The New Psychological Contracts at Work
by Daniel Yankelovich
No question will dominate the workplace in the 1980s more than how to revamp incentives to match
the new motivations of workers.
A NEW BREED OF AMERICANS, born out of the social movements of the 60s and grown
into a majority in the 70s, holds a set of values and beliefs so markedly different from the traditional
outlook that they promise to transform the character of work in America in the 80s. Here are just a
few consequences of New Breed values:
The desire to hold a paid job has become so compelling that some 24 to 27 million people not
now employed in full-time paid jobs—women, young people, and old people in particular—are
waiting to take jobs if they become available. The traditional method of creating jobs is through
growth in the economy at an average rate of two to-2.5 million new jobs a year; at this rate, supply
has no chance of catching up with demand. The official unemployment figure of about seven
million, therefore, grossly understates the potential demand for jobs. As we move closer to our
national commitment to guarantee a job to everyone who wants to work, we are confronted with the
awesome task of creating millions of new jobs in addition to those that will be generated by normal
or even superheated growth in the economy. Competition for jobs has already grown so fierce that
young blacks—the prime target group for many policy planners—are the most deprived; they now
suffer from an unemployment rate estimated at 46 percent to 60 percent. If our approach to the job
market does not change, their plight will grow worse. And yet, millions of jobs that are considered
undesirable, or "dead end," cannot be filled.
Today, millions who do hold paid jobs find the present incentive system so unappealing that
they are no longer motivated to work hard. As a consequence, not only do they withdraw emotional
involvement from the job, they also insist upon steady increases in pay and fringe benefits to
compensate for the job's lack of appeal. The less they give to the job, the more they seem to
demand—a process that cannot continue for long without breaking down. A deep flaw in the
incentive system, signified by the failure of the old incentives to catch up with the new motivations,
leads inexorably to deterioration in the workplace, threatening the position of the United States as
the world's foremost industrial nation.
Work and the Old Values
In the last half century, the field of psychology has added greatly to our understanding of
what contributes to people's feelings of well-being. A variety of studies have demonstrated that
psychological well-being is a complex structure. Among its chief building blocks are: a sense of self-
esteem and conviction of one’s worth as an individual; a clear-cut sense of identity; the ability to
believe that one's actions make sense to others as well as to oneself; a set of concrete goals and
The New Psychological Contracts at Work 2
values; feelings of potency and efficacy; enough stimulation to avoid boredom; a feeling that one's
world is reasonably stable; and an overall sense of meaning and coherence in one's life. People for
whom these needs are met often experience a joy in living and a conviction that they are successful
as human beings. Their lives may be marked by suffering and frustration—such is the human
condition—but, psychologically speaking, they are the fortunate ones.
Because psychologists focus so sharply on the individual, their writings imply that it is up to
each person to achieve his or her psychological well-being through inner resources. Unfortunately,
psychologists fail to appreciate how dependent all of us are on the ability of the society and culture
to create the conditions—social, economic, political, and cultural—in which personal ego strengths
can be nurtured.
For most of this century, and in particular in the quarter century following World War II
(roughly up to 1970l, the value system of most Americans centered around a number of powerful,
culturally derived symbols that drew their strength from their ability to "deliver" at least some of the
essentials of psychological well-being. In particular, they proved capable of giving people a sense of
self-esteem, a clear identity, concrete, well-defined goals and values, a sense of effectiveness, and a
conviction that one's private goals and behavior also contributed to the well-being of others.
Most of these symbols are strikingly middle-class in character. They became dominant
values in the 1950s and 1960s as more people were able to move into the middle class through
education, a booming economy, and a steady rise in the median income of all but the poorest 20
percent of the population.
Some of the consequences of the old value system for the world of work can be summed up
O If women could afford to stay home and not work at a paid job, they did so.
O As long as a job provided a man with a decent living and some degree of economic
security, he would put up with all its drawbacks, because it meant that he could fulfill his economic
obligations to his family and confirm his own self-esteem as breadwinner and good provider.
O The incentive system—mainly money and status rewards—was successful in motivating
O People were tied to their jobs not only by bonds of commitment to their family, but also by
loyalty to their organizations.
O Most people defined their identity through their work role, subordinating and suppressing
most conflicting personal desires.
O For all practical purposes, a job was defined as a paid activity that provided steady full-
time work to the male breadwinner with compensation adequate to provide at least the necessities,
and, with luck, some luxuries, for an intact nuclear family.
Under the onslaught of a new value system, all these consequences of the old value system
have already changed or are in the process of changing. The New Breed values are expressed in the
world of work in some ways that are obvious and others that are quite subtle. Three of the more
striking manifestations of New Breed work-related values are (1) the increasing importance of
The New Psychological Contracts at Work 3
leisure, (2) the symbolic significance of the paid job, and (3) the insistence that jobs become less
The Pursuit of Leisure
Along with family life, work and leisure always compete for people's time and allegiance.
One or the other is usually the center of gravity; rarely does the individual strike an equal balance
among all three. For the New Breed, family and work have grown less important and leisure more
important. When work and leisure are compared as sources of satisfaction in our surveys, only one
out of five people (21 percent) states that work means more to them than leisure. The majority (60
percent) say that while they enjoy their work, it is not their major source of satisfaction. (The other
19 percent are so exhausted by the demands work makes of them that they cannot conceive of it as
even a minor source of satisfaction.)
This is not a purely American phenomenon. A recent study in Sweden produced a striking set
of findings. When Swedish men, 18 to 55 years of age, were asked way back in 1955, "What gives
your life the most meaning—your family, your work, or your leisure?," only 13 percent answered
"leisure," 33 percent "work," and 45 percent their "family." In '977, when the same question was
asked of a new cross-section of Swedish men, the proportion of men naming work as the main
source of meaning in life had been cut in half—from 33 percent to 17 percent. The position of family
life had also eroded slightly—45 percent to 41 percent. But dedication to leisure had more than
doubled—from 13 percent to 27 percent!
The Paid Job as a Symbol
If leisure grows more important for men in the pursuit of self-fulfillment, for New Breed
women the symbolic significance of a paid job has greatly intensified. Let us acknowledge at once
that most women work for money: many women have no other source of economic support but their
own work, and increasing numbers support their dependent children through paid work. Even when
the burden of making a living falls mainly on the man, the money earned by the woman in most
families has proven indispensable to maintaining a standard of living the family considers
satisfactory. Yet, even though work is often an economic necessity for women, one of the essential
points of the women's movement is the symbolic meaning of a paid job.
In recent years, unpaid housework has suffered a severe loss in social status. For women
today, being “just a housewife" is a poor means of maintaining self-esteem. For New Breed women,
exclusive confinement to the unpaid work of homemaker and mother somehow implies being cut off
from the full possibilities of self-fulfillment. A paid job has become a badge of membership in the
larger society and an almost indispensable symbol of self-worth. It is also a means of achieving
autonomy and independence.
The woman with a paid job, however menial or poorly paid, feels that she no longer has to be
totally dependent on the will and whim of a man. No longer is she obliged, when trapped in total
dependency, to stay with an unsatisfactory marriage. Divorce rates have shot up because divorce is
The New Psychological Contracts at Work 4
now a practical option for millions of women. They now have, or can acquire, the "price of
admission" to independence in our society—a paid job. This does not mean that only women are
choosing divorce and are solely responsible for high divorce rates. Many women do not choose
divorce because they are able to find work—but find work because they are forced to support
themselves after their men leave to "fulfill themselves."
To observers, and indeed to many women who work, exchanging the security of homemaker
for a poorly paid job seems like a bad bargain. Often it is a bad bargain. Probably, therefore, women
in the 1980s will grow more discriminating about the jobs they take. But even when this occurs—as
seems inevitable—the pendulum will not swing all the way back. Unfortunately, many women seem
to have accepted unquestioningly the male-dominated values of the old era; instead of bringing men
to a greater appreciation of the values of home, family, and child care, women have endorsed the
male values associated with paid work.
The Person Comes First
More complex and intangible is the New Breed's refusal to subordinate their personalities to
the work role. To understand this refusal is to grasp the essence of the New Breed's quest for self-
One of the most striking characteristics of the old value system was the tendency for people
to identify themselves with their work role. European visitors to the United States are often startled
when Americans introduce themselves by saying, "I am a car dealer"; "I'm assistant manager of the
local bank"; "I'm a housewife''; "I manage the personnel department at I.C. Penney's."
Today, there is no greater source of discomfort to the New Breed than this traditional
equation of identity with work role. In their eyes, when an individual is subordinated to his role, he
somehow is turned into an object, and his humanity is reduced in some indefinable but all-important
sense. In the new value system, the individual says, in effect, "I am more than my role. I am myself."
The New Breed person demands that his or her individuality be recognized.
When we ask people in our surveys which aspects of their work are becoming more
important to them, they stress, above all else, "being recognized as an individual person." They also
stress "the opportunity to be with pleasant people with whom I like to work." Significantly, for the
majority of people these demands come ahead of the desire that the work itself be interesting and
Seeking New Breed Incentives
Perhaps no question will dominate the workplace in the 1980s more than how to revamp
incentives to make them a better match for the work motivations of the New Breed. One might
assume that because so many people want paid jobs, they are therefore motivated to work hard. This
is true for some people, but the desire for a paid job and the motivation to work hard are independent
factors. Just having a paid job meets important human needs: for income, independence, self-respect,
belonging to the larger society. In principle, a person might be satisfied merely by holding a job
without working at it seriously.
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And, in practice, this is what a great many do. People will often start a job willing to work
hard and be productive. But if the job fails to meet their expectations—if it doesn't give them the
incentives they are looking for—then they lose interest. They may use the job to satisfy their own
needs but give little in return. The preoccupation with self that is the hallmark of New Breed values
places the burden of providing incentives for hard work more squarely on the employer than under
the old value system.
Unaccustomed to this burden, employers are angry and frustrated. Under the old value
system, they relied on the carrot-and-stick approach, the carrot being money and success, the stick
being the threat of economic insecurity. This combination still works, but not as well as in the past.
With the advent of New Breed values, the motivational context has changed drastically.
The workplace in America is among the most conservative of our institutions. It has been
highly resistant to change, particularly to the successive waves of individualism that have swept over
so many other areas of American life. To be sure, at the stratospheric levels of giant corporations,
trade unions, government bureaucracies, hospitals, and other institutions, individualism flowers for
top-level executives. In these great baronies of our society, the self-fulfillment needs of those at the
top are given full play; but all other employees are expected to conform to rigid rules of group
behavior. On ceremonial occasions, obeisance is paid to them: "Our people are our greatest resource
and we must pay attention to their needs," their leaders say. But in everyday life, attention is paid to
everything but people—capital requirements, technology, material resources, managerial techniques,
political pressures, cost controls, and markets.
As long as the traditional carrot-and-stick worked well, those at the top could afford to pay
less attention to the human side of the organization. Perhaps the chief lesson we should draw from
the changes shaped by the new values is that concern with the human side of the enterprise can no
longer be relegated to low-level personnel departments. In the 1980s, knowledge of how the changed
American value system affects incentives and motivations to work hard may well become a key
requirement for entering the ranks of top management in both the private and public sector. If this
occurs, we shall see a New Breed of managers to correspond to the New Breed of employees.
Working Out Solutions
In retrospect, the 1970s will be seen as a watershed in American social history. The great
changes taking place in the value system have consequences for all aspects of American life, but for
none more than the workplace. Our traditional economic categories lead us to false conclusions.
Within their framework, we seem to be confronted with a disaster in the making: a mass of would-be
workers far in excess of the normal capacity of the economy to create jobs to accommodate them,
and an incentive system that no longer motivates people.
But disaster looms only if the situation is seen within a narrow economic perspective. If we
broaden our vista to take into account new psychosocial realities, the "disaster" looks more like an
opportunity. Ever larger numbers of people are willing to share the burdens of coping with our
advanced industrial society and its problems. A better-educated work force refuses to accept the old
alienations that past thinkers assumed were inherent in modern society. The employees' challenge is
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essentially constructive; and if it is properly understood and acknowledged, we may emerge with a
better society as well as a healthier economy.
We may have to push our institutions to mobilize their political will, but no one ever said that
the purpose of people is to suit the convenience of institutions. It is supposed to be the other way