Transactional & Relational Terms

Components of the Psychological Contract

The concept of the psychological contract may be differentiated and categorized as being transactional or relational in nature in order to clarify an otherwise perplexing theory.

  • Transactional terms are usually short-term and performance related, involving set monetary exchanges. A good example of such a contract would be temporary secretarial work; commitment and development of skills are negligible and a specific wage rate and period of employment is agreed on.

  • Relational contracts are based on emotional involvement as well as merely financial reward. They tend to be far more long-term and involve significant investment by both the employer and employee. Relational contracts are present in occupations that involve extensive training, such as law.