psychological contract

Unspoken agreement between employee and employer. The phrase was originated during the 1950s by Swiss-born US social psychologist Ed Schein of the Massachusetts Institute of Technology. The psychological contract described the mutually beneficial position where the employee gave his or her loyalty and hard work to an organization in return for job security and the company gained a committed workforce.

The downsizing of the late 1980s and early 1990s virtually put paid to the psychological contract by removing the trust on which it was based. The contract was superseded by concepts such as employability and free agents.