Chapter 5 IMPACT OF HUMAN RESOURCE PRACTICES ON EMPLOYEE...

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Chapter 5

IMPACT OF HUMAN RESOURCE PRACTICES ON EMPLOYEEATTITUDES AND BEHAVIOUR: A PATH ANALYSIS

There is growing evidence that HR practices are related to Organizational

Performance though weakly in some cases, but little empirical attention has been paid

to exploring the path through which these practices impact organizational outcomes,

such as productivity and profitability. HR models are mostly based on a common

underlying assumption that HR practices affect Organizational Performance through

HR outcomes, like changes in their work related attitudes and behaviours which

determine the extent of usage of their skills and abilities by the employees for the

benefit of the organization (Wright et al., 1994; Guest, 1999; Wright and Nishii, 2004;

Macky and Boxall, 2007). In terms of achieving improved Organizational Performance

the important employee outcomes including Perceived Organizational Support,

Affective Commitment, Organizational Trust and Organizational Citizenship

Behaviour are regarded as positive outcomes (Guest, 1999; Hoque, 1999; Eisenberger

et al., 2001). The researchers in the past included one or more of these employee

outcomes as part of their evaluation of the effects of HR practice on the basis that

individual skills and abilities will not on their own add value to an organization.

Rather, it is employees’ behaviour and attitudes that ultimately determine the extent to

which they are prepared to put their abilities to use within the organization (Park et al.,

2003). The present study has examined the causal chain of relationships among POS,

AC, Organizational Trust and Discretionary Behavior, incorporating all in a single

model.

Discretionary Behavior has been conceptualized as a core element of employee

performance (Rotundo and Sackett, 2002), which is influenced by individual attitude

and dispositional variables rather than directly by an employee's knowledge, skills and

abilities (Organ and Ryan, 1995; Konovsky and Organ, 1996). When supervisors treat

employees fairly, social exchange and the reciprocity norms dictate that employees

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also reciprocate. Organ (1988) proposes that Discretionary Behavior may be one likely

avenue for employee reciprocation. Compared to economic exchange relationships

which are more short term in nature, social exchange relationships tend to involve the

exchange of socio-emotional benefits which are long term in nature (Blau, 1964;

Organ, 1988; Cropanzano et al., 2001). These are associated with close emotional

attachment, informal, personal and more transparent obligations. When individuals

form social exchange relationships with their working organizations, they tend to

demonstrate improved job performance, enhanced discretionary behavior and weaker

turnover intentions (Wayne et al., 1997; Hendrix et al., 1998).

The literature on Discretionary Behavior reveals that this dimension of

performance is influenced by several workplace attitudes, notably Commitment

(Meyer et al., 2002), Organizational Support (Rhoades and Eisenberger, 2002) and

Organizational Trust (Tyler, 2003). Although the relevance of these psychological

states has been widely recognized, the role of HRM practices in these mediating

mechanisms has not been properly explored. Guzzo et al., (1994) studied the influence

of HRM practices on employees’ intention to quit by testing the mediating role of

Organizational Commitment and perception of Organizational Support. Wayne et al.,

(1997) evaluated the effect of HRM practices on ‘in-role and extra-role performance’

by examining the mediating roles of organizational support and quality of the leader-

member exchange (LMX). Meyer and Smith (2000) studied the effect of HRM

practices on Organizational Commitment and the mediating role of procedural justice

and Organizational Support, whereas, Allen et al., (2003) evaluated the effect of HRM

practices on ‘turnover’ and the mediating role of commitment and organizational

support. Whitener (2001) explored the influence of organizational support on

organizational commitment, the intermediate role of trust and the moderating role of

HRM practices. Gould-Williams (2003) assessed the direct influence of HRM

practices on various HRM performance indicators (effort, intention to stay) and the

intermediate role of organizational commitment, satisfaction, and trust. Pare and

Tremblay (2007) examined the effect of HRM practices on ‘intention to quit’ and the

intermediate role of justice, organizational commitment and extra-role behaviors. The

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literature illustrates that the effect of HRM practices on employee attitudes and extra-

role behaviors is attracting growing attention (Zellars and Tepper, 2003; Gould-

Williams, 2007). However, the influence of HRM practices on Extra-role behaviors

has not been yet investigated with a model, where Organizational Commitment, Trust,

and Organizational Support are the mediating variables. The present study attempted

to examine the relationship of HR practices with Extra-role behaviors with

Organizational Commitment, Trust, and Organizational Support acting as intermediary

variables. Before testing the final model which includes all the intermediate variables,

causality was determined between variables on the basis of theoretical justification and

empirical support. Here, only the significant relationships are reported.

HR PRACTICES, AFFECTIVE COMMITMENT AND

DISCRETIONARY BEHAVIOR

As discussed in previous chapter, the firms employ a well defined system of

HR practices through which they motivate their employees to engage in Discretionary

Behavior that ultimately contributes to the achievement of firms’ goals. Affective

Commitment has been found to be one of the significant antecedents of Discretionary

Behavior (Van Dyne et al., 1995; Organ and Ryan, 1995; Bolino et al., 2004).

According to Appelbaum et al., (2000) committed workers not only identify

psychologically with their employer and feel stronger attachment to the organization,

they are also more likely to expend discretionary efforts towards achieving

organizational ends. Wright et al.,(2003) have very rightly apprehended that the

employees who are committed to their organizations on one hand can be expected to

show less counterproductive behaviour than those less committed and on the other

hand to get engaged in a greater amount of positive extra-role behaviour and better

quality in-role behaviour. Thus, it seems reasonable to hypothesize that progressive

HR practices might serve to improve Discretionary behavior by improving

Organizational Commitment.

Correlations among all the intermediary variables are presented in Table 5.1.

The highest correlation coefficient (r = 0.732; p

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Organizational Trust, which indicate a possible problem of multicollinearity between

the two variables. This has been discussed later in the section dealing with testing

relationship between HR practices, POS and Trust.

Table 5.2 depicts the results of mediation effect of Affective Commitment

between Human Resource practices and Discretionary Behavior. In the first step the

Discretionary Behavior was regressed upon HRM practices and it has been found that

the HR practices explained about 9.9 percent of the variance in DB (p

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Table 5.2: Impact of HR practices on DB through AC

Variables Step 1(DB) Step 2 (AC) Step 3 (DB) Step 4 (DB)

Selection and Staffing 0.178** 0.229** -- --

PerformanceAppraisal

-- 0.206** -- --

Training andDevelopment

0.195** 0.192** -- 0.197**

Work Life Balance -- 0.146** -- --

Affective Commitment -- -- 0.294** 0.205**

Adj. R2 0.099 0.341 0.083 0.110

F - Ratio 17.771** 32.506** 28.641** 19.868**

N 306 306 306 306

Table 5.3: Other Relevant Statistics

Variables Standardizedcoefficients (β)

t - values Tolerance Collinearitystatistics- VIF

Training and Development 0.197 3.299 0.815 1.227

Affective Commitment 0.205 3.429 0.815 1.227

In the third step, Affective Commitment explained approximately eight percent of

the variance in DB, and it was found that the regression coefficient of Affective

Commitment was significant (β = 0.294, t = 5.352; p

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be the significant predictors of Discretionary Behavior, whereas Selection and Staffing,

Performance Appraisal and Work Life Balance practices became insignificant (Table

5.3). The results indicated that Affective Commitment had a significant partial mediating

effect on the relationship between HRM practices and Discretionary Behavior. The direct

and indirect relationship between HR practices and Discretionary Behavior through

Affective Commitment is shown in Figure 5(i).

Figure 5(i): AC as a mediator between HR Practices and DB.

As shown in figure 5(i) the dotted arrow from Selection and Staffing to

Affective Commitment indicates insignificant relationship between the two. For all

other significant links respective regression coefficients have been given showing a

direct as well as indirect relationship between Training and Development and

Discretionary Behavior. The results of previous researches have shown Training and

Development to be significantly related to Organizational Commitment (Chang, 1999;

Dockel et al., 2006) and Extra- role Behaviors to be the results of the Organizational

Commitment (Foote et al., 2005). Training and Development aims to enhance KSAs,

i.e. Knowledge, Skills, and Attitudes of the workforce that are necessary to perform

the tasks effectively. Training has also been found to affect the psychological state of

the employees by making them feel that the organization is concerned about them and

their commitment level increases (Chang, 1999) and Organizational Commitment

results into Extra-role Behaviors (Noor, 2009). Results of the present study

0.195**

0.178**Selectionand Staffing

AffectiveCommitment

DiscretionaryBehavior

0.197**

.205**


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empirically support these theoretical arguments in favour of Organizational

Commitment acting as significant mediator in the relationship between HR practices

and Discretionary Behaviour.

HR PRACTICES, TRUST AND AFFECTIVE COMMITMENT

Appelbaum et al., (2000) observed that in case of steel and medical

electronics’ workers, the High Performance Work Practices associated with providing

employees with opportunities to participate in decision making, led to increased

Organizational Commitment which was due to increased Trust in management and

intrinsic rewards, but no such relationship existed in case of apparel workers. Finally,

drawing on social exchange theory, Whitener (2001) used cross-level hierarchical

linear modeling to show that employee Commitment and Trust in management were

stronger when employees believed that their managers were more supportive and

committed to them. These perceptions were partially influenced by the HR practices

used by firms, thus suggesting that HR practices can change employee attitudes. Trust

in management was also found partially mediating the observed relationship between

Perceived Organizational Support and an employee’s Commitment to his/her

organization. The work of Whitener (2001) and Appelbaum et al., (2000) suggest that

Trust in management may have an important mediating role between the employee

experience of labour management practices associated with High Performance Work

System (HPWSs) and other attitudinal responses to these practices. Appelbaum et al.,

(2000) found that HPWSs enhanced employees’ trust in managers for all three

industries they studied and this largely explained the effects that participation

opportunities resulting from implementing HPWSs had on Organizational

Commitment. Other studies outside the HPWS framework have also shown that the

level of Trust workers show in their management is consistently and positively

correlated with Organizational Commitment (e.g. Gopinath and Becker, 2000; Pearce,

1994).

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Trust develops when the actions of others are expected to be beneficial or at

least not harmful to one’s own interests (Robinson, 1996). As Whitener (2001)

observed, Trust in management reflects the belief that managers are competent and

that their actions in seeking to attain organizational goals will ultimately prove

beneficial to employees. The trustworthiness of managers therefore comprises three

factors: their perceived ability, benevolence and integrity (Mayer and Davis, 1999;

Mayer et al., 1995). Management’s adoption of High Performance Work Practices

should lead to increased trust to the extent that such actions are seen by employees as

demonstrating managerial competence, reduce their perceptions of vulnerability or

threat, and are otherwise seen to be in the worker’s interests. Guest (1999) suggested

that greater use of high-commitment HR practices was associated with higher levels

of perceived fairness in how employees have been treated, stronger beliefs that

management delivered on promises, stronger feeling of job security, and higher levels

of Trust in management. Brockner and Siegel (1996) also observed that

organizational policies perceived by employees as procedurally and structurally fair

increased Trust, while the lack of such perceived fairness reduced Trust. It could

therefore be theorized that High Performance HR practices termed as ‘Progressive HR

practices’ in this study act to improve employee trust in their management which in

turn, influences employee commitment to their organization.

Table 5.4 reports the results of mediation of Organizational Trust between

Human Resource practices and Affective Commitment. In the first step, the Affective

Commitment was regressed upon HRM practices and these were found to explain

about 34 percent of the variance in Affective Commitment (p

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Table 5.4: Impact of HR practices on Affective Commitment (AC) throughOrganizational Trust

Variables Step 1

AC

Step 2

Trust

Step 3

AC

Step 4

AC

Selection and Staffing 0.229** -- -- 0.167**

Career Development -- 0.183** -- --

Compensation -- 0.275** -- --


0.206** -- -- 0.132*

Supervisory Support -- 0.430** -- --


0.192** -- -- 0.179**

Work Life Balance 0.146** -- -- 0.149**

Organizational Trust -- -- 0.448** 0.163**

Adj. R2 0.341 0.568 0.198 0.340

F - Ratio 32.506** 134.393** 75.892** 32.389**

N 305 305 305 305

**p≤0.01, *p≤0.05

p

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Selection and Staffing 0.167 2.764 0.597 1.834

Performance Appraisal 0.132 1.951 0.476 2.101


Work Life Balance 0.149 2.663 0.695 1.439

Organizational Trust 0.163 2.580 0.545 1.834

Selection and Staffing (β = 0.167, t = 2.764; p

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Figure 5(ii): Organizational Trust as a mediator between HR Practices and AC.

0.132**

0.192*

0.206**

0.146*

0.229**

0.149**

Selection andStaffing


Work Life Balance

Organizational Trust AffectiveCommitment

0.179**

0.167**

0.163*


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HR PRACTICES, TRUST AND DISCRETIONARY BEHAVIOR

Trust is globally viewed as a social expectation that has to do with peoples’

perception of the integrity/honesty, caring, and competence of an individual or system

that is verified by experience. Trust is essential in developing mutually dependent

relationships and is based upon repetitive actions that yield constant results (Fairholm,

1994). Trust has been associated with the willingness to take a chance on behalf of the

organization without fearing exploitation (Eddy, 1981). According to Mayer, et al.,

(1995) trust is the willingness of a party to be vulnerable to the actions of another party

based on expectations that the other will perform a particular action important to the

trustor, irrespective of the ability to monitor or control that other party. McAllister (1995)

defines Organizational Trust as reliability among the employees in terms of each one’s

discourses, acts and decisions. Being honest and concerned for the welfare of others is the

core of Trust. This does not mean that the interests of others always come before the

needs of the organization as a whole; however, it does require an understanding of the

impact of one’s actions on others. Belief in management, assurance about the thoughts of

the colleagues, honesty and positive expectations are common components among

various constructs of Organizational Trust used by various researchers (Yilmaz and

Atalay, 2009).

Organizations aiming to portray themselves to be employee friendly try to

identify ways to develop the required attitudes. Gould-Williams (2003) identified ways to

develop and enhance trust among employees and reported that bundle of HR practices

including employment security, selective hiring, team-working, performance-related pay,

training and development, egalitarianism and information sharing consistently predicted

change in systems and interpersonal trust. Tzafrir and Gur (2007) investigated the impact

of HRM practices on perceived service quality through employees’ trust in their

managers. Except training out of the five dimensions of HRM practices studied by them

the other four practices including leadership and supervision, promotion and career

development, compensation, and feedback and recognition have been found to be

significantly related to trust in managers. The practices like supervision, promotion,

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career development, compensation and recognition recorded as significant predictors of

trust were also perceived by employees as indicators of organizational care and support.

The linkage between Trust in organization and OCB has been primarily examined

by Konovsky and Pugh (1994) and Wong et al., (2004). According to Konovsky and

Pugh (1994), trust is a manifestation of social exchange, and social exchange accounts for

OCB by encouraging employees to behave in ways that are not strictly mandated by their

employers. The employees with higher trust in their organization are believed to be likely

to display more OCB, regardless of the types of organization (Rousseau and Parks, 1993).

Trust is based on Social Exchange Theory (Blau, 1964) which explains how individuals

feel about a relationship and what are the expected results from that relationship. If a

person trusts another person he/she will expect some benefits from the relationship. Trust

here is seen in two aspects; trust towards organization and trust towards a colleague.

Trust towards organization is important because an employee who has high trust towards

an organization will strive to make the organization achieve its goals (Mayer and Davis,

1999). The employees too will work beyond their job specification in order to show their

trust towards the organization (Settoon et al., 1996). Trust is expected to encourage

voluntary cooperation among the workers. Hence, is considered as the key of an

organization’s success.

Table 5.6 reports the results of mediation of Organizational Trust between Human

Resource practices and Discretionary behavior. In the first step the Discretionary

Behavior was regressed upon HRM practices. It has been found that the HR practices

explained about 9.9 percent of the variance in Discretionary Behavior (p

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regression coefficient of Organizational Trust was observed to be significant (β = 0.268, t

= 4.851; p

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Figure 5(iii): Trust as a mediator between HR Practices and DB.

0.196**

0.178**Selection andStaffing

OrganizationalTrust

DiscretionaryBehavior

0.181**

0.192**


146





Organizational Trust 0.192 3.313 0.877 1.141

Because Training and Development impacts Discretionary Behavior not only

directly but also indirectly through Organizational Trust. The direct and indirect

relationship between HR practices and Discretionary Behavior through Organizational

Trust is presented in Figure 5(iii). Respective regression coefficients have been given for

all significant links showing a direct as well as indirect relationship between Training and

Development practices and Discretionary Behavior. The dotted line indicates

insignificant link between Selection and Staffing practices and Organizational Trust.

Thus, only Training and Development practices can be seen as having significant direct

relationship and indirect relationship through Organizational Trust with Discretionary

Behaviour.

HR PRACTICES, PERCEIVED ORGANIZATIONAL SUPPORT AND

ORGANIZATIONAL TRUST

POS refers to the degree to which employees perceive their employer to be

concerned with their well-being and to value their contributions to the organization

(Eisenberger et al., 1986). Eisenberger et al., (1990) suggested that employees would

consider positive discretionary activities by the organization that benefited them as

evidence that the organization cared about their well being. It is argued that

organizational rewards represent investment by the organization in the employee and are

interpreted by the employee as indication of organizational appreciation and recognition

and thus contribute to the development of POS (Shore and Shore, 1995; Eisenberger et

al., 1997). Rhoades and Eisenberger (2002) suggested that providing potential career

147

opportunities, such as promotions may imply a high level of concern for employees and

the recognition of their contributions by the organization. Since these organizational

actions go beyond what is mandated by company policy or employment contract,

employees are likely to view them as discretionary treatment by the organization that are

indicative of organizational caring and support (Shore and Shore, 1995; Eisenberger et

al., 1997). According to Wayne et al., (1997) developmental experiences and promotions

both have significant positive impact on employees’ perceptions of organizational

support. It is also believed that the level of supervisory support has a positive relationship

with POS (Wayne et al., 1997; Rhoades et al., 2001; Rhoades and Eisenberger, 2002) and

POS has been found mediating the relationship between these variables and

Organizational Citizenship Behavior and Affective Commitment (Wayne et al., 1997).

Eisenberger et al., (1990) suggested that POS may be vital for determining, if any

attitudes or behaviors benefiting the organization, like Affective Commitment or

Citizenship Behaviors, emerge from the employment relationship. Annamalai et al.,

(2010) also examined the mediation effects of POS in the relationship between

organizational justice and teacher’s trust in the organization but found no such effects.

Riggle (2007) has shown that trust in the organization is positively influenced by the

employee’s perception of organizational support. Employees may perceive an

organization’s concern about their well-being as a benevolence evidence of the

organization’s trustworthiness (Chen et al., 2005). The more the employee views the

organization to be supportive of their efforts and value their contribution, the more trust

an employee will have in the organization (Tremblay et al., 2010).

Only a few researchers (like Whitener, 2001; Riggle, 2007; Annamalai et al.,

2010; Tremblay et al., 2010) have examined the support–trust relationship and their

findings show mixed results. The present study attempted to extend the existing research

and by seeking empirical support for mediation of POS in the relationship between HR

practices and Organizational Trust , believing that behaviors related to Organizational

Support (e.g. Promotions, Compensation, Career Development efforts) appear to be

interpreted by employees as mark of respect and consideration on the part of their

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employer, which in turn appears to increase their Trust in and the quality of their

relationship with the latter (Eisenberger et al., 1990; 2001).

Table 5.1 reports the correlation coefficients among intermediary variables. It can

be noticed that the highest correlation (r=0.732, p

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Table 5.8: Impact of HR practices on Trust through Perceived OrganizationalSupport (POS)

Variables Step 1(Trust)

Step 2(POS)

Step 3(Trust)

Step 4(Trust)


0.178** 0.275** -- --

Selection and Staffing 0.117* 0.149** -- --

Career Development 0.176** -- -- 0.181**

Compensation 0.167** 0.130* -- 0.181**

Supervisory Support 0.310** 0.377** -- 0.204**

POS -- -- 0.741** 0.381**

Adj R2 0.602 0.594 0.548 0.645

F - Ratio 89.767** 108.402* 356.744** 134.561**

*N=295

4.741; p

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Career Development 0.181** 3.539 2.163 0.462

Compensation 0.181** 3.789 1.898 0.527

Supervisory Support 0.204** 4.111 2.044 0.489

POS 0.381** 7.177 2.332 0.429

**p ≤0.01, *p≤0.05

POS in the regression equation and the regression coefficients of other significant

predictors also diminished as well (Table 5.9).

The results indicate that POS has a significant partial mediating effect on the

relationship between HR practices and Organizational Trust. It indicates that

Performance Appraisal practices and Selection and Staffing have been able to build

Organizational Trust among employees but these are not being perceived as supportive at

individual level. The results suggest that an organization’s investment in employee

Career Development should demonstrate to employees, the organizational effort and

support being offered to assist employees to expand their skills for employability. Liu

(2004) has revealed how ERG theory given by Alderfer (1972) helps in guiding the

organizations to employ HR practices to prove support for employees in order to develop

positive employee attitudes and behaviors. The theory holds that individuals attempt to

satisfy three levels of needs in organizations; existence, relatedness and growth.

Accordingly, several HR practices are important in offering support for employees to

satisfy these needs. For instance, satisfactory pay is necessary for meeting individuals’

physiological or existence needs, growth needs can be met by sufficient career

development opportunities that help employees extend their potential and expand their

capabilities. HR practices that provide social support, such as helping employees

maintain good work and family relationships through supervisory support can be instrumental

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Figure 5(iv): POS as a Mediator between Human Resource Practices and Organizational Trust

0.178**

0.117*

0.176**

0.310**

0.167**

0.204**


CareerDevelopment

Compensation

SupervisorySupport

PerceivedOrganizational

Support

Organizational Trust0.181**

0.181**

0.381**


152

in fulfilling employees’ need for relatedness. The results of the present study are in line

with the existing literature. (e.g. Shore and Shore, 1995; Eisenberger et al., 1997; Wayne

et al., 1997). Figure 5 (iv) also shows that Compensation, Career Development and

Supervisory Support practices affect Organizational Trust directly as well as through

POS but POS does not mediate the relationship between Performance Appraisal,

Selection and Staffing and Organizational Trust and the same is depicted in the figure 5

(iv) with a dotted line without a regression coefficient.

HR PRACTICES, POS, TRUST, AC AND DB

Earlier in this chapter different sub paths have been tested separately. This part

deals with testing how far the selected employee attitudes namely Perceived

Organizational Support, Affective Commitment and Organizational Trust mediate in the

relationship between HR practices and Discretionary behaviour. Table 5.10 shows the

results of the causal chain between HR practices and Discretionary behavior. At step 1,

when Discretionary Behavior was regressed upon demographic variables and HR

practices. The practices namely Selection and Staffing (β = 0.178, t = 2.811; p

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Table 5.10: Impact of HR practices on DB through Trust and AC

Variables Step 1DB (β)

Step 2DB (β)

Step 3DB (β)

Step 4DB (β)

Selection and staffing 0.178** 0.178** -- 0.085

Training and development 0.195** 0.195** 0.219** 0.167**

POS -- -0.035 -- --

Trust -- -- 0.192** 0.140*

Affective Commitment -- -- -- 0.156*

R2 0.099 0.099 0.108 0.123

F - Ratio 17.783** 17.783** 19.446** 15.159**

N 305 -- 305 305



t - values Tolerance Collinearitystatistics - VIF


0.167 2.725 0.770 1.298

Trust 0.140 2.288 0.772 1.296

Affective Commitment 0.156 2.439 0.702 1.424

**p≤0.01, *p≤0.05

Development influences Organizational Trust which in turn impacts Affective

Commitment ultimately leading to significant change in employee Discretionary

Behaviour. It can be inferred that organizations who want their employees to go

beyond their prescribed role requirements should not consider Training to be a cost.

Rather investment by an organization in employee Training and Development might

be seen by employees as something that yields long term benefit instead of short term

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Figure 5(v): Trust and AC as mediators between HR practices and DB.

0.156*0.140*

0.178**

0.196**


Organizational Trust DiscretionaryBehavior

.167**


AffectiveCommitment

155

gains for them. This helps in building trust among employees. With the passage of time

cognitive evaluation of organizational efforts by employees may help to create a sense of

belonging among them, which in turn may bring about discretionary efforts from them.

Employees under such circumstances might not bother about time spent or hardships

faced but only works with full zeal and zest to achieve organizational goals. This is really

needed in today’s competitive world because discretionary behaviour which is observed

to be important, is quite rare.

The present study hence, used a broad-based and multi-industry sample to

examine the extent to which the use of HPWS yields desired attitudes and behaviour in

Indian context. The results of the present study suggest that openness is a part of Trust

and Trust enhances Commitment, which in turn might increase Discretionary Behaviour

and Organizational Performance.

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