Organizational Implied Contract: What Did Your Organization Promise?

March 7, 2012
The Implied Contract

Implied Contract

As a leader, you know the importance of hiring good people (as well as the cost of making poor hires), so you lay out role and responsibilities for each position, using very specific and explicit expectations. You modify job descriptions to address past oversights or new circumstances. And yet, six months or a year after you make the hire, either you and/or the new hire are dissatisfied. Why?

The Implied Contract.

When a person is being hired, they and you have unstated expectations. These unstated expectations are often culturally based. The employee may come from a culture where they tightly control budgets, are kept abreast of coworkers’ progress daily, avoid fraternizing with direct reports, and aren’t expected to work on weekends. While you feel like you’ve made as many of your expectations explicit as possible, you may not have covered what meetings you expect the new hire to attend, what accommodations you’re willing to make when a family member is ill or when a child’s ballet recital coincides with a work deadline, and what travel expenses you’re willing to cover. Sometimes, you don’t express expectations because they’re so basic that you don’t want to insult the prospective employee. As a young tech company, we once hired a senior VP from Northwest Airlines only to learn he had no, none, zip computer skills.

With any new employee, there’s an adjustment period. You and the employee expect some give and take, but if you want to ensure alignment and avoid hurt feelings and wasted time here are some questions to ask before making the hire:

  • How do you like information reported to you and how frequently?
  • Do you make friends with direct reports or maintain distance?
  • Do you tend to motivate others with criticism or affirmation?
  • Do you tightly control budgets or leave that to your direct reports?
  • What are your travel and entertainment expectations–in terms of allowable expenses?
  • Does your spouse ever accompany you on work trips?
  • How many hours/week do you tend to work, and how much flexibility do you have?
  • Do you expect admin to assist with your personal as well as professional matters?
  • How comfortable are you with having/not having the authority to fire your direct reports?
  • What expectations do you have about HR?

There will always be elements of the Implied Contract that you don’t address explicitly, but the more you limit these elements, the less room for misunderstanding, frustration, and blame there will be.

For more in depth reading on this subject go to: Journal of Organizational Behavior.

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