Vavuniya University International Research Conference, 2021

EXTENDED ABSTRACT

IMPACT OF HIGH PERFORMANCE WORK

SYSTEM ON JOB SATISFACTION AND
ORGANIZATIONAL COMMITMENT:
EVIDENCE FROM MICROFINANCE COMPANY
Raveendran, T.,* Jepriya, T, and Sivaneswaran, A.
University of Jaffna, Sri Lanka
* [email protected]

(Published 15 October 2021)

Abstract
The concept of High-Performance Work System (HPWS) has attracted the attention of researchers
due to its possible benefits in organizations. HPWS involves a set of interconnected human resource
practices which are designed to promote employees’ satisfaction, commitment, productivity and other
work behaviours. The objective of the current study is to identify the influence of HPWS on employees’
job satisfaction and organizational commitment in a microfinance company in Colombo. A sample of
90 staff working in the company was selected for the study using simple random sampling method. The
study is explanatory and a cross sectional survey method was employed. Data were analyzed using SPSS
and regression analysis was performed to test the hypotheses of the study. The results revealed that HPWS
positively influences the job satisfaction and organizational commitment. The study gives an insight that
the firms that look for higher employee satisfaction and commitment among the employees should focus
on HPWS and should take action to invest in HPWS. Future studies may consider longitudinal study
to find the association among the constructs. Further, future research could be extended to the other
microfinance institutions in Sri Lanka.

Keywords: High performance work system, job satisfaction, organizational commitment

1. Introduction
TMicrofinance institutions are operating with the aim of improving the living standards of people
who are living at the bottom of the social-economic pyramid, and contributing to create a poverty
free society. Studying the effect of HPWS on employee attitude would give an insight for the
company to promote the quality service through HPWS. Nowadays, an organization can achieve
competitive advantage in marketplace through highly committed and satisfied employees. HPWS
is implemented in organizations to improve the employee performance and productivity (Bashir,
Jianqiao, Ghazanfar, & Abrar, 2012). According to Bashir et al (2012), the traditional HR practices
would not meet the employees’ needs and that they are inappropriate in the modern globalized
environment.
HPWS represents a set of dimensions which include employee selection, training & development,
performance evaluation and compensation, etc. The three fundamental elements of HPWS comprises
a group of different dimensions. Review of literature shows that many researches were conducted
©University of Vavuniya, Sri Lanka 2021.

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regarding the effect of HPWS on employees’ performance and overall organization’s performance
(Appelbaum, Bailey, Berg, & Kalleberg, 2000; Boxall, Ang & Bartram, 2011). Wickramasinghe
and Gamage (2011) suggested that there is a need for more research to understand the influence of
HPWS in Sri Lanka and to recognize the effectiveness of HPWS as limited number of studies were
carried out on this aspect in the Sri Lankan context.

2. Objective
In the competitive environment, organizations strive to achieve their goals by managing the human
resources effectively. The HPWS could benefit in retaining employees through motivating and
satisfying them. At the same time, HPWS trigger negative behaviour of employees by creating job
complexities which could result in increased stress and thereby intention to leave the organization.
Therefore, identifying the effect of HPWS on employee outcomes in the Sri Lankan context is the
focus of the current study. The main objective of this study is to identify the impact of HPWS on
employees’ job satisfaction and organizational commitment.

3. Research Problem
Even though HPWS assure to produce relatively better behavioural outcomes among employees
than those produced by individual HR practices in isolation (Hayton, Piperopoulos & Wellborne,
2011). Despite there are many researches on the effect of HPWS on employee outcomes, many
unanswered questions remain in the field. The current study pays attention on the association
between HPWS and its effects on employee satisfaction and commitment. The research question
of the study was formulated as follows. Does HPWS influence employees’ job satisfaction and
organizational commitment

4. Review of Literature
4.1 High Performance Work System (HPWS)
HPWS aims to boost employees’ abilities, to motivate them and to enhance their commitment and
performance and thereby organization performance (Huselid, 1995; Lepak, Liao, Chung, & Harden,
2006). HPWS includes extensive recruitment and selection, widespread training, development-
oriented performance appraisal, fair compensation, flexible job design and consultative decision
making. These components have been included in the previous researches (for example, Sun, Aryee
and Law, 2007; Jiang, 2013). The rationale Behind the HPWS research is that the synergy effect of
HPWS is stronger than the sum of its individual dimensions (Subramony, 2009; Aryee, Walumbwa,
Seidu, & Otaye, 2012). Earlier, HPWS researches focused at the organization level and rateed by top
level managers (Chang et al., 2014). Nowadays, researchers focus the employee perceived HPWS as
the organizations’ HR practices can influence the attitudes and behaviours of employees only when
the employees perceive and understand the practices (Boon & Kalshoven, 2014). However, there
could be mismatch between HPWS rated by managers and the HPWS perceived by employees.

4.2 Job Satisfaction

Locke (1976) defines job satisfaction as a pleasurable emotional condition as a result of appraisal of a
person’s job or experience. It is an outcome of employee’s perception of how will the jobs provide
the things which he/ she views as important (Luthans, 1989). Job satisfaction refers to the positive or
pleasurable feeling of a person on the job. It acts as a motivation among employees to exert high
effort in their job. Job satisfaction is related to the affiliation between the employees and the employer
regarding the job for which they are paid. It is a feeling of fulfillment of the need of employees in
the job. According to Schultz (1982), job satisfaction is the psychological disposition of employees
toward their job.
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4.3 Organizational Commitment

Robins (1993) defines that organizational commitment is a state in which employees identify with
their organization and its goals and wish to continue membership in the organization. According to
Meyer and Allen (1991), there are three components of commitment to organization namely affective,
continuance and normative commitment. Affective commitment is defined as the employees’ positive
emotional connection with the organization. An Individual with continuance commitment commits
to the organization because he/she perceives high costs of leaving the organization. Individuals
with normative commitment feel obliged to the organization and believe they ought to stay in the
organization. The most of the definitions of organizational commitment consider commitment as a
psychological state that describes employees’ relationship with their organization and a tendency to
continue the relationship with the organization. By identifying the determinants of organizational
commitment, an organization will be able to foster a work environment with highly committed
employees. In the current study, HPWS are examined to confirm to what extent they influence
commitment.

4.4 Empirical evidence

Many researchers have reported that HPWS are associated with employee outcomes such as job
performance, innovation and creativity (e.g. Jiang, Takeuchi, & Lepak, 2013; Chang et al., 2014;
Costantini, Sartori, & Ceschi, 2017), higher job satisfaction and organizational commitment (Messer-
smith, Patel, & Lepak, 2011; Korff, Biemann, & Voelpel, 2017), organizational citizenship behaviour
(Kehoe & Wright, 2013) and lower employee turnover (Sun, Aryee & Law, 2007; Huselid, 1995;
Jiang et al., 2012). Dayarathna, Dowling and Bartram (2019) found that HPWS leads to positive
outcomes on organizational effectiveness.
Earlier studies demonstrate that HR practices are significantly connected with job satisfaction
of employees (Harley, 2002; Macky & Boxall, 2007, Guest, 2002). Through elements of HPWS,
organizations will better fit employees to jobs and this fit can enhance job satisfaction. Qiao, Khilji
and Wang (2009) surveyed 1176 samples from six manufacturing organizations in China and found
that HPWS is associated with organizational commitment. Through a survey of 80 engineers
from 25 companies, García-Chas, Neira-Fontela and Varela-Neira (2016) found that the HPWS
strongly influence job satisfaction among engineers. Liu, Ye and Guo (2016) found that HPWS
have positive correlation with employees’ job satisfaction. They identified six dimensions of HPWS
namely developing training system, employee involvement, strict recruitment and selection, sound
performance management, information sharing in time and clear job design. According to Liu et al
(2016), all of these six dimensions significantly and positively influence job satisfaction. Surveying
782 employees in Chinese manufacturing and service sector organizations, Huang, Ma and Meng
(2018) reported positive relationship between HPWS and job satisfaction.
To identify the effect of HPWS on individual outcomes, researchers (Takeuchi et al., 2007; Kehoe
& Collins, 2017) focus on social exchange theory. If an organization offers HPWS to employees, they
will reciprocate by promoting organizational commitment and job satisfaction (Korff et al., 2017;
Kehoe & Wright, 2013; Macky & Boxall, 2007). This implies that HPWS could result in win-win
outcomes for employer and employees. HPWS are assumed to express that employer are genuinely
supportive to their employees (Alfes, Shantz, Truss, & Soane, 2019). There is a need for investigating
the nexus between the phenomenon in the Sri Lankan culture where the cultural dimensions differ
considerably from the western culture.

5. Methodology
The current study is explanatory in nature. A cross sectional survey method was employed to
investigate the association between the variables. Based on the literature review, the following
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hypotheses were formulated. H1: HPWS positively influence employees’ job satisfaction H2: HPWS
positively influence employees’ organizational commitment
Research sample was selected from a microfinance Head Office and its six branches operating in
Colombo. A total of 867 staffs working in the company out of which 15% of the employees were
selected as sample using random sampling method. The total of 130 questionnaires was issued among
selected employees and only 90 were returned constituting a response rate of 69%.
HPWS was measured adopting the HWPS Questionnaire (adopted from Bailey et al., 2001
and Guest, 1999). We drew the relevant items from both authors’ measures and developed the
instrument consisting of 14 items. Job Satisfaction was measured using Job Satisfaction Questionnaire
developed by Mowday et al (1979). Organizational commitment was measured using Organizational
Commitment Questionnaire (OCQ), originally developed by Mowday, Strees and Porter (1979).

6. Analysis
The SPSS 20.0 was used to analyze the data. Initially, correlation analysis was performed to iden-
tify the nature of relationship between the study variables. Subsequently, regression analysis was
performed to find the impact of HPWS on employee job satisfaction and organizational commitment.

6.1 Reliability

Table 1. Reliability statistics

Variables Cronbach’s Alpha No. of items

HPWS .775 14
Job Satisfaction .789 16
Organizational Commitment .765 9
Source: Survey data, 2020

The Table 1 represents the details of reliability of the study variables. It could be observed that all
of the alpha value is more than the requirement of 0.7 (Nunnally, 1978) and thus the analysis could
be performed.

6.2 Sample profile

The demographical variables of respondent’s are tabulated in Table 3. According to the table, the
sample consisted of 61% males (N=55) and 39% females (N=35). Among the samples, high percentage
of the samples (40%) are in the age group of 31-40 years whereas very less percent (15%) are in the
age group 51 and above. Experience-wise distribution of samples shows that 36% of the samples are
from below 5 years’ experience and 31% are from 6-10 years’ experience whereas very less percentage
are with 16-20 years’ experience (9%) as well as above 20’ years’ experience (6%). In case of marital
status, 68% of the employees are married.

6.3 Mean and correlations

As depicted in Table 2, the mean value of HPWS is 3.988 (std. deviation 0.443). Participants reported
mean score of job satisfaction is 4.013 (std. deviation 0.419 whereas the mean value of organizational
commitment is 4.288 (std. deviation 0.470). According to the results shown in Table 2, the correlation
between HPWS and Job satisfaction 0.635 and it is significant at 0.01 level. Therefore, there is
a positive association between HPWS and job satisfaction. The correlation between HPWS and
organizational commitment is 0.658 and it is significant at 0.01 level. Therefore, there is a positive
association between HPWS and organizational commitment.
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Table 2. Mean and correlations

Variables Mean Std.dev. 1 2 3

1. HPWS 3.988 0.443 - - -
2. Job Satisfaction 4.013 0.419 .635** - -
3. Organizational Commitment 4.288 0.470 .658** . 213** -
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Survey data 2020

6.4 Regression
The Table 3 and Table 4 show the regression results for the influence of HPWS on job satisfaction.

Table 3. Regression results for HPWS and Job Satisfaction

Model R R2 Adjusted R2 Adjusted R2

1 0.635 0.404 0.397 0.32555
Source: Survey data, 2020

Table 4. Regression coefficient for HPWS and job Satisfaction

Model Unstandardized Coefficients standardized Coefficients t Sig ANOVA

B Std.Error Beta F Sig.
(constant) 1.618 .312 5.183 .000 67.317 .000
(HPWS) .601 .078 .635 7.721 .000
Dependent_variable: Job satisfaction
Source: Survey data, 2020

As depicted in Table 4, R square value is 0.404 which means 40.4% of the variation in job
satisfaction is accounted for the variation in the value of HPWS.
According to the Table 4, HPWS positively influence employees’ job satisfaction (B=0.601,
p=.000). The ANOVA results also depict significant results (F-sig.= .000). From the results, the
hypothesis H1: ‘HPWS have a positive influence on employees’ job satisfaction’ is supported.
The results of regression reported in Table 4-a, show that the R square value is 0.42 which means
42% of the variation in organizational commitment is accounted for the variation in the value of
HPWS. As can be seen in Table 4-b, HPWS positively influence organizational commitment of
employees (B=0.698, p=.000). The ANOVA results also show significant results (F=67.3, p= .000).
From the results, the hypothesis H2: ‘HPWS have a positive influence on employees’ organizational
commitment’ is supported.
From the results, it is clear that HPWS has an impact on employees’ attitudinal dimensions named
job satisfaction and organizational commitment.
The present study examined the effect of HPWS on the employee attitudinal dimensions: job
satisfaction and organizational commitment. The results indicated that HPWS significantly and
positively influences job satisfaction. The finding is in line with the previous researches (e.g. Liu
et al., 2016; Korff, Biemann, & Voelpel, 2017). When employees get benefits from the HPWS
of the organizations, they tend to reciprocate with their positive behaviours and demonstrate job
satisfaction. HPWS could result in win-win outcomes for employers and employees. Therefore, the
positive effect of HPWS on job satisfaction is rationalized.
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Table 5. Regression results for HPWS and Job Satisfaction

Model R R2 Adjusted R2 Adjusted R2

1 0.648 0.420 0.413 0.35593
Source: Survey data, 2020

Table 6. Regression coefficient for HPWS and organizational commitment

Model Unstandardized Coefficients standardized Coefficients t Sig ANOVA

B Std.Error Beta F Sig.
(constant) 1.505 .341 4.409 .000 67.317 .000
(HPWS) .698 .085 .658 8.205 .000
Dependent Variable: Commitment
Source: Survey data, 2020

In the current study, the results show that HPWS significantly and positively influence organiza-
tional commitment. The finding also is concurrent with the reported studies (Messersmith, Patel
& Lepak, 2011; Korff, Biemann, & Voelpel, 2017). The reason for the positive effect of HPWS
on organizational commitment also could be rationalized in a similar way as for the HPWS-job
satisfaction relationship.

7. Conclusion and suggestions for future research

HPWS can provide many benefits to the organizations and employees. The present study revealed
that HPWS will lead to more satisfied and committed employees. For organizations which seek to
reduce the employee turnover, the results of the current study are eloquent: increased investment
on HPWS would improve job satisfaction and organizational commitment among the employees.
Therefore, the firms that look for higher employee satisfaction and commitment among the employees
should focus on HPWS and should take action to invest in HPWS. Through higher level of employee
satisfaction and commitment, organizations can gain many advantages such as customer satisfaction,
service quality, improved employee performance, employee retention and so on.
In the current study, HPWS was investigated as a predictor of job satisfaction and commitment.
These variables can be influenced by many other factors such as rewards, working condition,
leadership, organizational culture and so on. Future researchers may consider these factors as
predictors of satisfaction and organizational commitment. In addition, the current study covered
Microfinance Company in Colombo District and thus it would be better to cover other private sector
as well as state owned organizations.

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