State of the psychological contract : Manager and employee perspectives within an Australian credit union

Purpose – To identify and describe work environment conditions that give rise to a shared or different state of the psychological contract for managers and employees. Design/methodology/approach – Semi‐structured interviews conducted with seven managers and 12 employees within an Australian credit union. Questions relate to the causes (work environment conditions) and content (salary, recognition and rewards, trust and fairness, open/honest communication) of the psychological contract. Comparative analysis techniques identify and contrast psychological contract categories of managers and employees. Findings – Although managers and employees shared similar responses as to the state of the psychological contract, they attributed different causes to these states. Managers tended to construct rational explanations and emphasise resource constraints and financial considerations, whilst employees constructed emotional explanations and attributed this situation to an unfair, uncaring or distant management. Employees regarded the Staff Consultative Committee and open‐door policies as “symbolic acts” rather than genuine attempts to give employees a voice in the company. Practical implications – Aligning the psychological contract espoused by management more closely with that upheld by employees requires managers to adopt more personal, face‐to‐face communication strategies. The removal of status‐related barriers to communication places managers in a better position to explain to employees how the organisation can meet (or not) specific contract expectations and obligations. Originality/value – Paper provides interesting insights into how contracts form within the context of work environment, HRM policy and practice, and cultural factors – work context factors largely ignored by psychological contract researchers.