The Psychological Contract

What is the psychological contract? For Americans, I believe that there are 2 basic types of employee, and two basic types of psychological contract. Short-timers who are happy to be paid until they move to the next job, and long-timers who want to dedicate themselves to their organizations. I am interested to see how this idea applies in a cross-cultural environment. I recenty discussed this issue with a the top manager of my group when he was visiting from Tokyo. Other Japanese engineers also added input to the discussion.

2 Types of Psychological Contract in America

Short-Timers: This type of employee is very common in the United States. Highly skilled employees often have the “Gun for Hire” mentality that allows them to regard their engagement with a company as a temporary affair, and are content to move to other companies and other projects for any number of reasons. This type of employee is motivated primarily by shorter term factors such as salary, and availability of interesting work tasks. Job stability and emotional attachment to the company or the team are less important to this kind of worker. In exchange for a salary and a reasonably comfortable working environment, this type of employee will perform work for the company.

Long-Timers: This type of employee is primarily motivated by stability and often a desire to contribute to the organization. In my estimation, this type of employee has 3 primary expectations from his manager, and by extension from the organization:

1) “The manager should protect my time.” A manager should shield his employees from unnecesary distractions and ‘make work’ projects.

2) “The manager should communicate what the company needs of me in the form of achievable goals.” A manager should have a clear communication pattern with the employee, that includes a clear list of expectations.

3) “The manager should protect my career.” The manager should personally look out for the employee. This means that the manager is expected to look for opportunities to further the developmental and promotion-related goals of the employee, and to make every reasonable attempt to maintain their employment with the firm during tough times.

When these 3 items are satisfied, the long-timer will likely be motivated to provide good effort for his manager and for his company.

International Context: Japan

When I explained this thesis to my group manager from the Tokyo office, he advised me that this is not at all applicable in Japan. I have experienced a great amount of frustration being employed in this environment because I have a ‘long-timer’ mentality, and Japanese managers who often do not ‘manage’ in ways that are consistent with my version of the psychological contract. What could be happening here, and what might be the root cause of this disparity?

1) In Japan, the question of continuted employment (item 3) is classically a given. While it is less true today than in recent decades, an engineer in a Japanese major corporation can reasonably expect to keep his job until his retirement. In fact, I have interviewed Japanese who recount episodes such as the following:

A young engineer is hired just out of college. He is inducted into a major Japanese technology firm. After initial training, and his first assignment, it becomes clear that he has a mental problem which prevents him from being productive. While an American firm would soon terminate the employee, in this case the employee is given a desk in a small windowless office with other ‘unproductive’ employees. This engineer then spends his days reading magazines and doing no work for the rest of his career — he is not fired. The company continues to pay his salary because he was brought into the organization, and to terminate him would apparently be unreasonable. It was their mistake for hiring him, but since it was already done they let the situation be.

As for promotion, in Japan this is usually based on the private notes of the cadre of managers that have visibility of the employee. For them to have special attention for each employee is not really reasonable–they are all long-timers. These observations will usually not be shared with the employees.

As for “managers protecting employees time” this is also anathema to the Japanese system. Japanese employees are more likely than Americans to be expected to place the company above other things such as family. The “Zangyou (overtime) culture” is standard in Japan: Employees who aspire to be promoted over the long term tend to stay at least as late as the boss.

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Kevin Ready

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