Line managers' HR implementation level and work performance: Estimating the mediating role of employee outcomes

Mahmood, Shahid; Qadeer, Faisal; Sheeraz, Muhammad; Khan, Kanwal Iqbal Article Line managers' HR implementation level and work performance: Estimating the mediating role of employee outcomes Pakistan Journal of Commerce and Social Sciences (PJCSS) Provided in Cooperation with: Johar Education Society, Pakistan (JESPK) Suggested Citation: Mahmood, Shahid; Qadeer, Faisal; Sheeraz, Muhammad; Khan, Kanwal Iqbal (2017) : Line managers' HR implementation level and work performance: Estimating the mediating role of employee outcomes, Pakistan Journal of Commerce and Social Sciences (PJCSS), ISSN 2309-8619, Johar Education Society, Pakistan (JESPK), Lahore, Vol. 11, Iss. 3, pp. 959-976 This Version is available at: https://hdl.handle.net/10419/188324 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc/4.0/ Pakistan Journal of Commerce and Social Sciences 2017, Vol. 11 (3), 959-976 Pak J Commer Soc Sci Line Managers’ HR Implementation Level and Work Performance: Estimating the Mediating Role of Employee Outcomes Shahid Mahmood (Corresponding author) Department of Commerce, The Islamia University of Bahawalpur, Pakistan National College of Business Administration & Economics, Lahore, Pakistan Email: [email protected] Faisal Qadeer Lahore Business School, The University of Lahore, Pakistan Email: faisal.qadee[email protected].edu.pk Muhammad Sheeraz Lahore Business School, The University of Lahore, Pakistan Email: [email protected] Kanwal Iqbal Khan IOBM, University of Engineering and Technology, Lahore, Pakistan Email: [email protected] Abstract The ongoing debate to unlock the black box between HRM and performance is yet to be fully concluded. This paper addresses the recent calls by adding three employee outcomes (affective commitment, job satisfaction, and turnover intention) as a mediating mechanism in the causal chain from HR implementation level - i.e., the extent of organization's HR practices that are implemented by each line manager - to work performance. Primary data was collected through a self-administrative survey from 200 permanent employees and 82 supervisors/line managers working in four manufacturing firms. The data was analyzed using SPSS process macros and AMOS. The results reveal that line managers HR implementation level increases work unit performance. Furthermore, an elevated level of HR implementation enhances employees’ affective commitment and job satisfaction and reduces their turnover intention and mediating role of these employee outcomes is fully supported by our data. The paper advances the strategic HRM research and contributes by providing a new mechanism to unravel the complexity of HRM-performance linkage debate. Keywords: HR implementation level, affective commitment, employee outcomes, social exchange theory. 1. Introduction From the last few decades, an extensive body of research has investigated the relationship between human resource management (HRM) and performance (Boselie et al., 2005; Line Managers’ HR Implementation Level and Work Performance 960 Guest, 2011; Paauwe et al., 2013). Though the outcomes of this relationship appear to be quite stout, the mechanism through which HRM influence performance remains baffling (Bowen & Ostroff, 2004; Huselid & Becker, 2011). The prior HRM research just focused on the design and quality of HR practices instead of its implementation in the real sense (Becker & Huselid, 2006; Khilji & Wang, 2006). In strategic HRM (SHRM) research, the scholars began to acknowledge the importance of HR implementation and considered it as a keystone for the achievement of employees and organizational goals. Guest and BosNehles (2013) believe that well-designed HR practices do not predictably guarantee competitive edge until these are not implemented effectively. The consistent HR practices implementation increases the employee’s contentment with HR system which is helpful to enhance the performance of the organization (Khilji & Wang, 2006). Woodrow and Guest (2014) state “good HR policies and practices can get bad results” if not correctly implemented. Thus, the implementation of HR practices is essential for the successful employee management and superior organizational performance. In HRM implementation procedure, the line managers’ role has increased, and most of the HR work has devolved to them. They fetched HR policies to life and deemed as a vital factor in recognizing the relationship between HR system and firm performance. In many firms, well-developed HR practices are outdated and failed due to non-implementation or poor implementation of these practices (Khilji & Wang, 2006). The HR department is liable for the development of HR practices, whereas, the implementation of these practices is the responsibility of line managers. Researchers in the field recognize the importance of HR implementation and propose that the crucial role of line manager in implementing HR practices should be examined to resolve the complexity between HR practices and performance relationship (Azmi & Mushtaq, 2015; Becker & Huselid, 2006; Conway & Monks, 2010). There is a need to unlock the black box between HRM and performance (Kuvaas et al., 2014; Snape & Redman, 2010); we explain the mediating mechanism expressed through employee attitudes and behaviors. The academia is also interested in investigating the influence of HR implementation beyond some organizational level (such as work units or groups) where line managers continually implement HRM practices (Vermeeren, 2014). This study responds to the recent calls and intends to contribute to the existing literature in three ways. First, it aims to empirically examine the consequences of the extent of organization's HR practices that are implemented by each line manager (HR implementation level) on the performance of the work units’. Second, relying on social exchange theory, the study attempts to unlock the HR-performance black box by adding employee outcomes (affective commitment, job satisfaction, and turnover intention) as mediating variables between HR implementation level and work performance. In line with social exchange theory, the implementation of HR practices at floor send employees a signal that they are being valued which give rise a sense of obligation and they reciprocate through an elevated level of performance (Allen et al., 2003; Gould-Williams, 2007; Purcell & Hutchinson, 2007). In this way, this study attempts to fill the current research gap by adding a new mechanism to the causal chain from HR to performance (see Figure 1). Third, we may also contribute by focusing on a group level (work units) performance as the response variable. Group-level is a place where organizations can best predict the line managers HR implementation efforts. Mahmood et al. 961 2. Theoretical Background and Hypotheses The subsequent sections pertain the theoretical support and review of literature for developing the hypotheses. The graphical presentation of all hypotheses is depicted in the hypothesized model (Figure 1). 2.1 HR Implementation Level and Work Performance HR implementation level is an “extent of organization's HR practices that are implemented by each line manager. When managers consistently choose to use many of their organization's HR practices, their HR implementation level is high. Conversely, when a manager chooses to ignore or uses only a few of their organization's HR practices, then their HR implementation level is low” (Sikora & Ferris, 2014, p. 273). The work performance refers to the consequences of the work unit’s operations or attainment of its goals. Work performance may fall into three categories such as financial performance (profitability and sales growth), non-financial or operational performance (quality of the work, the quantity of the work, market effectiveness and growth in market shares) and organizational effectiveness (organizational goals and objectives) (Venkatraman & Ramanujam, 1986). This study assesses the performance of work units (groups) by utilizing non-financial/operational measures. In recent decades, the line managers are deemed a vital factor in recognizing the relationship between HR system and firm performance as they fetch HR policies to life. The importance of line manager’s involvement in HRM activities is confirmed by different research efforts (Conway & Monks, 2010; Maxwell & Watson, 2006; Sikora & Ferris, 2014). By implementing the HR practices at the floor, they not only influence the employee’s attitude and behavior but also affect the work performance of different units. However, little concentration has been given to the implementation of HR practices at work floor. The consistent implementation of HR practices at the floor is likely to have a reinforcing impact on performance (Bowen & Ostroff, 2004). The recent research has realized this notion and puts their emphasis on HR implementation in predicting the performance (Azmi & Mushtaq, 2015; Vermeeren, 2014). Line managers’ HR implementation level has been acknowledged in academic research, but there is a lack of research that empirically examines its impact on the performance of work units or groups. When line managers implement more of organizational HR practices at work floor, their HR implementation level is high. On the other hand, when line managers implement less of HR practices, their HR implementation level becomes low. This study attempted to examine the impact of HR implementation level on performance of work units and proposes that higher HR implementation level will enhance the performance of work units. Therefore, we expect that:  H1: HR implementation level is positively related to work performance. 2.2 HR Implementation Level and Employee Outcomes Employee outcomes include affective commitment, job satisfaction, and turnover intention. Where, affective commitment and job satisfaction represent employee attitudes and turnover intention “serves as a proxy for actual turnover” (Griffeth et al., 2000) which represents employee’s behavior. Affective commitment refers to “an effective or emotional attachment to the organization” (Allen & Meyer, 1990, p. 14). Job satisfaction describes Line Managers’ HR Implementation Level and Work Performance 962 employee’s overall job enjoyment and contentment, and turnover intention is the employee’s intention to leave the organization within next twelve months. 2.2.1 HR Implementation Level and Affective Commitment The line managers play a very pivotal role in HR implementation which has enormous importance for positive employee attitudes, i.e., affective commitment. The devolution of numerous HR responsibilities makes the line managers influential HR implementers as they are responsible for the implementation of HR practices at work floor (Trullen et al., 2016). They act as predictors of HR practices for employees who influence employees’ perceptions regarding HRM system. Prior studies in the field suggest that line manager’s involvement in HRM is imperative for the commitment of employees with the organization (Currie & Procter, 2001; Purcell & Hutchinson, 2007; Riaz & Mahmood, 2017). The involvement of line managers in HR implementation is increasing day by day (Perry & Kulik, 2008). Line managers are the agents of the organization but act as independent players when implementing HR practices (Kuvaas & Dysvik, 2010) and providing support to the subordinates (Maertz et al., 2007). Relying on the social exchange theory, we poise that when line managers implement HR practices on the work floor, they take individual employee needs into account which give employees a sense that they are supported and valued. In response to this employee shows affective commitment with their organization. Many studies find that HRM positively affects employee affective commitment (Gould-Williams & Davies, 2005; Pare´ & Tremblay, 2007; Whitener, 2001). Some scholars suggest that organizational investment in HR system send implied signals to the employees that they are trusted and valued, which give them a sense of obligation to exert positive attitude towards organization (Allen et al., 2003; Purcell & Hutchinson, 2007). In this regard, we propose that when organizational line managers implement more of HR practices, it, in turn, enhances the affective commitment of employees. Thus, we expect that:  H2: HR implementation level is positively related to affective commitment. 2.2.2 HR Implementation Level and Job Satisfaction Line managers are considered as an essential factor in recognizing the relationship between HRM and different employee outcomes as they fetch HR policies/ practices to life. By doing so, they persuade employees’ perceptions about HRM system as well as their attitudes, behavior, and performance (Purcell & Kinnie, 2007). Macky and Boxall (2008) investigated the association between HR practices and employee attitudes. They found a positive relationship between HR practices and job satisfaction. Similarly, Becker et al., (1997) advocated that HR practices facilitate to improve employee productivity and enhance job satisfaction. HR practices are also helpful to increase employee communication and cooperation with other employees which provides positive feelings about the job (Evans & Davis, 2005). The HRM implementation by line managers can influence many job-related activities of employees which are helpful in creating positive feelings about the job. Accordingly, it appears that when organizational line managers implement more of HR practices, employee’s job satisfaction should subsequently improve. Conversely, when HR implementation level is low employee’s job satisfaction will decrease. Thus, we propose the following hypothesis:  H3: HR implementation level is positively related to job satisfaction. Mahmood et al. 963 2.2.3 HR Implementation Level and Turnover Intention The line managers play very crucial role in the implementation of HR practices. There is a substantial fact that the line managers must progressively execute numerous HRM activities (Purcell & Hutchinson, 2007). In HR implementation process, the line managers induce employees’ perceptions about the HRM system. Recently Sikora et al. (2015) find that line manager HPWS implementation perceptions negatively influence employee turnover intentions. HR implementation level seems likely to negatively impact turnover intentions of employees because some HR practices reveal employees that the organization is caring of its employees and covet to build an enduring relationship with them (Bowen & Ostroff, 2004). In this regard, Allen et al. (2003) found that employees’ supportive HR practices are helpful to increase their attachment to the organization. Employees perception of their supervisor support and care motivate them to stay employed with the organization (Rhoades et al., 2001). Consequently, when organizational line managers implement more of HR practices, employees feel supportive of their supervisor which negatively influences turnover intention of the employees. Thus, we suggest that:  H4: HR implementation level is negatively related to turnover intention. 2.2.4 Employee Outcomes as a Mediator The elevated level of line managers HR implementation at floor sends employees a signal that they are being valued. This social exchange on behave of the supervisors/managers give rise a sense of obligation of employees, and they reciprocate through putting more effort and high performance. A fundamental precept in SHRM research is that HRM impact performance through employees’ motivation, attitudes and behaviors (Combs et al., 2006). In this perspective, Jiang et al. (2013) suggested that while examining employee’s attitudes and behaviors and their impact on performance, social exchange theory can explain the intervening mechanisms. Per social exchange theory (Blau, 1964) when individuals or organization care about employees’ well-being and value them through investment in HR, then employees feel an obligation to reciprocate by demonstrating positive work attitudes and appropriate behaviors towards the organization. Researchers highlight that employee’s attitudes and behaviors are based on their perceptions of how and why HR practices are implemented by the organization (Bowen & Ostroff 2004; Nishii et al., 2008). In this view, line managers play a vital role in communicating HR policies to employees and implementing HR practices on the work floor. Line managers are the agents of the organization and play a key role in implementing HR practices at the operational level. When line managers effectively implement HR practices at individual levels, it gives employees a sense that they are being valued and cared. Thus, they show their positive attitudes (affective commitment and job satisfaction) and appropriate behaviors (low turnover intention) towards the work units and organization. Based on above discussion, we can say that when organizational line managers implement more of HR practices, i.e., HR implementation level is high; it is expected to increase employee affective commitment and job satisfaction and reduces turnover intention. In turn, these employee outcomes are expected to enhance their work performance. Accordingly, this study proposes the following hypothesis. Line Managers’ HR Implementation Level and Work Performance 964  H5: Employee outcomes (affective commitment, job satisfaction, and turnover intention) mediate the relationship between HR implementation level and work performance. Figure 1: Hypothesized Model 3. Methodology 3.1 Data For data collection, we target fertilizing sector of Pakistan. The reason for selection of this sector is the relevance of HR implementation by firm’s line managers. Currently, there are seven companies which are major producers of fertilizers. Four of the seven companies allowed us for collecting the data from their production plants. These companies have a formal HR department, and HR practices/policies are also being delegated to the line managers. Permanent employees and their supervisors/line managers provided the primary data through a self-administered survey. For this purpose, two separate questionnaires were designed, one for the permanent employees of the organizations and second for the line manager. Before launching the full-scale survey, a pilot study was conducted to affirm the language and relevancy of the measures utilized in both the instruments. This pilot study was conducted among four line managers and eight employees (not included in the final survey) of responding companies. Upon their feedback and suggestions, one item has been customized in the second instrument. Apart from this minor change, there was no ambiguity in the understanding of any item in both the instruments. The final versions the questionnaires were then emailed to all permanent employees and the line managers by the HR department of each company. The support provided by HR representatives of each company proved very useful in generating positive responses from respondents. After one week of the email, follow-up emails were again sent by the HR representative of each company to remaining employees and supervisors. Finally, the researcher physically visited the firms to collect the questionnaires from remaining HR Implementatio Level Turnover Intention Job Satisfaction Affecti Work Performance H3 H1 Employee Outcomes H5 Mahmood et al. 965 employees and their supervisors. The follows up process has been continued for about two months. We distributed 500 questionnaires to permanent employees and 125 questionnaires to the line managers - the planned sample of the study. We obtained fully completed, usable questionnaires from 200 employees and 82 supervisors – the actual sample utilized for data analysis. The data collection process yields a response rate of 40% for permanent employees and about 66% for supervisors. The overall response rate is 45%. 3.2 Measurement 3.2.1 HR Implementation Level In SHRM, the line manager got much popularity in the implementation of HR practices at the workplace as most of the HR activities are devolved through line management (Conway & Monks, 2010; Maxwell & Watson, 2006). However, the level of their implementation may be different for various HR activities. Therefore, it is crucial to capture HR implementation level in various activities. This kind of practice has been used previously by Guest and Conway (2011) who measured the HR effectiveness through 9 HR practices by comparing the perceptions of line managers with HR managers. We used 11 HR activities to measure the HR implementation level. The Sample HR activities are “Job analysis and redesign” and “Information sharing of HR policies.” These activities were measured through four categories (category 1= sole HRM, category 2= HRM in consultation with supervisors, category 3= supervisors in consultation with HRM, category 4= sole supervisor). Keeping in view the implementation of these practices in the organizations, the line managers, and HR managers were asked to choose the most appropriate (only one) category for each activity. 3.2.2 Work Performance Based on the prior research, the work units’ performance was assessed using seven performance criteria's. Five items were modified from Liden et al. (2006), one question was modified from Bernardin (2003), and one item was modified from Hung et al. (2011). The sample items include “My department completes the tasks on time” and “Overall performance of my department has improved.” These seven items were measured on 5point Likert scale ranged from 1 (strongly disagree) to 5 (strongly agree). The line managers were asked to assess the performance of their work units. 3.2.3 Employee Outcomes Affective commitment was measured by adopting a 6-item scale of Meyer and Allen (1997). In the scale, one item is reverse coded. We have used these items without any further customization. The sample item includes “I really feel as if this organization’s problems are my own.” Job satisfaction was evaluated by employing 3-item scale of Cammann et al. (1979). One of the items is reverse coded. These items were utilized without any further customization. The sample item includes “All in all, I am satisfied with my job.” Turnover intention was scored by utilizing 4-item scale of Tett and Meyer (1993). One item in the scale was negatively worded. We used the original items without any modification. The sample item includes “I am always on the look-out for a better job.” All items about affective commitment, job satisfaction, and turnover intention were measured on a 5-point scale ranging from 1 (not at all true) to 5 (absolutely true). The assessment of all these items was made through permanent employees of the organizations. Line Managers’ HR Implementation Level and Work Performance 966 3.3 Data Analysis For analyzing the data, we utilize SPSS 22 and AMOS 20. The scale reliability is measured using Cronbach’s. The usual descriptive statistics and cross-tabulations are also utilized. We estimated Pearson bi-variate correlations to analyze the initial support for the hypothesized relations. For hypotheses testing, we employed SPSS process macros (Hayes, 2013). To estimate the indirect effects, the bootstrapping method is utilized for testing multiple mediators simultaneously. Preacher and Hayes’ (2008) SPSS process macros. These process macros allow the testing of multiple mediators simultaneously. Furthermore, the whole model is also tested through path analysis using AMOS software. 4. Results The collected data is initially screened for missing values and outliers for ensuring its significance and readiness for further analysis. Then, all the variables are evaluated for data normality using Kolmogorov-Smirnov test and Shapiro-Wilk test. The results yield that all values are within the acceptable range which confirms the normality condition of data. 4.1 Descriptive Statistics and Correlations Table 1 provides a detailed description of the sample participants along with the correlation among the variables. Of the 200 employees participating in the survey, 96.5% are male; 91.5% are married, and their mean age is 33 years. Moreover, the employees of the fertilizing companies are highly qualified as the mean value of their formal education is 15.3 years with an average departmental tenure of 5.9 years. Of the 82 line managers, 98.8% are male, 87.8% of the line managers are married. Also, they are experienced and mature as their mean age is about 38.1 years. Their average formal education is 15.5 years with mean tenure of 7.9 years in the current department. The reliability of all the scales is measured with Cronbach’s Alpha which is a more suitable technique for measuring the internal consistency of items. The results reveal that all the scales are reliable as their Alpha values are greater than the (0.70) minimum acceptable limit. The values of all Alphas are shown along the diagonal in parenthesis in Table 1. The means, standard deviations, and correlations among variables are also presented in Table 1. The values of standard deviation for all five variables are less than one which means that the properties of all variables are normally distributed among employees and line managers. The correlation analysis provides the initial support for proposed hypotheses. The results reveal that HR implementation level is significantly positively correlated with work performance (coefficient = 0.313, p < 0.01), affective commitment (coefficient = 0.281, p < 0.01) and job satisfaction (coefficient = 0.214, p < 0.01) which lends initial support to hypotheses H1, H2 and H3. Moreover, the HR implementation level has significant negative relationship with turnover intention (coefficient = -0.253, p < 0.01) which is as per our expectation under H4. Discriminant validity and multicollinearity assumptions are confirmed by observing the correlation coefficients of all five variables. The values of all these correlation coefficients are below 1 and are less than the threshold value of 0.75 (Kline, 1998) which confirm that all five variables are distinct from each other and rules out the possibility of multicollinearity (Montgomery et al., 2009). Mahmood et al. 973 Cammann, C., Fichman, M., Jenkins, D., and Klesh, J. (1979). 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