Cultures of Wellbeing: Repairing Psychological Contracts

Sep 14

Have you ever found yourself thinking, "This job just isn’t what I thought it would be?" Maybe you watched your leadership team make a decision that was supposed to help staff–and then you were shocked to see people’s negative reaction. Or, perhaps you were one of the staff members who felt deeply disappointed and confused by those decisions–wondering how these decisions are so misaligned with the organization you thought you were working for. In many cases, these experiences are the result of an invisible, unmet agreement: the psychological contract.

This edition of the Cultures of Wellbeing series explores why psychological contracts matter more than ever, especially in the nonprofit sector. When the gap between job expectations and job realities widen, or when waves of layoffs rock organizations to their core, nonprofit professionals are left questioning their trust in leadership and their future in the sector.

What Is Workplace Wellbeing Strategy?

At its core, wellbeing is a combination of factors that impact our ability to live healthy and fulfilling lives. It encompasses every facet of our lives, from our physical health to our finances, and our social connections. Work is no exception. Everything from workplace culture to daily tasks directly impacts our wellbeing. In nonprofits, where teams are often stretched thin by funding limitations and high expectations, the impact can be even greater.

Workplace wellbeing strategy has become a critical focus for nonprofit organizations looking to create a supportive and productive environment for their employees. These initiatives are meant to help professionals feel valued, supported, and equipped to sustain their passion for their work. For nonprofit leaders and those experiencing nonprofit burnout, this means creating environments where people can thrive in their roles and contribute to an organization's mission without sacrificing their mental health and emotional health.

What Are “Psychological Contracts?”

A psychological contract is the unspoken and unwritten set of expectations between an employee and their organization. Unlike a formal contract that outlines job duties, salary, and benefits, psychological contracts are developed based on assumptions about how someone will be treated, what they will receive in return for their effort, and what the workplace culture might be like.

These expectations might include:

Feeling that your hard work will inevitably lead to a promotion or pay bump
Trusting that your boss will be 100% transparent with you about every decision
The belief that an organization's named values will be honored in everyday tasks
Assuming that you’ll receive fair and flexible treatment because you are liked by your leadership team

When these implicit agreements are honored, people’s assumptions are affirmed, leaving them feeling secure, valued, and motivated.

But when those agreements are broken—especially without acknowledgment or repair—it can lead to confusion, resentment, disengagement, and unhealthy conflict. In nonprofits, these contracts tend to be more relational rather than transactional: most professionals enter the sector not for the pay, but for purpose, values, and impact. When their hard work feels disregarded, it can make people question their place in the workplace. That rupture can be painful, and often perpetuates the issues of mental health needs for nonprofit professionals.

Why We Need To Reset Psychological Contracts

In a time of rapid and widespread change, layoffs, mergers, addressing the psychological contract has never been more important. Nonprofit professionals are not only navigating how to keep up with external demands in their communities and beyond. They’re also facing internal shifts that affect job security, emotional safety, and trust in leadership.

Resetting these contracts can help your organization navigate times of change by:

Confronting conflict and misunderstandings with intention and compassion, while clearing away assumptions rooted in past decisions.
Rebuilding trust through transparency—openly addressing changes and limitations so people feel respected and informed.
Retaining motivation by clarifying the “why” behind decisions, ensuring values are reflected in actions, which keeps people engaged and supports burnout prevention strategies.
Restoring choice and autonomy, giving individuals the space to discern whether the organization’s new direction aligns with their values, and how they want to move forward.

What Our Community Says

In conversations with nonprofit leaders just like you, we’ve heard powerful reflections on what it feels like when the psychological contract is broken (or honored):

“I gave my blood, sweat, and tears to that organization and never once did I think that I would be let go during this layoff. I am in shock and cannot believe the lack of compassion that I’ve received from a boss that I trusted.”
“When the pandemic hit, we gave our staff anything they asked for. Flexible work. Extra time off. Five years later, people think this is the norm. I become the enemy the minute I suggest differently. But we cannot afford to keep running a business this way.”
“My boss listened to us when we said expectations have to change for the next fiscal year. A lot has changed very quickly in the world, which means we have to change too. We’re going to make these changes together and listen to each other.”

3 Questions to Consider

As you think about the invisible agreements that shape your workplace culture, consider:

What do your team members believe they’re owed beyond a paycheck? Are there unspoken promises about flexibility, career advancement, or recognition?
Where might expectations be misaligned? Have recent decisions or changes disrupted the trust or understanding people thought they had?
How can you make the invisible, visible? Are there ways to check in on assumptions and invite feedback about what people need to feel secure and valued?

2 Action Steps to Get Started

If you're looking to reset or rebuild psychological contracts in your organization, start by taking these two simple steps that prioritize transparency and empathy:

Name and normalize psychological contracts: In upcoming team meetings and individual conversations with your trusted colleagues, open up dialogue about unspoken expectations that influence how people show up at work. Recognize that these implicit agreements exist whether we acknowledge them or not, and naming them can prevent future misunderstandings. Invite people to share their perspective on the subconscious contracts they have with the organization, and what might need to be done for everyone to feel more aligned and supported within the organization.
Acknowledge and repair breaches: If you sense that trust has been damaged, bringing people together to review psychological contracts could be one of the first steps towards repair. You might consider inviting a facilitator to support the conversation so that the harm and tension can be acknowledged openly. This creates room for a conversation about what it would take to rebuild trust and connection can begin.

1 Healthy Mantra To Keep In Mind

“Let me always be curious; not certain.”

Join the Conversation!

At Do Good Leadership Collective, we believe that nonprofit employees shouldn’t just survive their work—they should thrive in it. If you need support in navigating these invisible contracts to build a culture of care and respect, we’d love to hear from you! We’re happy to discuss leadership development opportunities–through one-on-one nonprofit leadership coaching, tailored training, workshops, or team-building retreats that will help your teams thrive. If you’re ready to have a conversation to rebuild psychological contracts grounded in wellbeing—then get in touch.

If this post resonated with you, or it became one of your favorite blogs about nonprofits, share it with your network or reach out to continue the conversation!

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