HR Practices, Interpreted HRM, and
Organizational Performance:
Multi-level Analysis
Kim Eun Hee
2014. 12. 04
I.
Introduction
II.
Research model
III.
Method
IV.
Results
V.
Discussion
Introduction
This study
 investigates the role HRM perception in individual, organizational, and cross-level
 uses a multi-level sample of 263 firms and 2,200 employees in manufacturing sector
 supports that collective HRM perceptions fully mediate the relationship between HR practices
and organizational financial performance
 suggests that team-leaders’ HRM perceptions partially mediate the relationship between HR
practices and team-members’ HRM perceptions
Research Model
Research Questions
 Does collective HR perception mediate the relationship between actual HR practices and firm
performance?
 How employees perceive or interpret HR system, and what the mechanism is
Research Model
HPWS
Collective HRM
perceptions
Financial
performance
Organizational level
Individual level
Job satisfaction
Leader-rated
HPWS
Major constructs
Member-rated
HPWS
Organizational
commitment
Turnover
intention
 HPWS
 Meticulous staffing and recruiting, extensive training, fair appraisal/reward, communication
 Interpreted HR (-rated HPWS)
 For employees, HRM practices can be considered as a signal of the organization’s intentions
 Different interpretation on HRM practices may lead employees to react differently to the
same practices
Research Model
HPWS
Collective HRM
perceptions
Financial
performance
Organizational level
Individual level
Job satisfaction
Leader-rated
HPWS
Member-rated
HPWS
Major constructs
 Financial Performance
 ROA (return on assets, 총자산 수익률)
 ROE (return on equity, 자기자본 수익률)
 Job satisfaction, organizational commitment, turnover intention
 Employees’ attitudinal/behavioral outcomes
Organizational
commitment
Turnover
intention
Research Model
HPWS
Collective HRM
perceptions
Financial
performance
Organizational level
Individual level
Job satisfaction
Leader-rated
HPWS
Hypotheses
Member-rated
HPWS
Organizational
commitment
Turnover
intention
 Hypothesis 1. Collective perception of HRM will fully mediate the positive relationship between
HRM practices and organizational performance.
 Hypothesis 2a. Member-perceived HRM is positively related with job satisfaction.
 Hypothesis 2b. Member-perceived HRM is positively related with organizational commitment.
 Hypothesis 2c. Member-perceived HRM is negatively related with turnover intention.
Research Model
HPWS
Collective HRM
perceptions
Financial
performance
Organizational level
Individual level
Job satisfaction
Leader-rated
HPWS
Hypotheses
Member-rated
HPWS
Organizational
commitment
Turnover
intention
 Hypothesis 3a. HR practices are positively related with leader-perceived HRM.
 Hypothesis 3b. Leader-perceived HRM is positively related with member-perceived HRM.
 Hypothesis 3c. Leader-perceived HRM will partially mediate the positive relationship between HR
practices and member-perceived HRM.
Method
Sample and procedure




Stratified random sample of 1,899 companies
Only manufacturing firms and firms with more than 100 employees
Final sample: 263 firms and 2,200 employees
A sample of 150 groups requires only five persons per group to obtain a power of 0.90 (Hofmann,
1997)
Data analysis
 Organization- and Individual-level analyses
 Hierarchical multiple regression
 Cross-level analyses (mediation model)
 Hierarchical linear modeling
 Intercepts- as-outcome model (hypotheses testing)
 Group-mean centering plus the addition of an aggregate measure of the mean of the
individual scores
Result
Organization-level analyses (H1)
 H1(HPWS → Collectively rated HPWS) : supported
Results of Hierarchical OLS regression for Organizational Financial Performance
ROA
Variable
Model 1
†
Model 2
Model 3
ROE
Model 4
Model 1
Model 2
Model 3
*
Model 4
**
0.103
0.146
0.074
Firm size
0.11
0.04
0.06
0.01
0.19
Firm age
-0.01
0.01
0.00
0.00
-0.018
0.015
-0.005
0.01
Union relations
0.17**
0.14*
0.11†
0.09
0.13**
0.086
0.076
0.043
Organizational change
-0.07
-0.11†
-0.14*
-0.13*
-0.075
-0.115†
-0.121*
-0.141*
Market demand
0.20***
0.21***
0.19***
0.21***
0.21***
0.219***
0.22***
0.222***
Capital intensity
-0.04
-0.06
-0.12*
-0.11†
-0.049
-0.081
-0.133*
-0.123†
0.16*
HR practices
HRM perceptions
R2
0.08
0.10
F for incremental R2
3.85***
5.38*
†
p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.01
0.208**
0.10
0.27***
0.23***
0.13
0.14
0.093
17.80***
12.47***
4.546***
0.155*
0.267***
0.219***
0.124
0.147
0.159
9.439**
18.341***
11.193***
Result
Individual-level analyses (H2)
 H2a (Employee-rated HPWS → Job satisfaction) : supported
 H2b (Employee-rated HPWS → Organizational commitment) : supported
 H2c (Employee-rated HPWS → Turnover intention) : supported
Results of Hierarchical OLS regression for Individual Outcomes
Variable
Position
Tenure
Sex
Marriage
Education
Union
Employee HRM
Job satisfaction
Model 1
Model 2
0.02
0.01
**
-0.06
-0.06**
-0.06**
-0.03
-0.04
-0.06*
0.02
0.01
†
0.04
0.05*
0.48***
R2
0.01
0.24
***
F for incremental R2
4.83
707.59***
†
p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.01
Organizational commitment
Model 1
Model 2
0.034
0.02
**
-0.06
-0.05**
-0.11***
-0.08***
-0.07**
-0.09***
0.04*
0.03†
0.07**
0.07***
0.55***
Turnover intention
Model 1
Model 2
-0.08**
-0.07**
0.04†
0.03†
0.07**
0.05*
0.05*
0.06**
-0.02
-0.01
*
-0.05
-0.06**
-0.36***
0.03
12.76***
0.03
9.13***
0.33
1048.61***
0.15
341.73***
Result
Cross-level analyses
 Hypothesis 3a (HPWS → L-HPWS): supported
 Hypothesis 3b (L-HPWS → E-HPWS): supported
 Hypothesis 3c (HPWS → L-HPWS → E-HPWS): supported
 95% CI [.005, .017] excludes zero
 Using RMediation
Dependent variable
Intercept
Employee-rated HPWS
Model1
Model2
Model3
3.29***
3.30***
3.29***
Organization-level
HPWS
0.03***
Individual-level
L-HPWS
0.02*
0.19***
0.16***
Leader-rated HPWS
Model4
3.41***
0.06***
Result
Cross-level analyses
 Why RMediation?
 Several methods for computing Cis for the mediated effects
(1) Distribution of the product (e.g., MacKinnon, Fritz, Williams, & Lockwood, 2007)
(2) Monte Carlo method (MacKinnon, Lockwood, & Williams, 2004)
(3) Resampling methods (e.g., bootstrap resampling; MacKinnon et al., 2004)
(4) Asymptotic normal distribution method
 Distribution of product has been shown to produce CIs with higher coverage rates, especially
when the sample size is small
 PRODCLIN is widely used computer program that produces CIs on the basis of the
distribution-of-the-product method
 But, with limitation
(1) Popular statistical software packages cannot directly run the PRODCLIN program
(2) PRODCLIN program is limited in that it does not produce CIs for some mediated
effects for certain values of means
(3) Some limitations in producing CIs for the product of coefficients that are correlated
Discussion
Alternative models
 3-Level models
 Additional moderating factors
HPWS
Collective HRM
perceptions
Financial
performance
?
Organizational level
Leader-rated
HPWS
?
Individual level
Job satisfaction
Member-rated
HPWS
Organizational
commitment
Turnover
intention
Discussion
Alternative tools
 Multilevel SEM (structural equation modeling) using MPLUS
Remained issues
 Interpretation of variance components
 Interpretation of the meaning
Thank you!!