Research on the relationship between perceived overqualification and individual performance has examined individual experiences of overqualification in isolation. The present study approaches this relationship in a new light by examining a condition under which perceptions of overqualification lead to higher versus lower performance levels. This condition is the joint perception of overqualification held by one's colleagues. Regression analyses based on data from 780 employees in 62 teams in a service organisation in the United Kingdom reveal that overqualified employees perform better as peer-group perceptions of overqualification increase. Conversely, employees with lower perceptions of overqualification perform worse as peer-group perceptions of overqualification increase. These results indicate that HRM practitioners can avoid negative outcomes of overqualification if they position overqualified individuals within teams, where other employees are also overqualified.
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