In: Operations Management
(a)Distinguish between ‘over-investment’ and ‘under-investment’ in the context of
unbalanced exchanges between the employer and employee.
(b)Under what circumstances does reneging and incongruence occur?
(c)Should organisations take the psychological contract seriously? Justify your
answer using theory and evidence.
Answer-(a)The exchange can be of the following four types between the employer and employee-
Thus over investment and underinvestment in context of these exchange will be differentiate as
The under-investment e,ployment relationship approach that offers a competitive advantage if the firm pursue the prospector strategy, the domestic privately owned enterprise reported highest firm performance when they use underinvestment approach with their manager in contrast to state owned or foreign owned enterprise and vice versa happens in case of over-invesment
Answer-(b) when the employee feel betrayed on part of the organization for whom they are working for, as it occurs when an organization fails to fulfil its obligation as to what an emplyee has been promised and what it actually receives results in the occurence of reneging and incongruence.
Answer-(c) An organisation should take the psychological contract seriously as it refers to the beliefs about the obligations which an organisation has towards its employee and the violation of any of those obligation on behalf of the organization towards the employee results in the employee's feeling of anger and betrayal that is experience by an employee evidence- (Conway &Briner, 2009)