The black box of human resources: The effect of high performance work systems on organizational commitment, work engagement and intention to leave

University essay from Umeå universitet/Företagsekonomi; Umeå universitet/Företagsekonomi

Abstract: Employee attrition is a critical issue for organizations as retaining the best professional talent and controlling the costs linked to losing and employing new employees is a costly process. This is especially true for small and medium-sized enterprises that have limited resources and where every individual employee is a big part of the collective effort of the company. It has been argued that in most organizations the utility of human resources is not maximized and that investments in the right human resource practices would provide returns that exceed the costs. The unclear relationship between human resource practices and performance is commonly referred to as ‘the black box' of human resource management. Human resource practices are conceptualized differently in the literature and one of the most popular views states that practices should support and synergize with each other and that a combined implementation of practices leads to better results. This concept is often referred to as high performance work systems (HPWS) which is designed to enhance employee effectiveness. Based on the research of HPWS, the AMO-framework was introduced to better explain the linkage between human resources management and organizational performance. The framework is based on the idea that employees will perform better when they are able to do so (Ability), when they possess the motivation to do so (Motivation), and when their work environment provides the necessary support (Opportunity). Due to the lack of research of the AMO-framework in Scandinavian countries, the purpose of this quantitative study is to tests the relationship between the AMO-framework, intention to leave and the two constructs of organizational commitment and work engagement. Based on the purpose, a research question for this study is addressed as follows: What is the impact of Ability, Motivation and Opportunity HR-practices on organizational commitment, work engagement and employees' intention to leave? The sample consisted of a total of 95 employees from various small and medium-sized enterprises in Sweden. The empirical findings suggest that even though the AMO-framework does not impact employees' intention to leave directly, the individual dimensions of Ability and Motivation might do so indirectly through the constructs of organizational commitment and work engagement. These findings highlight the importance of the impact of the AMO framework on the above-mentioned constructs. Furthermore, this study contributes to the studies on human resource management in SMEs by providing more insight for the owner-managers on how to wisely invest in human resources in order to decrease employee attrition.

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