Nigel Cassidy: Closing the yawning gap between what you need from employees and what they delivery or expect from you in return. It's all about that unwritten psychological contract. I'm Nigel Cassidy and this is the CIPD podcast.
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Now, what most shapes our loyalty and engagement at work? It's 65 years since a Yale and Harvard business prof, Chris Argyris, won himself a place in a thinker's hall of fame. He coined the term psychological contract. It's the invisible handshake; the mutually understood nature of the employer employee relationship that ultimately dictates how hard people are prepared to work in exchange for the support they can get one-to-one in return.
Now, all this stuff is tricky because unlike your actual contract of employment, nothing is written down and those terms will inevitably change with the times and shifting employee expectations of values. So, what goes wrong and what can you do when either party feels let down and that implied contract has been breached? How can you balance responding to individual expectations with more pressing business needs? Well, with me, two people with clear ideas on how understanding and honing the psychological contract is one of the keys to great staff engagement. Patricia Hewitt is founder and MD and Haylo HR and Chief Executive at the mediation service Resolution at Work. Hi, Patricia.
Patricia Hewitt: Hi, thanks for having me.
NC: And Nelli Rowsell is people manager at Advantage Smollan, a global provider of outsource sales and marketing for retailers and consumer good companies. Hi, Nelli.
Nelli Rowsell: Good morning, Nigel.
NC: So just for starters, I'd be fascinated to know is there any non-negotiable on your personal list of job requirements, Patricia?
PH: I suppose I've got a proper answer, a grownup answer, and a fun answer. (Laughter) So my grownup answer would probably be psychological safety. So, I need to be in environments where I can raise concerns, where I can ask silly questions or where I'm not going to be judged. That's super important to me and obviously wouldn't be within your contract of employment, and then I suppose more fun answer, food is really important to me. So, if I'm…
NC: Okay.
PH: Working onsite, I need to be near places that have got good-quality food, and obviously that's not in your contract of employment too.
NC: What about you, Nelli?
NR: Well, I don't think I've got a fun answer, but I think my grownup answer, just mirroring what Patricia said, is probably the flexibility and being trusted to do the job that I know I can do. You know, micromanagement, anything like that would be a real issue for me, so just being able to work in the way that I think will deliver the best return obviously for the business.
NC: Okay, well we'll probably touch a bit more on some of those things in a minute, but Patricia, let's just talk a bit about what people want. I mean, once it was all about long-term job security, wasn't it, maybe but a steady promotion in exchange for loyalty. Now people want this flexibility that Nelli mentioned, autonomy perhaps. They want that contract to reflect their values, and I wonder if this is what's at the heart of the problem, that leaders and managers can't deliver on rising expectations.
PH: Phwoar, that's a really good question. I think Covid has shifted things quite considerably with the psychological contract and I think where we once would've seen working from home as a bit of a perk and a treat, now it's something that we just expect as standard, right, and if we don't get that it feels like that contract's kind of been breached.
I think there's probably… and obviously I'm not trying to tar all leaders with the same brush, but I think there are quite a lot of leaders who are stuck in that place of we have to be physically in the workplace, and that kind of causes a bit of an issue with the psychological contract because people don't want that anymore, right? We want to be at home; we want to have that… we want to be trusted. We don't want to be micromanaged in the way that Nelli described. So I'm not sure if I've answered your question there, but I think things have kind of shifted quite a bit and now we're after that flexibility, now we want to be trusted more, now our work life balance looks different, and I think companies need to step up to be able to manage that.
NC: And in fact, Nelli, when we were talking just before, you were suggesting that that very change because of Covid, the fact that some people have moved, is causing specific problems because people's expectations have moved faster than the ability of their companies to deliver on those.
NR: Yes, absolutely. I think, so for me, the first, kind of, time I've heard about the psychological contract was probably around 2006 when I did my CIPD qualification, and I think it's changed significantly over the years. So, what we're finding at the moment, so we, for example, there is a rise on flexible working requests. There is a change to working compressed hours, you know, part time, working from home more than, you know, one, two, three days a week. So, the way the business then follows through doesn't always sit with the expectations of the colleague or an individual is not suitable for their circumstances at the time.
So, it's making sure that you address each request obviously, each situation, in the way that suits that individual. So for me, that kind of tailored approach is the way the business can effectively catch up and ensure that clearly not one size fits all in these circumstances.
NC: Trish, I was talking to a friend who's a head teacher. She said the actual job contracts she issues tend to be much longer and more prescriptive now because of the psychological contract, if you like. Once staff would accept, I don't know, playground lunch duties, afterschool duties. Now they must be specified or people won't do them, and then I was thinking about, you know, the successive generations, X, Y and Z. They've come into the workplace with more red lines. You know, they guard their personal lives, their mental health very carefully, or to put it another way, they're more transactional. You know, this is what I'm paid for. So, it is harder to get this commitment to continue.
PH: Yeah, definitely, and I suppose I always… when I look at the different ways that generations interact, I suppose I always find that quite a difficult concept because I think people are individuals, right, and whilst you might fall into a certain bracket in terms of generations, we all behave differently. I'm 18 in my head but not in my body. (Laughter) And what I want as an individual is different, right.
So yeah, I think having more prescriptive contracts is really important but when it comes to psychological contract, we're talking about the way that we treat people, right, and the unseen stuff and culture, effectively. I'd say it's important that organisations fix that part as well as have pretty robust contracts of employment, but you can't write every single thing down, right.
NC: No, and so Nelli, it's difficult, isn't it, because somebody may perceive that a promise wasn't fulfilled. Maybe they had been led to believe there would… there would be promotion or more pay, but that was never an explicit promise. So, I mean in HR you may find yourself trying to change the basis of a contract that doesn’t exist in the first place.
NR: Absolutely. So, we often deal with situations where, you know, there are contractual points that haven't been in place in reality for years, right. So, there's been, you know, custom and practice, implied term, and then a new manager, say, comes in, they're trying to change it and the employee clearly is not very happy. So, I think the kind of, clear communication as to any reasons for change, if that change in fact is required, are extremely important.
And we have, just going back on the contracts, we have started to be, kind of, a lot more prescriptive, for example, in terms of location, right. So if you're working from home, for instance, and we issue a home-based contract, we specify that if you were to move, you'll have to notify the business and the reason for that is that we understand that the circumstances, things may change, but we don't want colleagues moving significantly far away and then having that expectation that the business will foot the bill for them to travel to the office.
So, I think it's just moving in with what's required for each colleague individually, but equally, you know, making sure we treat everyone fairly and equitably.
NC: I wonder, Trish, if there are kind of red flags for, kind of, seeing this relationship maybe isn't all it should be. I mean, what would you say are the strongest signs that the contract is breaking down or needs repair?
PH: I guess I'd probably point to something that Nelli said originally in terms of micromanagement and, kind of, a lack of clear transparency. I think that's a really key thing where organisations feel they need to be on top of you and also at the same time are not being clear about why or how they're doing things. I think that's a real red flag.
Equally, I think your classic things, turnover, if people are leaving on a regular basis that probably is indicating something. It might be indicating different things though, and maybe resistance to change, bit equally, as humans sometimes we are generally resistant to change, bit people tend to support what they help to create. So, if you are being transparent and speaking to people, then there shouldn't be so much resistance. I'd probably say those three things.
NC: So, the psychological contract is clearly not working. It's about lost trust. I just wonder if I could ask each of you briefly how you rebuild that trust?
NR: For me, probably starting from back from the basics, starting with clear communication, starting with ensuring that if you, you know, make any promises on whatever level that may be, and that may be something very, very small, baby steps in ensuring that trust builds up.
PH: I think a really important thing to do is acknowledge when there's been a breach of trust, if I'm really honest. I think I've worked in a lot of organisations where people don't acknowledge it. We skirt around it and it just, kind of, gets worse and worse. So, I think acknowledging that in the first place is really important and being able to put your hands up, regardless of what level you're at. I think people have a lot more respect for people who say, "Do you know what? This has gone wrong."
So, acknowledge the breach or the issue, and I think just work through it transparently. Like, talk about it, like, "How do we rebuild stuff?" For me personally, I give people trust until there's a reason for me to take it away, and when it's gone let's acknowledge it and then build that back up again, but I think acknowledging it in the first place is the key thing.
NC: So, Nelli, how do you have a conversation with somebody to find out what it is they really expect from the organisation and indeed, find out the sort of things that they think should be in their contract unofficially if you like that aren't actually there on paper?
NR: So, for me, it's probably starting with those one-to-ones with your line manager, you know, where the line manager knows what is important to you as an individual, moving all the way to, kind of, consistent messaging from the leadership team and how that aligns with your own values. Now, where the, well, majority of us so a lot of us work remotely at least some of the time, of course maintaining those conversations and that trust becomes even more important because obviously you don't see each other on a consistent regular basis. And so, just getting into the… I suppose as a manager, into the detail of what is important to one of your team members, one of your colleagues, and trying to deliver on that in line with both their values and the company values and the, you know, what can be done within the remits of the commercial reality in the business.
NC: Because it seems to me, Trish, that a line manager could inadvertently raise expectations as well as quash them.
PH: Yeah, definitely, and I think companies need to be really realistic when they speak to their people, and you can set that expectation from before someone joins, right? So, being really open with your employer brand and who you are as a company and then hopefully those expectations all pull through, but yeah, as with any communication, there can be miscommunication, right? Just need to be open and honest with people about what's achievable so people don't get disengaged.
NC: Do you think you can manage expectations, you know, even before somebody joins an organisation or during the onboarding, Nelli?
NR: Absolutely. I think if you are very clear about what the organisation can and can't offer, whether it's contractually or in terms of, you know, promotion opportunities or in terms of whether you're going to be able to gain experience, for example, in managing people going forward, if you set clear expectations then it is… you know, there is no room then to be disappointed in that something hasn't gone quite as to what you were promised.
NC: Yeah, I kind of get that, but there's so much room for disagreement or misunderstanding, isn't there? I mean, Trish, the actual contract could say work hours are flexible. The employer might feel this means answering out-of-hours calls or emails promptly, the employee may not.
PH: Yeah, definitely. I think there's always, kind of, room for interpretation, right, and exactly as you said, my version of reasonable might not be your version of reasonable. But I think that's why it's important to be as prescriptive as you can with those sorts of things, but expectations of things like when you're going to be promoted, you know, that's not something that you can necessarily write into a contract. That needs to be carefully managed through, kind of, performance management and people understanding what's going on.
It's all about communication, right. I think in HR, half of the problems that we deal with are miscommunication, so it's really important to get that right.
NC: So Nelli, who's responsible in the end? Is it HR that can take a big role in managing people's expectations or is this really up to leaders to talk to people more?
NR: Oh, I think it's probably a joint effort and I think in terms of what Trish just said, the communication element, you know, the last thing as HR, for example, we want is for a line manager or a senior leader to come to us at the point that the relationship has already gone pretty sour and you know, there's already a formal grievance looming. From the, you know, HR perspective, we're clearly there to support and guide and coach management teams, but equally there is in my view some expectation that the managers will do just that, manage and communicate with their team members.
NC: So, do you often have to educate managers over this?
NR: Yes. I think the managers are like any one of us, different experience, and some of the more experienced ones or the ones that more naturally, kind of, communicators and better, you know, people managers need probably less support and less handholding. But there are others who are just developing and we're obviously, as a team, are always there to, you know, to support them, to train them both from legal perspective but also from the, you know, management style and how you would align that to managing a particular individual with their particular needs.
PH: Yeah, no I totally agree. I think sometimes, I mean I've worked in other organisations where some managers just expect that HR are going to do everything and that's not great, right. You don't want everything filtering through HR. We want our managers empowered and being able to have those conversations, but I totally agree with Nelli. I think we need to make sure that we don't just put managers in management positions without giving them support and training and guidance, so they know how to manage those conversations, but that HR are also there to help and support when they need it.
NC: I just wonder whether any of you can think of any examples where this issue has loomed large and been tackled successfully?
PH: I mean, I worked for a very cool software company, a long time ago now to be fair, and they had an issue in terms of people wanting promotion, kind of, quicker than they could provide it. I think the issue there was more people having the expectation that because it was a pretty cool funky company that they would be able to, you know, move quite quickly. And as an HR team, I definitely can't take credit for this myself, but as an HR team we developed a career framework that made it really clear how people could develop and when they would develop and what the holistic view of development would be. Not just that you moved up and you got that job title, but these different skills that you would get.
So, we made that a, kind of, pictorial way of viewing your career development, which did help. I can't say it fixed the problem completely, but it did help because it managed people's expectations in terms of okay, I want to develop. That doesn't necessarily mean I become a senior software engineer straightaway, it means I get this skill and that skill and that experience and that shadowing, and it just helped, kind of, manage people's expectations in that sense.
NC: And these psychological expectations can be quite cultural, can't they? I mean, I've worked or reported in India where people, even in relatively humble jobs in call centres, are very keen to get a new title and even if it doesn't necessarily mean a lot more responsibility or more money, but that just seemed to demonstrate to themselves and their families that they were progressing in the organisation, whereas I guess in many places here, that wouldn't impress people very much.
PH: Yeah. I mean, I think there's definitely a, kind of, a cultural thing there. So, my background, my father was Nigerian and in the, kind of… not to tar every single Nigerian family with the same brush, but there are specific jobs and job titles in a, kind of, Nigerian environment that are seen as positive and that are okay, you want to be a doctor or lawyer, an engineer, those kind of roles. So when I explained to my father I was going into HR, he was very confused one of those…
Yeah, definitely. There's definitely something cultural in the… kind of, inbuilt with some of… within some of us in terms of where you are supposed to be and what progression looks like and what good looks like.
NC: I just want to go back to what you were at least hinting at earlier, Nelli, when we were talking about flexibility. You were saying it was very important to you personally and I guess to most people who've got family responsibilities. But there does seem to be a pretty universal mismatch between what a lot of people with those responsibilities would mean by flexibility and then what managers think it means, and organisations will talk about their flexibility policies, but people still complain that they don't really work in practice.
NR: Yes, most definitely. So, I think first of all, flexibility would be very different for everyone and I think it changes throughout your life. So, there are different obviously responsibilities with childcare, with any kind of, you know… you may be doing some kind of… getting, you know, a second education or whatever that flexibility may mean for you.
In terms of managers, what I find is, for example, a flexible working request is made and the manager's initial stance is, "Oh, that's not going to work," but when you actually start unpicking it, "Well, why do you think it's not going to work?" "Well, it's never worked before." "Well, you know, why don't we try this? Why don't we, you know, have a trial period and see whether something may work or maybe something halfway will work."
So I think that challenging the initial negativity which is probably based on… maybe on their experience, you know, and building that trust, so I think if you've got a certain level of trust with your colleagues then it's easier to say, "Oh, okay. Well actually, this will work because I trust them to do the right job in the time that they're actually working."
NC: Now, clearly that flexibility might well be demanded by people at every level including, you know, entry-level jobs, but I do wonder in a broader sense, Trish, whether the more senior you are the more important the psychological contract might be.
PH: That's a really good question. I think it's kind of equally important regardless of whether you're entry level of senior, but I think it probably moves and shifts depending on the roles and responsibilities that you have. So, I guess as I've moved up the career ladder and got to, kind of like, you know, international CPO, what's expected of me and what I expect in terms of flexibility is probably very different to what I expected when I was, you know, entry-level role in the NHS.
I think it's… remains important, equally important, but I think there's just a shift in terms of what you expect as you move up seniority wise.
NC: But do you think when you're in that more senior role you might have more red lines and organisations would do well to be aware of people's requirements?
PH: Potentially, but I suppose I'm of an opinion that we treat everybody as we expect to be treated, regardless of what level they're at.
NR: And I think like with anything, we probably know… with experience we get to know a little bit better as what we want. So, we're, kind of, on the one hand more set in our ways but on another, kind of, have better clarity about what specifically would work for us at that point in time and are able to almost, kind of, verbalise it and deliver it to our, you know, to our manager or to the business that we work and just clarify what it is that we need.
PH: As I've got older, my non-negotiables are quite fixed, whereas perhaps when I was younger, I would've been a little bit more flexible but now, you know, things relating to my family and my kids are pretty steadfast really and if that flexibility is not there then that's not great. (Laughter)
NC: So, what variation do you see in how well organisations are at conveying their willingness to be flexible, to be understanding, to be supportive so people do feel they don't have to ask about everything, that that psychological contract and understanding is in place?
PH: I think that depends on the person that you've got at the top. I think if you've got a CEO who is happy to accommodate flexibility and understands the importance of a psychological contract then provided you've got a decent leadership team, that kind of filters down, right. People are more willing to provide that kind of flexibility and be aware of that contract, but there are other organisations that aren't, right, and the person at the top or the leadership team aren't that flexible. And again, that peters down and probably leads to the things we chatted about earlier like micromanagement, people leaving, etc. So, I think it depends on the leadership really and that demonstration that you get from the people at the top.
NR: Absolutely, I agree with that. Most definitely. I also think it very much depends, you know how they say people leave their bosses when they actually leave. So, I think if your individual line manager and, you know, I've been very lucky, so for the last 12 years I worked with the same line manager and the development and the support and the flexibility he's given me over these years have been invaluable. So, for me it's you know, yes the organisation and, kind of, the business developed over the years, but it's very much how my line manager and my individual case has supported me. So, you know, for me management development is very important.
NC: And there was mention made earlier, Trish, of autonomy. Do we yet do enough to make people feel they're in control of their work and not needlessly interfere?
PH: I think it comes back to Nelli's point, really. I think it depends on the person that you've got managing you. Like, I've had some brilliant managers who have given me enough breadth and space to be able to go off and do my own thing but come back and ask questions if I was worried or nervous, and other managers that have watched every single little thing that I've done, and obviously I've not worked there for very long.
NC: (Laughter)
PH: It depends really, doesn't it, I think and again, I think it comes from what you see from the top. If you see a CEO that's micromanaging, your senior leaders start doing that, your, you know, middle management start doing it. It's not great.
NC: And since we all have widely different ambitions, expectations, work goals, all that, I just wonder whether in the end the best psychological contracts are entirely individual, and that really for the employer is something… it's very hard to deliver on because it's something tailored for every person.
NR: I think parts of it. So, certain elements, you know, the fairness, the consistency, making sure the values are cascaded from the top, that's similar across the board for everyone, but your individual circumstances in terms of, you know, working certain hours or, you know, having a hybrid working pattern and working from home, that is very much individual. So, for me, it's the combination and how in your particular circumstances that… between yourself and the business, that ties up and therefore supports you in your career at that point in time.
PH: Yeah, no I agree. I really love that answer. Yeah, I think it's about treating people like individuals and I think a lot of the time in HR, we try and treat everybody the same, right, and we're all about fairness and let's treat everybody in exactly the same way. Well actually, we need to understand what people's individual needs are, but also where the line is, right? Because as a company, you're still a company. You can't be flexing every single thing for every single individual. We've got to have a line and a balance where we can try and kind of manage things reasonably.
NC: And in the light of that, Trisha, what when you really can't deliver on people's expectations when people are really keen they should have a particular bit of flexibility or whether they should have some promotion or be allowed to work at a different office or whatever it is where you can't deliver on that, how do you manage their expectations but try and keep them happy?
PH: I think transparency is key, right. People want to know why. So, if you can't do something, explain the why in detail because the worst thing you can do is just say no, and then people fill in the gaps. We do, we're human, right. But also, where you can, try and find compromise. I mean, it comes back to that earlier point of we can't be flexing every single little thing for people, but sometimes there can be compromise so if there's not a promotion now, what can we do that holistically enriches your role that doesn't mean you get an extra job title but means that your role is a little bit bigger and means that you're getting a little bit of something extra?
NR: Yeah.
PH: I think it just comes down to that compromise piece but also holding a line in terms of being an employer and a company at the end of the day.
NR: Yes, agree most definitely with that answer, 100%.
NC: Well, many thanks to Patricia Hewitt of Haylo HR and Chief Executive of the mediation service Resolution at Work, and Nelli Rowsell, people manager at Advantage Smollan. Next month we're tackling loneliness at work, felt by a surprising one in five employees according to one study. Until next time, from me, Nigel Cassidy, and all the podcast team, it's goodbye.
