The future of the employment deal: What will the ‘new normal’ look like in a post-pandemic world of work?

IES Perspectives on HR 2021

Lucy D |   | Institute for Employment Studies  | Jul 2021

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The psychological contract represents the idea of an enduring mental model of the employment relationship. Each of us is considered to have, in our minds, a largely stable understanding of what to expect from our relationship with our employer. This mental model extends beyond formal, contractual rights and obligations to aspects of the relationship not written down, its intangibles, and ultimately issues, such as trust and fairness.

In such a period of upheaval, as created by the pandemic and its likely aftermath, it seems reasonable to suggest that we will all be looking for signs of what the ‘new normal’ is, and making up our own stories about what it should look like. It is in this context that Human Resources (HR) would be well placed to start an open and honest dialogue about what this ‘new normal’ looks like, and for HR to shape collaboratively with employees a shared understanding of what an employment deal may broadly resemble. In the absence of a conversation, the likelihood is that employees will reinvent their own psychological contract without HR’s input, and that is a path likely to lead to divergent expectations and disappointment on both sides.

This article looks at:

  • What is the psychological contract?
  • Why is it important now?
  • What difference does it makes and why you should care?
  • How is it changing or may be likely to change?
  • And, finally, and most importantly, what is HR’s critical role in shaping a future ‘deal’ that is equitable and enables high levels of motivation and performance?

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