How To Wildly Exceed Your People’s Expectations

Episode #347 How To Wildly Exceed Your People’s Expectations

KEEPING PEOPLE “HAPPY” ISN’T YOUR OBJECTIVE

Keeping people happy…

It seems to be a constant focus for leaders at all levels, and it spawns all sorts of cultural ills. But the worst part is that, for all the time, money, and energy that goes into trying to crack that nut, most leaders miss the mark.

To be honest, the vast majority of leaders aren’t even aiming at the right target.

You could work tirelessly, every day for the rest of your career, to try to exceed your people’s expectations – and not even move the needle. One of the main reasons for this is that you may be blissfully unaware of the role that the psychological contract plays in your people’s job satisfaction.

In this newsletter, I put people’s unspoken expectations into context to give you an understanding of the psychological contract, and to give you some ideas for how and where to start.

I begin by talking about how the psychological contract works; I expose two key elements of the psychological contract that leaders tend to overlook; and I finish with my top 5 tips for wildly exceeding your people’s expectations.

WHAT IS THE PSYCHOLOGICAL CONTRACT?

We all know what an employment contract is – it’s an agreement, normally spelled out in a formal document, that defines the terms of the employment relationship. These terms are often negotiated until they reach a point where each party is happy, and they sign the contract to confirm their agreement.

But there’s another contract that’s formed when you hire someone: the psychological contract. And often, you have no idea what you’ve just agreed to!

That’s because the psychological contract is implied. It’s the understanding that each individual – the person hiring and the person being hired – forms in their own head.

The concept of the psychological contract was developed over 60 years ago by Chris Argyris, a professor at Harvard Business School. Argyris noticed that, over and above the formal signed contract, there’s an unwritten understanding between an employer and an employee. It’s not really spoken about, and every individual may have a different perception of what the psychological contract is.

To make life even more interesting, the psychological contract can change frequently: it defines the mutual expectations that the employer and the employee have of each other.

Many problems that you experience in leadership stem from a fundamental mismatch in these undocumented expectations – but the problem is, if you don’t know what the expectations are, then how on earth are you going to take steps to bring any mismatches into alignment!?

The psychological contract largely reflects the social norms of the day.

For example, back in 1960 when Argyris formulated this concept, employees may well have seen their psychological contract like this:

• “I’ll come to work for you every day.”
• “I’ll give you a fair day’s work for a fair day’s pay.”
• “I’ll do what I’m told, and I’ll give you my best efforts while I’m there.”
• “When I leave the office, I’m done until I turn up tomorrow.”
• “In return, I expect to be treated with a level of dignity and respect.”, and
• “If I’m loyal to the company, then I expect the company to be loyal to me.”

There was a mutual understanding that employers and employees would look after each other’s interests.

Now, think about how the psychological contract evolved over the next 60 years. Just before COVID hit, the psychological contract could have been described (from an employee’s perspective), something like this:

• “I expect the same pay as anyone else who’s doing the same job.”
• “I expect the company to look after my personal health and safety.”
• “I expect promotion opportunities.”
• “I expect the company to invest in my professional development.”
• “I expect to be given autonomy in my work.”
• “I expect the workplace to be free from inequity, harassment, and bullying (which is guaranteed by the full protection of the law).”
• “I expect the company to understand and satisfy my need for work-life balance.”, and
• “Because I know there’s no such thing as job security, I expect my compensation to reflect that.”

But, since the Covid lockdowns started in 2020, the psychological contract has evolved even further. We can probably add this to the list:

• “I expect total flexibility in my work location and the times that I choose to work.”
• “I shouldn’t have to turn up to a central location because I can work just as effectively from home.”, and
• “I expect to be given meaningful work.”

In 99% of cases, the formal employment contract that existed in our post-Covid world were identical to the contracts that were in place before Covid hit. But the psychological contract was completely different.

And, all of this is before we even think about the expectations that might exist in the minds of each individual we hire.

INDIVIDAL PERSPECTIVES MAKE THIS EVEN HARDER

These general trends around the psychological contract don’t necessarily take into account people’s individual circumstances. But, as leaders, this is where we most often get it wrong.

Let’s just say, for example, you’re hiring two people into similar roles:

• Both roles have a base salary of $100,000 per annum;
• Both roles report to the same manager;
• Both roles have the same position description;
• Both individuals have been hired from the same intake pool; and
• Both employment contracts are identical.

Sitting behind these identical employment contracts may be two vastly different psychological contracts. And while there may be many elements that underpin these differences, let’s just look at a single element. What was their previous salary?

One person may have taken a pay cut from their previous job where they earned $120,000 a year. The other may have left a job where they were being paid only $80,000 a year.

The person previously on $120,000 will feel like she’s going backwards:

She may have tried to negotiate a higher salary, but you told her that you didn’t have the budget for it… however, she still may have felt that her current situation was untenable as she was being mistreated by her boss – she felt trapped… and, because you couldn’t move on her salary, she’s had to go away and work out what she’s going to cut out of her lifestyle in order to work for you… she feels like it’s a backward step that she was forced into due to her current adverse circumstances.

Taking that into consideration, it’s fair to say that there won’t be a lot of spring in her step when she turns up on the first day. At the center of her psychological contract will be the belief that she’s being undervalued!

However, the person who was previously on $80,000 is in a completely different frame of mind:

He’s just scored a 25% bump in pay… he has a new boss who’s excited to see him start… he didn’t have to negotiate to get what he wanted, which is a substantial improvement on his current position… he feels as though he’s being valued appropriately, and rewarded for the previous hard work that enabled him to land this job…

In his psychological contract, everything on the road ahead looks like upside!

Two people – arriving at exactly the same point – will have completely different expectations, depending on where they came from. And that’s just the money!

TWO COMMON MISUNDERSTANDINGS

You’ll never be able to satisfy every possible permutation and combination of people’s expectations, of course.

Having said that, some of the basic elements of the psychological contract are worth paying attention to, and the things you do – your leadership philosophy, style, behaviours, and actions – can either consolidate or damage the psychological contract.

There are two important points I want to make about the way the psychological contract works.

1. In the scheme of things, the psychological contract is a hygiene factor.

If someone’s expectations are met, then going over and above those expectations doesn’t necessarily create any additional goodwill – but breaching those expectations can land you in a world of pain, normally in the form of passive-aggressive employee backlash.

When I say “passive-aggressive”, I mean that you may not even realize that you’ve breached the psychological contract, and you’ll never see how the person chooses to get even with you. You just need to know that they will find a way.

You can think of the psychological contract like the minimum set of criteria that need to be met. The employee needs to feel as though the exchange of their time and expertise for money and career advancement is a fair exchange.

But once you clear that hurdle, you don’t get any extra bonus points for bending over backwards to make life better for your people. That just breeds a culture of entitlement and victimhood.

One of the biggest mistakes that leaders make these days is to pander to their employees and to try to give them everything they want. Of course, they do this for a variety of reasons, all of which are eminently justifiable:

• To avoid any conflict or unrest;
• To try to keep their people happy;
• To protect their mental health;
• To avoid overwork and burnout; and
• To minimize staff turnover in a difficult employment market.

When you boil it down, these are mostly just rationalizations that we use to avoid the hard work of leadership.

2. The psychological contract has two sides to it.

As a leader, you’ve got to remember why you have a job in the first place:

• Your primary objective is to maximize the value that’s created, using the resources your employer has invested: people, money, assets, and time;
• It’s to execute on management intent, which is communicated down from the board and the executive team;
• It’s to ensure the profitable growth of the business; and
• It’s to secure long-term employment for your existing people (and for future generations of employees) through superior performance in the market.

When you think about the psychological contract, your tendency will be to focus on meeting your people’s expectations.

Don’t let the company’s expectations play second fiddle, or you’re going to end up with a different problem: you’ll build a mediocre team with little chance of meeting its performance objectives… you’ll end up with a culture of entitlement, mediocrity, and dissatisfaction… and you’ll drive away any good people who may have wanted to work for you.

Whatever it is you choose to do as a leader should preserve the nature of the psychological contract – and there’s always going to be individual gaps in expectations. But regardless of this, you need to have a rock-solid foundation that preserves both sides of the psychological contract.

IS STRONG LEADERSHIP THE ANSWER?

How do you walk this tightrope?

• You want to satisfy your people’s unspoken expectations… AND
• You want to be a good steward of your employer’s resources… AND
• You want to build a team where everyone can thrive… AND
• You want to ensure strong performance.

What would you say if I told you that you could do all of this, and wildly exceed your people’s expectations at the same time?

You may have heard me say in the past, “The older I get, the less certain I am about… practically everything.” But there’s one thing that in my six decades on this planet I’ve become increasingly convinced of:

All self-esteem comes from doing difficult things.

If you can lift someone’s self-esteem, you are going to be one of the very rare people in their lives who leaves them better off than when you met them. Most people’s family, romantic partner, and closest friends don’t manage to do this. So it truly is an extraordinary gift.

This is why I have such an unshakable belief in the principles of strong leadership.

If you want to get a better understanding of what this is, we produced a podcast episode some time ago, which goes into a little more detail: Ep.182: What is Strong Leadership?

Strong leadership has all the elements you need to satisfy the core psychological contract that both parties hold, and to grow the self-esteem of the people who work for you.

Here are just three simple examples of how strong leaders achieve this.

1. Strong leaders make sure their people know how they fit into the big picture. They connect them to the purpose of the company, they show them how what they do makes a difference, and they never let them feel as though they don’t matter.
2. Strong leaders give their people respect and autonomy. They’re honest with them, they work at their own level, and they don’t exert inappropriate control. They don’t usurp their people’s accountability or decision rights, and they allow them to make mistakes in a safe risk-adjusted way.
3. Strong leaders lift people up to be their best. This is where the interest of the company and its people should be 100% aligned. By lifting people up to be their best, they give the company a higher level of performance and create better outcomes. But, this is also the path to helping people to build their self-esteem by stretching them beyond where they’re comfortable; by supporting them to do something exceptional; by helping them to grow, to do difficult things and to build their confidence.

Being a leader who wants the best for your people has nothing to do with giving them what they want. It’s about helping them to reach new levels of achievement, to give them the gift of self-esteem and to instill in them the confidence they need to go on to bigger and better things.

5 TIPS FOR WILDLY EXCEEDING YOUR PEOPLE’S EXPECTATIONS

If you want to know how to improve team performance, and at the same time wildly exceed your people’s expectations, clearly you need to start with our Leadership Beyond the Theory program. This is where we give you all the tools and strategies you need, and then… the work begins because, ultimately, what you choose to do is entirely up to you.

In the meantime, here are my 5 top tips for meeting and exceeding the unspoken commitments that exist in each person’s psychological contract:

1. Understand what drives your people on an individual basis.

With your direct reports, you have to spend enough time with them to understand them: what lights them up?… what drains their energy?… when are they at their best?… when do they struggle?

Once you know this, it’s less likely that you’re going to do dumb sh!t – and it’s much less likely that you’ll breach the psychological contract without even knowing you’ve done it.

2. Communicate your intent.

Leaders typically don’t communicate frequently enough. And, when they do, they tend to not be sufficiently open and direct.

For the sake of clarity, you probably need to up your comms.

Don’t just tell people what you expect: tell them why it matters. Help them to draw a line of sight to what’s important, and help them to work out what’s not.

3. Listen.

Most people would tell you, at least in a roundabout way, what’s causing them to lose motivation.

It may only be in their body language, or an off-handed comment. But if you listen and pay attention, you’re going to pick up on something that may be dragging one of your people down before it damages their psychological contract.

4. Deliver on the promise.

Whatever you tell your people in the hiring cycle has to come true for them. There’s no faster way to breach the psychological contract than to oversell the opportunity, or to not deliver on your promises.

This goes way beyond money. Like I said, money’s a hygiene factor. It’s all the other stuff that wears people down.

How often have you heard someone say, “I don’t have enough people, the boss’s expectations are unrealistic, I’m working 60 hours a week and…” (wait for it)“… I don’t get paid enough for this shit?“ 

5. Strike the balance between company and individual needs.

Communicate the company’s expectations really clearly. Don’t be embarrassed about the fact that your goal is to lift company performance. That’s why you are there.

If you don’t focus on that to the best of your ability, then one day all your people may be out of a job.

But also, talk about what it means to be on a winning team. Be explicit about the career opportunities that flow stretching your people to give them accelerated development. Talk about the fact that the team is doing something special.

THE ONES WHO COME WILL NEVER LOOK BACK!

Like most things in leadership, there’s no silver bullet.

It starts with a leader’s belief, the courage to put respect before popularity and the willingness to do the hard work of leadership.

Make no mistake, your people won’t all of a sudden miraculously feel as though their expectations have been wildly exceeded. It’s going to take at least one or two cycles of the stretch / grow / succeed experience before people are going to start to feel any different.

And let’s face it, not everyone’s going to choose to make that leap. Many people are going to self-select along the way. But for those who do choose to put their trust in you, they’re going to be rewarded beyond their wildest expectations.