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Home arrow Management arrow Performance Management for Agile Organizations: Overthrowing The Eight Management Myths That Hold Businesses Back

The Traditional Psychological Contract

With more than 200 years of conditioning—and principally with the influence of scientific management—a common psychological contract has developed and fortified. Two centuries of industry and the philosophy supporting scientific management have given durability and oxygen respectively to the management myths we’ve covered in Part II.

Scientific management and the traditional psychological contract have a symbiotic bond. On the one hand, scientific management strengthened and entrenched the existing psychological contract. The expectations and pivotal values of the conventional employment relationship was a product of the Industrial Revolution. Scientific management is a natural extension of the conventional employment relationship; its values and principles are compatible. So it’s comprehensible that scientific management grew and took hold in industry. On the other hand, when scientific management became mainstream, it reinforced the traditional expectations of employer and employee.

Before defining this traditional psychological contract, I’d like to point out that these frameworks I’m about to share with you are an extension of my previous work on the psychological contract. The research started with my doctoral study and was further developed in my first book: The 8 Values of Highly Productive Companies} The employee and employer expectations and the shared values are the same as my original model. But I’ve subsequently included the matching management myth in Table 12.1 and the new management belief in Table 12.2.

Table 12.1 shows the amended traditional psychological contract framework.

Referring to Table 12.1, the first column, labeled Management myth, covers the false beliefs we discussed in Part II. The second column is the value management and employee share, based upon the corresponding myth. These shared values are pivotal to the generic psychological contract. In the final two columns, I summarize the expectations management and employees have of each other, relating to the shared value.

Specifically, the third column summarizes the manager’s expectation of an employee. And the last column is the employee’s expectation of management. These expectations are nurtured by the myths arising from the principles of scientific management.

This framework summarizes the management and workforce expectations of the eight myths blocking agile performance in Part II. In other words, management myths are put into the context of the traditional psychological contract. Transforming organizational culture to enable the seven dimensions of agile performance I outlined in Chap. 3, starts with an evaluation of the psychological contract. The employment relationship is the backbone of organizational culture.

To change the culture, we need to understand what the ideal culture ought to look like. Table 12.2 is an illustration of a new psychological contract suited to agile performance.

You’ll note that the column headings are the same as those in Table 12.1, except for the first column. There are eight corresponding rows juxtaposed against the beliefs and values of the traditional psychological contract framework in Table 12.1.

I want to devote the rest of the book to describing these management beliefs and how they are polar opposite to those eight management myths underpinning the traditional psychological contract. Further, I’ll consider the matching shared values and expectations in how they benefit the dimensions of agility. Table 12.2 is an exemplar of the psychological contract necessary for agile performance. It represents an ethos where management and workforce work together in the opposite way to the old generic psychological contract. To attain these markers in the new framework, a completely different belief system to the one that supports the eight management myths is required.

Meeting the descriptors in the new psychological contract framework involves a dramatic change of thinking about the working relationship from both entities. One party may change, but if the other party’s mindset won’t—or can’t—change, the culture won’t budge. One partner changing their outlook without the other will produce conflict, confusion, and misunderstanding. And if the culture doesn’t shift to reflect the

Table 12.1 Traditional psychological contract framework

Management myth

Shared value

Management expectation of employees

Employee expectation of management

Job specification improves performance



Work in a clearly defined & specialized employment area

Offer clearly defined & specialized employment opportunities

Quality systems & processes guarantee good outcomes


Follow organizational policies & practices

Support employees to follow

organizational policies & practices

The job description helps the employee understand their organizational role


Fulfill job requirements

Link rewards & benefits to fulfilling job requirements

A business is best organized around functions

Function- based work

Focus on job functions

Structure work around functions

A satisfied employee is a productive employee

Human dispirit & work

Value a stable & secure job

Offer stable & secure jobs

A loyal employee is an asset to the business


Display loyalty to employer

Reward employees for displaying loyalty to the organization

A technically superior workforce is a pathway to a high-performing business


Commit to gain technical qualifications

Provide opportunities to develop technical skills

Employees can't be trusted with sensitive information



Comply with managerial instructions

Provide sufficient information for employees to do their job

Table 12.2 New psychological contract framework

Management belief

Shared value

Management expectation of employees

Employee expectation of management

Flexible deployment improves agile performance



Willingness to work in a variety of roles & settings


opportunities to work in a variety of role & settings

An external focus produces good outcomes


Serve the customer before your manager

Provide support & incentives to focus externally

The role description helps the employee understand their organizational role



Perform job & non-job roles

Provide support to focus on performing job & non-job roles

A business is best organized around functions & projects



Willingness to contribute crossfunctionally as well as functionally

Provide opportunity to use skills & gain experience working in project teams

An engaged employee is a productive employee

Human spirit and work

Valuing work that is meaningful

Provide work (wherever possible) that is meaningful

A committed employee is an asset to the business


Commit to achieving the business goals

Commit to assisting employees to achieve their personal & career objectives

A multi-dimensional approach to learning & development is a pathway to higher performance

Learning & development

Commit to lifelong learning & development

Support for technical and non-technical growth & development

Enterprising behavior comes from open channels of communication



Willingness to show enterprise & initiative in the right


Providing access to a wide range of information

Where the rubber meets the road ...

Misalignment of expectations

Indira is an employee with an expectation that as part of a team she will be consulted and involved in decision-making from time-to-time on work- related issues. Further, Indira believes that Roslyn, her manager, ought to share the responsibilities for decision-making with her team. But in this case, Roslyn has a different understanding of the psychological contract. Roslyn thinks that the lines of responsibility between herself and her team are very clear. In Roslyn's mind, her managerial role is broadly to make decisions and the team member's job is to follow her instructions and carry out the work.

Indira finds it exasperating that Roslyn in unwilling to engage the team in discussions. She's keen to discuss her ideas with Roslyn. But Roslyn is not at all receptive to any of her ideas or suggestions. Roslyn doesn't believe in collaborative leadership. She views her role, and the role of all management, differently. Roslyn thinks her role is to be decisive and to communicate those decisions clearly to employees. Roslyn thinks of this as being accountable and professional. Indira labels this mindset as "command and control."

These conflicting unwritten expectations result is some real frustration between Roslyn and Indira, despite the fact that both are, in their own ways, trying to fulfill what they understand to be their responsibilities.

framework, the practices we covered in Part II may work initially, but over an extended period of time, they won’t be viable.

I now want to consider each value in the new psychological contract framework. I’ll refer to each value and how it promotes agility with reference to the seven dimensions of agility. All eight of these shared values in Tables 12.1 and 12.2 have either a direct or indirect, negative or positive impact respectively on the Organizational Agility model in Fig. 3.1 (Chap. 3).

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