Discuss the below:
Based on the literature, what should managers understand about conducting an effective employee performance appraisal?
Psychological Contract
A person believing in what is expected of each other in a relationship.
The behavior is guided in much of the same way as a contractual legal agreement does. The only difference is that the agreement is perceptual in nature. It is not formally recorded on paper but thought to be understood.
If not communicated well, each person will interpret the expectations of each other differently. Ultimately, this could create challenges with interpersonal relationships and a negative, unbalanced working environment.
Relational Contract
Based on friendship. Having long-term perspectives are key to this type of contract. They are characterized by identification-based trust of knowing the other person for a period of time. Trust is earned throughout the relationship where it becomes accepted and understood by one another. Both parties' wants and desires are considered to be important and respected. They are not tied to pay or other awards. A greater sense of commitment toward the organization and the job is demonstrated by the individual. Because it is relational, trust is solely based on people and having the understanding that everyone will behave as promised because they have each other's best interests at heart.
Transactional Contract
A type of psychological contract that identifies relational characteristics specifically focused on economics and short duration of employment. For example, seasonal employees in retail stores are hired during the Christmas holidays to assist with the overwhelming demand of customer shopping. After the holidays, temporary employment ends for those employees hired for that time. Transactional contracts are also characterized by revenue-based trust where monetary services are provided upon completion of services. Expectation levels are high between the parties, and reputation to build a foundation of success is apparent.