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Journal of Management Studies 45:1 January 2008 doi: 10.1111/j.1467-6486.2007.00710.

An Exploration of How the EmployeeOrganization Relationship Affects the Linkage Between Perception of Developmental Human Resource Practices and Employee Outcomes

Brd Kuvaas
Norwegian School of Management, Oslo
abstract The purpose of the present study was to examine whether and how the quality of the employeeorganization relationship (EOR) inuences the relationship between employee perception of developmental human resource (HR) practices and employee outcomes. Analyses of 593 employees representing 64 local savings banks in Norway showed that four indicators of the EOR (perceived organizational support, affective organizational commitment, and procedural and interactional justice) moderated the relationship between perception of developmental HR practices and individual work performance. A strong and direct negative relationship was found between perception of developmental HR practices and turnover intention, but perceived procedural and interactional justice moderated this linkage. No support was found for a mediating role of the EOR indicators in the relationship between perception of developmental HR practices and employee outcomes. Implications and directions for future research are discussed.

INTRODUCTION Contemporary research on best practice, high-performance, high-commitment, highinvolvement, progressive, and human-capital-enhancing human resource management (HRM) implies that organizations offer resources and opportunities that improve the motivation, skills, attitudes and behaviours of their employees. Whereas most of these models suggest that human resource (HR) practices or systems deliver performance through the effect they have on people in organizations (e.g. Ostroff and Bowen, 2000), a recent review of best practice HRM concludes that the positive implications for employees are at best uncertain (Godard, 2004). In another review, Wright and Boswell (2002, p. 262) argue that the dearth of research aimed at understanding how multiple (or systems of ) HR practices impact individuals certainly suggests a ripe of opportunity for future research. Furthermore, most macro studies empirically assume
Address for reprints: Brd Kuvaas, Department of Leadership and Organization Management, Norwegian School of Management, Nydalsveien 37, 0484 Oslo, Norway (bard.kuvaas@bi.no).
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invariability in HR practices across large groups of jobs within organizations (Wright and Boswell, 2002), but recent research suggests variance in individuals perceptions of HR practices in organizations (Gerhart et al., 2000a, 2000b; Whitener, 2001; Wright et al., 2001). Beyond different HR congurations for different groups of employees (e.g. Lepak and Snell, 1999, 2002), such variation can occur because different supervisors vary in their implementation and because individuals have their own cognitive schemas for attending to and processing information (Wright and Haggerty, 2005). Employees may therefore not always perceive the objective existence of certain practices as the organization intends (Allen et al., 2003; Truss, 2001; Truss et al., 1997). Edgar and Geare (2005), for instance, recently reported weak and mainly nonsignicant relationships between employer and employee assessments of HR practices. Similar ndings were obtained by Khilji and Wang (2006), who argued for a clear distinction between intended (i.e. the practices formulated by HR mangers and senior management) and implemented (i.e. as experienced by the employees) HR practices. Accordingly, the overall purpose of the present study is to increase our understanding of the relationship between employee perception of HR practices and employee outcomes. The so-called best practice perspective proposes that superior organizational performance is achieved when employees exert themselves on behalf of the organization (Guest, 1997; Purcell, 1999). Thus, in theory, best practice HRM fulls employee needs and therefore generates favourable attitudes and behaviours that result in improved performance (e.g. Edgar and Geare, 2005). Unlike controlling or hard HRM, best practice HRM views the fullment of employee needs as an end in itself (e.g. Guest, 1997; Guest and King, 2004) and pertains to exible, autonomous and empowering work systems that rest primarily on employees self-regulated behaviour and discretionary effort (e.g. MacDufe, 1995; Truss et al., 1997). Social exchange research suggests that the motivation behind such behaviours is strongly inuenced by the quality of the employeeorganization relationship (EOR) (e.g. Coyle-Shapiro et al., 2004b; Settoon et al., 1996). Rooted in the concept of social exchange (Blau, 1964) and the norm of reciprocity (Gouldner, 1960), contemporary social exchange theories can in part explain why individuals express loyalty to organizations and engage in behaviours that are neither formally rewarded nor contractually enforceable (Settoon et al., 1996). Overall, the empirical evidence suggests that inducements such as positive and benecial actions directed at employees by the organization create conditions for employees to reciprocate in positive ways (Settoon et al., 1996). Within HRM research, Ostroff and Bowen (2000), using a social exchange lens, focused on HR practices as critical determinants in eliciting employees to behave in ways supportive of organizational goals, and Wright et al. (1994) viewed HR practices as the means through which employee perceptions, attitudes, and behaviours are shaped. Furthermore, investment in employee development is believed to facilitate greater obligation by employees towards the organization and therefore increase employees motivation to work hard to support organizational effectiveness (Lee and Bruvold, 2003). In concert with these literatures, this study proposes a micro best practice mediation HRM model where employee perception of developmental HR practices is expected to increase the perceived quality of the employeeorganization relationship, which, in turn, will
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The EmployeeOrganization Relationship


Mediation Model Perception of Developmental HR Practices Career Development Training Opportunities Performance Appraisal

POS Affective Commitment Procedural Justice Interactional Justice

Work Performance Turnover Intention

Moderation Model Perception of Developmental HR Practices Career Development Training Opportunities Performance Appraisal POS Affective Commitment Procedural Justice Interactional Justice
Figure 1. Alternative models of the relationship between perception of developmental HR practices and employee outcomes

Work Performance Turnover Intention

increase employees work performance and decrease their turnover intention (see Figure 1). Although perceptions of an organizations HR practices constitute an organizational inducement that will probably affect how employees perceive the quality of the employeeorganization relationship (e.g. Allen et al., 2003), individual factors (e.g. need for job security versus exibility), perceptions of other organizational factors (e.g. power distribution), and factors external to the organization (e.g. demand for labour), may also play important roles. Corsun and Enz (1999), for instance, suggest that workers may perceive an organizations efforts to provide more resources as motivated by self-interest rather than by genuine concern for employees. In such a case, it could be argued that the quality of the employeeorganization relationship (EOR) can moderate the relationship between perception of HR practices and employee outcomes. The contingency perspective of HRM argues that an organizations HR practices must be consistent with other aspects of the organization (e.g. Wright and Boswell, 2002), suggesting that best practice or developmental HR practices are not always better than, for instance, hard or controlling HRM. Furthermore, MacDufe (1995) noted that a necessary condition for an HRMrm performance relationship is that employees are motivated to apply their skills and knowledge through discretionary effort. At the individual level of analysis, and according to social exchange theory, a high quality EOR may thus be necessary in order for employees to be motivated to respond to developmental HRM in a way that will benet the organization. By contrast, low quality EOR, that should be associated with transactional psychological contracts (Rous Blackwell Publishing Ltd 2007

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seau, 1995) and economic exchange perceptions (Shore et al., 2006), will prevent employees from responding positively to developmental HRM. As a result, it may be suggested that more controlling modes of HRM will be more effective when an organization is characterized by low quality EOR. First, a low quality EOR probably implies that employees will not act according to the inducement-contribution argument and feel no obligation to repay the organization for its HRM efforts. Second, since developmental HRM entails leeway with regard to how employees respond to the HR practices, employees will probably lack the motivation to use developmental HRM in a way that will benet the organization (e.g. to a lesser extent use developmental performance appraisal to increase work performance). Accordingly, this study proposes a micro contingency HRM model where a certain level of quality of the EOR is needed in order for perception of developmental HR practices to positively inuence work performance and turnover intention. THEORY AND HYPOTHESES Accordant with the focus on fullment of employee needs in best practice HRM (e.g. Edgar and Geare, 2005; Guest, 1997), I dene perception of developmental HR practices as the degree to which employees perceive that their developmental needs are being supported by the organizations HR practices. In order to capture some of the core features of best practice and closely related HRM models, three widespread HR practices or functions[1] aimed at increasing employees skills, commitment, empowerment, motivation, or productivity, were investigated: career development, training opportunities, and performance appraisal. Whereas employees conception of the EOR can take many forms (e.g. Coyle-Shapiro et al., 2004b; Shore et al., 2006), this study investigates perceived organizational support, affective organizational commitment, and procedural and interactional justice perceptions. These factors were included because they represent conceptually different indicators of the EOR that have all been portrayed as potential mediators or moderators in prior HRM research. Besides, existing HRM and social exchange research does not provide the information needed to prioritize some of these indicators over others. Below, each EOR indicator is dened and then related to the link between perception of developmental HR practices and employee outcomes as potential mediators and moderators. Perceived Organizational Support Perceived organizational support (POS) refers to employees perception of the organizations commitment to them and reects their beliefs about the extent to which the organization values their contributions and cares about their well-being (Eisenberger et al., 1986). Social exchange theory suggests that workers who perceive a high level of organizational support will feel an obligation to repay the organization through positive attitudes and appropriate behaviours (Coyle-Shapiro and Conway, 2004; Eisenberger et al., 1990). Research on perceived organizational support indicates that employees interpret organizational actions, such as HR practices, as indicative of the personied organiza Blackwell Publishing Ltd 2007

The EmployeeOrganization Relationship

tions commitment to them (Settoon et al., 1996; Wayne et al., 1997). Prior research also suggests that POS may mediate the relationship between HR practices and individual HR outcomes. Shore and Shore (1995), for instance, argued that HR practices which signal recognition of employee contributions should be positively related to POS. Wayne et al. (1997), who found a positive relationship between both promotions and developmental experiences and POS, argued that growth opportunities signal that the organization values the employees contributions and imply further support from the organization. Furthermore, Allen et al. (2003) reported evidence that perceptions of supportive HR practices contribute to the development of POS, and that POS is negatively related to withdrawal. Finally, a meta-analysis conducted by Rhoades and Eisenberger (2002) supports a positive relationship between several human resource practices and POS, including training and promotion. The same meta-analysis also supports a positive relationship between POS and different measures of performance, and a negative relationship between POS and withdrawal behaviour. Hypothesis 1a: POS mediates the relationship between perception of developmental HR practices and work performance. Hypothesis 2a: POS mediates the relationship between perception of developmental HR practices and turnover intention. Because employees who perceive a high level of perceived organizational support believe that the organization is committed to them and that it will protect their interests (Eisenberger et al., 1986), they are therefore more likely than employees with low POS to respond positively to HR practices. Norms of reciprocity suggest that employees with high POS will feel morally obliged to respond to the organizations offer of better resources through positive in-role and extra-role behaviours (Eisenberger et al., 1986; Shore and Wayne, 1993). By responding more positively to developmental HR practices, they may also to a greater extent experience how such HR practices can represent an opportunity to improve capability and performance. Employees with low POS, on the other hand, may to a lesser extent feel obliged to use HR practices to grow and develop, even if they perceive the practices to be developmental. Hypothesis 1b: POS moderates the relationships between perception of developmental HR practices and work performance in such a way that it is more positive for higher than for lower levels of POS. Hypothesis 2b: POS moderates the relationships between perception of developmental HR practices and turnover intention in such a way that it is more negative for higher than for lower levels of POS. Affective Organizational Commitment Affective organizational commitment describes an affective or emotional attachment to the organization such that the strongly committed individuals identies with, is involved
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in, and enjoys membership in, the organization (Allen and Meyer, 1990, p. 2) and is the type of commitment that seems to have the strongest positive relation to desirable work behaviours (Meyer et al., 2002). While POS reects employees perception of the organizations commitment to them, affective organizational commitment represents employee commitment to the organization. POS is usually seen as an antecedent to affective commitment (e.g. Allen et al., 2003), but Shore et al. (2006) recently found that both POS and affective commitment were positively related to a newly developed measure of social exchange perception. This nding suggests that employees consider both how the organization treats them as well as their own feelings about the organization when they develop perceptions of their relationship with the organization (Shore et al., 2006). Several conceptual models of HRM have included organizational commitment or closely related constructs as mediating variables between HR practices and organizational performance (e.g. Beer et al., 1984; Ferris et al., 1998; Paauwe and Richardson, 1997) and several empirical studies support this proposition (e.g. Paul and Anantharaman, 2003; Rogg et al., 2001; Wright et al., 2003). At the individual level of analysis, a recent meta-analytic study provides support for a strong negative relationship between affective commitment and turnover or turnover intention (Meyer et al., 2002) and a positive relationship with different measures of work performance (Meyer et al., 2002; Riketta, 2002). According to social exchange theory, these ndings can in part be explained by the inducement-contribution logic that employees will reciprocate developmental HR practices with high affective commitment, which, in turn, will enhance performance and reduce turnover intention. Hypothesis 3a: Affective commitment mediates the relationship between perception of developmental HR practices and work performance. Hypothesis 4a: Affective commitment mediates the relationship between perception of developmental HR practices and turnover intention. Whereas there is a lack of empirical evidence that organizational commitment can moderate the effects of organizational resources provided for employees, there are studies reporting that affective commitment can buffer the negative impact of work stressors on employee health, well-being and job satisfaction (e.g. Begley and Czajka, 1993; Siu, 2002), and that the relationship between perceived politics and intent to turnover and job tension can decrease as affective organizational commitment increases (Hochwarter et al., 1999). However, based on recent social exchange theory research (Shore et al., 2006), it may be argued that employees that are highly affectively committed to their organization will reciprocate both directly with higher work performance and lower turnover intention as well as indirectly by way of making more extensive or more effective use of developmental HR practices than less committed employees. Moreover, highly committed employees are often more involved in their jobs and have higher occupational commitment (Meyer et al., 2002), and higher training motivation (Colquitt et al., 2000), which may imply that they are more motivated to develop their skills and work performance through developmental HR practices than employees with
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The EmployeeOrganization Relationship

lower commitment levels. The latter may to a lesser extent believe in the usefulness of performance appraisal, be less interested in career development in the organization and less motivated to respond to training opportunities offered by an organization they are not affectively committed to. Hypothesis 3b: Affective commitment moderates the relationship between perception of developmental HR practices and work performance in such a way that it is more positive for higher than for lower levels of affective commitment. Hypothesis 4b: Affective commitment moderates the relationship between perception of developmental HR practices and turnover intention in such a way that it is more negative for higher than for lower levels of affective commitment. Procedural and Interactional Justice A growing stream of research shows that fairness perceptions in organizations exert a strong inuence on how employees react to a variety of aspects of organizational life. Based on exchange theory, organizational justice focuses on the fairness of exchanges between employees and employers (Shore et al., 2004), and, to the extent that employees feel that they are being treated fairly, they will reciprocate by way of positive attitudes and behaviours (Coyle-Shapiro et al., 2004c). Organizational justice can take various forms, but perhaps most relevant in an HR context are procedural and interactional justice perceptions (Bowen and Ostroff, 2004). Procedural justice refers to the perceived fairness of the process by which outcomes are determined (Lind and Tyler, 1988), and interactional justice involves individuals perception of the quality of interpersonal treatment received during the enactment of organizational procedures (Bies and Moag, 1986). Research shows that procedures are viewed as fair if they are implemented consistently, on the basis of accurate information, with the interest of all concerned parties represented, and following moral and ethical standards (Brockner and Wiesenfeld, 1996; Colquitt et al., 2001). Accordingly, we should expect that the way organizations implement and manage HR practices is an important informational source of employee perception of procedural justice. Similarly, while organizational HR systems lay out the procedures to be followed in implementation and administration of HR practices, it is individual supervisors who actually manage these procedures. Thus, the degree to which the employees immediate supervisor administrates organizational HR practices in a polite and respectful manner will probably affect how employees perceive interactional justice. Coyle-Shapiro et al. (2004a) recently reported that perceptions of procedural and interactional justice were important to the development of a relationship based on mutual commitment, which in turn seemed to predict organizational citizenship behaviour. Furthermore, recent meta-analyses support a positive relationship between procedural justice and work performance and a negative relationship between procedural justice and withdrawal behaviour (Cohen-Charash and Spector, 2001; Colquitt et al., 2001). For interactional justice, meta-analytic results suggest a negative relationship to withdrawal behaviour, while the results are mixed for performance. Cohen-Charash and
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Spector (2001) reported a weak relationship and argued that individual work performance is organization-related, rather than supervisor-related behaviour. Colquitt et al. (2001) found a weak relationship with performance, but a strong relationship with organizational citizenship behaviour. Thus, both types of justice perceptions can be expected to mediate the relationship between perception of developmental HR practices and employee outcomes. Hypothesis 5a: Procedural justice mediates the relationship between perception of developmental HR practices and work performance. Hypothesis 6a: Procedural justice mediates the relationship between perception of developmental HR practices and turnover intention. Hypothesis 7a: Interactional justice mediates the relationship between perception of developmental HR practices and work performance. Hypothesis 8a: Interactional justice mediates the relationship between perception of developmental HR practices and turnover intention. Even though the most robust nding in the justice literature is that procedural justice can mitigate negative reactions to unfavourable outcomes (Brockner and Wiesenfeld, 1996), procedural and interactional justice may also amplify the effects of positive outcomes such as resource commitments provided by organizations HR practices. First, research reviewed by Bowen and Ostroff (2004) suggests that justice perceptions positively inuence the extent to which employees contribute to and utilize HRM (e.g. complete performance appraisal and use feedback from it to shape behaviour). Second, studies reviewed by Brockner (2002) suggest that procedural (Brockner et al., 2003) and interactional fairness (Leung et al., 2001) can magnify the effect of outcome favourability. These ndings suggest that people use fairness information to make attributions of personal responsibility for their outcomes (Brockner, 2002). Thus, the more fair employees perceive the organizational procedures and interactions with their supervisors to be, the more likely employees are to see themselves as personally responsible for their outcomes. In effect, more personal attributions for high levels of procedural and interactional justice may motivate employees to respond more positively and actively to HR practices (e.g. being more active in taking part in training and career development activities, and to a greater extent use performance appraisal to develop their skills), which in turn can magnify the effects of developmental HR practices on employee outcomes. Hypothesis 5b: Procedural justice moderates the relationship between perception of developmental HR practices and work performance in such a way that it is more positive for higher than for lower levels of procedural justice. Hypothesis 6b: Procedural justice moderates the relationship between perception of developmental HR practices and turnover intention in such a way that it is more negative for higher than for lower levels of procedural justice.
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The EmployeeOrganization Relationship

Hypothesis 7b: Interactional justice moderates the relationship between perception of developmental HR practices and work performance in such a way that it is more positive for higher than for lower levels of interactional justice. Hypothesis 8b: Interactional justice moderates the relationship between perception of developmental HR practices and turnover intention in such a way that it is more negative for higher than for lower levels of interactional justice. METHOD Procedures and Sample The data for this study were gathered with the help of a structured questionnaire distributed among 1508 employees from 75 organizations in 2003. Respondents were drawn from 82 small local savings banks in Norway that were members of a Norwegian alliance of savings banks. The questionnaires were distributed using a web-based tool (QuestBack) and e-mail addresses provided by representatives of the alliance. The survey resulted in data from 593 employees from 64 banks, representing a response rate of approximately 39 per cent. The sizes of the banks in terms of number of employees ranged from 5 to 148, with an average of 30 (which may suggest an overrepresentation of larger banks). Of the respondents, 321 were women, and 271 men; 228 were advisors for private customers, 41 were advisors for industrial customers, 155 held managerial positions, 119 had staff functions, and 50 were tellers. Their average age and tenure were 44 and 16 years respectively. Measures Unless otherwise noted, all items were measured using a ve-point Likert response scale ranging from 1 (strongly disagree) to 5 (strongly agree). Dependent variables. Work performance was measured by six items based on prior measures (Brockner et al., 1992; May et al., 2002). Example items are I intentionally expend a great deal of effort in carrying out my job and The quality of my work is top-notch. Five previously used items (Fahr et al., 1998; Khatri et al., 2001), such as I will probably look for a new job in the next year and I often think of quitting my present job, measured turnover intention. Mediating/moderating variables. Perceived organizational support (POS) was measured by an eight-item short form used by Eisenberger et al. (1997) and Rhoades et al. (2001). Example items include Help is available from the organization when I have a problem and My organization really cares about my well-being. The six-item scale used by Meyer et al. (1993) measured affective organizational commitment. Example items are This organization has a great deal of personal meaning to me and I do not feel like part of the family at my organization (reversed). The scales used in the construct validation study by Colquitt (2001) measured procedural and interactional justice perceptions. Accordingly, two items from Thibaut and
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Walker (1975) and ve items from Leventhal (1980) measured procedural justice. Example items are To what extent have you been able to express your views and feelings during those procedures? and To what extent have those procedures been applied consistently?. Interactional justice was measured by four items developed by Bies and Moag (1986) dealing with the interpersonal sensitivity dimension of interactional justice.[2] Example items are To what extent has your immediate supervisor treated you in a polite manner? and To what extent has your immediate supervisor treated you with respect?. Independent variables. The measure of perception of developmental HR practices was developed for this study but based on prior work (Meyer and Smith, 2000). The items addressed employees evaluation of the practices (e.g. satisfaction and adequacy) and the degree to which the employees perceived the practices as investment in employee development (e.g. in terms of their organizations effort and commitment). The career development measure included six items addressing perceived importance to the organization of employee career development, advancement, and opportunity for personal development, such as It seems like my organization really cares about my career opportunities and This organization puts in a great deal of effort in organizing for internal career development. The measure of training opportunities consisted of eight items addressing satisfaction with training, the sufciency of training received, and the comparability of training investments with that provided by other organizations. Example items include Considering the work I do, the training and development I have received are not sufcient (reversed) and I am satised with the training and development I have received. The performance appraisal measure included seven items concerning the perceived importance of performance appraisal to the organization, the adequacy of feedback they receive, and overall satisfaction with feedback processes in the organization. Example items are The feedback I receive on how I do my job is highly relevant and My organization seems more engaged in providing positive feedback for good performance than criticising poor performance. Control variables. Because organization size, position type and level, organizational tenure, and gender have been associated with the dependent and/or the EOR variables in previous research (e.g. Lee and Fahr, 1999; Mathieu and Zajac, 1990; Meyer et al., 2002; Sels et al., 2002, 2006), they were included as controls. Organization size was measured as the number of employees, but since the distribution of the measure was skewed a logarithmic transformation was applied (Hair et al., 1998). Organizational tenure was measured in years and gender was measured as a dichotomous variable coded such that 1 was female and 2 male. Type and level of position were dened by the association of savings banks and consisted of ve categories (managerial position, advisor for private customers or industrial customers, staff function, and teller). Finally, since employee attitudes and perceptions can be predicted by the nancial performance of their organization more strongly than attitudes and perceptions predict nancial performance (Schneider et al., 2003), I controlled for organizations return on assets (ROA) the year before the survey (provided by representatives of the alliance).
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The data were analysed in several phases. First, factor analysis (principal component analysis with varimax rotation) was performed on all multiple scale items to determine item retention (e.g. Coyle-Shapiro et al., 2004a). In order to avoid confounded measures of the closely related constructs, I applied relatively stringent rules-of-thumb and retained only items with a strong loading of 0.50 or higher (Osborne and Costello, 2004), a cross-loading of less than 0.35 (Kifn-Petersen and Cordery, 2003), and a differential of 0.20 or higher between factors (Van Dyne et al., 1994). Regression analysis was used to test the hypotheses. The three-step procedure recommended by Baron and Kenny (1986) was used to test the mediation hypotheses. According to Baron and Kenny (1986), the following conditions must be met to support a mediating relationship. First, the independent variable must be signicantly associated with the mediator. Second, the independent variable must be signicantly associated with the dependent variable. Finally, after the mediator is entered, the relationship between the independent and dependent variables should either disappear (full mediation) or signicantly diminish (partial mediation). Hierarchical moderated regression was used to test the moderation hypotheses (Cohen and Cohen, 1983). Interaction terms often create multicollinearity problems because of their correlations with main effects. I thus computed the interaction terms by centring the variables before multiplying them with each other.

Results The principal component analysis revealed that most of the items used to measure perception of developmental HR practices loaded on three separate factors. However, two of the six career development items, three of the eight training items, and three of the seven performance appraisal items had too low factor loadings or cross-loaded on other factors. Three of the eight POS[3] items cross-loaded on the procedural justice factor and two items loaded on a separate factor together with one of the procedural justice items. Finally, one of the affective commitment items cross-loaded on the procedural justice scale and one item had a loading lower than 0.50. All of these items were removed before scales were computed by averaging the items. Means, standard deviations, bivariate correlations, number of items in the nal scales, number of respondents, and Cronbachs alpha for all multiple item scales are reported in Table I. For reasons of space, and because perceptions of the individual HR practices had very similar relationships to the EOR variables and the dependent variables, I averaged the items to construct a composite measure of perception of developmental HR practices. Still, because the items loaded on three separate factors and composite measures can result in over- or underestimated effects (Shaw et al., 1998), analyses of perceptions of the individual HR practices were also performed, but not displayed in tables. All scales demonstrated acceptable reliability estimates and the high alpha (0.89) for the composite measure of perception of developmental HR practices suggests that reliability concern is not an obstacle to use a composite measure. Pairwise and multiple variable collinearity diagnosis was inspected prior to analyses. The lowest tolerance value
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Table I. Descriptive statistics, correlations and scale reliabilities


2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

12

Items N

SD

1 0.01 0.02 -0.05 0.01 -0.11 0.14 0.06 -0.30 0.32

593

1.42

0.21

593

1.18

0.41

0.00

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0.02 -0.16 -0.12 -0.15 -0.18 0.03 0.23 -0.18 -0.14 -0.16 -0.08 (0.82) 0.52 (0.93) 0.62 0.41 0.49 0.31 0.45 0.51 (0.88) 0.39 0.51 (0.72) 0.29 (0.89) 0.10 -0.05 -0.02 0.05 -0.05 0.01 0.26 -0.06 -0.04 0.10 0.13 0.01 -0.07 0.25 -0.07 -0.08 -0.09 0.15 0.01 0.22 -0.11 -0.07 -0.11 0.40 -0.18 -0.05 -0.20 0.23 -0.11 -0.05 -0.11 0.14 -0.14 -0.07 -0.02 0.02 0.00 0.02 0.08 0.12 0.01 0.13 -0.10 -0.06 -0.04 0.44 0.46 0.43 0.37 0.43 (0.82) 0.06 0.11 -0.04 -0.07 0.19 -0.11 -0.03 -0.03 0.57 0.58 0.56 0.28 0.53 0.44 (0.81) 0.02 0.13 0.05 -0.04 0.23 -0.12 -0.08 -0.07 0.62 0.61 0.61 0.39 0.80 0.81 0.78 (0.89) 0.02 0.13 -0.02 0.14 -0.03 -0.01 -0.09 0.17 0.08 -0.11 -0.01 -0.37 0.13 0.13 -0.31 -0.35 0.25 -0.44 0.11 -0.39 0.10 -0.36 0.10 -0.36 0.13 -0.46 (0.82) -0.03 (0.88) 0.03 -0.13

1 1 1

592 1.46 0.50 592 16.32 11.14 593 0.20 0.40

0.06 0.01 0.04

593

0.26

0.44 -0.04 -0.03

1 1

593 593

0.08 0.07

0.28 -0.01 0.25 0.07

593

0.38

0.49 -0.03 -0.01 -0.23 -0.01 -0.40 -0.47 -0.24 -0.22

3 4

593 593

3.95 3.83

0.70 -0.15 -0.01 0.86 0.01 -0.02

593

3.53

0.72 -0.11

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590

3.78

0.76 -0.05

589

2.92

0.83 -0.04

591

3.63

0.78 -0.03 -0.02

591

3.36

0.70 -0.05

13

591

3.33

0.62 -0.04

593

4.08

0.48

0.01 -0.01

1. Organization size 2. Return on assets 3. Gender 4. Tenure 5. Staff function 6. Managerial position 7. Teller 8. Advisor industry 9. Advisor private 10. POS 11. Interactional justice 12. Procedural justice 13. Affective commitment 14. Perception of career development 15. Perception of training opportunities 16. Perception of performance appraisal 17. Perception of developmental HR practices 18. Work performance 19. Turnover intention

591

1.98

0.96

0.11 -0.08 -0.02 -0.08

Notes: N = 588593 because of pairwise deletion of missing values. Coefcient alphas indicating scale reliabilities are in parentheses. Correlations greater than 0.08 are signicant at p < 0.05, and those greater than 0.11 are signicant at p < 0.01.

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Table II. Regression results testing the relationships between perception of developmental HR practices and the mediators Variables Organization size Return on assets Gender Tenure Staff function Managerial position Teller Advisor industry POS Affective commitment Procedural justice Interactional justice Perception of developmental HR practices R2 F POS -0.09** -0.02 -0.04 -0.07 0.01 0.01 0.00 0.02 0.15*** 0.30*** 0.13** 0.30*** Affective commitment 0.01 0.00 0.00 0.15*** 0.05 0.09* 0.00 0.01 0.23*** 0.12* 0.05 0.12* Procedural justice -0.05 0.02 0.12*** -0.07* 0.07* 0.22*** -0.04 0.00 0.28*** 0.07* 0.13*** 0.27*** Interactional justice 0.05 -0.03 -0.05 -0.07* 0.00 -0.07 -0.08* -0.04 0.15** 0.04 0.17*** 0.42***

0.51 50.58***

0.25 15.59***

0.56 62.42***

0.44 37.09***

Notes: N = 588 because of listwise deletion of missing values. * p < 0.05; ** p < 0.01; *** p < 0.001.

was 0.44, which is far from the common cut-off threshold value of 0.10 (Hair et al., 1998) and the worthy of concern value of 0.20 (Menard, 1995). The mediation hypotheses (1a8a) predicted that the relationship between perception of developmental HR practices and the dependent variables should be mediated by the EOR variables. Table II reveals that the rst condition for mediation was met whereby perception of developmental HR practices was positively related to all the four EOR variables. Analyses of perceptions of the individual HR practices show that perceptions of all three practices were positively related to perceived organizational support and procedural justice. However, only perception of training opportunities was signicantly related to affective commitment, and only perceptions of career development and performance appraisal were signicantly related to interactional justice. The second and third conditions for mediation, however, were not met. As shown in Table III (step 2), perception of developmental HR practices was not related to work performance before the EOR variables were entered. And, as Table IV shows, the strong negative relationship between perception of developmental HR practices and turnover intention in step 2 did not disappear or diminish after the EOR variables were entered in step 3. The same pattern emerged for perceptions of the individual HR practices, except that the negative relationship between perceptions of training opportunities and turnover intention were reduced after affective commitment was entered (from b = -0.15, p < 0.01 to b = -0.10, p < 0.05) and that perception of performance appraisal was not signicantly related to turnover intention before the EOR variables were included. Accordingly, the mediation hypotheses (1a8a) were not supported by the data.
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Table III. Regression results testing the mediation and moderation hypotheses on work performance Step 1 2 3 4 Variables Control variablesa PDHRPb PDHRP POS PDHRP POS POS PDHRP Control variablesa PDHRPb PDHRP POS PDHRP Affective commitment (AC) AC PDHRP Control variablesa PDHRPb PDHRP POS PDHRP Procedural justice (PJ) PJ PDHRP Control variablesa PDHRPb PDHRP POS PDHRP Interactional justice (IJ) IJ PDHRP b DR2 R2 0.092 0.093 0.097 F 5.33*** 4.89*** 4.72***

-0.03 -0.06 0.09 -0.07 0.16** 0.22*** -0.03 -0.06 0.21*** -0.08 0.22*** 0.12** -0.06 -0.06 -0.02 -0.03 0.01 0.22*** -0.03 -0.06 0.06 -0.06 0.13* 0.23***

0.001 0.004

0.041*** 0.001 0.033***

0.138 0.063 0.064 0.097

6.52*** 3.55*** 3.27*** 4.72***

1 2 3 4

0.014** 0.002 0.000

0.111 0.095 0.097 0.097

5.10*** 5.49*** 5.12*** 4.72***

1 2 3 4

0.046*** 0.001 0.002

0.143 0.094 0.095 0.097

6.84*** 5.45*** 5.01*** 4.72***

1 2 3 4

0.047***

0.144

6.90***

Notes: a Control variables include organization size, return on assets, gender, tenure, job position and type, and the three of the four mediators/moderators not of current interest. b Perception of developmental HR practices. N = 588 because of listwise deletion of missing values. * p < 0.05; ** p < 0.01; *** p < 0.001.

Hypotheses 1b8b predicted that the relationship between perception of developmental HR practices and the dependent variables should be moderated by the EOR variables. As indicated by the signicant interaction terms in Table III (step 4), all the four EOR variables moderated the relationship between perception of developmental HR practices and work performance. The results for perceptions of the individual HR practices showed the same pattern. Of twelve possible interactions, nine were highly signicant (p < 0.001) and only one was non-signicant (the one between perception of training opportunities and affective commitment). As shown in Table IV (step 4), procedural and interactional justice also moderated the relationship between perception of developmental HR practices and turnover intention.
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Table IV. Regression results testing the mediation and moderation hypotheses on turnover intention Step 1 2 3 4 Variables Control variablesa PDHRPb PDHRP POS PDHRP POS POS PDHRP Control variablesa PDHRPb PDHRP POS PDHRP Affective commitment (AC) AC PDHRP Control variablesa PDHRPb PDHRP POS PDHRP Procedural justice (PJ) PJ PDHRP Control variablesa PDHRPb PDHRP POS PDHRP Interactional justice (IJ) IJ PDHRP b DR2 R2 0.271 0.313 0.314 F

15

-0.30*** -0.29*** -0.05 -0.29*** -0.02 0.07 -0.32*** -0.29*** -0.29*** -0.29*** -0.29*** 0.02 -0.30*** -0.29*** -0.05 -0.28*** -0.04 0.10** -0.29*** -0.29*** -0.01 -0.29*** 0.02 0.07*

0.042*** 0.001

19.46*** 21.88*** 20.26***

0.004 0.046*** 0.064***

0.318 0.204 0.250 0.314

19.13*** 13.46*** 15.98*** 20.26***

1 2 3 4

0.001 0.042*** 0.001

0.315 0.271 0.313 0.314

18.81*** 19.46*** 21.86*** 20.26***

1 2 3 4

0.009** 0.041*** 0.000

0.323 0.273 0.314 0.314

19.57*** 19.62*** 21.98*** 20.26***

1 2 3 4

0.005*

0.319

19.18***

Notes: a Control variables include organization size, return on assets, gender, tenure, job position and type, and the three of the four mediators/moderators not of current interest. b Perception of developmental HR practices. N = 588 because of listwise deletion of missing values. * p < 0.05; ** p < 0.01; *** p < 0.001.

Analyses of the perceptions of individual HR practices revealed that both types of justice perception moderated the relationship between perception of career development and turnover intention, but that only procedural justice moderated the relationships between perceptions of the two other HR practices and turnover intention. Plots that illustrate the signicant moderations are displayed in Figure 2. The plots were constructed by plotting low versus high scores on perception of developmental HR practices and the EOR variables (one standard deviation below and above the means using standardized scores). The plots suggest that there is a negative relationship between perception of developmental HR practices and work performance for employees scoring low on the EOR
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Moderation by Perceived Organizational Support
4,2 Work Performance 4 3,9 3,8 3,7 3,6 3,5 Low High Perception of Developmental HR Practices

B. Kuvaas
Moderation by Affective Commitment
4,2 Work Performance 4,1 4 3,9 3,8 3,7 3,6 3,5 Low High Perception of Developmental HR Practices High AC Low AC

4,1 High POS Low POS

Moderation by Procedural Justice


4,2 Work Performance 4 3,9 3,8 3,7 3,6 3,5 Low High Perception of Developmental HR Practices High PJ Low PJ

Moderation by Interactional Justice


4,2 Work Performance 4,1 4 3,9 3,8 3,7 3,6 3,5 Low High Perception of Developmental HR Practices High IJ Low IJ

4,1

Moderation by Procedural Justice


1,9 Turnover Intention 1,7 1,6 1,5 1,4 1,3 1,2 Low High Perception of Developmental HR Practices High PJ Low PJ

Moderation by Interactional Justice


1,9 Turnover Intention 1,8 1,7 1,6 1,5 1,4 1,3 1,2 Low High Perception of Developmental HR Practices High IJ Low IJ

1,8

Figure 2. Plots of moderated relationships

variables. Following the recommendations of Aiken and West (1991), simple effects tests were conducted to determine whether the slopes differed signicantly from zero. These tests revealed that all the slopes for low levels on the EOR variables were signicantly different from zero (POS, t = 4.29, p < 0.001; affective commitment, t = 3.19, p < 0.001; procedural justice, t = 3.85, p < 0.001; interactional justice, t = 4.95, p < 0.001). Furthermore, except from affective commitment, all the slopes for high levels on the EOR variables were also signicantly or marginally signicantly different from zero (POS, t = 1.56, p < 0.10; affective commitment, t = 0.21, ns; procedural justice, t = 2.54, p < 0.01; interactional justice, t = 2.59, p < 0.01). Although I stated a more positive relationship between perception of developmental HR practices and work performance for higher than for lower levels on the EOR variables, the nature of the interaction is in the hypothesized direction. Plots of the signicant interactions from the regression analyses predicting turnover intention revealed that the negative relationships between procedural and interactional justice and turnover intention are stronger for employees perceiving low levels of justice.
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Accordingly, the direction of the interaction is the opposite of what were hypothesized in Hypotheses 2b, 4b, 6b, and 8b, providing no support for these hypotheses. Slope tests revealed that all slopes were signicantly different from zero (procedural justicelow, t = 3.85, p < 0.001; procedural justicehigh, t = 2.28, p < 0.05; interactional justicelow, t = 3.86, p < 0.001; interactional justicehigh, t = 2.50, p < 0.01), but also that the slopes were only marginally signicantly different from each other (procedural justice, t = 1.55, p < 0.10, interactional justice, t = 1.31, p < 0.10). DISCUSSION The results of the present study suggest that the quality of the employeeorganization relationship may be critical for the relationship between HRM and employees work performance and provide some support for a micro contingency HRM model. The positive relationship between perception of developmental HR practices and work performance for employees reporting high levels of perceived organizational support, procedural justice and interactional justice, indicates that a high quality employee organization relationship may be necessary in order for developmental HR practices to inuence work performance positively. The negative relationship between perception of developmental HR practices and work performance for employees experiencing a low quality employeeorganization relationship implies that developmental HR practices may also adversely affect work performance. First, it is possible that a more transactional or economic relationship with the organization may make employees reluctant to any attempts by the organization to use developmental HRM to develop emotional or social ties with its employees. Second, a low quality employeeorganization relationship and a more transactional or economic relationship with the organization will increase the likelihood that employees will act opportunistically by giving primacy to individual interests over collective interests of the organization, and developmental HRM represents a condition that may allow opportunistic behaviour. Thus, employees perceiving a low quality employeeorganization relationship and developmental HRM, will have both the motivation (low employee organization relationship) and the opportunity (i.e. they may view the HR practices as something they can use for their own good) to respond opportunistically. Accordingly, rather than repaying the organization for developmental HRM, they may respond to the HR practices in ways that indirectly reduce performance levels (i.e. in ways that full their own interests rather than those of the organization). They may, for instance, respond to training opportunities and career development activities by focusing mainly on their own careers and attractiveness in the labour market, or use participation and inuence in performance appraisal to set lower performance targets for themselves. Less developmental or more control oriented HRM, on the other hand, will probably not give much leeway to respond opportunistically to HR practices. These results contradict a pure view of best practices HRM positing that one size ts all because they indicate that investment in developmental HRM will not benet organizations characterized by low quality employeeorganization relationships. Such organizations may perform well with less investment in employee development and should perhaps use more control oriented HRM, in accordance with a contingency
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perspective. Still, the ndings do not necessarily contradict a best practice view that also stresses internal t between HR practices and between the HR practices and other organizational factors (e.g. Pfeffer, 1998). Furthermore, the correlation matrix reveals that employees having managerial positions had a more positive view of the employee organization relationship than did the tellers and the advisors. This observation may also lend some support to a less holistic perspective of HRM that pays attention to differentiating the HR architecture for different groups of employees or employee skills within an organization (Lepak and Snell, 1999, 2002). Whereas a number HRM models suggest that HR practices or systems deliver performance through the effect they have on people, this study found no support for a mediating role of the employeeorganization relationship. There were, however, moderate to strong positive relationships between perception of developmental HR practices and the employeeorganization relationship variables, indicating that employee perception of developmental HR practices inuences the employeeorganization relationship positively. Accordingly, the results support the rst link of a best practice or universalistic micro HRM model. The lack of support for mediation may be explained by the weak relationship between perception of developmental HR practices and work performance (insignicant beta coefcients in the regression analyses and a small, but signicant, bivariate correlation), and the strong and robust negative relationship between perception of developmental HR practices and turnover intention. Procedural and interactional justice also moderated the relationship between perception of developmental HR practices and turnover intention. These interactions suggest that developmental HR practices are more important in relation to turnover intention for employees with low procedural and interactional justice perceptions, implying that developmental HR practices can to some extent compensate for low levels of justice. However, although statistically signicant, the addition of the interaction terms resulted in modest increases in explained variance and the slopes were only marginally signicant from each other. Perhaps more importantly, the analyses revealed very strong direct negative relationships between perception of developmental HR practices and turnover intention. Consequently, the practical signicance of these ndings is probably not very high. Limitations The contributions of this research should be viewed in light of several limitations. First, the data were gathered at one point in time, making it impossible to draw inferences of causality or rule out the possibility of reverse causality. It is, for instance, not unlikely that the employeeorganization relationship variables and perceptions of developmental HR practices reinforce each other. Second, the reliance on self-reported questionnaire data causes concern about possible mono-method variance. Still, Harmans one-factor test (Podsakoff and Organ, 1986) seems to indicate that mono-method variance was not a serious threat in this study. Factor analysis of all the multi-item measures used generated twelve factors with eigenvalues of 1 or more, and an explained variance of the factors ranging from 29 per cent (factor 1) to 1.8 per cent (factor 12). Besides, as long as employees perceptions of HR practices should serve as the rst link between HR
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practices and their outcomes (Wright and Boswell, 2002), the only construct that could have been validly measured by other means than self-report is work performance. However, although a minimum of two data sources are needed to help rule out the validity threats of self-report and mono-method (Donaldson and Grant-Vallone, 2002), performance appraisal research recently reviewed by Levy and Williams (2004) suggests that performance ratings performed by supervisors are not less biased than self-report measures (see also Churchill et al., 1985; Levy and Sharma, 1993; Scullen et al., 2000; Sharma et al., 2004). Furthermore, if the signicant relationships in the present study were obtained only because independent and dependent variables were assessed in the same survey, one would expect practically all of the relationships to be signicant, which was not the case. Finally, the relative weak correlations between perception of developmental HR practices and work performance (ranging from 0.10 to 0.13), and the fact that the correlation pattern between the employeeorganization relationship variables and work performance is similar to those reported in the meta-studies referred to in the hypotheses section, indicate that mono-method variance has not heavily inuenced the observed relationships. A related concern is the high mean value for self-reported work performance, which may indicate an upward bias or a sample bias towards high performers. Research on salespeople suggests that self-rated performance tends to be upward biased, but also that the amount of bias does not seem to vary across performance levels (Sharma et al., 2004). It is therefore likely that the employees in the present study overestimated their performance, but that such an overestimation has not heavily affected the results. A potential sample bias towards high performers would limit the generalizability of the ndings. At the same time, it may also result in attenuated relationships due to range restrictions. The most serious threat against generalizability is that the data were obtained only from employees from small Norwegian savings banks, since relationships may differ in larger organizations, in other industries, and in other countries. On the other hand, a sample consisting of local savings banks that are members of an alliance providing them with standardized products, services and systems probably implies relatively effective control for factors such as product market strategy and technology. Furthermore, smaller organizations represent an ideal eld for studying the relationship between specic management practices and employee outcomes, due to their more transparent nature and more personalized HR and other management practices (Aldrich and Auster, 1986). Research on larger organizations from different industries in other countries is certainly warranted before any rm conclusions can be drawn. Finally, in order to avoid confounded measures of conceptually related constructs (e.g. the employeeorganization relationship variables), I had to shorten some of the measures. Although the nal scales had acceptable reliability estimates, I cannot discount the possibility that this may have had an impact on some of the ndings. Suggestions for Future Research It should be noted that alternative models of the variables under investigation provide some support for mediation. The regression analyses reported in Tables III and IV show that affective commitment is positively related to work performance and negatively
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related to turnover intention, and supplemental analysis (with the justice variables as controls) reveals that the relationship between perception of developmental HR practices and affective commitment is partly mediated by perceived organizational support.[4] Thus, and as indicated by prior research (e.g. Allen et al., 2003; Rhoades et al., 2001), developmental HR practices may operate via perceived organizational support to increase affective commitment, which, in turn, may affect turnover intention and work performance. Furthermore, since recent research suggests that work performance is not necessarily a response to organizational commitment, but to commitments to cognitively closer foci such as the supervisor and co-workers (Redman and Snape, 2005), future studies could investigate multiple constituencies of commitment as potential mediators. It may also be argued that the employeeorganization relationship variables, particularly justice perceptions (e.g. Bowen and Ostroff, 2004), can function as antecedents to employee perception of HR practices.[5] These alternative models support the observation that the relationship between HR practices and social psychological variables is more complex than typically assumed (Godard, 2004), which makes this linkage an interesting opportunity for future micro HRM research. Another interesting avenue for future HRM research is to investigate moderation models at different levels of analysis. The ndings of the present study suggest that the social contexts of organizations, as indicated by the quality of the employeeorganization relationship, may be relatively more important in determining employees work performance than how the HR practices are perceived (not only because of the moderating roles of the employeeorganization relationship variables, but also due to the direct relationships, i.e. perceived organizational support, affective commitment and interactional justice were all positively related to work performance in the full regression models in Table III). Furthermore, the disordinal interactions found for the justice variables (see Figure 2) suggest that justice perceptions may be particularly critical moderators. Since justice perceptions may affect the direction of the relationship between HR practices and employee outcomes, future studies should investigate macro HRM contingency models with justice perceptions as a potential moderator of the relationship between HRM and different measures of organizational performance. At the individual level of analysis, future studies could replicate the key ndings of the present study using perceptions of other HR practices or functions. Alternatively, and in order to take an HR system approach, one could use measures less closely related to particular practices, for instance by operationalizing perception of HR practices in terms of participation in decision making, fairness of rewards, and growth opportunities (Allen et al., 2003), or by investigating employee perception of investment in employee development (Lee and Bruvold, 2003). Finally, this study investigated perception of HR practices partly because recent ndings suggest within-organization variance in perceptions of HR practices (Gerhart et al., 2000a, 2000b; Whitener, 2001; Wright et al., 2001). However, based on data from the 30 organizations with ten or more respondents (N = 400, with an average of 13.33 respondents from each organization), the ICC(1) score for perception of developmental HR practices was 0.14 and the ICC(2) score was 0.68.[6] These ICC values suggest that the measure displays an appropriate degree of within-organization agreement relative to between-organization variance (e.g. Bliese, 2000) and that future
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studies could collect data from a larger number of organizations and aggregate individual-level perceptual data on HR practices to the organizational level and conduct cross-level analysis. Still, it should be noted that this study investigated relatively small organizations. Practical Implications Beyond the practical implications already discussed, it is important to note that even though employees perceive HR practices to be developmental, this may not translate into higher work performance. The results suggest that without a high quality employee organization relationship, developmental HR practices may actually reduce work performance. Therefore, investments in HR practices should not be viewed as a way to compensate for a poorly managed employeeorganization relationship. On the positive side, however, as long as HR practices (especially training and career development activities) are perceived as developmental, they can be very important in reducing turnover intention and thus voluntary turnover. CONCLUSION According to Ferris et al. (1998), the implicit (if not explicit) assumption since the beginning of the science and practice of HRM has been that if we do HRM well, this will somehow make organizations perform more effectively. The present study attempted to more precisely articulate this somehow by exploring a mediating and a moderating model of the relationship between employee perception of developmental HR practices and work performance and turnover intention at the individual level of analysis. While the ndings of this study are in accordance with prior HRM research regarding the relationship between HR practices and turnover intention or actual turnover, the ndings for individual work performance imply that the success or failure of developmental HRM is dependent on the quality of the employeeorganization relationship. ACKNOWLEDGMENTS
The author would like to thank the three anonymous reviewers for their constructive comments and advice.

NOTES
[1] By focusing on employee perceptions of HR practices within functional areas, rather than particular practices (e.g. balance scorecard), it was possible to obtain comparable data across organizations using different practices to cover similar HR functions. [2] Interactional justice has been investigated along the two dimensions of explanation and sensitivity and are referred to as informational and interpersonal justice (Greenberg, 1993). [3] The three remaining items are: Help is available from the organization when I have a problem, My organization is willing to help me if I need a special favour, and My organization would forgive an honest mistake on my part. [4] It was an anonymous reviewer who suggested this chain of relationships. She/he also proposed a moderated mediation model where procedural and interactional justice moderates the rst link between
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developmental HR practices and perceived organizational support. Supplemental analysis of this particular link (not a test of the full model) provided no support for moderation. [5] This was also suggested by two of the anonymous reviewers. [6] For the 62 organizations with two or more respondents, the ICC(1) score was 0.15 and the ICC(2) score was 0.63 (N = 591, with an average of 9.53 respondents from each organization).

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