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Leadership Styles and Their Impact on Psychological Contract

Essay by   •  February 28, 2018  •  Research Paper  •  3,886 Words (16 Pages)  •  729 Views

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The study examines the different kinds of leadership styles that exist in an education institution and the impacts that this leadership makes on the psychological contract between the leader and sub-ordinate. Through this study, we investigate the relationship between leadership styles and the psychological contract in various work teams or committee teams in the organisation.The objective of this study is to first conceptualise the relationship between leadership styles and the psychological contract, which is achieved through an in depth literature review on the two constructs, followed by determining the construct validity and reliability of the leadership style questionnaire and psychological contract questionnaires and finally to determine the relationship between the two aspects of our study.


Work teams, team members, team leader, leadership styles, employment relationship and psychological contract.


In recent years, many relationships at work have been mauled by organizational changes such as downsizing, reengineering, and reorganizations, which have had significant effects on the relationships with one’s supervisors who have become less personally involved; peers who have been more competitive for fewer resources; customers who are more demanding; organization which has become less personal. Managers realized that they do not just need more efficient processes and technology in order to compete, but also need motivating people in order to survive and to be competitive.

Today we have new leadership definitions. It is redefined as being grounded in relationships rather than execution of positional authority. It is more about a process involving relationships and reciprocity with others. Leadership is the process by which a person exerts influence over other people and inspires, motivates, and directs their activities to help achieve group or organizational goals. Effective leadership increases an organization’s ability to meet all challenges, but at the same time it includes the need to obtain a competitive advantage, the need to foster ethical behaviour.

Psychological contract is defined as “individual’s beliefs regarding the terms and conditions of a reciprocal exchange agreement between that focal person and another party” (Rousseau, D. M. (1989) Psychological and implicit contracts in organizations). Today employee may be effective because of his liking of the job, passion for the job, opportunities for the job, sometimes, stress or deadlines or rarely obligation towards organizations. But such effectiveness can be of a temporary nature. whereas if an employee has a positive psychological contract with his leader, it aligns his goals with his leader’s goals and may increase his personal effectiveness, satisfaction and in turn productivity manifolds. Psychological contracts are never discussed amongst the teams. Employees try to work on a set of beliefs and expectations from a company. His behaviour may be guided by company policies but his effectiveness can be ensured by company’s mission & visions.[pic 1]

Today people are also experiencing that people do not change organization, they change managers (and hence the organisation). This has been observed in various industries and across various positions and designations. The increased frequency of the phenomena is a trigger for the current study.  The study refers to the leadership style model developed by Kurt Lewin; and hence will be considering three styles of leaderships viz. authoritarian style, participating style and delegative style. Therefore, this study will mainly focus on how various leadership styles beget unsaid psychological contract between an employee and its manager. The second objective will be to find out whether these psychological contracts change or remain same for an employee and its leader. And third how these phycological contracts are affecting the employee effectiveness.  


A. Conceptual definitions:  The relevant conceptual definitions from the literature review are given below:

Leadership styles: A leadership style, according to Cooper (2003) defines the behaviour of Leaders towards prospective followers. It also refers to the approach and manner of giving direction, implementation of plans, and inspiring them.

 • Psychological contract: Schein (1980) says that psychological contract’s definition can be given as "unwritten set of expectations between every member of an organization and the various managers and others in that institution operating at all times". The contract is representative of "a set of beliefs (that are subjective) about the agreement of exchange between the individual and the company" (Sparrow & Cooper, 2003).

 • Teams: A team is "a small group of people with skills that are complementary to each other, who are committed to a common purpose, performance goals and approach for which they hold themselves mutually accountable." Teams are the basic units of performance for most organizations where all the experience skills and insights of a number of individuals are bond together.

Well-being: Wellness is defined as the state of being illness-free, injury and disease (Browne, 2005).

• Lewin 's Leadership Style Model: Since there are a variety of models from where leadership styles can be studied from, for the purpose of this study, the leadership style model of Lewin will be used. This model identifies three main leadership styles. These styles include authoritarian style, participative style and delegative style.

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Source: Adapted from the U.S. Army Handbook, 1973.

The literature review is focused on the functioning of work teams, the relationship between team leaders and team members, the psychological contract between them, violation of the psychological contract and different leadership styles.

Comte(1988) said that systems theory is an idea that focuses on the arrangement of and relations among elements or parts of an entity, which connects them as a complete unit. General systems theory has been defined as an approach to the study of systems (either individuals or group) that has following characteristics:

• A general structure is common for all systems;

• Contents of systems differ significantly;

• A hierarchy of systems is created by all systems that keep increasing in intricacy, and

• Changes in any one component has an effect on the rest of the systems too.

Having mentioned above, he following basic assumptions have been made:

• Psychological contract and Leadership styles are two separate and different constructs. When they are used together when doing an assessment, there is a possibility that a relationship may come out, which results in a novel understanding of social behaviour in a particular system. If relationship could not be uncovered, it implies that the combination of these parts do not together create a "new system"



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