Editing Psychological contract (section)

== Formation of the contract ==
Psychological contract formation is a process whereby the employer and the employee or prospective employee develop and refine their [[Mental mapping|mental maps]] of one another. According to the outline of phases of psychological contract formation, the contracting process begins before the employment itself and develops throughout the course of employment. As the employment relationship grows, the psychological contract also grows and is reinforced over time.<ref name=":03">{{Cite book|title=Psychological Contract: Managing and Developing Professional Groups|last=George|first=Christeen|publisher=Open University Press|year=2010|location=Maidenhead, G.B.|pages=Chapter 1|via=ProQuest ebrary}}</ref> However, the psychological contract is effective only if it is consented to voluntarily.<ref name=":12">{{Cite book|title=The Psychology of Work|last=Gautier|first=Chantal|publisher=Kogan Page|year=2015|pages=Chapter 7|via=}}</ref> It is also useful in revealing what incentives workers may expect to receive in return for their employment.<ref name=":12" /> There are two types of contracts depending on the nature of the relationship between employee and employer. These are relational psychological contracts and transactional psychological contracts.  
# Transactional psychological contract: focuses more on the explicit elements of the contract without accounting much for the intrinsic motivations of workers. These are more common in organizations with authoritative management styles and hierarchal control.<ref name=":12" /> Transactional contracts are found to be "related to careerism, lack of trust in employer, and greater resistance to change."<ref name=":22">{{Cite journal|last=Rousseau|first=Denise M.|year=1998|title=The 'Problem' of the Psychological Contract Considered|journal=Journal of Organizational Behavior|volume=19|issue=S1 |pages=665–671|jstor=|doi=10.1002/(sici)1099-1379(1998)19:1+<665::aid-job972>3.0.co;2-x|doi-access=free}}</ref> They tend to be shorter term in nature.<ref name=":03" /><p>Some scholars consider McGregor's [[Theory X and Theory Y|Theory X]] to be closely related to transactional employer-employee relationships or authoritarian management, which are bound by transactional psychological contracts that aim to keep people working for extrinsic reasons and maintain the status quo.<ref name=":12" /></p>
# Relational psychological contract: stresses the interdependence of the organization and level of social exchange. These psychological contracts tend to be longer-term in nature.<ref name=":03" /><p>McGregor's [[Theory X and Theory Y|Theory Y]] is seen in [[Participatory management|participative management]] which emphasizes the role of leadership. This has similarities with relational psychological contracts in terms of common emphasis on commitment and belief in the intrinsic motivations of people who may want to work for something beyond merely monetary reasons.<ref name=":12" /> Relational contracts are found to be associated with trust and increased acceptance of change.<ref name=":22" /></p>
The content of psychological contracts varies widely depending on several factors including management style, as discussed earlier. It also depends on the type of profession and differs widely based on the stage in the career; for example, between graduates and managers.<ref name=":03" /> Denise Rousseau is credited with outlining these 5 phases of contract formation:
# Pre-employment: The initial expectations of the employee form through professional norms and societal beliefs that may be influenced by information gathered about the organization and how certain occupations are portrayed by the media.
# Recruitment: The first instance of two-way communication involving promise exchanges between employer and prospective employee during the recruiting process.
# Early socialization: Promise exchanges continue with both parties actively continuing their search for information about one another through multiple sources.
# Later experiences: The promise exchange and search for information processes slow down as the employee is no longer considered new. There may be changes to the psychological contract introduced at this stage.
# Evaluation: The existing psychological contract is evaluated and possibly revised and it is determined whether a revision is needed. Incentives and costs of change impact revision.<ref name=":03" />

The psychological contract model is applicable not only to supervisor-subordinate relationships but also to business relationships. In 2015, a study was conducted on hotel franchising.<ref>{{Cite web |title=Psychological Contract and the Hotel Franchising Relationship |url=https://www.longdom.org/open-access/psychological-contract-and-the-hotel-franchising-relationship-2167-0269-1000147.pdf |access-date=August 6, 2022 |website=longdom.org}}</ref> [[Franchising]] is an agreement between a brand owner and franchisee that grants the franchisee rights to use the brand in exchange for a fee.<ref>{{Cite web |title=Analyzing the 'Franchising' Definition|url=https://www.franzoom.com/franchise-101/franchising-definition/ |access-date=August 6, 2022 |website=franzoom.com|date=27 April 2012 }}</ref> According to the study, apart from this, the franchisee agreement includes an unwritten psychological contract agreement, consisting of unwritten promises and obligations between both parties.