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text and is seen as an integral part of human resource management. The notion behind the concepts elaborates upon the importance as well as influence of augmented employer-employee relationship to ensure long-run productivity and sustainability. Since its development, the concept has gained increasing significance and that positive psychological contract can lead to better effectiveness of the organisational process and subsequently, ensure productivity through competitive human resource management. However, managing psychological contract within modern day organisations can prove to be quite challenging, owing to the influences caused by continuously altering cultural perspectives, increasing diversity within the labour market environment of world economies and changes in the socio-economic dimensions (Maguire, 1998).

Recent studies have further revealed that modern day organisations need to overcome these challenges by focusing on the implementation of effective human resource policies and well-defined organisational norms, values and mission so as to gain competency through psychological contract. Practicing psychological contract is quite significant for organisations, fundamentally because it enhances the organisational competencies to manage its human resources with greater efficiency. Psychological contracts have also rewarded enhanced flexibility in the managerial practices of the organisations with the virtues of augmented employee morale and commitment in the contemporary employment relationship. This in turn increases the organisations' risk managing capacity. Organisations should focus on practicing the concept of psychological contracts to gain internal strengths and competencies through better employer-employee relationship.

Understanding the importance of psychological contract and the changing employment relationship
Organisations are portrayed as good employers when they have an identifiable image and display commitments towards their employees. To achieve this target organisations conventionally establish 'an employer brand' which is a corporate personality or identity with a set of corporate values or a mission statement which employees and customers recognise and relate to. Cullinane and Dundon (2006).

However in the ever changing business environment and world economy, threats, uncertainty and constant change has led to organisations to reconstruct seeking alternatives such as downsizing, to keep afloat and mergers to share assets, intelligence and costs. It can be said that flexibility and adaptability are considered more crucial in such a demanding and constantly changing business environment. An understanding of the importance of the psychological contract is important in understanding the management of contemporary employment relationship as managerial change in the way employees are recruited, hired and retained are seen on the basis of short-run, rather than the old-fashioned long-term, future job. This is because the culture perspective has changed and organisations now are interested on particular sets of skills and concentrate more on the short-term future and less on the long-term performances. Therefore employees must adapt and become ever more flexible in an ever changing business environment, as there no longer exists the same kind of job security and job progression as in the old-fashioned psychological contract.

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