Psychological Contract or Covenant: The Coaching Challenges

As coaches who work within an organizational context, we are often asked to assist our client in addresses fundamental and challenging issues as motivation, sustained commitment, workplace disappointments and psychological burnout. While many factors are at play in addressing these challenging concerns, I find that Edgar Schein’s concept of psychological contract often can provoke rich insights for my clients. I would suggest that the extension of Schein’s concept—which I identify as the psychological covenant — often yields even greater insight, especially if there are powerful emotions (especially of anger) underlying the concerns being addressed by my client.

In this essay, I summarize Schein’s concept, relate it to several of the more basic notions about workplace motivation, and end with the introduction of psychological covenant as an even deeper (and often unconscious) aspect of a client’s lingering concern about the worth assigned to her work and the way in which she justifies her commitment to long hours of labor in her organization.

The Psychological Contract

The psychological contract, according to Schein, is an implicit agreement reached between an employee and her organization. As a psychological event, this agreement holds strong emotional implications (Dunahee and Wrangler, 1974):

. . . it is a psychological agreement between two parties, and it is a much broader concept than the traditional use of the word “contract” in industrial relations. It is a reality that has a great many implications for productivity and individual satisfaction. This contract is concerned with the organization’s expectations of the individual employee and the employee’s attempts to meet those expectations. It also includes expectations of the employee, and the employer’s continuing willingness to satisfy his needs.

The dynamic quality of the psychological contract means that the individual and organization expectations and the individual and organization contributions mutually influence one another.. . . This contract is not written into any identifiable formal agreement between employee and organization, yet it operates as powerfully as its legal counterpart. Furthermore, it is not static; it is an evolving set of expectations. Thus, neither party to the transaction, since the transaction is such a continuing one, fully knows what he wants over the length of the psychological contract, although each acts as if there were a stable frame of reference which defines the relationship.