Convenience

contributions
What the individual
provides to the
organization
inducements
What the
organization
provides to the
individual
262
Part 4:
Leading
Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
www.MyEbookNiche.eCrater.com

---

If both the individual and the organization perceive that the psychological contract is
fair and equitable, they will be satisfied with the relationship and will likely continue it.
On the other hand, if either party sees an imbalance or inequity in the contract, it may
initiate a change. For example, the individual may request a pay raise or promotion,
decrease her contributed effort, or look for a better job elsewhere. The organization can
also initiate change by requesting that the individual improve her skills through training,
transfer the person to another job, or terminate the person’s employment altogether.
3
A basic challenge faced by the organization, then, is to manage psychological contracts.
The organization must ensure that it is getting value from its employees. At the same time,
it must be sure that it is providing employees with appropriate inducements. If the organi-
zation is underpaying its employees for their contributions, for example, they may perform
poorly or leave for better jobs elsewhere. On the other hand, if they are being overpaid
relative to their contributions, the organization is incurring unnecessary costs.
4