Renegotiating the Psychological Contract for the Post-COVID World


The psychological contract is essentially the unwritten rules or unofficial guide to relationships between employers and employees. This kind of contract is gaining attention among HR leaders as people struggle to understand the new definition of work in the post-COVID world.

As people return to the office (or not), they are reconsidering their priorities and their relationship to work. So, they are renegotiating the terms of the psychological contract. This can be challenging for leaders because it is an unofficial and often unwritten set of rules or expectations. And the game is changing swiftly.

WATCH: Employee Engagement and Experience

Here’s what the new psychological contract often includes:

Improved Work-Life Balance

U.S. workers have a reputation for making work their life. The pandemic, however, forced everyone to reconsider their priorities. On social media platforms like LinkedIn, many are even changing the phrase to “life-work balance” to indicate that personal lives and family should come first.

READ: Work-Life Balance: Should Your Boss Get Fired for Calling You After Hours?

In Portugal, the government made calling or emailing employees after hours against the law. No one has gone that far in the United States, but global HR leaders recognized that burnout was the number one consequence of the pandemic in the latest State of HR report.

What does this mean for employers? Well, for starters, it means undoing some of the previous norms like the expectation that people sat in the office past 5 p.m. just to show supervisors they were putting in the time.

Another more challenging aspect of this part of the contract is reprioritizing people’s to-do lists. Managers must ask, “Do people really need to fill out that form? Is that extra project going to make enough of a difference to justify putting one more thing on the plate of workers?”


Along with this new focus on work-life balance comes the understanding that the 9 to 5 just doesn’t work anymore. In fact, employee engagement and experience and flexibility are the top two priorities of HR leaders, according to the State of HR report. The pandemic proved remote work was feasible and often resulted in more productive employees. It also showed bosses that they didn’t have to have their eyes on workers 24/7.

Now, employees expect to be able to work when and where they see fit. They want an employer who understands if they have to step out for a doctor’s appointment or pick up their kid from school. Employees, of course, must do their work, make deadlines, and hit KPIs or the contract will be broken on their end.  

Empathetic Leadership

The days of the dour supervisor are over. People are looking for their leaders to show compassion and care about their wellbeing and their professional growth. In fact, some HR leaders have suggested that empathy is no longer optional.

“We are all here to do our best work, and when your work environment is one where you feel safe and capable of doing your best work, retention and employee engagement soar,” says Maria Leggett, Director of Talent and Professional Development at MHI in Charlotte, North Carolina, who spoke at HR Exchange Network’s HR and Future of Work event. “Empathy is a critical leadership skill. The only way that companies will adapt and change and indeed be agile is by trusting their employees, management, and customers.”

WATCH: Important Steps to Strategically ‘Free’ Up Managers to Become Leaders

Diversity, Equity, and Inclusion (DEI)

Diversity has been a priority for companies for years. But the pandemic put DEI initiatives in the spotlight, and pushed organizations beyond mere representation. Now, they are assessing their processes and culture to provide equity of salary and opportunity and to ensure employees feel as though they fit in and are welcomed.

HR leaders have made the business case for DEI by linking diversity with positive business outcomes. But particularly the inclusion and equity parts of DEI are vital to the new psychological contract. People expect to be able to bring their whole selves to work and to be accepted regardless of race, gender, religion, sexuality, etc.

READ: How to Train Leaders for Transformation

Matching Values

Fit might not have been as important in the hiring process in the past, but now it is another essential part of the psychological contract. Recruits and employees are choosing to apply to jobs that match their values and give them a sense of purpose.

With employee activism on the rise, companies that veer away from their values are being held to account. For example, Disney employees recently forced CEO Bob Chapek to take a stand against Florida’s “Don’t Say Gay Bill,” which many feel is an affront to the LGBTQ+ community.

Ultimately, the psychological contract between employer and employee will vary from place to place. Some might also expect learning and development opportunities or mental health and wellness initiatives. Regardless, with these new norms taking shape, employees are changing their expectations. Frankly, they are willing to walk away from an employer who doesn’t abide by these unofficial guidelines.

Photo by SHVETS production

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