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In today’s ever-changing work environment, the psychological contract between employers and employees is under serious strain. This unwritten set of mutual expectations—job security and fair treatment in exchange for loyalty and performance—has been the cornerstone of the workplace for decades. But recent trends are shaking things up, often leaving both sides feeling disillusioned.
Let’s take a peek at why the relationship is changing and find out how a revitalised Employer Value Proposition (EVP) can rebuild the psychological contract.
Why is the relationship between employers and employees changing?
Economic Pressures and Job Insecurity
Economic ups and downs are nothing new, but they seem more intense than ever. Recessions, globalisation, and tech advancements are pushing companies to cut costs, often at the expense of job security. A 2023 McKinsey & Company survey found that over half of employees felt less secure in their jobs than they did five years ago. That’s a big hit to the trust employees place in their employers.
The Remote Work Revolution
The COVID pandemic changed the way we work, possibly forever. Remote work became the new normal, bringing both perks and challenges. While working from home offers flexibility, it also blurs the lines between work and personal life, which can lead to more stress and burnout.
Career Development: A Missing Link
Career growth is vital for keeping employees engaged and loyal. Yet, many feel their employers aren’t doing enough to help them advance. The 2023 Workplace Learning Report by LinkedIn showed that 94% of employees would stay longer if companies invested in their career development. Without training, mentorship, and clear paths for advancement, motivation and loyalty take a hit.
The Demand for Corporate Social Responsibility
Employees today want their companies to stand for something beyond profit. They expect a commitment to social and environmental issues. However, many businesses fall short, either doing too little or acting unethically. The 2023 Edelman Trust Barometer revealed that only 57% of employees trust their employer to do what’s right, highlighting a significant trust gap.
Employers’ Side: Frustration with Productivity
It’s not just employees who are frustrated. Employers, too, feel the strain of a broken psychological contract. With intense market competition and economic pressures, businesses are laser-focused on productivity and efficiency. Many employers feel that despite investing in technology and training, employees aren’t hitting productivity targets.
A 2023 report by the Chartered Institute of Personnel and Development (CIPD) found that nearly half of UK employers were worried about low productivity. There’s also a sense that employees aren’t as committed or engaged, especially with remote and hybrid work setups. Employers feel they’re offering flexibility and tools but not seeing the expected productivity in return, adding to their dissatisfaction.
The rising demands from employees for better work-life balance, benefits, and career growth often clash with the pressure on employers to maximise output and stay competitive. This misalignment adds more tension, further weakening the psychological contract.
How can a revitalised Employer Value Proposition (EVP) rebuild the psychological contract?
Moving forward: reframing expectations and rebuilding trust
So, what’s the solution? Employers clearly need to communicate openly, treat employees fairly, support their well-being, and genuinely invest in their career development.
At TMP, we’re seeing many employers revisiting their Employer Value Proposition (EVP) to create a clearer understanding of expectations on both sides, aiming to drive higher performance. Rebuilding the psychological contract is crucial for the long-term success and sustainability of businesses and their employees, though it won’t be easy. Speak with our experts today to revitalise your EVP and rebuild your organisation’s psychological contract. Let’s take the first step towards a stronger, more sustainable relationship with your employees.
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