ACME Insurance Company has discovered that many of their employees are feeling angry over a sense of betrayal.Employees believe that their psychological contract with the company has been breached.Management is not sure what all the fuss is about or even what a psychological contract is.You have been hired to help them understand what a psychological contract is, what it means to breach a psychological contract, and the reasons why psychological contract breach occurs.What will you tell them?

A psychological contract refers to beliefs held by employees regarding the reciprocal obligations and promises between them and their organization.Perceptions of psychological contract breach occur when an employee perceives that his or her organization has failed to fulfill one or more promised obligations of the psychological contract.Some of the reasons for psychological contract breach include: Recruiters promise more than the organization can provide to attract the best applicants; newcomers often lack sufficient information to form accurate perceptions concerning their psychological contract; differences in understandings between an employee and the organization about promised obligations; and organizational changes such as downsizing and restructuring can cause organizations to knowingly break promises made to an employee that they are either unable or unwilling to keep.