We’re in the fourth industrial revolution.  There’s no escaping that fact.  The world has changed and continues to change at pace.  My 13-year-old daughter can’t believe that smart phones didn’t exist when I was in University, Google wasn’t around, and phones were attached to the wall!  With this pace of change, surely how we approach, manage and “do” work must also change. Well, yes I think it should, but I still think we haven’t really shifted our thinking around the psychological contract – that is still stuck in the past…

What do I mean by the psychological contract?  It’s the deal between employers and employees.  Beyond the traditional employment contract that sets out the all legal stuff.  The psychological contract is about the relationship between employers and employees (or workers these days).  The informal expectations of each other that – although unwritten – can significantly impact the length and quality of their relationship.

So how has it changed over time?  Previously the psychological contract was more about job security and pay.  It was almost accepted that the relationship was not equal.  The employer had more control or power over the employee – and this was understood by both parties.  But as we “developed” as a society the psychological contract has become richer, and the balance of power shifted to more of an even keel.  Employees want more, and employers recognise the value of mutual beliefs, common ground and a commitment to treat each other fairly.

As a new generation – the millennials – have entered the labour market, and as technology and society have evolved, so must the psychological contract.

Today’s employees want more.  We may have record employment levels, but the latest figures show that companies are struggling to fill vacancies amid mounting fears over skills shortages.  If organisations don’t shift their traditional assumption about the psychological contract they’re going to miss that talent.

Today’s employees want more than simply a job – they want a purpose, and to feel the difference they are making.  I don’t mean the financial rewards they are producing for the business – but the REAL difference they are making to customers, society or the environment.  Something to really care about.  These days people are raised to believe they could change the world. They want organisations and managers to show them how their work matters, even just a little bit.

Employees also care about the organisation’s culture.  I don’t mean games, free drinks, funky decor – I mean the real stuff that makes a purposeful culture.  They want to be surrounded by people who are passionate about what they’re doing.  A manager who pushes boundaries and thinks differently, is open to new ideas and opinions and who’s comfortable with change.   All this can help create a purposeful culture.  A culture of purpose drives exponential sales growth

Interestingly organisations with a purpose bigger than money have a growth rate triple that of their competitors.  Research from the Institute of Customer Service consistently shows that the more employees are positively engaged with the organisation they work for, the higher customer satisfaction is. And the higher that customer satisfaction is, the better the overall performance of the organisation.  Engagement starts with a healthy and mutually beneficial psychological contract.

So here’s my challenge to employers.  Be brave.  Be bold and start to make that change.  What we know about the 4th Industrial Revolution is that it’s not going away.  This mirrors what we are seeing in wider society.  So my suggestion is that we should…


“The only way to make sense out of change is to plunge into it, move with it, and join the dance.” Alan Wilson Watts