The Impact of Human Resource Management and Work Climate on Organizational Performance
Garry A. Gelade Business Analytic Ltd Mark Ivery Lloyds TSB
Abstract This paper examines relationships between human resource management (HRM), work climate and organizational performance in the branch network of a retail bank. It extends previous research on group-level climate-performance and HRM-performance relationships and examines how climate and HRM function as joint antecedents of business unit performance. Significant correlations are found between work climate, human resource practices, and business performance. The results show that the correlations between climate and performance cannot be explained by their common dependence on HRM factors, and that the data are consistent with a mediation model in which the effects of HRM practices on business performance are partially mediated by work climate.
Few organizations can evaluate their performance accurately by averaging the performance of their employees. In most cases, the performance of an organization is determined by the productivity and efficiency of such higher-level organizational entities as departments, retail outlets, plants, or teams. In the language of operations research, these productive entities are called 'decision-making units' (DMU's). DMU's can be compared with each other when they consume the same type of resources and produce the same type of outputs. Examples of DMU's within an organization are branches of a bank, stores in a retail chain, or assembly lines in a factory. At a higher level, whole organizations in the same industry can also be treated as DMU's. Despite the practical importance of DMU performance for managing organizations, research on the psychology of work effectiveness has historically been focused on performance outcomes at the individual employee, rather than at the DMU, level. Thus in a recent meta-analysis of job attitudes and... [continues]
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