Chapter 1(2)

1.2      The Objectives of this Study

The objective of the study are first, to understand the relationship between strategic human resource management (SHRM) and employee outcome in terms of attitudes and behavior; second, to test perceived organizational support as to whether it will be the mediator between strategic human resource practice and attitude and behavior. Affective commitment refers to the employee’s attitudes towards the organization. The study will prove the elements of perceived organizational support as playing a mediating role of the SHRM and employee’s affective commitment and felt obligation as well.

This dissertation has the potential to contribute to the literature in the following aspects. First, the dissertation will test SHRM in terms of the antecedents of POS and their relationships. Some human resource practices have been tested before; however, it would be interesting to understand if SHRM aims to achieve organizational performance, how employees respond to the organization through organizational support and whether affective commitment will be changed or not.

There are a few studies that have explored the link between SHRM and perceived  organizational support. The implementation of different SHR practices often communicate the degree to which the organization cares about its employees and values their contribution, and POS is often treated as a topic of Organization Behavior topic. In OB study, it is assumed that employee motivation and behavior are the mediators between HR practices and firm performance (Jackson, Schuler, & Rivero, 1989; Schuler and Jackson, 1987; Wright and McMahan, 1992). The HR literature, however, has focused only on the relationship between HR practices and firm performance (Arthur, 1992, 1994; Becker and Huselid, 1998; Delery and Doty, 1996; Huselid, 1995). There is little research regarding the effects of the implementation of HR practices on employee attitudes and behaviors. In this dissertation, how employees’ evaluation of HR practices can influence their perceptions of the level of support from the organization which affects their work attitudes and behavior will be tested. The antecedents of individual job performance are also tested, looking at such elements for example as affective commitment and organizational rewards, which are believed to be related to work effort and performance. This dissertation validates the proposition of social exchange theory (Blau, 1964) and organizational support theory (Eisenberger et al., 1986; Rhoades and Eisenberger, 2002) regarding the norm of reciprocity in the employer-employee relationship, by investigating the mediating role of affective commitment and employee job involvement in the POS-outcome relationship.

In this dissertation, the hypothesis will be tested regarding the employee’s perceptions of SHR practices, aligned with corporate strategies that are implemented, and whether it has an impact on employee attitude and behavior and work outcome through perceived organizational support and affective commitment as mediators.

1.3      Research Questions

In order to fulfill the objectives of the study, the following research questions have been used:

  1. Does SHRM, as a set of HR practices, have a direct impact on employee attitude and behavior?
  2. Does perceived organizational support mediate SHRM and employee attitude and behavior?
  3. Is perceived organizational support the antecedent of affective commitment and felt obligation?
  4. Does affective commitment mediate SHRM and employee attitude and behavior?
  5. Does felt obligation mediate perceived organizational support and affective commitment?
  6. Does felt obligation mediate perceived organizational support and affective commitment ?
  7. Does felt obligation have the direct impact on employee attitude and behavior?

1.4      Significance of the Study

Major threats to employee commitment mean the fact that organizations are less able, or willing, to provide support than was the case in the past (Baruch, 1998). According to Meyer (1990), threats to commitment can be classified into four areas:

perceived organizational support, organizational justice, person-organization (P-O) fit, and psychological contract fulfillment.

A organization with a strategic commitment to the well-being of employees operating in an economic downturn or time of increased competition may be forced to make choices between commitment to employees and a need for restructuring, layoffs, or other non-friendly actions towards employees in order to remain solvent ( Allen and Wright, 2006). According to Meyer (2009), the major threat to commitment is change, e.g. changes in technology, global competition, and consumer demands.

Organizational changes sensitize employees to the procedure used in making allocation decision and to the treatment of those affected by the changes (Gopinath and Baker, 2000; Korsgaard, Sapienza and Schweiger, 2002).

Organizations encounters pressure for increased flexibility and efficiency, and they sometimes intentionally or inadvertently violate their contracts in the eyes of employee by eliminating jobs, cutting salaries, increasing workloads and the like (Rousseau, 1996). As a consequence of the organizations’ measures in response to change, the testing of perceived organizational support is therefore interesting in terms of consistency.

POS suggests that some work experiences may contribute to affective commitment by means other than POS. For example, work experiences intrinsic to the job itself (autonomy, variety and challenge) might be attributed more to the job’s nature than to organizational support (Rhoades, Eisenberger, Stephen Armeli, 2001). A positive relationship was found between intrinsic job conditions and AC (Colarelli, Dean and Konstan, 1987; Dunhan, Grube and Casteneda, 1994; Hackett at al., 1994).

This dissertation is aimed at finding the relationships between strategic human resource practices and employee behavior, attitudes and work outcome through perceived organizational support. Strategic human resource management is aligned with corporate strategy which is contingent on situational factors. Whether perceived organizational support will change depend on the contingent relationship which affects employee outcome? There are few studies relating strategic human resource practices and perceived organizational support, although there have been some studies regarding the casual relationship between SHRM and organizational commitment. However, in modern terms, such work commitment is integrated with SHRM and becomes a high performance work system where usually both terms are used interchangeably.

The non-stability of employment is the result of the changing nature of the employment relationship and the current business environment, characterized by mergers, spin-offs, layoffs, outsourcing, and flexibility. Commitment cannot be viewed the same way it was when employees could expect to spend their entire career with a single company (Meyer, Allen, and Topolnytsky, 1998). Mowday (1998: 394) notes that with the composition of organizations changing so rapidly, it is not clear “whether employees know from one day to the next who they are working for, let alone what organization they are committed to, if any”. Some have argued that commitment is losing relevance (Baruch, 1998); others suggest that it is more important than ever (Mowday, 1998). Social exchange theory (the basis for Bartlett’s

hypotheses) would suggest that companies show less loyalty to employees. Invited reaction employees should not be as loyal to employers. The “free agent” mentality that exists in today’s workforce may make it difficult to build strong attachments to organizations, regardless of the investments made in HRD. The counterargument has also been made that, within this environment, the most competitive organizations are those that adopt a high-performance, high-commitment strategy (Mowday, 1998; Tsui, Pearce, Porter, and Tripoli, 1997).

The dissertation will study the relationship between perceived organizational support and strategic human resource management as its antecedent. Also, the relationship between SHRM and employee attitudes and behavior will be investigated. A field study was carried by collecting data and information from various functions in the organization.

1.5      Definition of Terms

Strategic human resource management refers to practices that are responsive to a strategic change in the environment (Ellis, 1982; Fombrun, 1982; Lindroth,1982; Maier, 1982; Warner, 1984). Strategic human resource management is also defined as matching human resources to strategic or organizational conditions (Gerstein & Reiseman, 1983; Harvey, 1983; Leontiades, 1982; Migliore, 1982; Miles and Snow, 1978), selection and retention (Galosy,1983), compensation system (Migliore, 1982), domain choice (Miles and Snow, 1978) and productivity (Deutsch, 1982).

According to Alcazar, Fernandez, and Gardey, (2005), HRM can be defined as the integrated set of practices, policies and strategies through which organizations manage their human capital that influences and are influenced by business strategy, organizational context and the socio-economic context. Agarwal and Ferratt (1999) found recognition, empowerment, distributive and procedural justice, competence development, work-life policies, and information-sharing to be the critical HR practices in the software industry. Delery and Doty (1996) identified seven human resource practices considered to be strategic: career opportunities, formal training systems, appraisal measures, profit sharing, employment security, voice mechanisms, and job definition.

The High Performance Work Systems (HPWS) is an advanced form of strategic human resource management composed of employee involvement, empowerment and responsibility. It has been described in terms of high involvement management, high commitment workplaces and high trust workplaces ( Ramsay, Scholaries and Harley, 2000).

Perceived organizational support theory asserts that employees are likely to develop higher levels of POS when the organization cares about their well-being and values their contributions (Eisenberger et al., 1986; Eisenberger et al., 2001; Rhoades and Eisenberger, 2002).

Procedural justice concerns the perceived fairness of the means used to determine the amount and distribution of resources among employees (Greenberg, 1990). Procedural justice has two aspects (Skarlicki and Folger, 1997): one aspect refers to the fairness of organizational procedures, while the other, called interactional justice (Bies and Moag, 1986) focuses on the employee’s perceptions of the quality of interpersonal treatment received during the enactment of organizational procedures.

Folger and Konovsky, 1989; Kovolsky and Pugh, 1994; Moorman, 1991) found that procedural justice, especially interactional justice, provides a better explanation of employee attitudes and behavior than distributive justice. Affective commitment is seen as the employees’ emotional bond to the organization. The sense of belonging and identification, that increases involvement in the organization’s activities (Eisenberger et al., 2001). Mowday, Porter, and Steer (1982) characterized organizational commitment as follows: first, strong belief in, and acceptance of, organizational goals and values; second, willingness to exert considerable effort on behalf of the organization; and third, the strong desire to maintain membership in the organization. Meyer and Allen (1990, 1991, 1996) have proposed the conceptualization of organizational commitment consisting of affective, normative, and continuance commitment.

Felt Obligation is based on employee’s reciprocity with the organization in caring about the organization and in helping the organization to reach its goals and objectives (Eisenberger et al., 2001). Work attitudes were defined by Staw and Salanick in terms of the individual developing an attitude that is consistent with behavior; this attitude can be considered one manifestation of a commitment mindset. Attitudinal variable i.e. job satisfaction represent work attitude in the study. Job involvement refers to identification with, and interest in, the specific work that one performs (Cropanzano et al., 1997; O Driscoll & Randall, 1999). Performance and productivity are defined as the result of the pattern of actions carried out to satisfy an objective according to some standard (Bailey, 1982). Withdrawal behavior concerns the employee’s avoiding work and included such concepts as tardiness, absenteeism and voluntary turnover (Allen, 1977).