Breach of The Psychological Contract
Psychological contract breach may occur if employees perceive that their firm, or its agents, have failed to deliver on what they perceive was promised, or vice versa. Employees or employers who perceive a breach are likely to respond negatively. Responses may occur in the form of reduced loyalty, commitment, and organizational citizenship behaviors. Perceptions that once psychological contract has been breached may arise shortly after the employee joins the company or even after years of satisfactory service. The impact may be localized and contained, but if morale is more generally affected, the performance of the organization may be diminished. Further, if the activities of the organization are perceived as being unjust or immoral, e.g. aggressive downsizing or outsourcing causing significant unemployment, its public reputation and brand image may also be damaged.
Manager–subordinate mismatch may also cause a breach of the psychological contract.
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“Moral laws are set as a curb and restraint to these exorbitant desires, which they cannot be but by rewards and punishments, that will over-balance the satisfaction any one shall propose to himself in the breach of the law.”
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