In today’s rapidly evolving business landscape, organizations face constant change and
uncertainty. One critical factor that can impact employee engagement and organizational
success is the psychological contract. The psychological contract is the exchange relationship
between an individual employee and the organization. Drawing on relevant theories and
findings in organizational psychology, analyze how the psychological contract influences
employee behaviour, job satisfaction, and organizational performance in the 21st century. You
are expected to discuss the key components of the psychological contract and their implications
for organizational success.

Next, identify and examine the factors that can affect the psychological contract, such as
organizational culture, leadership style, and communication practices. Explain how these
factors contribute to the development and maintenance of a strong psychological contract that
enhances employee commitment and performance. Additionally, discuss the potential
consequences when the psychological contract is violated and propose strategies that
organizations can use to manage and repair a damaged psychological contract, ultimately
ensuring sustainable organizational success.

Recommended/suggested readings:
Psychology applied to work: An introduction to industrial and organizational psychology
(13th ed.).
• Chapter 3: The Context of Work
• Chapter 8: Performance Management
• Chapter 9: Culture and Organizational Change and Development
• Chapter 11: Affect, Attitudes, and Behaviour at Work
• Chapter 12: Workplace Health and Well-being
• Chapter 13: Work Motivation

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