Employees' perceptions of HR investment and their efforts to remain internally employable: testing the exchange-based mechanisms of the ‘new psychological contract’

Abstract

This study investigates the relationship between perceived investment in employee development (PIED) and the internal employability efforts that such perceptions are assumed to influence under the terms of the ‘new psychological contract’. A cross-sectional survey among 238 employees in a Norwegian IT and management consulting firm provides support that PIED relates positively to employees' openness to develop themselves and adapt to changing work requirements (‘internal employability orientation’) and their active pursuit of new competencies and career trajectories within the organization (‘internal employability activities’). However, our findings challenge widely held claims that investment in employee development elicits these responses by way of the reciprocal mechanisms of a social exchange relationship. While PIED is found to relate positively to employees' perceptions of a social exchange relationship with their organization, these positive exchange experiences are not supported to influence internal employability outcomes. Our findings do support, however, that PIED relates negatively to perceived economic exchange relationships that in turn undermine internal employability orientations. Suggestions for future research and implications for practice are discussed.