When it comes to employees, a contract is always being created, reinforced, violated or re-negotiated.
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I recently presented at a Human Resources conference where I was asked to speak on “Designing the Employee Experience.” When I arrived at the conference, I was informed that the two presenters before me would be addressing employee perks and employment contracts — two seemingly disparate topics within the same field.
In the first presentation, we have a session on giving employees more benefits, trinkets, and paid time off so that they are engaged. In the follow-up session, we have an hour on how not to get sued by the disengaged employees that don’t like these perks? I recognize this is a bit of an exaggeration, but not by far.
These contrasting ideas left me reflecting on two questions that were included in both of these presentations, as well as in my own keynote: “What do employees expect from us?” and “What’s in the employee/employer ‘contract?'”
There is more to the employment contract than meets the eye.
In doing research for our book, The Employee Experience, Matthew Wride and I studied the results of nearly 34 million employee surveys from over 70 countries. Within the survey, we asked employees the question, “What do you expect from your employers?” From employers, we gathered responses to the question, “What do you expect from your employees?”
Some of these responses clearly fell within the legal contracts signed by both parties as a condition of employment. For employees, this meant abiding by the rules and regulations, showing up to work on time, adhering to company policies and procedures, conducting business ethically, etc. For employers, this included paying the employees an agreed-upon wage, ensuring a harassment-free work environment, proving the needed tools to do the job, etc.
However, as we dug deeper, it became clear that the “contract,” for both parties, went beyond what was agreed upon in writing.
Every relationship has a contract.
Every relationship — company to employee, husband to wife, parent to child — forms around a core of expectations. The health of that relationship depends, in great part, on whether the expectations are legitimate and realistic and whether the parties live up to what is expected. In a sense, each relationship is a “contract.”
The contract is the totality of explicit and implicit expectations that define the operating rules of the relationship. It is the perceived set of promises that establish the terms of that relationship. This dictates the degree to which parties fully engage in that relationship. Some contracts are explicit, such as a written Statement of Work from a vendor. Others are not clearly expressed or agreed upon. These contracts are implicit.
Contracts are never static. A contract is always being created, reinforced, violated or re-negotiated. Often, this takes place without us recognizing it. In fact, most of us pay little attention to the contracts that exist within our relationships.
The three contracts with employees
To further complicate matters, the contract between employer and employee is actually three contracts in one: the Brand Contract, the Transactional Contract, and the Psychological Contract. Each contract comes with questions we should be asking ourselves:
The Brand Contract: Your Brand Contract is all the implied promises that your employer brand makes to those exposed to it. It consists of your culture, marketing, reputation, media coverage and what the behaviors of your team does to create expectations. It’s your public face — the way the world sees you. Your Brand Contract doesn’t stop when someone is hired. The expectations created by the brand contract has a lot to do with the employee experience; whether the day-to-day reality of the job supports or contradicts this perception of the brand.
Question to ask: Is the job, the culture and the company what your employees thought they signed up for when they took the job?
The Transactional Contract: The Transactional Contract is the mutually accepted, reciprocal, and explicit agreement between two or more parties that defines the basic operating terms of the relationship. These are quid pro quo arrangements: something for something. You work these hours and do this job, and we’ll compensate you fairly for your work. It’s a transaction. It defines the boundaries. So long as both the company and the employee are operating within the bounds outlined in the contract, the contract is satisfied.
Question to ask: Are your transactional expectations (pay, work hours, policies, job requirements, location, performance, etc.) with all employees clearly outlined and formally agreed upon?
The Psychological Contract: Much like an iceberg, a significant part of the employee experience depends on what’s below the surface. Brand and Transactional Contracts are often explicit and visible. However, the Psychological Contract is the unwritten, implicit set of expectations and obligations that define the terms of exchange in a relationship. Hidden in our hearts are the ideas, hopes, and dreams that truly define us. These expectations cannot be addressed by clauses in a pre-hire agreement or hiring slogans that attempt to align expectations. With the Psychological Contract, the challenge lies in understanding and managing something that is dependent on elements such as feelings, beliefs, perceptions, and desires.
Questions to ask: Do you know what your employees want and expect, both collectively and individually? Are you addressing these?
These contracts are where employee expectations meet the realities of running an organization and satisfying stakeholders. They contain the promises that an organization can reasonably be expected to honor, as well as those that employees are expected to keep in order to fulfill their end of the bargain.
So, next time you are evaluating your employee experience and that of your employees, ask yourself the question, “What is in the contract?” It is a useful check on your own actions, as well as an important reminder to be aware of what you may have led your people to believe, intentionally or otherwise.