In my previous blogpost, Five tech-led solutions to build trust with international postgraduates, I explored how technology-enabled interventions can help strengthen trust and engagement among international postgraduate students. That piece positioned the psychological contract as a critical, yet often implicit, driver of student experience and institutional effectiveness. However, the rapid advancement of artificial intelligence (AI) now requires us to move beyond strengthening the psychological contract towards recognising that it is being fundamentally reshaped. AI is not simply a technological development, it is a catalyst for redefining expectations, relationships and value within higher education. For institutional leaders, this presents not just an operational challenge, but a deeply relational and organisational one.
Reframing the challenge: AI and shifting expectations
Psychological Contract Theory offers a useful lens to understand the implications of AI in higher education. Traditionally, the sector has operated on a relatively stable set of implicit expectations such as - institutions provide structured learning and credible qualifications; students demonstrate engagement and independent effort; and academic staff design, deliver and assess learning within agreed norms.
AI disrupts this balance
Students now have access to tools that can generate content, support research and enhance productivity. At the same time, institutions are seeking to uphold academic standards, while staff navigate increasing uncertainty around authorship, originality and the value of established assessment practices. What emerges is not simply a technological shift, but a misalignment of expectations between stakeholders. This misalignment reflects a broader transformation of the psychological contract, one that can no longer be assumed, but must be actively understood and managed.
Why this matters for leadership
When psychological contracts become unclear or contested, the consequences extend beyond individual behaviours. At an institutional level, leaders may observe:
- reduced trust between students, staff and the institution
- inconsistencies in teaching, assessment and academic practice
- increased reliance on compliance-driven approaches
- growing uncertainty around the purpose and value of higher education.
These challenges are not isolated, they are interconnected and systemic. Addressing them requires more than policy adjustments or technological solutions. It requires a shift in how leaders understand and respond to change. AI is not only altering what HE stakeholders do, it is reshaping what they expect. Leadership, therefore, must focus on realigning these expectations in a coherent and transparent way.
From disruption to action: what can leaders really do?
So what can higher education leaders really do to respond to AI-driven disruption and realign the psychological contract across their institutions? Here are four practical, leadership-level actions that move beyond policy and begin to address the relational and organisational shifts at the heart of this challenge.
1. Make expectations explicit, not assumed
AI has exposed the risks of relying on implicit norms. Leaders must ensure that expectations, learning, assessment and acceptable AI use are clearly defined, consistently communicated, and institutionally aligned. This includes moving beyond vague guidance towards shared, operational clarity across programmes.
2. Lead assessment transformation, not adaptation
Incremental adjustments to assessment will not be sufficient. Leaders should champion a shift towards authentic, process-driven and applied assessment models that are less vulnerable to AI misuse and more reflective of real-world practice. This requires institutional coordination, not isolated module-level change.
3. Invest in staff confidence and consistency
Uncertainty among academic staff is one of the most significant risks in the current landscape. Leaders must prioritise staff development that builds confidence in navigating AI, supports consistent decision-making and reinforces a shared pedagogical approach across the institution.
4. Rebuild trust through dialogue, not enforcement
A purely compliance-driven response risks further weakening the psychological contract. Leaders should create space for open, ongoing dialogue with both staff and students about expectations, responsibilities and the role of AI in learning. Relational leadership, not surveillance, will be key to sustaining trust.
Moving beyond a technological narrative
There is a risk that AI is framed primarily as a technical issue requiring technical solutions. However, its most significant impact lies in its ability to reshape relationships and expectations within higher education.
For leaders, this raises important questions:
- what does meaningful learning look like in an AI-enabled environment?
- how should institutions define and communicate value to students?
- what is the evolving role of academic staff?
These questions cannot be addressed through policy alone. They require thoughtful, adaptive leadership that is willing to engage with complexity and uncertainty.
Leading the rewriting of the psychological contract
AI is fundamentally rewriting the psychological contract that underpins higher education. The expectations that once guided the relationship between institutions, staff and students are no longer stable; they are evolving in response to new technological realities. For leaders, the challenge is not simply to respond to AI, but to lead through its implications. This involves moving beyond reactive measures towards a more deliberate effort to redefine expectations, align institutional practices and rebuild trust. In doing so, leaders have an opportunity not only to manage disruption, but to shape the future of higher education in a way that is coherent, inclusive and sustainable.
Ultimately, effective leadership in this context is not about controlling technology, it is about leading the rewriting of the psychological contract itself.
Rayhan Zakaria is a faculty member at BPP University Business School and a Senior Fellow of Advance HE. His current research explores how the psychological contract plays out in the lived experiences of wider stakeholders in UK business schools.