Managing the psychological contract in competitive labour-market conditions

This paper presents a reconceptualisation of the PC by incorporating the marketing concepts of ‘value’ and ‘cost’ into its tenets. We illustrate the manner in which marketing language may be incorporated into our understanding of the PC by drawing a parallel between consumer-market transactions for products and labour-market transaction for employment. This paper suggests that to effectively manage PCs in a competitive labour-market must have a detailed understanding of the costs it’s willing to bear, as well as the benefits it receives in the employment relationship. Similarly, it must consider what PC features are most likely to be perceived by employees as representing the most attractive value proposition on offer in a competitive labour market.