contract includes member which can provide contact in fair. It can perform better
at work will provide commitment to company objective and provide go to extra mile.
Psychological contract enabling employees a to get a relationship with their employer. This can
be effective and provide better improvement in working role. This also provide a benefit to
employer which can a level them to evolve with this (Da Costa and et. al., 2019).
For example- There are various opportunities for employee which enable them to get the
better growth over and above job security. This is effective and allowed them to work a extra that

enable them to provide a better relationship with their employer. This can also enable them to get
a priority at their workplace. This can be effective and ensure that they provide better
relationship and have better outcomes during their appraisal time. This can also enable them to
learn various thing which includes better growth and opportunity as personal and professional
way. Due to this, employer get benefit and value the employee more than others. Through this,
these employee get beneficial and assets for the organisation which enable the business
organisation to get high benefit from it (Kim and et. al., 2020).
When an employee engaged in psychological contract when they like to get treated fair.
In this, they have also some expectation to receive back in return. When this is not possible, then
employee mat get feeling demotivated or under-appreciated. This can also impact the
productivity of employee which may also impact the employers. In this, there is need to take care
about the psychological contract in effective way. There should not be any type of and breach in
psychological contract. When such type of psychological contract is breached, this can create
problem for organizational productivity and can have the risk to decrease the overall benefit for
the organisation. Imbalanced psychological contract also create a negative impact on team
members. During working as a team, there is a psychological contract between every member of
team where the work together and help in each other's work. Due to imbalance in psychological
contract, this create a conflict between team member and it decrease the support of a treating
each other and impact the overall outcome of the team (Li and et. al., 2020).
There is also need to ensure that psychological contract should not be breached . Wen this
type of psychological contract breach with an organisation, can create very real consequences.
For example- when any individual is higher at the company and told that they will get extra
benefit are promoted easily but they need to work at the lower salary in initial time. Such type of
psychological contract has been deal with the employee and employer. So employee work
effectively in their organisation and provide their best and provide high benefit to the
organisation. Employee get expected that he can perform well for the organisation and provide
the best deal for the organisation and increase the productivity and profitability of the
organisation. Their employee has also some expectation from employer that in a due to his work
hard and continue as achievement get allow for higher benefit from the manager or organisation.
It also expect that there could be promotion or increment in their salary but due to any reason
employee does not get promoted or increment in their salary (Spiker and et. al., 2020). This can

create a bridge in the psychological contract. Due to this, employee get irritated and demotivated
at the same time. In this, employee can impact their work and may create various difficulty for
the business organisation. Through decreasing, their productivity at the organisation employee
may also discontinue the work at the organisation which may create negative impact on business
organisation because that employee was productive employee at the organisation. They provide
high benefit now this type of breach in a psychological contract created high difficulty for the
business organisation which created decrease in the productivity. Due to not fulfilling the
psychological contract this also creates negative impact on employee that the employee does not
get what was expected from the employer at some specific time (Durst and et. al., 2020).
CONCLUSION
From above discussion, it can be concluded that psychological contract play an important
role in in creating a better relationship between employer and employee within and business
organisation. This create high impact and positive response to the organisation with increasing
productivity and profitability. Here, sustainable leadership plays an important role in creating the
psychological contract between employer and employee. It can enable them to guide more
effectively that can enable to improve the employee performance and provide a positive impact
on higher productivity of business organisation through enabling this type of productivity.
Through creating psychological contract, it allow creating a some expectation from employer by
the employees. This may include appreciation to get motivated to perform more productive work
at the same organisation. This can enable them for their personal and professional growth. In
this, breach in psychological contract and creative consequences with and employer and
employees. This may also impact the organizational productivity and profitability. In this essay,
there is a discussion about it understanding of psychological contract within business
organisation through including sustainable leadership.

REFERENCES
Books and Journals
Aboramadan, M. and Karatepe, O.M., 2021. Green human resource management, perceived
green organizational support and their effects on hotel employees’ behavioral
outcomes. International Journal of Contemporary Hospitality Management.
Avelar, A.B.A., da Silva-Oliveira, K.D. and da Silva Pereira, R., 2019. Education for advancing
the implementation of the Sustainable Development Goals: A systematic approach. The
International Journal of Management Education, 17(3), p.100322.
Da Costa, B.B. and Da Motta, A.L.T., 2019. Key factors hindering sustainable procurement in
the Brazilian public sector: A Delphi study. International Journal of Sustainable
Development and Planning, 14(2), pp.152-171.
Diab-Bahman, R. and Al-Enzi, A., 2020. The impact of COVID-19 pandemic on conventional
work settings. International Journal of Sociology and Social Policy.
Durst, S. and Zieba, M., 2020. Knowledge risks inherent in business sustainability. Journal of
cleaner production, 251, p.119670.
Gordon, S., 2020. Organizational support versus supervisor support: The impact on hospitality
managers’ psychological contract and work engagement. International Journal of
Hospitality Management, 87, p.102374.
Karatepe, O.M., Rezapouraghdam, H. and Hassannia, R., 2021. Does employee engagement
mediate the influence of psychological contract breach on pro-environmental behaviors
and intent to remain with the organization in the hotel industry?. Journal of Hospitality
Marketing & Management, 30(3), pp.326-353.
Kim, W.G., McGinley, S., Choi, H.M. and Agmapisarn, C., 2020. Hotels’ environmental
leadership and employees’ organizational citizenship behavior. International Journal of
Hospitality Management, 87, p.102375.
Lam, L., Nguyen, P., Le, N. and Tran, K., 2021. The relation among organizational culture,
knowledge management, and innovation capability: Its implication for open
innovation. Journal of Open Innovation: Technology, Market, and Complexity, 7(1),
p.66.
Li, W., Bhutto, T.A., Xuhui, W., Maitlo, Q., Zafar, A.U. and Bhutto, N.A., 2020. Unlocking
employees’ green creativity: The effects of green transformational leadership, green
intrinsic, and extrinsic motivation. Journal of Cleaner Production, 255, p.120229.
Murtagh, N., Scott, L. and Fan, J., 2020. Sustainable and resilient construction: Current status
and future challenges. Journal of Cleaner Production, 268, p.122264.
Patiar, A. and Wang, Y., 2020. Managers' leadership, compensation and benefits, and
departments’ performance: Evidence from upscale hotels in Australia. Journal of
Hospitality and Tourism Management, 42, pp.29-39.
Sandhya, S. and Sulphey, M.M., 2020. Influence of empowerment, psychological contract and
employee engagement on voluntary turnover intentions. International Journal of
Productivity and Performance Management.
Schulze, H., Bals, L. and Johnsen, T.E., 2019. Individual competences for sustainable purchasing
and supply management (SPSM): A literature and practice perspective. International
Journal of Physical Distribution & Logistics Management.

Spiker, M., Reinhardt, S. and Bruening, M., 2020. Academy of Nutrition and Dietetics: revised
2020 standards of professional performance for registered dietitian nutritionists
(competent, proficient, and expert) in sustainable, resilient, and healthy food and water
systems. Journal of the Academy of Nutrition and Dietetics, 120(9), pp.1568-1585.
Ybema, J.F., van Vuuren, T. and van Dam, K., 2020. HR practices for enhancing sustainable
employability: implementation, use, and outcomes. The International Journal of Human
Resource Management, 31(7), pp.886-907.