What psychological or social contracts are you bound by?

The first thing you learn as a law student studying contract law is that there are four elements that make up a contract: Offer, acceptance, consideration and intention. In essence, you need to show you want to enter into the agreement, give something up to show you’re serious and have a clear understanding between the parties about what’s being exchanged.

Social contracts are slightly more difficult because more often than not, one party remains oblivious to the terms they’ve entered into. This is because the terms are based on the expectations of the other party. For instance, I have social contracts with my friends and family. I expect them to act in certain ways around me and when they act out of character, I’m likely to respond in turn as I’ll feel like they’re in breach of our social contract.

The same expectations apply outside of our social circles in both work and our lives as consumers. When it comes to employment, research shows that the ability of an employer to meet an employee’s expectations has a direct impact on the likelihood of their leaving or staying with the company and the amount of effort they invest into their jobs. Within our jobs there are temporary and long term social contracts. From the day we sign on to join a company, we hold an expectation that the company we work for will protect us as best they can and help us grow and progress in our jobs. This is why corporate restructures can be so harmful not only to morale but willingness to invest in keeping a company going. The arbitrary decision to fire staff (where we can’t see evidence that they were doing a terrible job or something socially inexcusable) damages the trust people invest in their companies and in turn breaches the social contracts and expectations we have of them. Similarly, we expect that our bosses will stand up for us and protect us when we make mistakes. A boss who fails to protect their team, who takes credit for their work or throws them in the firing line when things go wrong will be in direct breach of a social contract. Though nothing may be said, one only needs to look at how staff quickly become cautious and calculated in how and when they respond, how much effort and time they invest and how long it takes before they start looking elsewhere. This is the reason studies have shown that your direct boss is the most important factor in determining employee happiness, satisfaction and likelihood of staying with a company.

But our social contracts are not exclusively generic. We take our expectations from past experience and impose them upon our new work environments. For example, someone used to a promotion every two years or a raise of 10% each year will be dumbfounded if that doesn’t happen in a new job unless it’s made explicitly clear during the hiring process. The challenge is that people rarely put their cards on the table during this courting process and this lack of transparency can result in all sorts of difficulties as time progresses.

When it comes to temporary projects, these social contracts also stand. For example, if working to a tight deadline means that someone stays back late at work, works on weekends or takes on an extra task to help others out, they’ll expect something in return. It could be something as simple as self-satisfaction from helping others (sort of like the high we get from donating to charity) but it’s more likely that they’ll expect at least praise or recognition if not some physical or monetary compensation as thanks.

Customers and consumers also hold social contracts with companies. Choosing brands that they want to represent them and the values they hold, customers will support brands, championing them through their purchases, showing off labels and in some situations becoming influencers and brand champions to encourage others to follow suit. However, the moment a brand gets caught for misbehaving or for acting in a way that consumers don’t want to be associated with, they’ll drop them without blinking. This is why customer insights are considered as valuable as they are. While customers may not always know or reveal exactly why they choose one brand over another (where this is proactive rather than a default choice due to familiarity), understanding the terms of the social contract can help companies to better engage with their customers, better meet their needs and build their brands.

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