What is the psychological contract? Why is it important to understanding employment? What responsibility should organisations have to help employees deal with work stress? What major challenges to the quality of work life are presented by the conditions and environment of today's organisations?

As the text states, a psychological contract is the set of expectations held by the individual that specifies what the organisation and individual expect to give and receive from one another in their working relationship. When an inducement-contributions balance exists, the value exchange in the psychological contract is felt to be fair; thus, the individual can be expected to feel positive toward the organisation and his or her position. However, when the exchange of values is perceived to be unfair, the individual may feel negatively toward the organisation and his or her position, possibly resulting in negative attitudes, work behaviour, etc. Managers should take care to first create a healthy psychological contract by fairly representing inducements and discussing expectations about employee contributions. The same honesty applies when maintaining the psychological contract. Quality of work life encompasses such areas as participation, independence, equity and responsiveness.

Organisations should help employees deal with stress for several reasons — not the least being the high costs of employee turnover and absenteeism, low productivity and labour shortages in some areas. As well, in terms of the psychological contract, the organisation has the responsibility to ensure the balance of expected contributions from the employee with inducements. There will be a limit to what an employee can feasibly do, no matter what the contributions, and this limit needs to be monitored. It is also important to achieve optimum performance from employees and this means not losing performance due to the health and other problems associated with stress. Finally, there is a social responsibility to care for the humans in the workplace and the likely negative publicity of employees or former employees who criticise the organisation's treatment of its workforce.

Today's organisations present many challenges for quality of work life. There is no limit to the points that might be raised. These might include complexity, constant organisational change, stress, quality of management, uncertainty, family/social pressures. The important thing would be for students to consider and discuss these rather than coming up with a definitive list.