Sense and sensibility in psychological contracting: a multi-phasic perspective

Long gone are the days of lifelong employment and rigidly structured business relationships, and with that the benefit of static framings of these socially constructed realities. Ongoing change in relational dealings can challenge the perceptions of participating parties, creating the need for more nuanced models of evolving personal agreements. Psychological contracting is an established framework to discern and reconcile the promises created in continuing social exchanges (Rousseau, 1995). Often theorized and investigated in employment settings, the PC construct has been similarly applied to customer (Gillani et al., 2021; Kutaula et al., 2022; Menninger, 1958) and supply chain (Eckerd et al., 2015; Ozpolat and Dresner, 2018; Thorton et al., 2013) relationships. However, despite considerable research on PC dynamics (see Conway and Briner, 2005), confusion persists about why those participating in the same exchanges can perceive and respond differently to what has transpired. We suggest varied responses are likely attributable to differences in meaning from sensemaking (Weick, 1995), a process scholars have linked to PCs but not holistically explained (e.g. Chaudhry et al., 2009; De Vos and Freese, 2011; Diehl and Coyle-Shapiro, 2019). The goal of this article is to thoroughly delineate how PCs are rooted in personal sensemaking, explaining in the process how information gathering, interpretation, and responsive enactments drive the behavior of holders. Better integrating these theories contributes broadly to management research and theories of social exchange.

In contemporary framings of psychological contracts, authors tend to agree on the following: (1) PCs embody personal beliefs about the terms and conditions of reciprocal exchanges governing one’s relationship with another party (Rousseau, 1989), (2) obligations and expectations are included in PCs provided there is mutual agreement (perceived or actual) they need to be fulfilled (Conway and Briner, 2005; Morrison and Robinson, 1997), (3) a PC’s structure can change over time, from subtle shifts to entire overhauls depending on the circumstances (Rousseau, 1995) ^[1], (4) each party accordingly may harbor different perceptions of what has been “promised”, their relative importance, and the degree of fulfillment when exchanges occur, and (5) existing PCs only tend to draw attention if holders come to question a sense of adherence (Schalk and Roe, 2007). In contrast, existing works that delve into the cognitive and affective processes of psychological contracting lack a cohesive framework (Bankins, 2015; Chaudhry et al., 2009; Rousseau et al., 2018; Tomprou et al., 2012). Absent is a central mechanism that facilitates recognition of (1) promised obligations that are inadequately fulfilled, (2) the breaches that should engender strong negative, affective reactions, (3) the appropriate behaviors to engage in for what is discerned (breach, violation, or a sense of fulfillment), and (4) how schemas may be modified as PCs evolve.

We contend that sensemaking furnishes this unifying lens. At the individual level, people create realities that align with their interpretations of information and events (Weick, 1995). They also are likely to seek out situations in which their understanding of their job and relationships are reinforced through interactions (Wrzesniewski et al., 2003). Social and interpersonal dynamics are thus important contexts in which meanings are constructed and enacted. Through sensemaking of psychological contracts, people fashion an understanding of their position in an organization, their role, and their relationship to others, and then act accordingly. Without the enacted reality of psychological contracts, PCs would be relatively stagnant and yield similar outcomes for holders in similar positions.

While previous conceptual and empirical research has connected sensemaking to segmented aspects of psychological contracting, they are not readily integrated and therefore supply limited perspectives on sensemaking’s significance. For example, PC formation, the process of setting promise-exchange expectations, itself involves sensemaking as the inherent uncertainty of relationship beginnings invites this kind of behavior (De Vos et al., 2005; Tomprou and Nikolaou, 2011). Assessments of promise fulfillment also should invoke this, especially when the positive outcomes from social exchanges are ambiguous or unanticipated (Chaudhry et al., 2009; Hallier and James, 1997; Weick et al., 2005). Regarding its application to PC breaches (e.g. Bankins, 2015; Conway and Briner, 2005), sensemaking should also play a role in evaluating contracts and responding to adherence. Moreover, what occurs in each stage should not be siloed, promoting feelings and actions that, in turn, become inputs elsewhere in the PC lifecycle. Despite this rationale, past research on PC breach has either artificially constrained responses or assumed its occurrence is an automatic trigger, both failing to explain how available information directs interpretation and the choice of action. The relationship between cognitive and affective processes is thus underdeveloped, along with the role of social and relational factors.

In response, we present a model that integrates and extends past conceptualizations by specifically addressing how personal experiences and interpretations shape distinct understandings of, and responses to, psychological contracts. We posit that two sensemaking phases unfold in the face of prevailing uncertainty: formation sensemaking and compliance sensemaking—all interconnected by enactment behaviors that deliver critical feedback. Accordingly, we make two contributions to the management literature. First, we more thoroughly map the intricate and interwoven facets of sensemaking that PC holders will navigate, shedding more light on the nuanced reflections that guide behavioral decisions. Such insight better equips managers to recognize the value of sensegiving efforts and pinpoints how they can be most impactful. Similarly, we cast employee thinking, feeling, and processing more holistically, linking the relevance and interpretation of a single event to the larger spectrum of prior exchanges. Personal mindsets that adopt this perspective should be less vulnerable to uncertainty. Second, we offer a dynamic framework to track the evolution of maturing PCs across recurring lifecycles. In an era of increasingly uncertain business dealings, understanding how to best nurture stakeholder relationships is a critical capability and being responsively aware of PC “baggage” should be vital in shepherding new ones. Our focus now turns to the extant literature.

Psychological contracting is acknowledged to be a dynamic and highly subjective process (e.g. Bankins et al., 2020). Conway and Briner (2005) described the foundation for understanding PCs as a process that parallels traditional contracts which are formed, developed, and changed over time. In line with longstanding calls for a greater understanding of these process intricacies (Solinger et al., 2016), studies abound with a limited focus on isolated segments. They selectively target formation (e.g. Purvis and Cropley, 2003; Sherman and Morley, 2015), fulfillment (Chaudhry et al., 2009; Ho, 2005), breach assessments and the likelihood of perceived violations (Robinson, 1996; Yang et al., 2020), and post-violation responses (Bankins, 2015; Conway and Briner, 2002; Payne et al., 1998; Robinson and Morrison, 2000; Tomprou et al., 2015; Turnley and Feldman, 1999). However, none of these works span the full process, and thus fail to provide a comprehensive paradigm uniting these contracting phases.

Rousseau et al. (2018) model psychological contract processes more thoroughly over time, demonstrating how PC disruptions (specific events or accumulated encounters) lead to contract repair, renegotiation, maintenance, and exit. Motivated by affective responses and self-regulation (i.e. applying goals and feedback), their model neglects the cognitive and social mechanisms that prompt one to recognize discrepant experiences. It thus fails to capture some of the individual variability in interpreting context (information and experiences) that can direct people in similar situations to pursue different outcomes. Schalk and Roe (2007) similarly emphasize that PC evolution is fundamentally driven by self-regulation with holders reacting to observed counterparty behaviors based on whether they are considered “acceptable” or “unacceptable” discrepancies. This theorizing lacks a full accounting of what leads different observers of the same behaviors to classify them as one or the other. Why individuals receiving the same exchange-outcomes might characterize their nature quite differently—affecting the gap one perceives to exist and how it should be handled—remains unexplained.

Distinct in its own right, sensemaking is “a process, prompted by violated expectations, that involves attending to and bracketing cues in the environment, creating intersubjective meaning through cycles of interpretation and action, and thereby enacting a more ordered environment from which further cues can be drawn” (Maitlis and Christianson, 2014, p. 67) ^[2]. Though originally theorized at the organizational level (Daft and Weick, 1984), sensemaking relies heavily on individual cognition, being the modus operandi for understanding, interpreting, and then creating meaning that flows from available information (Cristofaro, 2022; Maitlis et al., 2013; Vranjes et al., 2023; Weick, 1995; Zhang and Soergel, 2014). When the gap between promises and experiences (positive or negative) is noticeable enough to induce a search for answers, individuals will (1) embrace a largely retrospective perspective in seeking explanations, (2) selectively focus on cues which foster a coherent story, (3) orient that story to preserve self-identity, (4) be more concerned with plausibility than accuracy per se, (5) seek social support (tacit or explicit) in the course of its fashioning, and (6) enact the environment via action (e.g. questioning, negative reciprocity) (Diehl and Coyle-Shapiro, 2019; Parzefall and Coyle-Shapiro, 2011; Weick, 1995).

Acting on interpretations of the environment is important for multiple reasons. First, doing so allows the actor to test their provisional understanding which was constructed through the interpretation process (Maitlis and Christianson, 2014; Weick, 1988). Second, actions generate more experiences and therefore opportunities for constructing new understandings of the environment through the subsequent sensemaking process. This allows for iterative learning by trial. As the enactment of interpretations, actions are an individual’s way of constructing the environment around them as they understand it (Weick, 1988, 1995; Weick et al., 2005).

While past authors have referenced sensemaking in PC investigations (Bankins, 2015; Chaudhry et al., 2009; Diehl and Coyle-Shapiro, 2019; Parzefall and Coyle-Shapiro, 2011), key gaps in our knowledge continue to persist, including all the junctures in contracting where sensemaking happens, the full set of frames that will guide interpretation, and how the behavioral actions concluding one phase can impact subsequent phases. Answers to these questions would advance our understanding of PC complexity, paving the way for more targeted sensegiving as contracts evolve. This leads to our model.

Our model is set at the individual level, casting the creation and evolution of psychological contracts as a multi-phase, iterative process that encompasses formation sensemaking and compliance sensemaking. Sensemaking is triggered by disruptive experiences that require conscious attention (Conway and Briner, 2005; Rousseau, 1995; Chaudhry et al., 2009). Three distinct stages occur in each phase: noticing and bracketing; interpretation; and enactment (Cristofaro, 2022; Jeong and Brower, 2008; Weick et al., 2005). In the first stage, individuals notice and organize problematic stimuli they encounter for further cognitive processing, while in the second they imbue meaning to the “as-is” structure of noticed cues through the application of personal schemas. In the final stage, individuals transform the intended plan of action into reality, leaving an enduring imprint on the external surroundings. Each phase’s completion re-establishes reasonable order, suspending additional sensemaking until unsettling discrepancies or ambiguities reappear (Sandberg and Tsoukas, 2015) ^[3] (see Figure 1). This demarcation embraces the notion that sensemaking episodically unfolds with distinct starting and ending points, stopping, at least temporarily, whenever feelings of clarity and rationality are achieved (Bajwa et al., 2020; Sonensheim, 2007). The model also contains post-enactment feedback loops to phase-specific, situational inputs, since “action and cognition are [recursively] linked: action [serving] as fodder for new sensemaking, while simultaneously providing feedback about the sense that already has been made” (Maitlis and Christianson, 2014, p. 84).

Sensemaking has been characterized as an effortful process in which people must feel sufficiently motivated to not only abandon their existing world accounts but also to work to construct new meanings (Maitlis and Christianson, 2014). It is cognitively demanding, can impede personal identity resilience, and may entail public admission of confusion, error, or uncertainty, drawing into question personal competence (Maitlis et al., 2013). This effortful, cognitively demanding process does not occur passively or continuously. It must be spurred on by specific conditions. Sensemaking is triggered by experiences that require conscious attention to context and signal a need to change from automatic processing to conscious attention (Conway and Briner, 2005; Rousseau, 1995; Chaudhry et al., 2009). Maitlis and Christianson (2014) more pointedly asserted that one is:

Accordingly, circumstances only precipitate sensemaking when they have sufficient personal gravity or magnitude to prompt inquiries about what’s going on and what should be done next (i.e. fosters “disruptive ambiguity”, Weick et al., 2005).

Events, particularly those evoking feelings of novelty, discrepancy, uncertainty, or mandated change, trigger sensemaking when two specific conditions are met (Chaudhry et al., 2009; Cristofaro, 2022; Sandberg and Tsoukas, 2015). First, the nature of the event must not be readily normalized or easily accommodated by the norms and culture the person embraces, as this would dispel the need to evaluate them further. Second, evaluating the event must provoke sufficient emotion to fuel sensemaking efforts. Moderately intense, negative emotions like frustration and sadness are posited to be the most likely to energize a search for meaning (Maitlis et al., 2013). When both conditions are met, events cease to be buffered and trigger sensemaking in an effort to reduce uncertainty.

In the context of psychological contracts, the need for sensemaking first arises at organizational entry, where entrants inevitably encounter uncertainty stemming from differences in working conditions, role, status or influence, creating surprise, contrast, and stress that require attention and resources (Louis, 1980; Thomas and Anderson, 1998). Sufficient time has not yet elapsed for onboarding and social interactions to effectively buffer the anxiety and uncertainty (Saks and Ashforth, 1997; De Vos and Freese, 2011), prompting their need for sensemaking. Newcomers accordingly engage a formation sensemaking process characterized by constructing and enacting an understanding of the new relationship to reduce the uncertainty and anxiety from their insecure organizational position and the changes and surprises of entry (De Vos and Freese, 2011). Treating entry itself as a qualifying stimulus, one anticipates that:

The triggers of compliance sensemaking are delved into later.

Newcomers will initially prioritize the identification and organization of relationship structuring cues (i.e. noticing and bracketing) to reduce anxiety or confusion and perfect their understanding of employment exchanges. Such framing advances a sense of personal control that should increase self-confidence and perceived self-efficacy in navigating counterparty dealings (Ashford and Black, 1996). Inputs are likely to be drawn from numerous sources. Proactive information seeking is an important means of reducing uncertainty during organizational entry (Miller and Jablin, 1991). These behaviors tend to be concentrated in the first few months and target members of one’s immediate role-set (i.e. supervisor, co-workers, fellow newcomers) ^[4]. Additional sources should also be tapped including past PC experiences, the perceived nature of the contract (transactional or relational), pre-entry communications, and other normative schemas (professional, societal) (Chambel and Fontinha, 2009; Morf et al., 2014; Lapalme et al., 2011; Guest, 2004; De Vos et al., 2005; Eilam-Shamir and Yaakobi, 2014; Greese et al., 2013; Purvis and Cropley, 2003; Rousseau, 2001; Sherman and Morley, 2015; Westwood et al., 2001). Bracketing these cues creates a structuring framework that is otherwise absent, since newcomers have not yet developed a local schema or become sufficiently connected to draw comprehensive insights from organizational members (Louis, 1980). This leads one to expect:

PC formation fundamentally rests on relationship structuring cues being interpreted as promise-laden, social exchanges. Contract parties aggregate perceived promises in a psychological contract (Conway and Briner, 2005; Robinson and Rousseau, 1994), an important nuance being that promises understood by one party can, and likely often do, differ from the understandings of their counterparty (Rousseau, 2001; Conway and Briner, 2005) ^[5]. Examples of PC promises could include working extra hours, loyalty, volunteering to do non-required tasks, rapid advancement, training, long-term job security, career development, and support with personal problems (Conway and Briner, 2005). In this manner, social exchange and PC schema serve as “frames” to generate plausible accounts of what was experienced and guide one’s responses (Tomprou and Nikolaou, 2011). One therefore projects that:

Newcomers evolve initial beliefs about the terms of their employment deal as they make sense of encountered exchanges (De Vos and Freese, 2011). Consistent with “testing limits” as an information seeking tactic (Miller and Jablin, 1991), individuals trial the ways and effects of fulfilling promises with an eye toward exchanges received. We label such behavior “PC experimentation”, carrying with it a holder’s expectation that the extent they deliver on personal promises will elicit reciprocity from the other party (Rousseau, 2001; Handy et al., 2020). A contract’s central facets should be scrutinized first, extending outward to those more peripheral ^[6]. To test the nature, extent, and understanding of a psychological contract, parties must actively test perceived promises and their fulfillment. This coincides with other forms of experimentation behavior by organizational members and leaders, where the objective is to affirm and enhance value-creation through iterative, data-driven decision-making (Harvey and Kudesia, 2023; Rahmann et al., 2023, p. 1807). The inference is that:

PC party members remain in a state of experimentation until sufficient, unbuffered ambiguity arises—regardless of its valence (Maitlis and Christianson, 2014)—that triggers a new sensemaking process in which they evaluate and create understanding of the extent to which the psychological contract is fulfilled. Social exchange theory posits that individuals want to be part of relationships in which they neither owe nor are owed (Blau, 1964; Homans, 1974), suggesting they will constantly monitor interactions and adjust as needed. Since PCs allow for fluctuating exchanges within “limits of acceptability” (i.e. what can be buffered) (Schalk and Roe, 2007), imbalances per se are not a problem. Perceived ambiguity or disruption, even to their benefit, that is unbuffered by strong contexts or normalization triggers sensemaking regarding the extent of their own and the counterparty’s compliance with the PC (Maitlis and Christianson, 2014). It is only when there is disruptive ambiguity in PC experiences that the holder questions the state of compliance. Needing order restored in confusing surroundings, holders engage in sensemaking anew. Rousseau and Schalk (2000) similarly asserted that contracts inevitably are challenged over time, invoking reflection and a return to sensemaking. We thus clarify the timing of when this occurs. One therefore should observe that:

When individuals face sufficient uncertainty in an established PC they have come to rely on, they reinstitute sensemaking to examine the relevant levels of promise fulfillment. Compliance sensemaking accordingly entails seeking, constructing, and enacting interpretations of the state of contract adherence. It is predicated on proactively identifying promise exchange cues, drawing on such referent sources as previously communicated HR practices (e.g. Guzzo and Noonan, 1994), support from colleagues, supervisors or the larger organization (Tekleab et al., 2005; Sutton and Griffin, 2004), job communications (Guest and Conway, 2002), past experiences (Robinson and Morrison, 2000), and employment alternatives (Ho, 2005; Conway and Briner, 2005, pp. 67–68). Their isolation and bracketing clarify the nature of what was received and consistency with what was expected, beginning to ameliorate the triggering ambiguity. This leads to:

Subsequent interpretations of the state of compliance should be moderated by multiple factors. We begin with those shaping the overall feeling of contract (un)fulfillment. Promise importance and size of the discrepancy should moderate reactions to deviant exchange cues (Morrison and Robinson, 1997; Rousseau, 1995; Montes and Irving, 2007), cumulatively steering the holder’s perception toward fulfillment or unfulfillment. Labeled M1 in the model, they are our first set of moderator variables ^[7].

PC fulfillment refers to “employee perceptions of the extent to which the organization lives up to its side of the bargain” (Alcover et al., 2017, p. 16). It can manifest in varying degrees depending on levels of perceived promise importance and conformity (Robinson and Rousseau, 1994). Exchanges that on balance are interpreted as having either a moderately positive effect on important promises or an extensively positive impact on those less salient should generate powerful, positive emotions, intensifying one’s effort to perfect understanding (Maitlis et al., 2013). Building on the net interpretation of counterparty fulfillment, holders fashion an outlook of “PC adherence”, warranting further buy-in and feelings of support. This promotes contemplation of a continued status quo or greater exchange investments (the latter a potential response to over-fulfillment). One therefore should observe that:

Promise fulfillment induces PC holders to “act rather automatically, predictably, and mechanically without giving much thought to their behavior” (Schalk and Roe, 2007, p. 172). Rousseau et al. (2018) likewise envisioned the PC maintenance stage manifesting in “sustained”, ongoing exchange[s] with minimal PC-related, cognitive effort (p. 1088). As noted earlier in the text, holders may also expand their contributions if over-fulfillment occurred, going beyond role expectations or rewardable work to re-establish balance. For example, PC fulfillment has been linked with increases in organizational citizenship behavior towards the firm and individual members (Rodwell and Ellershaw, 2015; Chaudhry et al., 2009; Suazo, 2009). One accordingly expects that:

Rousseau et al. (2018) characterized the PC maintenance phase as a self-sustaining loop in which holders fulfill their promises and counterparties do the same. PCs thus can stabilize over time when novel information dwindles and finetuning slows (Rousseau et al., 2018; Thomas and Anderson, 1998). These behaviors should continue until there is deviant ambiguity in one’s PC experiences, signaling a need for renewed sensemaking. Among the possible stimuli are internal (increased tenure or expanded job skills) or external (altered role or job expectations) changes that cannot be buffered by applying existing schema. The model captures this contingency with a dotted line from PC maintenance behaviors to the sensemaking trigger box in the center of the model.

Cues that signal promise unfulfillment are understood through a similar, but distinct, process. Although sensemaking is called for (Maitlis and Christianson, 2014; Parzefall and Coyle-Shapiro, 2011; Weick, 1995), the frames that are utilized and their accompanying moderators take holders in another direction. The focus here is on seeking, constructing, and enacting interpretations that characterize and cope with the level of deficiency. Paralleling our earlier assertion, cues that are collectively recognized to have either a moderately negative effect on important promises or a severely detrimental impact on those less salient should generate powerful, negative emotions, intensifying the search for, and bracketing of, the critical outcomes withheld (Maitlis et al., 2013).

Interpreting promises perceived to be unfulfilled begins by assessing contract breach—a perception that the promises of a counterparty have not been adequately delivered. While breach may be perceived even when an objective evaluation would not support that conclusion (Morrison and Robinson, 1997), conditions also can exist where unmet promises are not considered a “breach”. For example, holders attributing breakdowns in the normal exchange process to external shocks avoided perceptions of violation by temporarily embracing a downwardly revised crisis-specific PC, suspending their precrisis PC entirely, or maintaining their exchanges (i.e. “PC credit”) with the expectation that counterparty exchanges would resume as soon as the crisis resolved (Löffert and Diehl, 2023). Factors such as salience, vigilance, and referent comparisons should influence how more typical shortfalls are classified (Morrison and Robinson, 1997; Robinson, 1996; Robinson and Morrison, 2000), depicted in the model as a second set of moderators (M2) ^[8]. The perceived absence of breach is not likely to challenge a sense of compliance or inspire negative enactments. This should foster an interpretation of “PC resilience” (i.e. sufficient perceived accordance with PC reciprocity to preserve its fundamental integrity). This outlook aligns with the idea that changes in the structure of PCs and the associated commitment occur only when specific boundaries are crossed (i.e. exceeds the limit of tolerance for what’s been exchanged) (Schalk and Roe, 2007). It also is consistent with definitions of resilience as the ability of a system—here comprised of promise-exchange expectations—to absorb and recover from disruptive events by returning to its previous state (Den Hartigh and Hill, 2022; Proag, 2014).

Whenever breach is perceived, further processing is needed to determine its significance. While recognized breach can lead to feelings of PC violation (i.e. the affective experience of anger and betrayal), that outcome is not automatic (Morrison and Robinson, 1997). As trust grows, there is a lower probability of harmful attributions (Robinson, 1996), thus diminishing the likelihood of felt violation. Trust therefore serves as our M3 moderator (see Figure 1). PC breaches that do not inspire a sense of violation should similarly engender PC resilience, since they fail to induce strong negative, affective reactions that might alter the holder’s behavior. This should bring about the following:

How enactments play out will be guided by additional moderators. In instances where there is insufficient reason to believe contract breach or subsequent violation has transpired, individuals will choose to remain in their current PC and enact this interpretation through acceptance (unabated delivery of promise obligations) or withdrawal (downwardly modifying exchange contributions—labeled “impairment” (Tomprou et al., 2015) and “reduction” (Krause and Moore, 2018) elsewhere). Although acceptance may not necessarily constitute perpetual organization loyalty in the face of unfulfilled contract promises, it does represent a temporary decision to continue engaging with the contract until a time that warrants contract reevaluation. The degree of continued engagement, as moderated by relationship tenure and history (Rousseau, 2001; Svensson and Wolvén, 2010), determines if one is accepting of, or withdrawing from, the PC. They comprise our fourth set of moderators in the model (M4).

Holders should respond more strongly to the negative affect of perceived violation, either through concerted effort to remedy the shortfalls or by choosing to leave the situation. Efforts to remedy the shortfalls materialize as repair efforts to restore PC integrity (Turnley and Feldman, 1999). PC repair may involve acts of individual coping (e.g. upward dissent strategies (Schalk et al., 2018)) or group formation and heightened engagement (Payne et al., 1998). To illustrate, unionization and union engagement have been viewed as attempts to readdress widely perceived PC violation by utilizing influence collectively through a third party (Braekkan, 2013; Turnley et al., 2004). In either instance, holders are pressing for delivery of what is perceived owed. Repair can also take the form of PC reconstruction where holders unilaterally renegotiate their promise expectations to reestablish a functional or goal-consistent contract (Krause and Moore, 2018; Rousseau et al., 2018). This may entail revising or adding to the expected exchanges based on what is now greater (1) firsthand knowledge of counterparty propensities, and (2) breadth of information they share. A revised PC, should it be fashioned, extends beyond small adjustments to content and spirit (Rousseau, 1995; Tomprou et al., 2015; Rousseau et al., 2018).

In limited circumstances, the sense of betrayal or stress may be so strong that holders instead choose to abandon the PC (also described as “dissolution” (Tomprou et al., 2015) and “desertion” (Schalk and Roe, 2007)). Moderators such as counterparty responsiveness and available resources (collectively designated M5 in the model) then dictate the chosen response (Robinson and Morrison, 2000; Morrison and Robinson, 1997).

We thus have reason to believe that:

Enacting the interpretation of unfulfilled promises allows holders to potentially rebalance a compromised contract. Since success is not guaranteed, they should regularly seek out relevant information to leverage in future sensemaking (Maitlis and Christianson, 2014; Weick, 1988). Doing so aligns with the contention that sensemaking behaviors precipitate reflection on whether the coping action worked, what is next if it hasn’t and what that might mean for the exchange relationship (Bankins, 2015). We therefore expect behaviors representing acceptance and withdrawal—like those for maintenance—will persist until disruptive ambiguity arises in future PC experiences. Repair efforts should similarly continue until there is unbuffered ambiguity in the extent to which counterparty exchanges have affected the balance of intended reciprocity. At that point, compliance sensemaking is rekindled. This leads to:

Figure 1 depicts this relationship with a dotted line from repair-oriented responses to a new sensemaking trigger box in the center of the model. Proposition 3, in contrast, explains how the need for sensemaking is created following maintenance, acceptance, and withdrawal.

While unsuccessful repair efforts may loop for some time with additional corrective responses, the long-term, expected consequence is PC maintenance, exit, acceptance, or withdrawal. When exit is the outcome, the psychological contract becomes part of the historical experiences that inform relationship structuring cues with a future counterparty. A dotted line back to Reference Sources in formation sensemaking conveys this connection.

In summary, we map the cognitive aspects of PC creation, application, and potential evolution across a series of integrated phases. A synopsis of their features is found in Table 1.

Our comprehensive model of individual PC sensemaking accounts for the cognitive, affective, and social mechanisms that at best have been probed in a fragmented manner (Robinson and Morrison, 2000; Rousseau et al., 2018; Turnley et al., 2004). Moreover, the chosen variables and pathways easily adapt to any type of contracting party. This adaptability addresses a noticeable pattern of siloed modeling for psychological contracts (i.e. specific to full-time workers, customers, or supply chain partners). Recent extensions to contingent (i.e. part-time and temporary) employment (Morf et al., 2014; Svensson and Wolvén, 2010; Guest, 2004) are likewise context specific. By framing each contract and process as entirely exogenous, past authors have neglected a web of interconnected experiences with potent sensegiving properties.

Moreover, Kutaula et al., (2022) identified a need for PC models that transcend a myopic focus on employee-employer (organizational agent) dyads. One can easily adapt the constructs and pathways in Figure 1 to account for buyer behaviors (B2B and B2C), given the comparable dynamics of marketing PCs (e.g. Hannah et al., 2016; Kaufmann et al., 2018; Zhao et al., 2020). To illustrate, perceived contract violations stemming from the receipt of inadequate goods/services or post-sale customer support should (1) prompt repair initiatives or relationship exit (Gillani et al., 2021), and (2) be moderated by the counterparty’s responsiveness in addressing the disparity (e.g. engaging in penance or regulation; Kaufmann et al., 2018). Repair-oriented coping actions at the individual level could take the form of complaining behaviors (direct, third-party filings, negative word of mouth)—the last option only qualifying as a “repair” effort if it is motivated by a consumer advocacy orientation to secure remedial action (Chelminski and Coulter, 2011). Group formation and engagement also may occur, the former potentially manifesting in such structures as consumer coalitions or orchestrated boycotts, while the latter might entail seeking out and participating in grassroots, online petition drives to remediate practices driving the violation (e.g. Carrns, 2011). Similar adjustments are feasible across the model.

It also should be noted that while our individual-level model focuses on multiple phases of iterative sensemaking, we acknowledge the higher-level outcome of sensemaking is organizing and organization (Weick et al., 2005, p. 410, Brown et al., 2015, Sandberg and Tsoukas, 2015). Simultaneous individual sensemaking and sensegiving, the interpretive process in which actors influence each other through persuasive or evocative language (Bartunek et al., 1999; Dunford and Jones, 2000; Snell, 2002), lead to conceptions of collective identity whereby organizing and organization are generated. Therefore, we assert that collective identity, and thereby organization, are more likely to emerge as individuals generate shared conceptions of PC processes. By better understanding how people ascertain meaning and construct their realities, managers can create resilient organizations that withstand uncertainty and challenges.

With respect for the vast body of prior research on components of the PC process, we suggest several areas for future research of this model and directions for the field more broadly. Past studies of psychological contracts have relied heavily on quantitative analyses of cross-sectional surveys, an approach that is, “particularly unsuitable for examining the sort of dynamic and within-person processes suggested by psychological contract theory” (Conway and Briner, 2005). Though such studies are useful for understanding relationships between constructs, they are limited in their ability to convey temporally evolving processes over time. In attempting to study the sensemaking processes we propose here, we recommend future researchers adopt process research methods focusing on incidents or events which can demonstrate patterns and mechanisms in processes over time (Langley, 1999). An event sampling design may allow for a more pointed examination of how, and under what conditions, PCs actually change. Such diary-based studies have been encouraged (e.g. Conway and Briner, 2002; Tomprou and Nikolaou, 2011) and should be conducted with greater frequency. Immersive ethnographies hold similar promise in testing our model but have not been in fashion in PC research, although they are common, if not normative, in the sensemaking literature. For example, a researcher interested in noticing and bracketing during contract formation might consider studying information search processes to better specify how, where, and to what extent PC parties seek relationship structuring cues during newcomer onboarding.

A fundamental principle guiding our model is that perceived disparities in areas of importance will trigger individual sensemaking. Although this is amply accommodated in the present model, two components require development. First, our contention that PC maintenance will continue until promise-adherence is sufficiently undermined to re-invoke compliance sensemaking is rooted in logic, though there is a paucity of studies on the aspects and magnitude of PC discrepancies that are likely to trigger this activity. Second, we must improve our understanding of PC-repair efforts. While we suggested several holder repair behaviors as means of restoring PC reciprocity, empirical evidence is lacking on their breadth and probability of occurrence, not to mention relative effectiveness. Henderson et al.’s (2020) study of employer-initiated repair tactics is relevant in spirit to the work that is needed. Future research should examine the conditions under which repair efforts lead to continued engagement with a psychological contact and those under which a contract is eventually dissolved.

We further suggest three extensions of the model to enhance its contribution to the literature. The first is to account more explicitly for the influence of culture. National culture may be a critical linchpin in business sensemaking (Ivanova and Torkkeli, 2013) and the dynamics of psychological contracts (e.g. Thomas et al., 2003; Thomas et al., 2016; Jayaweera et al., 2021; Rousseau and Schalk, 2000). This necessity has been partially attributed to PCs being nested in, and thus influenced by, a larger “social contract” that reflects broad cultural beliefs about the nature and repercussions of structured obligations (Rousseau, 1995) ^[9]. The importance of culture also may stem from systemic differences in work centrality, work-based duties and entitlements, and the appropriate goals for work relationships—all of which are rooted in societal culture (Sparrow, 1998). Schemas thus might vary widely in what will be recognized as (1) credible promises, mutuality, and the parties involved (formation); (2) efforts and outcomes that satisfy promises (compliance); and (3) the reasons for (i.e. discrepancies vs. breach) and appropriate responses to promise shortfalls (compliance) (Eckerd et al., 2015; Kraak et al., 2018; Rousseau and Schalk, 2000; Sparrow, 1998; Thomas et al., 2003). Culture’s actual effects on each phase of sensemaking are yet to be established but should be.

Multinational enterprises (MNEs) bring added complexity with their systemic cross-cultural exchanges. While host-nationals (e.g. Choi, 2020; Shih et al., 2013) and expats ^[10] can harbor PCs, much needs to be clarified concerning the latter. To begin with, are distinct multi-foci contracts a common development (i.e. with the home- and host-units, respectively) (Perera et al., 2016; Wang et al., 2023)? If so, does the one with headquarters garner more attention in terms of sensemaking and have a higher probability of eliciting reactions? How do the length and breadth of expatriate assignments alter the schemas embraced—do they tend to be immutable (and selectively applied to minimize perceptions of PC violations) or blend with the passage of time (Ivanova-Gongne, 2015)? How often is their personal sensemaking formally institutionalized in the course of being repatriated, essentially fulfilling a sensegiving role for future assignees (their accounts and stories being key sources of contextualized explicit and tacit knowledge of expatriation (Pinto and Caldas, 2015))? Exactly how do expats co-construct, negotiate, and share their narratives once they move on from their stationed host units—through formal debriefings, informal storytelling, or ongoing entries in IT-based systems? Responsive answers await further study.

The second extension pertains to technology. To the extent data integration is essential for sensemaking, one might expect that technology inevitably empowers it. While this undoubtedly happens ^[11], there also are scenarios where sensemaking may be obstructed. For example, Paul (2006) suggests numerous challenges in a distributed environment, including (1) a compromised ability to communicate emotions and tacit knowledge (pertinent to plausibility assessments and sensible environment enactments), and (2) constrained opportunities for reflection and deliberation given the speed and complexity of IT experiences. Further concerns arise when individual mobile devices feed multi-faceted, work data into prescriptive algorithms that automate managerial decisions (i.e. algorithmic management). Leicht-Deobald et al. (2019) argued that this stunts personal (and ultimately organizational) sensemaking by supplanting critical reasoning, emotions, and personal intuitions with a preferred reliance on pre-programmed, processing routines. If so, does technology self-efficacy mediate or moderate the effects of such software on schema structures, propensity for sensemaking, or the intensity of PC violations? Is there a lower likelihood of relational PCs in these kinds of settings? These ambiguities may be especially problematic in gig work contexts, where much of one’s organizational interactions and feedback emanate from algorithm-heavy, online platforms that have limited transparency and are often perceived as opaque (Duggan et al., 2023). How well does the algorithm sensemaking used by gig workers (Möhlmann et al., 2022; Weber et al., 2023) dovetail with the phases described in our model? Can such technology itself be a counterparty (Bankins and Formosa, 2020)?

Finally, while previous research and our model cast union activity as a potential response to employer breach, it may also give rise to separate PCs with organized labor. This is implicitly acknowledged by Payne et al. (1998), who note that union-governance breakdowns perpetuating the problems that had led to organizing ultimately decreased loyalty to union leaders and a willingness to strike. Tetrick (1995) directly hypothesized (but did not test) that rank-and-file members have specific expectations for promise exchanges, basing PC assessments on perceived fairness of treatment, union instrumentality, and meaningful voice that, in turn, will determine their union commitment. Limited research appears to support this, at least in the context of job insecurity (De Witte et al., 2008). This relationship can be easily accommodated in the existing model by linking union activity with new PC formation. The extension to union activity provides yet another setting to test the robustness of our pathways and moderators across the sensemaking phases.

Management’s deliberate use of PCs as a policy framework for employee relations has been associated with fairer exchange perceptions and more positive assessments of how promises and commitments are being managed (Guest and Conway, 2002). To maximize these benefits, organizations must recognize that exchange behaviors may have an initially subtle, cascading impact on judgments due to the interlocking decision-making processes holders move through when constructing and responding to unfolding PCs. A suboptimal work experience that does not seem to be immediately material to PC assessments may set in motion schema adjustments that will influence subsequent sensemaking. The same can be said for those that positively valent from the holder’s perspective. Managers thus must embrace a more holistic approach when trying to shepherd subordinate PCs, rather than simply trying to discern and be sensitive to their content-structures. This need is particularly true in the context of organizational change, where communication offers a means of minimizing misattributions of the purpose and import of associated events (Cristofaro, 2022). Such communication not only offers an opportunity to build trust and buffer against perceived violation, but also affords a means of bringing promises back to memory and inspiring feelings of inclusion (De Vos and Freese, 2011). Managers can thus serve as potent sensegivers at the individual and organizational levels (Parzefall and Coyle-Shapiro, 2011). Onboarding initiatives can further reinforce this by profiling entry stressors and coping strategies to mitigate subsequent feelings of breach (Li et al., 2022). These too can be channels of very rich sensegiving.

Managers also benefit from being mindful of, and responsive to, the reality that PCs are likely to change over time, necessitating regular monitoring and adjustments to foster perceptions of contract fulfillment. Such behaviors implicitly strengthen retention management and would complement initiatives like re-recruiting staff to combat the lasting effects of the Great Resignation.

Finally, since past contracts and experiences are likely to influence formation sensemaking, what caused one to stay at and eventually leave their previous employment should be discussed during hiring and onboarding. This information will give firms a better understanding of what expectations and perceived promises new employees may carry, whether they are aware of them or not (Coyle-Shapiro et al., 2019). By identifying what eventually prompted exit from prior engagements, managers can shed more light on their sensemaking frames.

Efforts to constructively manage PC dynamics would benefit greatly from an enhanced understanding of personal sensemaking. While their nexus is well-documented in prior research, greater clarity is needed of sensemaking’s functioning to tailor appropriate interventions. Toward that end, we modeled PC sensemaking as a multi-phasic process with a series of intricate feedback loops. Giving separate attention to each of its targets—formation and compliance—will hopefully facilitate greater precision in not only identifying the perceptions that need to be modified, but also in deducing the practices most likely to foster sustainable, positive outcomes. A savvy awareness of how “sense” is made should elevate sensibility in handling such contracts.