The Importance of Managing Expectations

Posted by on Dec 4, 2017

A few years ago, Ally Bank did a series of clever commercials with children. They all demonstrated how powerful and important expectations are and how we manage (or don’t manage) them with customers, employees and each other. The commercial with the pony captures the essence of psychological contracting.

What is Psychological Contracting?

Social psychologists who study the nature of the employment relationship refer to psychological contracting as an exchange process. Essentially, it goes like this…

“You give me the right information, in the right way, at the right time, and I’ll do the same for you…”

And it works like this…you take a job with the belief that there are mutual obligations between you and your boss, between you and the organization. This belief is based on the perception that an exchange of promises has been made. These promises are perceptual, unwritten and are not necessarily discussed, meaning that the chances that promises will be broken are pretty high.

Grounded Leaders Create Mutually Rewarding Relationships

Why does the psychological contract go awry? Let’s take an example. During the recruiting process, you heard your boss say that your company will support you and your career goals. That sounds like a promise for advancement to you.

But what your boss really meant is … if you work hard, build skills valuable to the company, if your department has the training budget and has allocated the time, you’ll get a shot at development.

There’s a lot more tied to the boss’ promise — leaving the situation wide open to broken promises. Newcomers (especially) tend to have high expectations. For many young workers, their first job gets littered with real and perceived broken promises. So what you say, from the beginning of a relationship, is remembered and taken to heart – even if only unconsciously. The promises you make, the behavior you demonstrate, how you treat employees, colleagues (even your boss), all build the first layers of this psychological contract.

When the psychological contract breaks down, either because of economic downturns or bad management, it causes anxiety, resentment and anger. This is why managing expectations (and your own expectations) is critical to being an effective leader.

In “Grounded,” our CEO Bob Rosen talks extensively about the need for leaders to build their social health — authenticity, mutually rewarding relationships and development of nourishing communities. Understanding the role psychological contracting plays in your ongoing leadership activities will help you tremendously.