Do “high commitment” human resource practices affect employee commitment?

Pergamon Journal of Management 27 (2001) 515–535

Do “high commitment” human resource practices affect employee commitment? A cross-level analysis using hierarchical linear modeling Ellen M. Whitener* Department of Management, McIntire School of Commerce, University of Virginia, Charlottesville, VA 22903, USA Received 20 September 1999; received in revised form 7 September 2000; accepted 27 November 2000

Abstract Relying on a cross-level paradigm and on social exchange theory (i.e., perceived organizational support) I explore the relationships among human resource practices, trust-in-management, and organizational commitment. Individual-level analyses from a sample of 1689 employees from 180 credit unions indicate that trust-in-management partially mediates the relationship between perceived organizational support and organizational commitment. Cross-level analyses using hierarchical linear modeling indicate that human resource practices affect the relationship between perceived organizational support and organizational commitment or trust-in-management. © 2001 Elsevier Science Inc. All rights reserved.

1. Introduction In a survey of over 7500 U.S. workers, Watson Wyatt International found that companies with highly committed employees experienced greater 3-year total returns to shareholders (112%) than companies with low employee commitment (76%; Watson Wyatt, 1999). They also found that human resource practices and trust in management had the strongest impact on building commitment. As Watson Wyatt’s survey implies, human resource practices and trust may provide two avenues that corporate executives can use to increase the commitment of their workforce.

* Tel.: ⫹1-434-924-7091; fax: ⫹1-434-924-7074. E-mail address: [email protected] (E.M. Whitener). 0149-2063/01/$ – see front matter © 2001 Elsevier Science Inc. All rights reserved. PII: S 0 1 4 9 - 2 0 6 3 ( 0 1 ) 0 0 1 0 6 - 4

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Academic research conducted at the organizational level suggests that human resource practices affect organizational outcomes by shaping employee behaviors and attitudes (Arthur, 1994; Huselid, 1995; Wood & de Menezes, 1998). More specifically, systems of “high commitment” human resource practices increase organizational effectiveness by creating conditions where employees become highly involved in the organization and work hard to accomplish the organization’s goals (Arthur, 1994; Wood & de Menezes, 1998)—in other words, by increasing their employees’ commitment to the organization. However, ironically, these studies have provided estimates of the strength of the relationship between high commitment human resource practices and measures of organizational effectiveness without investigating the relationship between human resource practices and employee commitment. Similarly, researchers have not systematically developed or tested theories linking trust and commitment; however, incidental to tests of other variables or theories, they have found significant correlations between commitment and employees’ trust in a specific individual (e.g., their supervisor or leader) (Folger & Konovsky, 1989; Pillai, Schriesheim & Williams, 1999; Podsakoff, MacKenzie & Bommer, 1996) or generalized trust-in-management (e.g., Gopinath & Becker, 2000; Kim & Mauborgne, 1993; Pearce, 1993). These estimates suggest that further study of the nature of the relationship between trust and commitment would be fruitful, especially if theory-based. The motivational processes of social exchange theory and the norm of reciprocity (e.g., Blau, 1964; Homans, 1961) may explain the relationships among human resource practices, trust-in-management and employee commitment (Eisenberger, Fasolo & Davis–LaMastro, 1990; Settoon, Bennett & Liden, 1996; Wayne, Shore & Liden, 1997). A well-established stream of research rooted in social exchange theory has shown that employees’ commitment to the organization derives from their perceptions of the employers’ commitment to and support of them (Eisenberger et al., 1990; Hutchison & Garstka, 1996; Settoon et al., 1996, Shore & Tetrick, 1991; Shore & Wayne, 1993; Wayne et al., 1997). The research suggests that employees interpret organizational actions such as human resource practices (Settoon et al., 1996; Wayne et al., 1997) and the trustworthiness of management (Eisenberger et al., 1990; Settoon et al., 1996) as indicative of the personified organization’s commitment to them. They reciprocate their perceptions accordingly in their own commitment to the organization. Only a few studies have explored the role of human resource practices in this model (e.g., Allen, 1992; Guzzo, Noonan, & Elron, 1994; Miceli & Mulvey, 2000; Wayne et al., 1997) and none has explored the role of trust. The purpose of this study is to investigate the relationships among human resource practices, trust-in-management, perceptions of organizational support, and organizational commitment. I rely on a “meso” paradigm recognizing that these variables exist at different levels of analysis (organizational and individual) but nonetheless interact and affect each other (House, Rousseau & Thomas–Hunt, 1995; Rousseau, 1985). I use a social exchange lens relying specifically on the role of perceptions of organizational support to explore the processes that link these factors. I test the relationships with data from a sample of over 1600 employees from 180 credit unions. I explore individual-level hypotheses using hierarchical linear regression and cross-level hypotheses using hierarchical linear modeling.

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2. High commitment human resource practices Human resource practices can be classified as “control” or “commitment” practices (Arthur, 1994; Walton, 1985; Wood & de Menezes, 1998). Control approaches aim to increase efficiency and reduce direct labor costs and rely on strict work rules and procedures and base rewards on outputs (Arthur, 1994). Rules, sanctions, rewards, and monitoring regulate employee behavior (Wood & de Menezes, 1998). In contrast, commitment approaches aim to increase effectiveness and productivity and rely on conditions that encourage employees to identify with the goals of the organization and work hard to accomplish those goals (Arthur, 1994; Wood & de Menezes, 1998). The practices that represent a high commitment strategy include sets of organization-wide human resource policies and procedures that affect employee commitment and motivation. They include selective staffing, developmental appraisal, competitive and equitable compensation, and comprehensive training and development activities (Ichniowski, Shaw & Prennushi, 1997; MacDuffie, 1995; Snell & Dean, 1992; Youndt, Snell, Dean & Lepak, 1996). A review by Delery (1998) shows that early studies of human resource practices attempted to find the universally best conduct of each independent practice. However, recently results have also shown that high commitment practices can work well synergistically, reflective of a general commitment strategy. Across a variety of industries (e.g., automotive assembly plants, steel companies and minimills, not-for profit organizations), organizations with high commitment systems experience greater productivity, financial performance, and effectiveness than organizations with low commitment or control systems (e.g., Arthur, 1994; Delaney & Huselid, 1996; Huselid, 1995; Ichniowski et al. 1997; MacDuffie, 1995; Wood & de Menezes, 1998; Youndt et al., 1996). The organizational context (e.g., fit) and goals (e.g., outcomes) may impact whether particular human resource practices have synergistic or independent effects on firm outcomes (Delery, 1998).

3. Social Exchange Theory Social exchange theory (Blau, 1964; Homans, 1961) originally explained the motivation behind the attitudes and behaviors exchanged between individuals. Eisenberger, Huntington, Hutchison, and Sowa (1986) expanded this work by proposing and establishing that the theory of social exchange and the norm of reciprocity also explain aspects of the relationship between the organization and its employees. They noted that employees form general perceptions about the intentions and attitudes of the organization toward them from the policies and procedures enacted by individuals and agents of the organization, attributing human-like attributes to their employer on the basis of the treatment they receive (Levinson, 1965). In this way, employees see themselves as having a relationship with their employer that is parallel to the relationships individuals build with each other. Recognizing this tendency to personify the organization, they applied social exchange theory to the relationship between the personified organization and its employees. In particular, they predicted that “. . . positive, beneficial actions directed at employees by the

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organization and/or its representatives contribute to the establishment of high-quality exchange relationships. . . that create obligations for employees to reciprocate in positive, beneficial ways” (Settoon et al., 1996, p. 219). 3.1. Perceived organizational support, trust, and commitment Eisenberger et al. (1986) developed the construct, perceived organizational support, to reflect employees’ beliefs about the organization’s support, commitment, and care for them. They proposed that perceived organizational support would be significantly related to a variety of employee attitudes and behaviors including organizational commitment and trust (Eisenberger et al., 1990). Organizational commitment refers to identification with organizational goals, willingness to exert effort on behalf of the organization, and interest in remaining with the organization (Mowday, Steers & Porter, 1979). Employees’ commitment to the organization would be significantly related to their perceptions of the employer’s commitment to them (perceived organizational support) as they reciprocate their perceptions of the organization’s actions in their own attitudes and behavior (Shore & Tetrick, 1991). Perceived organizational support has a high and significant correlation (0.38 – 0.71) with organizational commitment; yet, construct validity studies have verified that they are distinct though closely linked variables (Shore & Tetrick, 1991). In this study, I expect to replicate these results: Hypothesis 1: Employees’ perceptions of organizational support will be positively and significantly correlated with their commitment to the organization. Trust is a complex phenomenon that has long eluded precise definition because it encompasses many facets and levels that need to be carefully specified (Rousseau, Sitkin, Burt & Camerer, 1998; Whitener, 1997). Rousseau et al. (1998) recognized these difficulties noting that trust can be different depending on the focal object and level (such as interorganizational vs. interpersonal trust). However, they asserted that the primary components of trust—risk, uncertainty, and interdependence—remain constant across contexts. Relying on these elements, Rousseau et al. defined trust as a “psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another” (Rousseau et al., 1998, p. 395). This definition suggests that employees’ trust in management reflects employee faith in corporate goal attainment and organizational leaders, and to the belief that ultimately, organizational action will prove beneficial for employees (Kim & Mauborgne, 1993). Like perceived organizational support, trust develops through a social exchange process in which employees interpret the actions of management and reciprocate in kind. “. . . The gradual expansion of the exchange permits the partners to prove their trustworthiness to each other. Processes of social exchange, consequently, generate trust” (Blau, 1964, p. 315). According to Eisenberger et al. (1986), perceived organizational support embodies the social exchange process, reflecting employees’ interpretations and perceptions of the organization’s actions. Trust in management, who tends to be the primary purveyor of the personified organization’s actions, is a likely response to their perceptions. On this basis, I predict a significant relationship between perceived organizational support and trust such that:

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Hypothesis 2: Employees’ perceptions of organizational support will be positively and significantly correlated with their trust in management. Similarly, researchers (e.g., Gopinath & Becker, 2000; Kim & Mauborgne, 1993; Pearce, 1993) have estimated the strength of the relationship between organizational commitment and employees’ trust in management. They have found significant correlations ranging from 0.42 to 0.61. I expect to replicate these past results such that: Hypothesis 3: Employees’ commitment to the organization will be positively and significantly correlated with their trust in management. Hypotheses 1 through 3 suggest that trust, perceived organizational support, and commitment are inter-related. Indeed, Eisenberger et al. recognized links among perceived organizational support, trust and commitment when they noted “perceived organizational support would also enhance calculative involvement [an aspect of commitment] by creating trust that the organization will take care to fulfill its exchange obligations. . . ” (Eisenberger et al., 1990, p. 52). Although they did not elaborate, they seem to be suggesting that trust in management mediates the relationship between employees’ perceptions of the organization’s support and commitment and their own commitment response. Several studies looking at other kinds of perceptions (e.g., procedural fairness or individuals’ support) have generated results consistent with this notion. Individuals’ trust builds as a response to their perceptions of the actions of another and leads to an increase in their commitment to that actor (Folger & Konovsky, 1989; Gopinath & Becker, 2000; Pillai et al., 1999; Podsakoff et al., 1996). These results suggest a perfectly mediated relationship in which perceptions are associated with commitment only indirectly through trust; however, in this context, the relationship between perceived organizational support and commitment is likely to include a direct link as well. Because the correlations between perceived organizational support and commitment found in previous research (0.38 – 0.71) are so similar to the correlations between trust and commitment (0.42– 0.61), the relationship between perceived organizational support and trust would have to be perfect (1.0) for trust to perfectly mediate the relationship between perceived organizational support and commitment. These previous results suggest a partially mediated model instead such that: Hypothesis 4: Employees’ perceptions of organizational support will be related to employee commitment directly as well as indirectly through their trust in management. 3.2. Human resource practices, perceived organizational support, trust-in-management, and commitment Ostroff and Bowen (2000) relied on social exchange and the norm of reciprocity in developing hypotheses about the relationships among human resource practices, attitudes, and performance. They proposed that human resource practices shape work force attitudes by molding employees’ perceptions of what the organization is like and influencing their expectations of the nature and depth of their relationship with the organization. Employee attitudes and behaviors (including performance) reflect their perceptions and expectations, reciprocating the treatment they receive from the organization. In their multilevel model

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linking human resource practices and employee reactions, they depicted relationships suggesting that human resource practices are significantly associated with employee perceptions and employee attitudes. In the only study testing these relationships that explicitly recognizes the cross-level nature of the research questions, Tsui and her colleagues (Tsui, Pearce, Porter & Tripoli, 1997) found that employee attitudes (specifically employee commitment) were associated with the interaction of human resource practices and perceptions. They analyzed data from a sample of 10 organizations and over 900 employees in 85 jobs. They conducted their analyses at the individual-level but controlled for job-level differences in organizational support. They found that employee commitment is associated with the interaction of human resource practices (e.g., performance appraisal and rewards) and support. These results are consistent with research on perceived organizational support. Several studies have indicated that perceived organizational support interacts with organizational actions (including human resource practices) in affecting employee commitment (Allen, 1992; Guzzo et al., 1994; Miceli & Mulvey, 2000; Wayne et al., 1997). Therefore, rather than just looking at direct relationships, I investigate the impact of the interaction of human resource practices and perceptions on employee attitudes in the following hypotheses: Hypothesis 5: Human resource practices will moderate the relationship between perceived organizational support and organizational commitment such that the relationship will be stronger under commitment human resource practices than control human resource practices. Hypothesis 6: Human resource practices will moderate the relationship between perceived organizational support and trust-in-management such that the relationship will be stronger under commitment human resource practices than control human resource practices. These hypotheses are consistent with the general notion that human resource practices interact with perceptions of organizational support to affect employee commitment. However, some human resource practices are more likely than others to have significant relationships (Delery, 1998). Huselid (1995) suggested that human resource practices group into two categories—those practices that improve employee skills and those that enhance employee motivation. In a study of over 900 organizations in the United States, he validated these two categories and their effects. He found that skill-enhancing human resource activities included selection and training activities and were associated with turnover and financial performance and that motivation-enhancing activities included performance appraisal and compensation activities and were associated with measures of productivity. Because they can provide direct and substantial harm or benefit to employees (Mayer & Davis, 1999), motivation-oriented human resource activities are more likely to be associated with perceived organizational support and commitment than skill-oriented activities. Indeed, selection and training activities may not even be very salient to employees. Although job candidates pay close attention to selection procedures, current employees are more likely to be focused on the job itself. Similarly training activities are infrequent occurrences. Even at

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the “100 best companies to work for” employees spend only 2% of their work-year (an average of 47 hr a year) in training (Levering & Moskowitz, 2000). In contrast, performance appraisal and compensation processes have regular and powerful effects on employees. Poorly designed or conducted appraisal systems can fail to accurately evaluate the quality or quantity of performance. Compensation systems, especially those linked to performance assessments, can miss providing salient rewards to the right people in a timely fashion. These flaws have the potential to under-reward deserving individuals and over-reward undeserving individuals. Aware of their vulnerability to the vagaries of badly designed appraisal and reward systems, employees are likely to perceive well-designed, developmental performance appraisals and internally equitable and externally competitive compensation systems (Snell & Dean, 1992) as indicative of the organization’s support and commitment to them. As discussed above, employees would reciprocate their perceptions of the organization’s support and commitment conveyed by appraisal and compensation practices with their own commitment to the organization. In the same way, employees are likely to reciprocate their perceptions of support conveyed by appraisal and compensation activities in their trust in management. Whitener (1997) also relied on social exchange theory to predict that trust-in-management is associated with human resource practices through their effects on employees’ perceptions of support. In a longitudinal, quasi-experimental study conducted at the individual level, Mayer and Davis (1999) found that the implementation of a “more acceptable” performance appraisal system increased employees’ trust in management. They also found that employees’ perceptions of management’s ability, benevolence, and integrity mediated the relationship between their perceptions of the performance appraisal system and trust-in-management. Mayer and Davis’ purpose was to test somewhat different constructs and relationships; yet, their results reflect the same pattern suggested by social exchange: human resource activities are associated with employee attitudes through their perceptions. Hypothesis 7: The patterns of relationships among human resource practices, perceived organizational support, trust-in-management, and organizational commitment will be stronger for performance appraisal and compensation human resource practices than for selection and training.

4. Summary Taken together, these hypotheses imply a framework (depicted in Fig. 1) in which trust-in-management mediates the relationship between perceptions of organizational support and employee commitment and human resource practices moderate the relationships between perceptions of organizational support and both trust and commitment. As described below, the individual-level relationships in the framework are tested using hierarchical multiple regression and the cross-level relationships are tested using hierarchical linear modeling.

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Fig. 1. Cross-level framework depicting hypotheses linking human resource practices, perceived organizational support, trust-in-management, and employee commitment.

5. Materials and Methods 5.1. Sample and procedures I worked with research associates from credit union associations to identify and contact the sample. We drew the sample from the population of credit unions in the United States. In 1996, the year this study was conducted, there were approximately 12,000 credit unions in the U.S. Most of them (75%) were small, with assets of less than $25 million and fewer than 10 employees. One percentage was large, with assets of more than $500 million and an average of 350 employees. The research associates generated a stratified random sample of 500 credit unions from their database of credit unions. We excluded the small credit unions, those with assets below $25 million, because they have too few employees. We were concerned that it would be difficult to preserve their confidentiality and that they would not have a formal human

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resource function. We slightly oversampled large credit unions, with assets over $1 billion, because there are so few. We mailed letters describing the study and requesting participation to the CEO of each credit union. We also included the human resource and employee surveys. We instructed the CEO to ask the senior human resource officer to complete the human resource practices questionnaire and to organize the distribution, collection, and return of employee surveys in a way to preserve the anonymity of participants. We included identification information on the human resource survey; however, the employee survey included no identifying information. In addition, the employee survey was contained in a booklet with an opaque cover sheet on the front and back. Employees stapled their survey closed inside the cover sheet so that their responses were completely hidden. The human resource contact returned all surveys unopened to the research team. The research team was instructed to identify any surveys that had been opened and restapled. None appeared to have been tampered with. Of the 500 credit unions contacted, 185 returned all or part of the survey for a response rate of 37%. Respondents varied by asset size ($27 million to $8,700 million with a mean of $326 million), number of members (2000 to 2,000,000 with a mean of 65,912), and number of full time equivalent employees (12 to 3035 with a mean of 133). A comparison of respondents to nonrespondents by the credit union research affiliate provided no evidence of response bias. The human resource practices survey asked human resource managers to describe their credit union’s staffing, training, compensation, and performance appraisal practices. Of the 185 organizations, 182 provided complete data on their human resource practices. The employee survey assessed employees’ commitment to the organization, perceptions of organizational support, and trust-in-management. Human resource managers were asked to pick 10 employees to complete the surveys and most indeed returned 10. The number of employees responding from each credit union averaged a mean of 9.37 and mode and median of 10 employees per credit union. One credit union only returned one employee survey; another made copies and returned 18. The remaining credit unions provided at least 5 and no more than 10 employee usable responses. The two outliers were removed from the database, yielding a total sample of 180 credit unions and 1689 employees. The average employee respondent was 36 years old and had worked for 6.7 years at his or her credit union. Most were full time (92.5%) and female (83%). Three percentage held executive positions, 25% held management or supervisory positions, 43% held professional staff positions and did not supervise subordinates, and 29% were administrative assistants or tellers. 5.2. Measures 5.2.1. Human resource practices The human resource practices survey contained scales developed by Snell and Dean (1992) to measure high commitment human resource practices: selective staffing measures the extensiveness of the firm’s selection process; comprehensive training measures the extensiveness of the firm’s training and development process; developmental appraisal

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measures whether performance appraisal is used for developing employees; externally equitable reward systems measured the extent to which the organization’s pay levels were competitive with similar organizations; and internally equitable reward systems measured the extent to which the organization’s pay structure was equitably construed. Scales ranged from 1 to 5 but the anchors varied depending on the question. For example, the response for the staffing item, “How extensive is the employee selection process for a job?” ranged from “not extensive (1) to ”very extensive (5). The response for the comprehensive training item, “How much priority is placed on training employees?” ranged from “very little” (1) to “a great deal” (5). Snell and Dean (1992) provided little evidence of the construct validity of their measures, conducting only an exploratory factor analysis, so I replicated their procedure and took several additional steps to explore their psychometric properties (Hinkin, 1995; 1998). First, an exploratory factor analysis (principle components and varimax rotation) yielded five factors consistent with those proposed by Snell and Dean. A confirmatory factor analysis, however, did not fit the factors well yielding a ␹2 of 1276.78 (df. ⫽ 395), with NFI ⫽ 0.60 and CFI ⫽ 0.68. To explore whether greater parsimony would increase the fit, I evaluated the top four items for each scale using confirmatory factor analysis. The five factor model (developmental appraisal, selective staffing, comprehensive training, internally equitable rewards, and externally competitive rewards) fit the data significantly better yielding a ␹2 of 393.72 (df. ⫽ 160), with NFI ⫽ 0.79 and CFI ⫽ 0.86. In addition, this five-factor model fit the data better than a one factor model representing the whole system of high commitment human resource practices (␹2 ⫽ 1006.60, df. ⫽ 170, NFI ⫽ 0.46 and CFI ⫽ 0.50). On this basis the four-item scales were retained to measure human resource practices. Coefficient alpha for these scales fell within acceptable levels ranging from 0.70 (staffing) to 0.86 (training). 5.2.2. Employee attitudes Well-established scales were used for each attitude. Perceived organizational support was measured with Eisenberger’s scale (Eisenberger et al., 1986). The positively worded items from the Organizational Commitment Questionnaire (Mowday et al., 1979) measured organizational commitment. Their items reflect the extent to which the employee is willing to put in a great deal of effort beyond that normally expected and the extent to which the employee “talks up” the organization as a great place to work. Robinson and Rousseau (1994) developed a scale to measure employees’ trust in their employer. Items include “I am not sure I fully trust my employer (R)” and “In general, I believe my employer’s motives and intentions are good.” These items were also subjected to an exploratory factor analysis yielding three scales. Scales comprised of the top four items were evaluated using confirmatory factor analysis. The results indicated that a three-factor model (␹2 ⫽ 521.72, df. ⫽ 51, NFI ⫽ 0.97 and CFI ⫽ 0.97) fit the data better than a one-factor model (␹2 ⫽ 3741.47, df. ⫽ 54, NFI ⫽ 0.80 and CFI ⫽ 0.80). Coefficient alpha for each scale fell in acceptable and usual ranges from 0.85 (trust-in-management) to 0.90 (employee commitment).

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5.3. Data analysis 5.3.1. Individual-level analyses As indicated above, I analyzed the individual-level data using multiple regression. With Hypothesis 4, which predicts that trust-in-management mediates the relationship between perceived organizational support and commitment, I used hierarchical multiple regression to assess the three conditions to demonstrate mediation: (1) a significant relationship between the mediator and the dependent variable, (2) a significant relationship between the independent variable and the dependent variable, and (3) the relationship between the independent variable and the dependent variable decreasing or becoming nonsignificant when the mediator is added to the step (Baron & Kenny, 1986). 5.3.2. Cross-level analyses As indicated above, hierarchical linear modeling allows for the iterative investigation of multiple levels of relationships with individual-level dependent variables (Hofmann, 1997; Hoffman, Griffin & Gavin, 2000). A “level 1” analysis estimates parameters describing the relationship(s) between independent and dependent variables within each group, that is, at the individual level. The parameters depicting the relationships (the intercept and slope estimates) become the dependent variables for the “level 2” analysis that assesses the role of the higher order (e.g., group or organizational) variables. Significant coefficients on predictors of the intercepts and slopes provide evidence of the cross-level relationships. Several conditions must be established before testing specific hypotheses using hierarchical linear modeling. These conditions are investigated through a series of models. First, the purpose of this study is to investigate whether employee commitment is associated with individual-level (trust-in-management and perceived organizational support) and organizational-level (human resource practices) variables. Therefore, the first condition to be established is the existence of within- (individual) and between- (organizational) variance in employee commitment. This condition is evaluated by estimating the “null model,” which partitions the variance in commitment into within and between-group components. A ␹2 test on the residual variance indicates whether the level-2 (between-group) variance is significantly different from zero. The second model investigates the nature of the between-group variance, after controlling for within-group variance. For example, this model explores the amount of variance in groups’ intercepts and slopes of the regression equations representing the relationship between the individual-level variables, organizational commitment, and perceived organizational support. A t test of the parameters in the level 1 equation provides evidence of the strength of the relationship between organizational commitment and perceived organizational support. A ␹2 test for the residual variances in the level 2 equations in which group intercepts and slopes are regressed on unit vectors (no predictors) indicates whether the variances in group intercepts and slopes are significantly different from zero. Finally, the last set of models is only investigated if the second model indicates that there is significant variance in the intercepts and/or slopes. If there is significant variance in the intercepts, then the “intercepts-as-outcomes” model estimates whether this variance is associated with the organizational-level variable (human resource practices). For example,

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the level 1 equation regresses organizational commitment on perceived organizational support as in the second model above, but the level 2 analysis of intercepts-as-outcomes adds human resource practices as predictors to the intercept equation. The t tests on the coefficients associated with human resource practices test whether they are significantly related to the variance in intercepts or in other words, whether human resource practices are related to organizational commitment after controlling for perceived organizational support. If the ␹2 test on the residual variance is significant, it indicates that additional group-level predictors may be associated with the group-level variance in intercepts Similarly, if the results of the second model indicate that there is significant variance in the slopes, then the “slopes-as-outcomes” model estimates whether this variance is associated with the organizational-level variable (tests of Hypotheses 5 and 6). This model is similar to the intercepts-as-outcome model but adds human resource practices as a predictor to the slopes equation in the level-2 analysis. The t test on human resource practices indicates whether they are significantly related to the variance in slopes. Such a result is consistent, for example, with the notion that human resource practices affect the relationship with organizational commitment and perceived organizational support thus representing a cross-level interaction effect. The ␹2 test indicates whether additional level-2 predictors might be associated with the variance in slopes. Hierarchical linear modeling provides several “centering” options to assist in the interpretation of results concerning the intercept term in the level-2 analyses (Bryk & Raudenbush, 1992; Hofmann, 1997; Hofmann & Gavin, 1998). “Grand-mean” centering indicates that the intercept represents expected commitment for a person with an average level of the predictor, perceived organizational support. “Group-mean” centering represents expected commitment for a person with his or her group’s average perceived organizational support. The appropriate choice of centering depends on the model. Grand-mean centering provides better estimates and interpretability with most models; however, group-mean centering plus the addition of an aggregate measure of the mean of the individual scores in perceived organizational support in each organization, facilitates estimation and interpretability of cross-level moderation effects (as in the slopes-as-outcomes model). The data used for the hierarchical linear modeling analyses were gathered from over 180 credit unions with a median of 10 employees from each. Recent studies have provided evidence that this data set should have sufficient power to detect differences. For example, results indicate that a sample of 150 groups requires only five persons per group to obtain a power of 0.90 (Hofmann, 1997). This data set surpasses this estimate. Even though ten subjects per group may be adequate for power analyses, they may not adequately represent a group. To establish whether recognizing them as a group is appropriate, I calculated intraclass correlations and inter-rater agreement indices to examine within-group agreement and between-group variation (James, Demaree & Wolf, 1984; Klein & Kozlowski, 2000). ICC(1) ranged from 0.18 to 0.19, ICC(2) ranged from 0.69 to 70, and rwg ranged from 0.91– 0.93 indicating aggregating the measures of employee commitment, perceptions of organizational support, and trust to the organizational level was appropriate.

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Table 1 Descriptive statisticsa Mean SD 1 1. Perceived organizational support 2. Trust 3. Organizational commitment 4. Appraisal 5. External rewards 6. Internal rewards 7. Staffing 8. Training

2

3

4

5

6

7

8

(.85) .61** .13 .08 .21** .06 .01

(.90) .10 .08 .11 .07 .09

(.78) .16* .37** .35** .42**

(.74) .37** .17* .25**

(.70) .34** .23**

(.70) .47*

(.86)

3.60 .83 (.88) 3.86 3.96 3.01 3.65 3.41 3.72 3.34

.87 .85 .80 .73 .68 .54 .90

.66** .70** .20** .12 .19** .05 .02

n ⫽ 180 for inter-correlations among HR practices and cross-level correlations between HR practices and aggregated employee attitudes; n ⫽ 1689 for inter-correlations among individual-level employee attitudes. Coefficient alphas are on diagonal. * p ⬍ .05. ** p ⬍ .01. a

6. Results Table 1 contains descriptive statistics across all levels. The individual level data allow for the assessment of Hypotheses 1 through 3, which predict significant relationships among the three attitudes: perceived organizational support, trust, and organizational commitment. The correlations among these variables, presented in the top third of Table 1, indicate that the data are consistent with these hypotheses. The relationships are strong, for example, the correlation between perceived organizational support and organizational commitment is 0.70, consistent with results found in prior studies. In Hypothesis 4, I predicted that trust mediates the relationship between perceived organizational support and organizational commitment such that perceived organizational support is both directly and indirectly related (through trust) to organizational commitment. Table 2 presents the results of the hierarchical regression testing whether trust acts as a mediator. The result is consistent with this prediction. The significant relationship between perceived organizational support and organizational commitment declines substantially when trust is added to the equation. However, the relationship between perceived organizational support and organizational commitment remains significant when controlling for trust, Table 2 Results of regressing employee commitment on perceived organizational support and trust (n ⫽ 1689) Step

Independent variable

␤

Adj. R 2

1

Perceived organizational support Perceived organizational support Trust

.70 .53

2

.26

⌬R 2

F

p

.49

1658.69

.000

.53

963.77

.000

137.67

.000

.04

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consistent with the hypothesis, that trust only partially mediates the relationship between perceived organizational support and organizational commitment. I investigated the cross-level hypotheses (5–7) using hierarchical linear modeling. However, before testing the hypotheses I needed to explore the conditions associated with hierarchical linear modeling. The first condition, whether there is systematic within- and between-group variance, is explored by looking at the null model. The ␹2 test on the null model (␹2 ⫽ 377.85, df. ⫽ 179, p ⬍ .001) indicated that employee commitment varied significantly by organizations, satisfying the first condition. In addition, the intraclass correlation (Hofmann, 1997) indicated that 10.5% of the variance in organizational commitment lies between organizations. Similarly, the null model for trust indicated that there is systematic within and betweengroup variance. The ␹2 test (␹2 ⫽ 331.96, df. ⫽ 179, p ⬍ .001) showed that trust varied significantly by organizations. The intraclass correlation (Hofmann, 1997) indicated that 8.2% of the variance in trust lies between organizations. The second model estimated the between-group variance in the intercepts and slopes and the amount of variance in organizational commitment or trust explained by perceived organizational support (R2). The results for organizational commitment replicate the findings of previous studies indicating that organizational commitment and perceived organizational support are strongly related (␥ ⫽ 0.70, t ⫽ 33.58, p ⬍ .001; R2 ⫽ 0.49). They also indicate that, after controlling for perceived organizational support, sufficient variance remains in the intercepts and slopes to investigate their relationship with human resource practices (␹2 ⫽ 273.45, df. ⫽ 179, p ⬍ .001 for intercepts; ␹2 ⫽ 230.69, df. ⫽ 179, p ⬍ .001 for slopes), satisfying the second condition. The results also indicate that perceived organizational support and trust are significantly related (␥ ⫽ 0.70, t ⫽ 31.86 p ⬍ .001; R2 ⫽ 0.44). They reveal that, after controlling for perceived organizational support, sufficient variance remains in the intercepts and slopes to investigate their relationship with human resource practices (␹2 ⫽ 263.54, df. ⫽ 179, p ⬍ .001) for intercepts; ␹2 ⫽ 247.75, df. ⫽ 179, p ⬍ .001 for slopes). The intercepts-as-outcomes model explores whether human resource practices were associated with the variance in intercepts in organizational commitment or trust-in-management after controlling for perceived organizational support. t tests indicated that none of the regression coefficients representing the relationship between human resource practices and organizational commitment were significant. Human resource practices did not explain additional variance in organizational commitment after controlling for perceived organizational support. However, sufficient between-group variance remained in organizational commitment after controlling for perceived organizational support that a search for alternative between-group predictors would be warranted. I also used the intercepts-as-outcomes model to explore whether human resource practices were associated with the variance in intercepts in trust after controlling for perceived organizational support. t tests indicated the coefficient representing the relationship between internal equity of rewards and trust was significant (␥ ⫽ 0.06, t ⫽ 2.05 p ⬍ .001; R2 ⫽ 0.08). Fairness of rewards predicts variance in trust beyond that explained by perceived organizational support. Sufficient between-group variance remained to warrant a search for additional between-group predictors.

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Table 3 Results of the level-2 analysis for slopes-as-outcomes (controlling for perceived organizational support) Dependent variable Organizational Commitment Trust

␥ S.E. p ␥ S.E. p

Appraisal

External rewards

Internal rewards

Staffing

Training

.04 .03 .209 .07 .03 .045

⫺.06 .03 .054 ⫺.05 .03 .157

.08 .04 .025 .05 .04 .216

⫺.04 .05 .421 .00 .05 .949

⫺.03 .03 .364 ⫺.06 .03 .047

After exploring these conditions, I used the slopes-as-outcomes model to test Hypotheses 5 and 6. First I tested Hypothesis 5, whether human resource practices were associated with the variance in slopes in organizational commitment after controlling for perceived organizational support. Perceived organizational support was added in the level-1 equation with group-mean centering and organizational means of perceived organizational support were added in the intercept equation in the level-2 analysis (Hofmann & Gavin, 1998). As shown in Table 3, t tests indicated that internal equity significantly affects the relationship between perceived organizational support and organizational commitment such that it is stronger when organizations have high internal equity of rewards. It accounted for 16% of the variance in the organizational commitment—perceived organizational support slopes. The ␹2 indicated that a search for additional between-group predictors would be warranted. Second, I explored Hypothesis 6, whether human resource practices were associated with the variance in slopes in trust after controlling for perceived organizational support. Similar to the previous analysis, perceived organizational support was added in the level-1 equation with group-mean centering and organizational means of perceived organizational support were added in the intercept equation in the level-2 analysis (Hofmann & Gavin, 1998). As shown in Table 3, t tests indicated that the interactions of developmental appraisal and comprehensive training with perceived organizational support were related to trust. The relationship between perceived organizational support and trust is stronger in organizations with highly developmental appraisal processes but weaker in organizations with highly comprehensive training opportunities. These human resource practices accounted for 23.5% of the variance in the trust—perceived organizational support slopes. The ␹2 indicated that a search for additional between-group predictors would be warranted. Finally, the hierarchical linear modeling analyses summarized in Table 3 provide evidence of Hypothesis 7, that appraisal and rewards processes are more likely to be associated with commitment and trust than selection and training. The results are only partially supportive of this hypothesis. Appraisal and internal reward human resource practices moderated the relationships of perceived organizational support with organizational commitment or trust. However, comprehensive training also moderated the relationship between perceived organizational support and trust (albeit in an unpredicted, negative direction).

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7. Discussion The purpose of the study was to explore the relationships among human resource practices, trust-in-management, and organizational commitment using social exchange theory. Research on social exchange theory has shown that employees’ commitment to the organization derives from their perceptions of the employers’ commitment to and support of them. It also implies that employees interpret human resource practices and the trustworthiness of management as indicative of the personified organization’s commitment to them. They reciprocate their perceptions accordingly in their own commitment to the organization. Human resource practices and trustworthiness of management exist at different levels of analysis, organizational and individual respectively, and thus require cross-level analyses. Hierarchical linear modeling complemented analyses conducted at the individual level using hierarchical multiple regression to investigate these relationships. The first set of Hypotheses (1– 4) summarized relationships among the individual-level variables culminating in the integrating prediction (reflected in Hypothesis 4) that trust partially mediates the relationship between perceived organizational support and organizational commitment (e.g., Eisenberger et al., 1990; Settoon et al., 1996). The results of the hierarchical linear regression were consistent with a case of partial mediation: perceived organizational support has direct and indirect relationships, through trust-in-management, with organizational commitment. These results indicate that employees’ trust and commitment are stronger when they perceive that the organization is committed to and supportive of them. Researchers exploring employees’ perceptions of organizational support have proposed such relationships but rarely explored them empirically. This study contributes to that literature by demonstrating the strong relationships. However, as a cross-sectional study, it cannot more deeply contribute to the understanding of the processes of social exchange. As Blau predicted (Blau, 1964), trust (also commitment) grows as partners’ exchanges gradually expand. To more fully investigate these relationships, we need to conduct longitudinal studies with multiple measurements of perceptions and attitudes. The second set of Hypotheses (5–7) explored the cross-level relationships between human resource practices (an organizational-level variable) and employee perceptions and attitudes (individual-level variables). Using hierarchical linear modeling, I explored whether employees’ attitudes (trust and commitment) were related to the organization’s human resource practices. The analysis first established that 8% of the variance in employee trust and 10% of the variance in commitment were associated with organizational differences. Second, it indicated that a search for organizational-level predictors was warranted for both trust and commitment but that only internal equity of rewards directly accounted for differences across organizations in trust after controlling for perceived organizational support. Finally, I used hierarchical linear modeling to explore the cross-level hypotheses. The hypotheses represented the social exchange-based notion that employees’ attitudes reflect their interpretation of the actions of the personified organization, including the organization’s human resource policies. In the most specific and integrated Hypothesis (7), I predicted that appraisal and compensation activities interact with perceived organizational support to affect both organizational commitment and trust. The results of the analyses are partially consistent

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with these predictions. Two of six predicted relationships were significant: the relationship between perceived organizational support and organizational commitment was stronger when organizations have high internal equity of rewards and the relationship between perceived organizational support and trust in management was stronger when organizations conduct developmental appraisals. I also did not find evidence to reject three of the four null predictions (for selection and training); however, contrary to expectations, training did have a significant, and negative, interaction with perceived organizational support. Specifically, the relationship between perceived organizational support and trust was stronger when organizations offer less comprehensive training opportunities. The results of the cross-level analyses are not inconsistent with Ostroff and Bowen’s (2000) framework suggesting that human resource practices are significantly associated with employee perceptions and employee attitudes. Organizations’ employee groups do vary in their attitudes— differences in organizational membership were significantly associated with differences in trust and commitment. In addition, motivation-focused human resource practices such as developmental appraisals and equitable rewards seem to have a stronger and more meaningful relationship with those organizational differences than selection and training. Though not representing strong effects, the results indicate that managers can be encouraged that their commitment-oriented actions are associated with positive perceptions and attitudes. However, the study also yielded an unexpected result—that commitment is related to a disordinal interaction between training and perceived organizational support. The graph of this result indicates employees with low perceptions of organizational support expressed higher commitment when they worked for organizations with more comprehensive training but employees with high perceptions of organizational support expressed high commitment when they worked for organizations with less comprehensive training. The complexities of this result suggest that other, unmeasured variables, perhaps related to employees’ perception of special treatment might also be interacting with perceptions of support and training comprehensiveness in affecting commitment. For example, employees in organizations with numerous opportunities for training may not see those opportunities as conveying the organization’s support and commitment to them personally because the opportunity and benefit of training are widely available. And, employees in organizations with fewer opportunities for training may see these relatively rare opportunities as special treatment that conveys the organization’s personal support and commitment. This result needs to be explored further to see if it is an idiosyncratic result. In similar fashion to Mayer and Davis (1999), future researchers exploring these relationships should measure employees’ perceptions of the characteristics of human resource practices as an intervening variable between managers’ descriptions of human resource practices and employees’ perceptions of support. In addition, this study addresses but does not resolve the dilemma over whether human resource practices contribute to organizations’ effectiveness as individual practices or as systems of high commitment versus high control practices (Delery, 1998). In this study, specific practices (e.g., internal equity of rewards and developmental performance appraisal) were associated with a specific employee-centered outcome— employee commitment. In other studies, systems of practices have been associated with more global measures such as

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financial performance. These results provide some support for Delery’s proposal that the relationship between human resource practices and outcomes depends on the fit between the practices and outcomes—a proposal, however, that needs to be tested more directly and deliberately. Finally, this study has several strengths, for example, sufficient power and multiple sources of data; however, its limitations suggest that the findings should be interpreted with caution. First, common method variance might inflate the estimates of the strength of the relationships among the individual-level variables (Harris & Schaubroeck, 1990). However, because the confirmatory factor analysis indicated that the variables were sufficiently distinct (Hinkin, 1995) and the intercorrelations were consistent with previous results, this threat is probably minimal. Second, the data on human resource practices were provided by only one source. The reliability and validity of this person’s perceptions of the credit union’s human resource practices could not be verified. Third, I could not ensure managers randomly selected employee respondents. Sampling bias could have artificially influenced the within group agreement, reducing the variation among employees within each organization. Finally, the domain of high commitment human resource practices includes a wide variety of management and human resource activities. The survey measures do not include all possible activities, policies, and procedures. Future research should remedy these deficiencies. In addition, it should be designed to capitalize on the analytic capabilities offered by hierarchical linear modeling to investigate the relationship between organizational-level practices and employee attitudes and behavior. This study explored only a few relationships but demonstrated the usefulness of hierarchical linear modeling in testing cross-level relationships. For example, none of the correlations between human resource practices and aggregated organizational commitment was significant; but hierarchical linear modeling analyses indicated that employees’ commitment varied by organization and that human resource practices were associated with some of that between-organization variation. Finally, future research should continue to explore whether human resource practices affect organizational variables synergistically (e.g., in a bundle) or independently. In conclusion, employees interpret human resource practices and the trustworthiness of management (Eisenberger et al., 1990; Settoon et al., 1996) as indicative of the personified organization’s commitment to them. The results of this study, consistent with social exchange theory, implies that they reciprocate their perceptions accordingly in their own commitment to the organization.

Acknowledgments An earlier version of this study was presented at the 1998 Meeting of the Southern Management Association. Thank you to David Hofmann and Jeff Vancouver for their assistance with hierarchical linear modeling and to John Delery, Adelaide Wilcox King, and three anonymous reviewers for their comments on earlier drafts. Thanks also to the Filene Research Institute, the Center for Credit Union Research at the University of Wisconsin—

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Madison, and the Center for Financial Services Studies at the University of Virginia for their support of this project. Ellen M. Whitener is a professor of management at the University of Virginia’s McIntire School of Commerce. She earned her Ph.D. in management at Michigan State University. Her current research interest focuses on the impact of human resource practices on employee commitment, trust, and perceptions of organizational support.

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