DEAR CAPTAINS of Industry and Public Institutions
THE SOCIAL CONTRACT: A CEO’s FIRST DUTY
Dear Captains,
The first duty of a CEO is to ensure that the organisation’s social
contract is understood, accepted and internalised. The beginning of the year is
the most natural time to reaffirm it, or whenever the organisation needs to
regroup around shared values, standards and spirit.
What is a social contract?
A social contract is a shared understanding of how we agree to work
together. It defines what we expect from one another when we are trying to
achieve something as a group. It is not limited to organisations. It exists in
marriages, families, partnerships, corporations and even nations. Wherever
people must cooperate, expectations must be made clear.
We must not mistake a social contract for the company handbook.
The employee handbook tells you the rules.
The social contract tells you the spirit.
The handbook is compliance-driven.
The social contract is culture-driven.
A social contract is not HR paperwork. It rests with the CEO.
As such, it is not just a policy document or an employee handbook
exercise. It includes the company’s core values but goes further by explaining
how those values are practised in everyday work. It is about shaping behaviour.
It shapes how people treat one another, how decisions are made and how
accountability is carried. It moves employment beyond a legal arrangement and
turns it into a mutual commitment. Most importantly, it sets the tone for how
people engage in every direction, whether managing upwards, leading downwards
or working alongside peers and external stakeholders.
Most organisations focus almost entirely on the legal contract. Salary,
working hours, leave entitlement and confidentiality clauses are clearly
documented. Yet the real tension in organisations rarely comes from these
clauses. It comes from expectations that were never clearly expressed.
Employees expect fairness, recognition and opportunities to grow.
Managers expect ownership, loyalty, followership and performance. Employees
look for dignity and development. Leaders look for accountability and results.
None of these expectations are unreasonable. Problems arise when they are
assumed instead of discussed.
When expectations are unclear, resentment builds quietly. Emotions
replace structure. Small misunderstandings turn into fixed narratives. Making
the social contract explicit reduces ambiguity. It removes guesswork. It
replaces silent frustration with shared clarity.
Most new employees skim through the handbook, sign the document, file it
away and rarely revisit it unless there is a dispute or disciplinary issue. The
handbook outlines what is punishable. It asks only for the minimum standard
required. The social contract clarifies what is honourable. It shows us how we
can grow as individuals, as a team and as a company. The difference is
profound.
A leader’s role is not merely to enforce rules but to align people. The
social contract becomes the shared understanding that guides daily behaviour
beyond compliance. It helps transform a workplace into a functioning community,
creating an environment where performance benefits both employer and employee.
This is especially relevant in today’s workforce. As a younger generation
enters organisations in greater numbers, expectations are shifting. Many
younger employees seek meaning, regular feedback, fairness, growth and
psychological safety. Employers, in turn, expect accountability,
professionalism, adaptability and respect for structure. Without deliberate
conversation, these expectations collide rather than complement one another.
Clarifying the social contract should therefore be the first management
conversation each year. It comes even before onboarding and KPI reviews.
Expectation alignment must come before strategy presentations.
A simple exercise can be transformative. Based on corporate goals and a
clear understanding of what success requires, management lists what it expects
from employees. Employees list what they expect from management. Both sides
discuss these openly. This builds shared ownership.
It is crucial that the CEO defines the playing field of the social
contract based on the company’s needs, not merely on management preference or
employee desire. A social contract must rest on what needs to be done for the
organisation to succeed, not simply on what any party wishes to do. Once a
refined set of mutual expectations aligned with corporate needs is documented,
it becomes the team’s compass. It may or may not be legally binding, but it
must be upheld culturally and morally.
The need for a clear social contract becomes even more urgent when the
nature of work itself changes. One of the most obvious examples in recent years
is Working from Home (WFH).
WFH is not just a logistical arrangement. It forces us to rethink how we
work and what work means. When presence is no longer visible, trust,
accountability and performance must be redefined. Without an explicit social
contract, assumptions quickly replace clarity.
Some employees see WFH as the flexibility to work from anywhere, whether
their hometown or even a holiday destination, as long as they remain reachable
and deliver their work. Employers, on the other hand, may interpret WFH to mean
that employees are working from home and should be available to come into the
office at short notice if required.
Others may view WFH as similar to flexible working hours, where they can
step out to run errands or do their grocery shopping as long as their tasks are
completed on time. Employers, however, may see WFH and flexible hours as two
separate arrangements with different expectations.
Without a clearly defined social contract, these differing
interpretations can easily lead to frustration on both sides and affect company
performance.
Dear Captains,
The social contract is a crucial exercise. It is our first duty. It sets
the environment for performance by helping us agree on how we work and live
together within an organisational community. It not only defines behavioural
parameters but also builds relationships that support performance. It explains
how we communicate, how we give feedback and how we get things done.
Once a company-wide social contract is established, it becomes the
responsibility of the heads of department to cascade it further. Each
department should develop its own social contract based on the company’s
foundation while adding expectations that are specific to the way the
department operates, both within the team and in its interaction with other
departments.
Social contracts should be revisited yearly, with fresh commitment
breathed into their spirit. Every new employee must be clearly introduced to it
so they understand what it means to belong and contribute to their new
community. This discipline is vital for any organisation and, by extension, any
society.
Clear expectations align people. Aligned people build institutions.
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