Abstract:
In this study, the relationships between Human Resource Practices (HRPs), firm performance (service quality), and the mediation effects of employees’ abilities were examined. To assess the relationships between variables, before evaluating the fitted structural model, the measurement model was defined to verify that the measurement variables used to reflect the unobserved constructs do so in a reliable manner. The Structural Equation Modelling (SEM) was utilized to test the fitness of the model and to provide evidence of discriminate validity through chi-square difference tests. Data were collected from a sample of 179 branches of two banks in Tehran, Iran. Analysis with the bootstrapping method showed that employees’ abilities mediated the relationship between performance appraisal and service quality. Furthermore, the result of this article showed training practices had an indirect significant relationship with service quality through employees’ abilities. Overall, the findings of the current study provided insights into the role of HRPs and employees’ abilities in firm performance. Furthermore, it becomes important for organizations to build strategic practices in terms of training, career development, participation, and performance appraisal.
Machine summary:
Faculty of Educational Studies, University Putra Malaysia (Received: 18 December, 2013; Revised: 26 April, 2014; Accepted: 3 May, 2014) Abstract In this study, the relationships between Human Resource Practices (HRPs), firm performance (service quality), and the mediation effects of employees’ abilities were examined.
The importance of human resources as a fundamental channel towards their competitiveness (Moreira, 2008) on the one hand, and the strategic importance of their contribution to the effectiveness of business firms (Huang, 2000) on the other hand, have motivated the current research efforts to show how HRPs are linked to firm performance (Takeuchi, 2003; Ferguson, 2006; Andersen et al.
Furthermore, there are studies that have illustrated the effects of employees’ behaviour outcome variables on firm performance (Podsakoff & MacKenzie, 1994; Podsakoff et al.
In addition, the utility of human resource practices research is limited without explicating the processes that occur within the relationship between HRPs and firm performance with mediating variables.
This model links the practices, strategy, and outcome of human resource management with performance, employee behaviours and financial organizational outcome.
According to this theory, the following hypothesis can be formulated in the study: Employees’ abilities have a mediation role in the relationship between HRP (training, selection, career development, performance appraisal, participation practices) and firm performance.
Human Resource Practices Behaviour Outcome Skills & ability (Quality) Effort/Motivation (Commitment) Role Structure & Perception (Flexibility) Performance Outcomes High: Productivity, Quality and Innovation Low: Absence, Turnover, Conflict, Customer Complaints Fig. 1.
The model hypothesizes that human resource practices will be related to firm service quality, directly and indirectly, being mediated by ability.