Diversity in HRM Implementation and its Effect on Performance

Transcription

1 Diversity in HRM Implementation and its Effect on Performance Paper to be presented at the EGPA conference, September 8-10, Toulouse Panel Track 3 Public Personnel Policies ***Paper in progress: please do not cite*** Brenda Vermeeren vermeeren@fsw.eur.nl Erasmus University Rotterdam Department of Public Administration The Netherlands

2 Abstract In a multi-source study within 33 divisions of a Dutch municipality, we tested whether HRM activities applied by line managers affect employee perceptions of HRM. We also tested whether these perceptions influence employee satisfaction and divisional performance. Further, we explored line manager s leadership behavior as a moderating variable in the relationship between HRM and performance. Contrary to what was expected, the findings indicate that employees do not perceive the same HRM activities as line managers say they implement. On the other hand, line manager s leadership behavior shows to have an independent effect on perceived HRM. Next to this, the interaction between perceived HRM and leadership appears to have a significant effect on employee satisfaction. This implies that there is a symbiotic relationship between employees perceptions of HRM and their line manager s leadership behavior. These results create an interesting basis for further research and discussion. In particular, these results require more attention to leadership behavior in the relationship between HRM and performance. Key words: HRM implementation, transformational leadership, employee satisfaction, performance 2

3 1. Introduction Over the last few decades a substantial body of HRM research has investigated the relationship between HRM and organizational performance (e.g., Beer, Spector, Lawrence, Mills & Walton, 1984; Fombrun, Tichy & Devanna, 1984; Huselid, 1995; Becker, Huselid, Pickus & Spratt, 1997; Guest, 1997; Boselie, Dietz and Boon, 2005; Paauwe, 2009). Although the relationship between HRM and organizational performance outcomes seems quite robust, the mechanism which explains how HRM practices and organizational performance relate remains puzzling (Bowen & Ostroff, 2004). With respect to this, in previous research on the relationship between HRM and performance, there has been little attention to the implementation of HRM within the organization. In the HRM implementation process, line managers and employees play an important role. First, line managers because there is clear evidence that the role line managers play in HRM have been broadened (Purcell & Hutchinson, 2007). Second, employees because the practices are implemented to affect them, with the ultimate aim of a positive effect on organizational performance. In general, the HRM literature has stated that the HRM activities perceived or experienced by employees will be those enacted by their supervisors (Paauwe & Boselie, 2005; Becker & Huselid, 2006; Bowen & Ostroff, 2004). In this context, several authors stress that having a well-designed hr system on paper might not be sufficient to positively affect employee and ultimately organizational performance as rhetoric and reality might differ from each other (Legge, 2005; Nishii & Wright, 2008; Paauwe, 2009). Den Hartog, Boselie and Paauwe (2004) stress the important role line managers play in implementing the designed systems as differences in implementing might occur at this level and differences in the implementation and communication may lead to variation in hr perceptions of individual employees. Nishii & Wright (2008) point out that besides the intended or designed HRM system the actual (what is implemented) and the perceived HRM system (how individuals interpret it) are also important for explaining performance effects of HRM. Thus, researchers admit that there can be diversity in the process through which HRM systems are enacted within organizations, and that this diversity in HRM implementation can lead to variability in the perceptions and responses of employees. However, there is little empirical evidence for these assumptions. In addition, an important question that rises is about the effect of employee perceptions of HRM on their attitude and behavior. Guest (1999) suggests that the impact of hr practices on attitudes and behavior likely depends more on employee perception and evaluation of these practices than on the intended HR practices or policies themselves. Subsequently, several authors stress the crucial role of employee attitudes and behavior in translating HR practices into 3

4 organizational performance (Guest, 1999; Boselie et al., 2005). At this time, a few studies have started to examine the mediating effects, but more research is needed to fully understand how HRM and organizational performance are related. Based on the above considerations, this study aims to contribute to the existing research in two ways. The first aim is to examine how the implementation of HRM by supervisors affects employee perceptions of HRM. The second aim is to focus on whether these employee perceptions of HRM influence employee attitude and subsequently performance. We will address these aims in four stages. First, we discuss what the existing literature has to say about these relationships. This discussion leads to three hypotheses, which are detailed below. Second, we discuss our research design and methods and explain the measurement of the variables in the study. Third, we test our hypotheses using structural equation modeling and we present our findings. Fourth, we discuss the implications of our findings for theory and practice. 4

5 2. Theoretical Framework 2.1 Intended, actual and perceived HRM Most evaluations of HRM use data collected among HR managers. The HR manager completes a survey regarding the HR practices that exist within his or her organization. Then the response from the HR professional is statistically related to some measure of organizational performance. Such methods implicitly assume that the single organizational respondent can accurately represent the opinions and experiences of all organizational members with regard to HR practices, and that diversity in implementation between supervisors and employee experiences of HR practices need not to be captured when examining the HRM-performance relationship (Nishii & Wright, 2008). Following this line of reasoning, Nishii & Wright (2008) seek to clarify the distinction between policies, practices and employees experiences of these. They build a strong argument for making a clear distinction between intended HR practices, actual or implemented HR practices, and perceived HR practices. Intended practices are those HR policies designed by the organization to contribute to the achievement of organizational strategy and meets tenets of social legitimacy (Boxall & Purcell, 2008). Actual practices are those HR practices that are implemented by line managers. It is these practices and the way they are implemented that employees perceive and react to (Purcell & Hutchinson, 2007). Based on this line of reasoning, the assumption is that because line managers have a certain level of discretion in the way they implement HR policies, diversity between divisions can be witnessed, however within divisions similar viewpoints exist about what has been implemented. This brings us to our first hypothesis: H1: Actual HRM is positively related to perceived HRM. 2.2 Line manager s leadership behavior For many years research into HRM and research into leadership were separate areas. Gradually, there is increasing interest in combining these two research areas. This is based on the notion that employees are likely to be influenced by both the HR practices they experience and by their managers' leadership behavior (Purcell & Hutchinson, 2007). Line managers need well designed HR practices to use in their people management activities in order to influence employee attitude and behaviour. However, the way line managers enact these practices will be influenced by their leadership behavior. Support for the notion that managers play a critical role in shaping individuals perceptions of HR practices can be found in the work of Daniel (1985) who found that management style is related to employee s perceptions of HR practices. 5

6 In this respect, not only what HR practices are implemented will influence employee perceptions and reactions, but also how HRM is implemented will influence employee perceptions and reactions. Purcell & Hutchinson (2007) state that the twin aspects of line managers people management activities, namely the application of HR practices and their leadership behavior, imply a symbiotic relationship between them. Poorly designed or inadequate policies can be influenced positively by good management behaviour in much the same way as good HR practices can be negated by poor line managers behaviour or weak leadership (Purcell & Hutchinson, 2007). Moreover, Bowen and Ostroff (2004) suggest that a strong HRM system coupled with a visible supervisor may foster stronger relationships among HRM climate and performance more than either by itself. Numerous studies have reported positive relationships between transformational leadership and outcomes at the individual level and organizational level (see for an overview Zhu, Chew & Spangler, 2005). Line managers have the task of executing organizational policies by translating them into situation specific action directives during their interactions with employees. The relationship between employees and line managers is important in influencing employees views of the support received or available. Transformational leaders have a clear vision of what the organization or unit is going to be and what it is going to do in the future (Bass & Avolio, 1993). They must communicate this to employees so that they will also believe in it and become excited by it, resulting in better performances (Zhu et al., 2005). Following this line of reasoning the assumption is that: H2: Transformational leadership moderates the relationship between actual and perceived HRM, such that when the level of transformational leadership is high, the relationship between actual and perceived HRM is stronger than when the level of transformational leadership is low. 2.3 Employee attitude as mediating variable In 1999 Guest stated that with the growing interest in research on the relationship between HRM and performance it becomes more important to focus on workers viewpoints. Guest argues that the individual perceptions of these practices rather than the intended or actual HR practices make a difference for performance. However, according to Guest it is rarely possible to draw on evidence about workers perceptions of and reactions to HRM. The analysis of 104 articles by Boselie et al. (2005) confirmed the impression of Guest that the linking mechanisms between HRM and performance have largely been disregarded. To understand how HR practices influence employee attitudes and improve worker performance, research focusing on employee perceptions and reactions to HRM is required (Purcell & Hutchinson, 2007). Existing research offers an exhaustive 6

7 range of options for employee attitudes and behavior to consider. Therefore, we limited ourselves by focusing on employee satisfaction. Previous research has demonstrated a positive relationship between HRM and employee satisfaction (e.g., Guest, 1997; Steijn, 2004) and between transformational leadership behavior and employee satisfaction (Podsakoff, MacKenzie, Moorman & Fetter, 1990). Research also shows support for the assumption of a positive relationship between employee satisfaction and performance (Hackman & Oldham, 1975; Judge, Thoresen, Bono & Patton, 2001; Taris & Schreurs, 2009). These results support the hypothesis that employee satisfaction acts as a mediating variable in the relation between HRM and divisional performance. Therefore, we hypothesize: H3: The relationship between perceived HRM and transformational leadership on the one hand and divisional performance on the other hand is mediated by employee satisfaction. The proposed relationships between the variables are showed in the model below. [Insert Figure 1 about here] 7

8 3. Research methods 3.1 Data For our analysis we collected data about the existence of HRM activities operationalized by using AMO theory (abilities, motivation and opportunity to participate) (Appelbaum, Bailey, Berg & Kalleberg, 2001), data about line manager s leadership behavior, data about employee satisfaction and data about divisional performance. The database consists of 439 respondents (response rate 65%) of a Dutch municipality. By using data from one organization the HR system as intended by HRM is kept constant and this makes it possible to examine sources of variance in actual and perceived HR practices and their effects on employee satisfaction and divisional performance. In this research the testing variables are residing at different levels of analysis. Therefore, for this study the data were aggregated at the divisional level. Only the divisions were both the line manager and employees has filled in the questionnaire are selected, resulting in a data base with 33 different divisions. The response rate within each division was at least 40%. 3.2 Measurement HRM In HRM and performance research there has been little consistency in selecting HR practices to measure HRM. Boselie et al. (2005) analysed 104 important HRM and performance studies and they identified as many as 26 different HR practices that are used in different studies. However, in the last decade in scientific literature concerning HRM and performance a certain commonality around how HRM is operationalized is noticeable. More than half of the articles published after 2000 made use of AMO theory (Paauwe, 2009). AMO theory (Ability, Motivation and Opportunity) proposed that a HR system should be designed to meet employees needs for skills and motivation, and thereafter provide them with opportunities to use their abilities in various job roles (Appelbaum et al., 2000). The underlying idea is that employees will perform if they have the abilities, when they are motivated and when they get the opportunity to profile themselves (Boxall & Purcell, 2008). Inspired by Lepak, Liao, Chung & Harden (2006) we used six different HR practices to measure HRM. To measure the HR policy focused on the abilities of employees we used two different HR practices. The first practice to obtain the required abilities is training and development. The second HR practice is recruitment and selection. While most of the scholars put recruitment and selection outside the ability component, we consider selection as part of this component because 8

9 organizations can not only obtain abilities by training their employees, but they can also bring knowledge into the organization by recruitment and selection (Gould-Williams, 2003). To measure the HRM activities focused on the motivation of employees, so that employees want to carry out their function in a good manner, we also used two practices, namely performance appraisal and rewards. Finally, to measure the HRM activities aimed at the opportunity to contribute we used two HR practices. The first one is autonomy and the second one is participation. Appelbaum et al. (2000) state that employees should get responsibilities, should have the opportunity to exert influence, should have the possibility to solve problems and should be able to make decisions to be able to exert their function in the required manner. Although there is some commonality around how HRM is operationalized, there is still less consistency in which items should be used to measure the HR practices. Based on previous research (Appelbaum et al., 2000; Boon, 2008; Ahmad & Schroeder, 2003; Gould-Williams, 2003; Huselid, 1995; Wright, Gardner, Moynihan & Allen, 2005), we developed several HR practice items for this study. These were formatted as five-point Likert scales ranging from strongly disagree to strongly agree as the possible answers. To increase content validity 5 experts examined the initial pool of potential items after which five people tested the questionnaire with respect to clarity of questions, ambiguous wording, technical errors and accessibility of the survey. After the fieldwork, an exploratory factor analysis was conducted on the data using a principle components approach with an oblique rotation. We chose for oblique rotation because we expected the factors to be related (Field, 2005). As criteria for item deletion, we adopted three common statistical warning signs 1) items correlating less than.3 or more than.9 with other items in the dimension, 2) items loading more than.3 on two factors and 3) items making a negative contribution to Cronbach s alpha (Field, 2009). [Insert Table 1 about here] To measure actual HRM, line managers rated the HRM activities (question formulation: In this department employees [..]) and their answers are used as a measure of actual HRM. We measured perceived HRM by asking employees to rate these same practices (question formulation: I have [..]). Ideally, we would take all six HRM activities separately in the analysis, but because of the number of cases, we have taken together the six HRM activities in an overarching HRM variable. For line managers the Cronbach s alpha is,76 and for employees the Cronbach s alpha is,74. To determine whether the data could be aggregated to the divisional level, the intraclass correlation 9

10 (ICC) was computed. Aggregation is allowed when the variance between groups is larger than the variance within groups (Klein & Kozlowski, 2000). This is the case when the F-value is statistically significant above one. For the perceived HRM variable aggregation is allowed (F=1.518, p<0.05). This result gives some support to the assumption that because line managers have a certain level of discretion in the way they implement HR policies, diversity in perceived HRM between divisions can be witnessed Transformational leadership One approach to leadership that has dominated the literature since the 1980s is about transformational leadership 1 (Jackson & Perry, 2008). Our measurement of transformational leadership is based on Podsakoff, MacKenzie, Moorman and Fetter (1990) and is translated in Dutch by Den Hartog, Van Muijen & Koopman (1997). Transformational leadership consists of 23 questions. The answers were given on a five-point Likert scale ranging from strongly disagree to strongly agree. The Cronbach s alpha is,96. All answers were given using a five-point Likert scale ranging from strongly disagree to strongly agree. For the transformational variable aggregation is allowed (F= 2.613, p<0.05) Satisfaction To measure satisfaction (F= 1.757, p<0.05), we used two items. The first one is: All things considered, how satisfied are you with your job? and the second one is: All things considered, how satisfied are you with the organization?. The answers were given using a five-point Likert scale ranging from very dissatisfied (1) to very satisfied (5) Divisional performance To measure perceptual divisional performance (F=1.544, p<0.05) we used five items based on Bernardin (2003), namely how do you assess 1) the quantity of work of your division, 2) the 1 A common distinction in leadership literature is the distinction between transformational and transactional leadership. For two reasons we have decided to focus only on transformational leadership in this study. The first reason is methodological in nature. Due to the small number of cases we cannot include too many variables in the analysis. The second reason is substantive in nature. Transactional leadership is primarily focused on rewarding employees. HRM operationalized by using AMO theory is more than just rewarding employees. In addition, a characteristic of a transformational leadership style is that managers have a clear vision and that they communicate to employees so they will believe it. This seems to be an interesting insight with respect to the distinction between actual and perceived HRM. 10

11 quality of work of your division, 3) the time frame in which your team completes the tasks, 4) the extent of goal achievement of your division, and 5) the performance of your team all in all. The answers were given on a five-point Likert scale ranging from very poor to very good. The Cronbach s alpha is, Control variables Of course, several other variables can affect the relationship between HRM and performance. Therefore, several control variables were included in the analysis. We coded gender as a dummy (1 = female). The category of age was subdivided into ten categories (1 = years; 2 = years; 3 = years; 4 = years; 5 = years; 6 = years; 7 = years; 8 = years; 9 = years and 10 = 60 years and older). Educational level was also subdivided into categories (1 = primary education; 2 = lower vocational education; 3 = higher general secondary education, preparatory academic education; 4 = higher vocational education, candidate exam; 5 = scientific education). Finally, the span of control is a continuous variable ranging from 5 to 49 employees. 11

12 4. Results The proposed relations between the variables were analyzed using structural equation modeling (SEM). An advantage of this statistical methodology is that the full conceptual model can be tested in a simultaneous analysis. SEM allows us to analyze the direct and indirect relationships between the dependent and independent variables and among the dependent variables at the same time (Byrne, 2001). We built our SEM model using Amos version 16. In Table 2, the means, standard deviations, and divisional level correlations of the study variables are presented. [Insert Table 2 about here] The results show an average score on a five-point scale of 3.72 with respect to actual HRM. This means that on average line managers execute an active HRM policy. With respect to perceived HRM, the average score on a five-point scale is 3.43 what means that employees also perceive an active HRM policy. We found a significant, yet relatively weak correlation between actual HRM and perceived HRM. Moreover, the results show that perceived HRM is positively associated with transformational leadership; however this appears to be not the case for actual HRM. The average score on transformational leadership is 3.42 showing that employees perceive their supervisor exhibiting transformational leadership behavior. Both perceived HRM and transformational leadership appears to be positively associated with satisfaction. Employees are on average satisfied with their jobs. The average score for this variable on a five-point scale is Finally, satisfaction is positively associated with divisional performance. To test the proposed relationships, a causal structure was posited that resulted in a structural equation model. First, we tested the hypothesis that actual HRM is positively related to perceived HRM. The effect of actual HRM on perceived HRM appears to be not significant. In other words, employees do not perceive the same HRM activities as line managers pretend to implement. Then, according to the second hypothesis, we did not test the effect of what HR practices has been implemented on perceived HRM, but we tested how HRM has been implemented by testing the interaction effect between actual HRM and transformational leadership. Our second hypothesis is that transformational leadership moderates the relationship between actual and perceived HRM, such that when the level of transformational leadership is high, the relationship between actual and perceived HRM is stronger than when the level of transformational leadership is low. Based on the results, also this hypothesis needs to be rejected. The interaction effect appears to be not significant. However, interestingly enough the analysis shows that transformational leadership has its own independent effect on perceived HRM as can be concluded from the statistically significant 12

13 high beta weight. In other words, when line managers have a more transformational leadership style, employees perceive a more active HRM policy. Finally, we tested the hypothesis that the relationship between perceived HRM and transformational leadership on the one hand and divisional performance on the other hand is mediated by employee satisfaction. To test our third hypothesis, we add an interaction term between perceived HRM and transformational leadership. Because of the strong correlation between these two variables we tested the collinearity statistics. Variance inflation factor values above 10 and tolerance values below 0.1 indicate serious problems. In our study the results (VIF and tolerance.475) give no reason for concern (Field, 2009). The interaction effect on employee satisfaction appears to be significant. In Figure 2 this interaction effect has been shown. [Insert Figure 2 about here] The results show that transformational leadership moderates the relationship between perceived HRM and employee satisfaction, such that when the level of transformational leadership is high, the relationship between perceived HRM and employee satisfaction is stronger than when the level of transformational leadership is low. Thus, the interaction between perceived HRM and transformational leadership appears to influence employee satisfaction. However, we expected employee satisfaction moderating the relationship between perceived HRM and transformational leadership on the one hand and divisional performance on the other hand. Our results show no statistically significant effect of employee satisfaction on divisional performance. Based on these results, the third hypothesis also needs to be rejected. After an intensive analysis of the modification indices, significance tests, standard errors and several intermediate model modifications, the model in Figure 3 is regarded as the best-fitting model (Hu & Bentler, 1999). In Figure 3 only the statistically significant relationships (significance level 0.05) has been shown. The numerical scores on all lines indicate standardized regression coefficients (beta), and the scores in brackets are the explained variances. [Insert Figure 3 about here] The overall model fit was tested using several fit indices. In general, the chi-squared test is used to assess sample data in proportion to implied population data. The result of the chi-squared test was CMIN ; DF 21; P and CMIN/DF 1.132, with a CMIN/DF between 1.0 and 3.0 indicating a good fit. A number of alternative fit measures have been developed. However, not all 13

14 of these fit measures were used in our analysis because some of them (e.g., GFI and NFI) are sensitive to small sample sizes. Our data had a Root Mean Square Error of Approximation (RMSEA) of indicating a reasonable fit. The Comparative Fit Index (CFI) and the Tucker- Lewis Index (TFI) values were and 0.967, whereas the popular cutoff level in social sciences is 0.900, implying that the model is a good fit. The information theoretical measures (AIC, BIC, BCC and CAIC) all showed a better fit in the default model than in the saturated model, also indicating a good fit Examination of the effects of the control variables in Figure 3 shows that there is a significant correlations between the control variables, but more interesting is the effect of the control variables on the variables of interest. First, in divisions with more male employees a more active HRM policy has been experienced. On the other hand, in divisions with older employees a less active HRM policy has been perceived. Next to this, educational level appears to have a significant effect on divisional performance, showing that in divisions with higher educated people, employees will assess the divisional performance lower. 14

15 5. Conclusion and Discussion The aim of this study was to get more insight into how HRM affects performance by focusing on whether the implementation of HRM by supervisors affects employee perceptions of HRM and whether these employee perceptions of HRM influence employee attitude and subsequently performance. With regard to the above aim, our research provides two somewhat unexpected and notable results. The first result is that there is no significant influence of actual HRM on perceived HRM. This means that employees within a division do not perceive the same HRM activities as managers pretend to implement. A similar result can be found in research by Dorenbosch (2009). Although he has measured actual HRM and perceived HRM differently, he also finds no clear direct relationships between the responses of line managers and employees. Possible explanations for the lack of such results are methodological and substantive in nature. A first possible methodological explanation is that employees are possibly not aware of the terminology used with regard to HRM. Line managers and employees have been asked the same questions where the only difference is that line managers were asked if employees within the division had to do with it and employees were asked if they had to do with it. Because the results show that there is more variance between divisions than within divisions, the assumption is that the explanation cannot be found in diversity between what employees experience within their division. The possible explanation that it is the way the questions are interpreted need to be examined by doing qualitative interviews. Another explanation is substantive in nature. Perhaps there is no relationship because line managers do not actually implement what they claim to implement or they do not communicate it in an appropriate manner with the result that employees have a different experience. Also this explanation needs to be examined by doing qualitative interviews. A second notable result is the important influence of line manager s leadership behavior. Earlier research on the HRM and performance link focused almost exclusively on a count of HR practices and the degree of employees covered by such practices. This research gives the impression that it was the number and mix of practices that was important. This research shows that the assumption that it is the quality of HR practices per se which causes the chain reaction is untenable. In line with the result of previous research (Purcell & Hutchinson, 2007) there appears to be a symbiotic relationship between employees perceptions of HRM and their line manager s leadership behavior. This can be explained by the fact that line managers are seen as the agents of the organization and in most cases the deliverer of the HR practices. Employee perceptions of 15

16 HRM are not restricted to those written in the employment manual but also cover their line manager s leadership behavior (Purcell & Hutchinson, 2007). This study has several strengths, including the fact that data from multiple raters has been used. In many HRM and performance studies the HR manager completes a survey regarding the HR practices that exist within the organization. The reliance on a single HR professional is highly questioned in terms of reliability and validity (Gerhart, Wright & McMahan, 2000; Guest, 2001). Questions have been raised as to whether a single HR professional can provide an accurate description of the implemented practices in the organization. Therefore, in this study line managers as well as employees have filled in the questionnaire. An additional strength is that we know exactly which line manager and which employees are in the same division, what the divisional tasks are and how many people there are employed within a division with what kind of appointment. Nevertheless, there are also several limitations. A first limitation is the multilevel problem. In this study the testing variables are residing at different levels of analysis. Therefore, the data were aggregated at the divisional level. However, an analysis on aggregated data may be misleading. Therefore, using multilevel analysis techniques is preferable. The data in this study are suitable for multilevel analyses (data on the divisional and data on the individual level). However, with respect to further analyses, we also have some objective performance data on the divisional level. In other words, we have HRM and performance information on the divisional level and we have employee perception data on the individual level. This asks for a specific multilevel analysis, called multilevel mediational analysis (Croon & Van Veldhoven, 2007; Zhang, Zyphur & Preacher, 2009). In the further development of this paper we will use this technique to analyze the proposed relationships. A second limitation of this research is that the sample size is rather small. Although the underlying data are based on more than four hundred respondents, the data were aggregated at the level of 33 divisions. A small sample size could affect the statistical power and precision of the model s parameter estimates as well as the indices of the overall model fit. In this research we focused on one municipality. An advantage is that by using data from one organization the HR system as intended by HRM is kept constant so we can be more confident than in a multiorganization study that variations between divisions are due to implementation by line managers and employee perceptions. In the further development of this paper, we will include more divisions of other municipalities to increase the sample size. Despite the aforementioned disadvantage of using data from more than one organization, an advantage will be that the generalizability of the study will increase. 16

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20 Figure 1 Transformational Leadership H2 Actual HRM H1 Perceived HRM H3 Employee Satisfaction H3 Divisional Performance Figure 1: Conceptual model 20

21 Table 1 Factor analysis HRM Component Recruitment and Selection I have suffered a careful selection procedure before I was employed. 0,789 During the selection procedure the organization has verified carefully whether my skills were in line with the function. 0,865 During the selection procedure the organization has verified carefully whether I fit within the department. 0,820 During the selection procedure the organization verified carefully whether my training was in line with the function requirements. 0,782 Training and Development I have the opportunity to take part in trainings, courses and workshops 0,591 I have the opportunity to climbing up in position. 0,731 My responsibilities will increase if I perform well. 0,751 Career appointments are well respected. 0,612 I am able to work anywhere else within the organization. 0,643 My development opportunities are tailored to the needs of the organization. 0,585 I am encouraged in my development. 0,618 I am supported in my future development plans. 0,611 Performance appraisal My performance is periodically reviewed with me. 0,703 My assessment is the basis for my further development. 0,595 I know the performance criteria. 0,696 I receive my assessment on paper. 0,763 Both my functioning as well as the organization s functioning are addressed in a formal meeting. 0,702 There is a clear procedure for my assessment. 0,750 Rewards My performance plays a role in my rewarding. 0,483 The organization gives me a good salary compared to similar organizations. 0,427 There are enough opportunities for financial growth for me within this organization Autonomy I can decide how I execute my duties. I have influence on the fulfilment of my role. 0,819 0,812 21

22 I have the opportunity to further develop my own ideas. 0,709 I can decide in what order I am doing my work. 0,778 I have the opportunity of flexible working hours. 0,621 Participation I have the opportunity to be involved in decision making within this organization. 0,754 I have the opportunity to give my opinion on work related issues. 0,698 In a working meeting, I am involved in the decisions that are made. 0,607 Through the works council I am able to participate. 0,620 I am well informed of the views and policies of the organization 0,508 Cronbach s Alpha,85,87,86,59,84,72 1. Recruitment and Selection, 2. Training and Development, 3. Performance Appraisal, 4. Rewards, 5. Autonomy, 6. Participation. KMO-test.90 (criterion >.5). Bartlett s test significant (p<.001) (criterion: significant). 22

23 Table 2 Means, standard deviations, and correlations (N= 33) M SD Actual HRM Perceived HRM * - 3. Transformational Leadership *** - 4. Satisfaction ***.711** - 5. Divisional Performance ***.548**.372** - 6. Gender Age Educational Level *** Span of Control *** ** * p<0.1; ** p<0.05; *** p<

24 Figure 2 15,0 14,0 Interaction between HRM and transformational leadership on satisfaction 13,0 Satisfaction 12,0 11,0 10,0 9,0 Transformational Leadership High Transformational Leadership Low 8,0 7,0 6,0 Low HRM High Figure 2: Interaction between HRM and transformational leadership on satisfaction. 24

25 Figure 3 Spam of Control.430 Transformational Leadership Gender Age Perceived HRM (.731) Employee Satisfaction (.506) Divisional Performance (.471) Educational Level Figure 3: Results of Structural Equation Modeling 25