What are the two types of psychological contracts mentioned in the context of employee expectations?

The two types of psychological contracts referred to in the context of employee expectations are transactional and relational contracts. This classification is significant as it highlights the different expectations and motivations that employees have regarding their relationship with the organization.

Transactional contracts are typically short-term and focused on specific monetary exchanges or benefits, such as salary and benefits in return for work. These contracts emphasize economic exchanges and tend to be more rigid, with clear expectations and obligations on both sides. Employees under transactional contracts often prioritize specific outcomes and tend to see their relationship with the employer in a more utilitarian or market-based manner.

In contrast, relational contracts are long-term, emphasizing a more emotional or supportive relationship between the employee and the organization. These contracts involve trust, mutual respect, and a sense of loyalty. Employees engaged in relational contracts are more likely to value job satisfaction, career development, and an overall positive organizational culture, thereby fostering a deeper connection with their employer.

This distinction is crucial in managing employee expectations and helps organizations tailor their management strategies to enhance employee engagement and satisfaction effectively.