Employee Recovery: getting back to ‘normal’ and the importance of the psychological contract

A rear view of businessman commuter with electric bicycle traveling to work in city.

By Liz Hey, Principal Psychologist, Hogrefe Ltd

The ‘new’ normal

Recovery is defined as a return to a ‘normal’ state of health, mind, or strength. But what is now considered ‘normal’? The coronavirus pandemic has resulted more than 500 million confirmed cases and over 6 million deaths worldwide (World Health Organization, 2022). Let those numbers just digest for a minute … how can the world return to any definition of the word ‘normal’ following this? And yet finding a way to move forward is essential, just as humans have done after every catastrophic event they have experienced.

Getting back to a ‘new normal’ (or some semblance of pre-Covid life) requires living and working, with or without the people who were in our lives before, in the same or in different jobs, with or without ongoing health concerns, and processing everything that has happened during the last two years. With the ongoing pandemic, global warfare and, more locally, substantial rises in living costs, the road to recovery will rely on a level of resilience few in this lifetime have experienced, with important lessons to be learned for the future.

The Great Resignation & the problem with presenteeism

The ‘Great Resignation’ theory would suggest that, since the pandemic, large numbers of people are re-evaluating what they want from work and will no longer put up with job dissatisfaction. Figures from certain industries go some way to support this assertion and, even if employees are not actively looking for a new job, they are now deciding that they are more likely to start looking (CIPD, 2022). For those that choose to remain in their jobs, the picture is not looking particularly healthy either, with the rate of cases of work-related stress, depression or anxiety in 2020/21 remaining higher than pre-coronavirus levels. These account for 50% of all work-related ill health cases, and half of the people suffering from work-related stress, depression or anxiety report that this was caused by, or made worse by, the effects of the coronavirus pandemic (HSE, 2021). The industries in which this is most prevalent are education, health and social work and professional occupations. Currently, the cost of work-related stress to the UK economy is believed to be £4 billion, primarily in lost working days. The more hidden costs of ‘presenteeism,’ wherein employees are attempting to work in spite of struggling with physical and mental health concerns, is likely to significantly increase this figure.

It is clear that employees continue to need support and help with the journey back to the ‘new normal’ at work. The link between employees being engaged and being productive is well-researched; in order to reduce work-related stress, organisations need to improve wellness at work to reduce absenteeism and create a happier workforce. Working throughout the pandemic has presented challenges - but also opened up opportunities for organisations to create new ways of working for the benefit of both employee and employer.

Reinventing remote: making working from home possible

According to the CIPD, home working has risen to 19% (from 5% previously) over the past 12 years, with a significant portion of that rise occurring during the pandemic. This is prevalent mainly in professional, scientific and technical, information and communication, public administration and defence, financial and insurance, and health and social care roles. Less than half of UK employees report that their organisations have other flexible working arrangements in place, such as job shares and changes to hours. Flexible working arrangements beyond home working “give opportunity and choice to all,” and “will empower people to have greater control and flexibility in their working life … and support(s) peoples’ wellbeing and productivity” (CIPD, 2021).

The ‘hybrid’ working model is only one way, and perhaps only a quick fix, in trying to ensure that the organisation is operating in the most effective way. Going forward, employers need to do more to help staff feel that they are valued, that they are being treated fairly, and that they have some control over their work environment.

The psychological contract: finding balance

The psychological contract goes beyond the legal contract of employment and refers to individuals’ expectations, beliefs, ambitions, and obligations at work. These expectations may be around job security, managerial support, or learning and development. They may also be linked to the concept of fairness or equity. The psychological contract is a reciprocal obligation and more often perceived to be between the employee and their line manager, rather than the organisation at large. Line managers are key to understanding and managing employees’ expectations on what fair processes and outcomes look like in an organisation.

For employees who believe that there is a balance between the contribution they make to the organisation and what they receive back from the employer, there can be positive outcomes. However, if the psychological contract is breached by either the employer or employee, this can lead to poor job satisfaction, a lack of organisational commitment and reduced work performance. Factors that may affect the psychological contract include economic uncertainty (for example the impact of the coronavirus pandemic and Brexit), technological developments, competition, and organisational downsizing. Changes to working practices can also impact on the expectations of workers.

Remote or hybrid working practices rely on a strong psychological contract between employee and employer, and even between co-workers. Communication, trust, and transparency are critical to successful working practices. An effective two-way dialogue between employer and employee is necessary for giving employees a 'voice'. Trust in organisations is essential for the creation of a positive and risk-free environment. Trust is also linked to employee motivation and becomes increasingly important during disrupted working practices.

Psychological contracts which are transactional are found in organisations that have more authoritative management and hierarchical control. They focus more on extrinsic rewards and less about what might be really motivating employees. These can lead to discontent and high turnover. Relational psychological contracts, however, are characterised by mutuality, loyalty, and greater effort and commitment, and are likely to have more longer-term success.

The psychological contract is central to work performance and employee engagement. Successful management of employee expectations requires a broader look at the organisational strategy, and the people management and development practices that support it.

What can organisations do to ensure the right kind of psychological contract is in place?

Manage expectations: Whether it is onboarding a new employee or addressing new ways of working following a change to working practices, employers need to create the foundations of building a realistic psychological contract.

Measure employee attitudes: This should be done on a regular basis, regardless of how small or large the organisation is, to identify any potential problems, for encouraging employee voice, and being transparent in its outlook. If employees are engaged this is likely to be characteristic of a positive psychological contract.

Create learning and career development opportunities: Employees expect their organisation to offer opportunities for skills and career development.

Factors such as these should be considered before new working practices are put into place, or into policy. With a robust psychological contract established, employees are more likely to be engaged and the new and agile ways of working will be more sustainable longer-term.

With continuing uncertainty as to whether people will decide to remain in their jobs and concerns about the wellbeing of those at work, it seems in the best interests of all employers to ensure that employees are supported and offered help where needed. Organisations have a clear role to play in helping their employees with their return to their ‘new’ or ‘next’ normal working environment. Flexible working arrangements, workplace adjustments, and collaborative technology are some of the ways that organisations can enable their workforces to work in a maintainable, hybrid way.

And the best way to find out what employees need right now? Why not simply ask them?

Editor’s note: Hogrefe has recently developed and published the Emotional Processing Scale – Wellbeing – one way of ‘checking in’ with employees to see how they are coping with change, handling return to work, or dealing with outside stresses that may impact their work. Find out more on our website.


CIPD (February 2022) The great resignation- fact or fiction? https://www.cipd.co.uk/news-views/cipd-voice/Issue-33/great-resignation-fact-fiction#gref

CIPD Trends in flexible working arrangements (April 2022) https://www.cipd.co.uk/knowledge/fundamentals/relations/flexible-working/trends

CIPD article by Dr Wilson Wong The psychological contract (February 2022) https://www.cipd.co.uk/knowledge/fundamentals/relations/employees/psychological-factsheet#gref

HSE Work-related stress, anxiety or depression statistics in Great Britain (December 2021) https://www.hse.gov.uk/statistics/causdis/stress.pdf

Rousseau, D. M. (1989). Psychological and implied contracts in organizations. Employee Responsibilities and Rights Journal, 2: 121-139.

World Health Organization Coronavirus (COVID-19) Dashboard (2022) https://covid19.who.int/