High Performance Work System at Bank Branches: Exploring the 'Black Box' of Strategic Human Resource Management through the Lens of Resource Based view and Organizational Justice Theory

Abstract

Previous research linking high performance work systems and organizational performance, mainly done at organizational level of analysis, is declared managerially biased. Moreover, researchers are exploring the mediating mechanisms linking high performance work system with performance outcomes and termed this issue as ‗black box‘ debate in the literature. In addition to this, previous studies have been criticized for using intended, instead of implemented, high performance work system highlighting that intended may not be implemented, by the line managers, in same way throughout the organization. Keeping in view these gaps in literature, this study attempts to investigate the relationship of implemented high performance work system with bank branch performance and employee outcomes, and the mediating processes for explaining these relationships. Drawing upon mutual gains perspective of HRM, this study, first, hypothesizes that implemented high performance work system is positively related to both bank branch performance and employee outcomes (employee engagement, service performance and service oriented organizational citizenship behavior). Further, based upon resource based view of the firm, the study hypothesizes that implemented high performance work system and bank branch performance relationship is mediated by branch level collective human capital. In the last, using social exchange theory, this study also investigates organizational justice dimensions (distributive justice, procedural justice and interactional justice) as mediating mechanisms for explaining the relationship between implemented high performance work system and employee outcomes. For this multilevel study, survey technique is used to obtain data from 323 bank branch managers and 1369 front line employees of 30 commercial banks operating in Punjab, Pakistan. For data analysis, structural equation modeling is employed to test branch level, whereas hierarchal linear modeling is used to test cross-level proposed relationships of the study. Findings of the study indicate that (i) implemented high performance work system is positively related with bank branch collective human capital and bank branch performance; (ii) branch level collective human capital partially mediates the relationship between implemented high performance work system and branch performance; (iii) implemented high performance work system is significantly related with three dimensions of organizational justice and employee outcomes and (iv) distributive justice, procedural justice and interactional justice perceptions partially mediates the relationship between implemented high performance work system and employee outcomes. This study contributes into literature through proposing and empirically examining a comprehensive integrative framework linking implemented high performance work system with branch performance and employee outcomes, and the intermediary mechanisms for explaining these direct relationships. In specific, findings of the study support the mutual gains perspective of human resource management (i.e. human resource management is beneficial for organization and employees both) and that human capital of bank branch emerges as intervening mechanism to explain the relationship between implemented high performance work system and branch performance. Further, employees‘ justice perceptions are also emerged as important factor in explaining the effects of implemented high performance work system on employee outcomes. The findings of this study also assist organizations and HR practitioners in understanding the role of line managers in effective implementation of high performance work system and the focus areas (intermediary mechanisms) for such systems to favorably influence both bank branches performance and employee outcomes.