And – has the psychological contract in your industry shifted since the 1990s?
If there is one idea from the 1993 edition that has entered the lexicon of every HR department and MBA program, it is .
Essential secondary reading for undergraduate or MBA students of organization theory. handy c. -1993- understanding organizations
In 2026, the contract is even more fractured. AI is replacing middle management. Remote work has eroded loyalty. Handy’s argument that organizations must offer growth instead of security is the only viable retention strategy today.
Handy argues that the choice of organizational structure depends on various factors, including the organization's goals, size, and environment. And – has the psychological contract in your
List your sources of power (position, resource, expert, personal, connection, information, coercive). Which one do you over-rely on? Which one is underdeveloped? Handy’s claim: The manager who only has position power is a manager in danger.
But why, in an era of agile workflows and AI-driven management, should we revisit a book published over three decades ago? Because the questions Handy asked in 1993 are the very ones plaguing boardrooms today: How do you balance control with creativity? Why do cultures clash after mergers? Can organizations be designed to accommodate the flawed, ambitious, and unpredictable human being? In 2026, the contract is even more fractured
If you’re in change management, OD, or leadership, this is still a masterclass.