Abstract:
The workplace is governed by various formal contracts that outline the terms of employment between
employers and employees. However, there exists an often overlooked yet crucial aspect of the employment
relationship known as the psychological contract. This informal agreement plays a pivotal role in shaping
employee engagement within organizations. This study aimed to investigate executive officers' perceptions
regarding the influence of the psychological contract on employee engagement within the Sri Lankan banking and
finance sector, with a specific focus on selected Finance Company. Additionally, it aimed to propose suitable
strategies and initiatives to enhance employee engagement levels and improve overall performance within the
finance sector. Using a quantitative research approach, this study employed random sampling techniques to select
participants. Structured questionnaires were then distributed to collect relevant data. The findings of the study
revealed a positive and significant relationship between psychological contracts and employee engagement. This
underscores the importance of considering and optimizing the psychological contract to enhance employee
engagement levels. In conclusion, the study highlights the need for company management and financial sector
policymakers to prioritize the optimization of the psychological contract to foster higher levels of employee
engagement. By focusing on enhancing the psychological contract, organizations can create a conducive work
environment that promotes employee engagement, ultimately leading to improved performance within the finance
sector.
