GERMANY, THE PSYCHOLOGICAL CONTRACT IS CALLING: A LONG PATHWAY TO SUSTAINABLE HRM

Lau, Annica ORCID: https://orcid.org/0000-0002-8956-4755, Rebehn, Christian, Nichol, Lynn ORCID: https://orcid.org/0000-0001-9889-9912 and Bell, Robin ORCID: https://orcid.org/0000-0002-7325-4277 (2025) GERMANY, THE PSYCHOLOGICAL CONTRACT IS CALLING: A LONG PATHWAY TO SUSTAINABLE HRM. In: 2025 Bi-Annual Psychological Contract (PC) Small Group Conference, April 7-8th 2025, Mike Ilitch School of Business, Wayne State University, Detroit, Michigan, USA. (Submitted)

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Abstract

This conceptual paper explores the underrepresentation of the psychological contract (PC) in German Human Resource Management (HRM) research, education, and practice to identify cultural, organizational, and academic barriers to the concept’s adoption. In response to global calls for more sustainable employment and the benefits of understanding the PC (United Nations, 2015; Griep, Kraak and Beekman, 2023; Wojtczuk-Turek et al., 2024), we propose a framework for integrating sustainable PCs to bridge research and practice (Guest, 2024). This framework emphasizes attentiveness, responsibility, and responsiveness to foster mutually beneficial and long-term employment relationships.
RATIONALE
A psychological contract (PC) is a cognitive schema through which employees interpret workplace interactions, obligations, and expectations (Rousseau, 1989). They are highly subjective, shaped by personal perceptions, social exchanges, organizational culture, and communication. Kraak et al. (2024) highlight that in the wake of historical changes, the employee-employer relationship is being redefined. Research on working from home (Gong and Sims, 2023), artificial intelligence (Braganza et al., 2021), and multiparty employment in a global context (Schuster et al., 2022) have increased.
These emerging trends in the workplace are linked to broader shifts in organizational
priorities such as social responsibility and long-term economic benefits. The role of human resources (HR) becomes central to align workplace practices with evolved employee values to create and maintain high-quality PCs that meet the sustainability goals of an organization. By offering sustainable PC terms , HR departments can realize the desired outcomes of employee well-being, growing environmental awareness, and building sustainable career ecosystems (Donald, Van der Heijden and Baruch, 2024).
While interest in sustainable HRM is growing (Aust et al., 2024), the concept of PC remains underutilized in research, education and practice in Germany (Braekkan, 2012). Although the vast majority of German employees report being affected by PC breaches or violations (Reimann and Guzy, 2017), PC has not been of great interest to the practitioner and scholarly community and is rarely an explicit element of consideration in HRM practice (see Table 1).
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DESIGN/METHODOLOGY/APPROACH
This paper employs a conceptual approach, drawing on a comprehensive review of
literature on PC theory, HRM practices, and sustainability in Germany. It synthesizes insights from global and German contexts to develop a framework that adapts the PC to Germany’s specific cultural, legal, and organizational environment. The study integrates relational HRM perspectives with sustainability goals, building on construct definitions such as sustainable PCs (Kraak et al., 2024).

A FRAMEWORK FOR SUSTAINABLE PSYCHOLOGICAL CONTRACTSIN
GERMANY
Though prominent in Anglo-American HR literature, the PC has not gained significant
traction in German HRM departments. We suggest this underrepresentation is due to five key factors: legal, educational, organizational, cultural, and research. We discuss these five factors by drawing on Kraak et al.’s (2024) construct definition of a sustainable PC, which requires both parties – the employee and the employer - to be attentive (listening to and understanding each other’s needs), responsible (acting on those needs ethically and fairly), and responsive (adapting quickly and constructively to changes). Meeting these conditions paves the way for a sustainable employment relationship that benefits both sides while being strong enough to withstand future changes in society and the workplace (Cooke, Dickmann and Parry, 2020).
First, Germany’s HRM practices are strongly influenced by legal chains (i.e. codified
labor laws and collective bargaining agreements), which prioritize employee protection through mechanisms like dismissal protection, regulated working hours, and mandatory social insurance (Giardini, Kabst and Müller-Camen, 2005). Works councils, present in companies with more than five employees, significantly impact workplace decisions, representing 43% of employees in 2023 (Destatis, 2024). While these legal frameworks ensure employee rights, they overshadow the nuanced informal, mutual expectations that characterize the PC (Braekkan, 2012). By introducing the idea of a sustainable PC, HRM professionals can go beyond legal obligations to focus on human aspects like understanding needs (attentive).
Second, the limited integration of relational frameworks like the PC within HRM
education exacerbates this issue. German HRM curricula predominantly focus on strategic and operational HR concepts, sidelining relational dimensions. The most commonly used HRM textbooks in Germany (cf. Jung, 2017; Scholz and Scholz, 2019; Stock-Homburg and Groß, 2019; Berthel and Becker, 2022; Holtbrügge, 2022) hardly mention the PC. Only Huf (2022) dedicates a partial chapter to legal and psychological contracts. The PC is rarely addressed in practitioneroriented outlets (see Table 1). As a result, HR professionals are less equipped to recognize and effectively use the PC in practice. Teaching business and HRM students relational aspects is vital for developing adaptability to evolving workplace dynamics (responsive).
Third, Germanys emphasis on standardized organizational practices, particularly high-
performance work systems (Brodbeck, Frese and Javidan, 2002), prioritize collective outcomes and formalized procedures, often overlooking the individualized, perception-driven nature of PC (Braekkan, 2012). Training HR professionals to think about employee-employer relationships in context of sustainability (attentive, responsible and responsive), could help in building deeper, non-standardized connections with employees. Broadening expertise will ultimately create more sustainable PCs, allowing organizations to tailor relationships while maintaining structure.
Fourth, Germany's cultural preference for formal structures reinforces this disconnect (Giardini, Kabst and Müller-Camen, 2005). The focus on structured processes and formal agreements often minimizes the value of informal, unwritten commitments central to the PC. Raeder (2018) notes that particularly the American term “psychological contract” leads to a negative reaction in Germany, where psychology is associated with private or pathological matters rather than the workplace. However, adopting a sustainable PC in Germany could foster open communication about mutual expectations, reduce misunderstandings, build trust, and enable constructive adaptation to a volatile work environment (responsive).
Finally, this neglect is compounded by limited research and awareness-building efforts. With fewer empirical studies and limited emphasis on psychological contracts in HRM discourse, the concept remains underutilized and less accessible to HR professionals. Current German research focuses on how PCs were affected by organizational changes (e.g. flexibility, downsizing), the role of leadership in managing PCs, and turnover intentions or health implications. It rarely utilizes the PC to understand positive developments or attempts to generate deeper knowledge about the creation or maintenance of PC (see Table 1). Sustainable PCs emphasize building and maintaining strong relationships, addressing dissatisfaction's root causes while fostering satisfaction and preventing breaches (responsible).
Together, these factors create a systemic underrepresentation of psychological contracts
in German HRM research and practice. A more balanced approach that integrates both formal and relational frameworks is needed to enhance workplace dynamics. While the underrepresentation has long been noted (Raeder, 2018), little has happened in practice, education and research to change this. We present a framework for a sustainable PC that considers contextual, organizational and individual factors and adds the perspectives of research and practice.
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LIMITATIONS
This paper's conceptual nature limits empirical validation. The framework requires testing in varied organizational settings to evaluate its applicability and effectiveness. The findings, focused on Germany, may need adaptation for wider use.
THEORETICAL AND PRACTICAL IMPLICATIONS
We show that the PC requires and deserves more attention by German scholars. While
it has been of constant interest, the circle of scholars engaging with it remains very small and apparently fails to attract mainstream attention. We answer recent calls for context-specific PC research by presenting a conceptual framework of the sustainable PC with credit to the specific circumstances and realities of the German working world. Empirical researchers may utilize our framework to structure their research and interpret their findings. Meanwhile, our framework can be introduced into university and professional HR curricula and in continuing professional development programmes, raising awareness for sustainability in HRM and explaining the reciprocal employee-employer relationship. Raising awareness of PCs among employees and employers, including small business owners, can make their active management a staple in business and employment relations.
The concept of sustainable PC can and should be directly applied to HRM practice. By
creating awareness for the concept and its mechanics, scholars can aid practitioners to utilize the framework in hiring and onboarding processes and negotiations, allowing for comprehensive and explicit discussion to align PCs and thus reduce the risk of breach. In regular conversations between parties to the exchange relationship, the changing nature of PC can be actively acknowledged and expectations readjusted. We believe that greater awareness of the sustainable PC, its subjectivity and volatility can contribute greatly to the installation of communication channels and modes of conversation that allow employees and employers (or agents thereof) to freely voice their expectations and interpretations. It would provide a forum for more open and honest communication which in turn leads to better aligned PCs, fewer breaches, and decreased turnover and create a further and unexplored dimension to HR practice in Germany.
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Table 2 summarizes concrete actions that the stakeholders – scholars and practitioners
– can take to promote sustainable PC in Germany and develop context-specific knowledge.
ORIGINALITY AND VALUE
We argue that the psychological contract (PC) is underutilized in German HRM due
to five factors: focus on labor laws, limited HRM education integration, reliance on standardized practices, preference for formal structures, and lack of research. A framework for sustainable PCs tailored to Germany can address these issues by encouraging open communication, going beyond legal obligations, and adapting to workplace changes. Our framework offers a starting point for integrating PCs into German HRM practice to inspire a
culture of sustainable workplace relationships.

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