A Structural Equation Model of HRM Practices, Employee Engagement, and Organizational Performance
DOI:
https://doi.org/10.64137/31079423/IJEBMR-V2I2P105Keywords:
Human Resource Management, Employee Engagement, Organizational Performance, Structural Equation Modeling, Mediation Analysis, IT SectorAbstract
This study examines the relationship between Human Resource Management (HRM) practices, employee engagement, and organizational performance using a Structural Equation Modeling (SEM) approach. Drawing on Social Exchange Theory and the Resource-Based View, the research investigates how HRM practices influence organizational outcomes through employee engagement as a mediating variable. Data were collected from 310 employees working in leading software companies in Bangalore, India, using a structured questionnaire based on a five-point Likert scale. The results of Confirmatory Factor Analysis (CFA) and SEM indicate that HRM practices have a significant positive impact on employee engagement (β = 0.65, p < 0.001), and employee engagement significantly influences organizational performance (β = 0.58, p < 0.001). The model explains 34% of the variance in organizational performance. Further, mediation analysis using bootstrapping confirms that employee engagement partially mediates the relationship between HRM practices and organizational performance, with a significant indirect effect (β = 0.37, p < 0.001). The findings highlight the critical role of engagement-driven HR strategies in enhancing organizational effectiveness. The study contributes to HRM literature by validating a comprehensive SEM framework and offers practical insights for managers to strengthen workforce engagement and performance outcomes.
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