Psychological Contract for Human Development and Organizational Sustainability

Abstract

Organizations can sustain different efforts toward human development, and employee–employer relationships can sustain the organizations to work toward their purpose. However, contemporary organizations are facing unprecedented challenges as a result of COVID-19, intensified globalization, increasingly diversified workforce, and continuous technological advancements, thereby impacting the way businesses and people are managed. Most of the work has transitioned to online, and employees are working from home due to pandemic situations. Organizations need to manage the emerging, complex employee–employer relationships in this new order of the world for the purpose of human development as well as organizational sustainability. In the absence of frequent employee–employer meetings at physical workplaces and the transition of the workspace into virtual workstations, we need to look at new ways of initiating and sustaining employee–employer relationships. In this conceptual article, we propose that different types of psychological contracts, like relational and transactional contracts, can contribute to these goals. Through a conceptual analysis of relevant literature, we first examine different aspects of the psychological contract—its types, antecedents, and consequences of different types of contract on organizations. Sustainable human development is related to organizational sustainability. We propose that a relational psychological contract may help in sustainable human development as well as organizational sustainability, whereas a transactional psychological contract moderates the relationship between sustainable human development and organizational sustainability.