HR-performance linkages through the lens of social exchange

Abstract

.This research explores the linkages between HR practices and business sales performance in a retail bank branch network. Whilst previous research in the last two decades has generally supported the notion that when appropriately designed HR practices can help enhance organizational outcomes, there is still ongoing debate regarding how such practices can actually influence business results. In particular, academics have highlighted the importance of the quality of HR implementation, because this can affect employee day-to-day experiences of and reactions to the HR practices which can impact on variance in the business results. In effect, it is crucial for research to take up the employee lens of the implemented practices and their reactions to these, if the HR-performance relationship is to be clearly understood.This thesis contributes to this research agenda by adopting the social exchange lens to shed light on the nature of the aforementioned relationship. A multidisciplinary and multilevel HR-performance model was employed for conducting empirical tests. Specifically, the empirical model was constructed from the literature in three different fields: strategic human resources management, social exchange theory and psychological contract, with the aim of eliciting the nature of employer-employee exchange relationships in the HR process. Subsequently, the model was tested using the data obtained from 1,286 employees in 149 bank branches and analysed so as to assess the multilevel process through which HR practices can influence business sales performance.The empirical results indicate that an organization can improve branch sales performance by paying careful attention to several processes pertaining to the implementation of HR practices. That is, through the psychological contract process, employees, based on their perceptions of the quality of the received practices (i.e. HR level and breach), reciprocate the organization with their discretionary performance, i.e. commitment attitudes and organizational citizenship behaviours and these outcomes have an impact on business results. Moreover, the findings also point to a boundary condition, whereby the HR-performance relationship can be enhanced by stressing the role of the key constituencies responsible for delivering these practices, namely: senior management and the line manager. That is, respectively, through the affective and relational processes, these agents can have an impact on employee perceptions of HR level and whether there has been a breach of the psychological contract, which in turn influence employee reactions in the causal chain.In summary, having applied the social exchange perspective to elicit the employee interaction with the different quality of HR implementation across bank branches, this study has contributed to the literature by identifying the key processes including psychological contract, relational and affective processes through which HR practices can impact on business sales performance, thereby illustrating how an organization’s human resources can serve as the source of sustained business competitive advantage.

Date of Award	1 Jun 2011
Original language	English
Awarding Institution	University of Bath
Supervisor	Bruce Rayton (Supervisor) & Nicholas Kinnie (Supervisor)