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The Relationship between Human Resource Management Practices and

Employee Engagement: the Moderating Role of Organizational Culture

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53

Journal of Knowledge Globalization: Vol 10, No,2

The Relationship between Human Resource

Management Practices and Employee Engagement:
the Moderating Role of Organizational Culture

Alima Aktar
Universiti Utara Malaysia
Faizuniah Pangil
Universiti Utara Malaysia

Abstract
Employee engagement has received considerable attention among academic
community and business consultants in recent years. This topic still needs to be
prioritized in the academic research particularly as it is essential to understand the
antecedents of employee engagement. The objective of this study is to examine
the relationship between human resource management (HRM) practices and
employee engagement and to explore whether organizational culture can
moderate this relationship on the basis of social exchange theory. Survey data
were collected from 283 employees working in private commercial banks in
Bangladesh. Regression results indicate that compensation, job security and
working condition have significant association with employee engagement. In
addition, hierarchical regression results revealed that organizational culture may
partially moderate the link between HRM practices and employee engagement.
Keywords: employee engagement, HRM practices, organizational culture, Social
Exchange Theory, banks.
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Aktar and Pangil: Human Resource Management Practices and

Employee Engagement

Introduction
In recent years, employee engagement has become an interesting topic among
academic researchers as well as among corporate practitioners. Employee
engagement has frequently been considered as the key to an organization’s
success and competitiveness (Gruman and Saks, 2011). Kahn (1992) and Macey
et al. (2009) argue that employee engagement is positively related to performance
outcomes. Macey et al. (2009) also assert that organizations can achieve a
competitive advantage through employee engagement. A number of previous
studies e.g., Baumruk (,2004;) Richman, (2006 ;) Kular et al. (2008); Shuck &
Wollard (2010) have identified employee engagement as the key driver of
individual attitude, behavior and performance. Furthermore, researchers have
found employee engagement positively affects the financial results
(Xanthopoulou et al., 2009), return on assets and profitability (Macey et al., 2009),
employees’ job performance (Bakker & Bal, 2010) and client satisfaction
(Salanova et al., 2005). In other words, engaged employees are critical for
organizations because of their contributions add to the organizational bottom line
(Demerouti & Cropanzano, 2010). Therefore, employee engagement needs to be
prioritized to enhance organizational performance and to gain competitive
advantage.
However, Gallup's survey (2012) showed that the average level of employee
engagement is only 13% across the world which indicates that most of the
employees are disengaged. This high level of employee disengagement suggests
that majority of the employees in their jobs lack motivation and they are not
putting their discretionary effort in organizational outcomes. This poor level of
engagement is a great concern for organizations. Moreover, as disengaged
employees cannot be psychologically present at their works (Kahn, 1990), a low
level of employee engagement may hamper the employees’ productivity. For
example, Bates (2004) estimates the cost of productivity loss due to disengaged
employees in USA to be as high as USD 300 billion per year
On the other hand, the level of employee engagement positively affects
performance (Saks, 2006). Authors argue that engaged employees are
energetically and effectively connected to their work (Schaufeli & Salanova,
2007), which, in turn, positively affect organizational performance metrics such
as customer satisfaction, loyalty, profitability and productivity (Harter et al.,
2002). Therefore, employee engagement is critical for organizational
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Journal of Knowledge Globalization, Vol.10, No 1

performance. According to Kahn (1990), the extent of engagement depends on

three psychological conditions of the employees’ e.g., psychological usefulness,
psychological safety, and psychological availability.
Human Resource Management (HRM) practices are positively related to
employee behavior (Huselid, 1995) and motivation (Delery and Shaw, 2001). A
possible link, therefore, can be expected between HRM practices and employee
engagement. Prior studies rarely explored the relationship of overall HRM
practices and employee engagement. For example, Menguc et al., (2013) narrowly
explore the relationship of supervisory service and supervisory feedback with
employee engagement.
Based on this background of low level of employee engagement in spite of its
critical role in organizational performance, the important issue can be identified
as how to enhance the level of employee engagement at work. Therefore, the
objective of this study is to examine the relationship between HRM practices and
employee engagement, and the moderating role of organizational culture in the
relationship.

Economic and Institutional Environment in Bangladesh

Bangladesh, a South Asian emerging economy, has shown consistent growth for
the last decade and has attracted the attention of global economy. Although
Bangladesh adopted a socialistic economic framework after its independence in
1971, it has gradually transformed its economic policy in line with market based
economy. Consequently, it has become one of the major garments exporting
country in the world. As a bank-based economy, Bangladesh significantly
depends on financial institutions to meet the increasing capital need for its
expanding business and economic activities. For example, 75% of the total fund
in 2008 which is 52.8% of GDP was supplied by banks in Bangladesh (ADB,
2008). Therefore, overall economic performance of Bangladesh depends on
efficient performance of banks to generate adequate capital for businesses.
Additionally, as the banking sector is highly dependent on human resources,
banks rely on the outcomes of its employees for their ultimate performance. Thus,
it is important to investigate the issue of employee engagement in the banks of
Bangladesh.
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Aktar and Pangil: Human Resource Management Practices and

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Literature Review and Hypotheses

Employee Engagement
Previous studies have conceptualized employee engagement as positive attitudes
of employees towards their organizations that may help them to improve their job
performance for the benefit of the organizations (Karatepe, 2013). According to
Kahn (1990), employee engagement is the psychological state of mind of
employees during performing their work role. He identified three psychological
conditions such as psychological meaningfulness, psychological safety and
psychological availability which may enhance the well-being of employees to
contribute in organizational success. Another group of researchers have focused
on the concept of burnout (Maslach et al., 2001). They assert that the core
dimensions of burnout (exhaustion and cynicism) and engagement (vigor and
dedication) are opposite of each other (Barkhuizen et al., 2014). Similar to Khan
(1990), Rothbard (2001) also defined employee engagement as the psychological
presence of employees while performing their work. However, he extended the
prior definition by suggesting the addition of two critical components of
engagement i.e., attention and absorption of employees. Employee Attention
means the cognitive availability and the amount of time one spends thinking about
a role, and absorption refers to the state of being engrossed in a role and the
intensity of one’s focus on a role.
Existing literature demonstrates several factors why an engaged employee can
perform better than someone who is disengaged. These factors can be summarized
into three groups.
Firstly, as engaged employees hold positive emotions (Bindl & Parker, 2010),
these emotions enhance their confident and optimistic attitude towards work
(Timms et al., 2015), and they may perform better (Bakker et al., 2012). In
addition, positive emotions like joy, interest and contentment build personal
resources (i.e., physical, intellectual, social and psychological) of employees
through widening the array of thoughts and actions (Fredrickson, 2001) which, in
turn, may positively affect employees’ outcomes.
Secondly, engaged employees have more physical resources which lead to better
performance than disengaged counterparts. Prior research has also showed a
positive association between engagement and physical resources. For example,
Shuck and Reio (2014) found that engaged employees have fewer psychosomatic
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Journal of Knowledge Globalization, Vol.10, No 1

complains than disengaged ones. Agarwal (2014) explored the positive

relationship between work engagement and working ability among Indian
workers.
Thirdly, according to Social Exchange Theory (SET), when employees receive
economic and socio-emotional resources from their organization, they recognize
an obligation to respond in kind and repay the organization due to the “rules” of
exchange philosophy (Cropanzano & Mitchell 2005). Saks (2006) argued that one
way for employees to repay their organization is higher level of engagement.
Therefore, when the psychological contract of employees has been fulfilled
(Khan, 1990), their obligation towards organization lead them to engage more in
work to and to perform at a higher level.
Theoretical Background
As the Social Exchange Theory (SET) includes the most influential theoretical
paradigms to understand workplace behavior, this study applies the social
exchange perspectives to explain the relationship between HRM practices,
organizational culture and employee engagement. According to Blau (1964), the
social exchange involves such interactions which are interdependent and
conditional that may be affected by the action of opposite person (Wiesner et al.,
2007; Jordan et al., 2006; Cole et al., 2002; Burgess & Huston, 1979). Although
different views of SET have emerged, the SET consist a set of interactions that
involve in a process of obligation (Emerson, 1976).
Based on SET, a reciprocal relationship could be found through a series of
interactions between two parties who are in a state of reciprocal interdependence.
Thus the SET can be used to explain the employee behavior and the relationship
of two parties including employee and employer (Coyle-Shapiro & Conway,
2005). According to Saks (2006), SET comprises the theoretical rationale for
explaining employee engagement (Saks, 2006). In fact, scholars suggest the SET
as the most significant and descriptive theory which can explain contextual factors
of workplace and workplace behavior. For example, several empirical studies
such as e Demerouti et al. (2001), Menguc et al. (2013) and Simpson (2009)
support the role of social exchange perspective in describing the reciprocal
relationship of employees with higher level of contextual work-related factors,
including job autonomy or performance feedback, and a higher level of
engagement. Based on these arguments of SET, this study proposes that when
employees perceive that they are supported in the work context, i.e. the
organization invests in HRM practices for their well-being; employees feel
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Aktar and Pangil: Human Resource Management Practices and

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obligated and show high level of engagement. Considering the context of SET,
supportive work-related context (i.e. work practices) helps to send important
messages to employees that their organization values their effort (Lee & Bruvold,
2003) which, in turn, encourages them to devote themselves towards their job i.e.
engagement (Shuck & Wollard, 2010; Wayne et al., 1997).Therefore, the SET
could form the theoretical foundation to explain the variability of employee
engagement i.e. why people engage more or less to their work and organization.
According to the models of Kahn (1990) and Maslach et al. (2001), employees
may need economic and socio-economic benefits to fulfill the conditions of
engagement. In the context of SET it can be argued that when employees get these
resources from their organization, they will feel indebted to repay by showing
higher level of engagement. Indeed, engagement is the process by which
employees feel obliged to involve themselves more seriously into their work roles
in order to reciprocate the resources they have received from their employer
(Kahn, 1990). Consequently, the degree of cognitive, emotional and physical
resources that an employee maintains during their role performance is more likely
to be contingent on the economic and socio-economic resources they have been
provided by their organization.
HRM Practices and Employee Engagement
Researchers have suggested that proper HRM practices create a healthy
psychological well-being for employees that may motivate them to achieve
organizational objectives (Becker et al., 1998). HRM practices are defined as the
process of managing employees who utilize other resources to accomplish the
organizational goals (Schuler & MacMillan, 1984; Schuler & Jackson, 1987;
Wright & Snell, 1991). Other scholars have defined HRM practices as highly
committed organizational practices such as compensation, training, employee
participation, selectivity, and flexible work arrangement that are formulated for
motivating the employees towards organizational success (Huselid, 1995; Becker
et al., 1998; Delery & Shaw, 2001). With this view, Gruman & Saks (2011)
proposed a model describing the relationship of performance management and
employee engagement to enhance organizational performance. According to their
model, overall performance management process may affect employee
engagement. Mone and London (2010) assert that effective application of
performance management can help to create and sustain high level of employee
engagement that leads the higher level of performance. Similarly, Suan and
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Journal of Knowledge Globalization, Vol.10, No 1

Nasurdin (2014) argue that rigorous process of training; rewards and performance
appraisal enhance the motivation of employees towards their work and help to
improve their performance. Moreover, prior researchers have identified a
hypothetical foundation for the linkage of HRM practices and employee
engagement under the norms of SET that suggests that if organizations provide
resources through HRM practices to their employees, the employees will be
obliged and engage in performing their work at higher level (Karatepe, 2011).
Thus, a linkage between HRM practices and employee engagement may be
theorized.
Training and Development
In the HRM literature, training and development has been acknowledged as one
of the important predictor of employee motivation and employee performance.
Scholars have conceptualized training and development as the programs that are
designed and sponsored by the organizations for improving the employees’ task
related skills and abilities so that the employees can handle service related
complex situations ((Yang & Fu, 2009, Karatepe et al., 2007; Schlesinger &
Heskett, 1991). Therefore, higher level of training and development provided by
the organization is expected to help them to improve their performance. Kahn
(1990) also suggested that organizations can provide resources to employees
through proper training and development programs that make them feel capable
of doing the work in a better way and help to enhance employee engagement.
Training and development programs also help employees to feel confident and
leads to the attitude of availability during role performance (Gruman & Saks,
2011). In addition, positive association has been found between training and
development and employee psychological health (Luthans et al., 2008). A better
psychological health is positively related to employee engagement (Gruman &
Saks, 2011). This trend is also explained by the norms of SET which suggests that
employees feel obligated if they understand that their organization has concerns
for their development. When an organization invests resources through
appropriate training programs, employees reciprocate by engaging themselves
more to their organization (Karatepe, 2013). Therefore, the hypothesis 1 has been
developed as follows:
Hypothesis 1: There is a positive association of appropriate
training and development program with employee engagement.
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Aktar and Pangil: Human Resource Management Practices and

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Compensation

Compensation is an important HRM practice adopted by an organization for

motivating employees towards their works. Kahn (1990) stated that as employees
perceive that their organization provides a proper compensation package for their
work; their engagement level will be higher. Several empirical studies (e.g., Grace
& Khalsa, 2003; Batt, Colvin & Keefe, 2002) show a significant positive
relationship between pay and employee positive attitudes towards the
organization. Azoury et al. (2013) found that appropriate compensation package
had a positive association with the level of engagement among the public and
private sectors employees in Lebanon. In addition, according to SET, employees
will be engaged more if they feel that the resources given by their organization is
appropriate for their job (Saks, 2006). On the other hand, some other studies (e.g.,
Anitha, 2014; Sarti, 2014) found the relationship between compensation and
performance to be insignificant. Based on the prior discussions, it is anticipated
that the appropriate compensation practices help to improve employees’
psychological health and will help to increase employee engagement. Thus, this
study conceptualizes the hypothesis 2 as follows:
Hypothesis 2: Adequate compensation is positively related to
employee engagement.
Performance Appraisal
Performance appraisal is defined as the continual process of observing and
assessing the employee performance with a predetermined work-related standard
(Cheung & Law, 1998; Erdogan, 2003). Scholars suggest that a fair and suitable
performance appraisal system has an extensive influence on employees’ positive
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Journal of Knowledge Globalization, Vol.10, No 1

attitudes and job-related behaviors within the organization (Erdogan, 2003). Saks
(2006) argued that if employees feel that their organization offers benefit on the
basis of their performance that is measured fairly, they will be obliged to the
organization and lead to higher level of engagement on their part. Furthermore,
Maslach and Leiter (2008) asserts that fairness of organizational practices is
positively related to engagement. Similarly, authors have also found that
performance appraisal is a tool to predict employees' positive attitudes during their
work role (Haynes & Fryer, 2000). It can be summarized that proper performance
appraisal process may enhance the positive behavior of employees and ultimately,
will help them to improve employee engagement. Therefore, the study theorizes
hypothesis 3 as follows:
Hypothesis 3: Periodic performance appraisal system has a
positive association with employee engagement.
Career Advancement

Career development is the arrangement of organizational system for which an

employee can get a clear career path opportunity within the organization
(Herzberg, 1986). According to Kahn (1990), career development opportunity
ensures the employees’ psychological safety that helps employees to be
motivated. For example, the internal promotional opportunity acts as a key
motivational factor to engage employees in positive job-related activities (Batista
et al., 2013). Furthermore, Bal et al. (2013) found that internal ongoing
improvement and career development opportunity are positively related to
employee well-being and negatively related to employee unacceptable behavior.
Thus, it can be expected that career advancement opportunity helps to trigger
employees’ positive attitudes and increased engagement towards t work. With this
view, this study considers Hypothesis 4 as follows:
Hypothesis 4: Career advancement opportunity is positively
related to employee engagement.
Job Security
Job security is defined as the degree to which an employee may expect to remain
in his/her job for a specified time period (Delery & Doty, 1996). Previous studies
(e.g., Strazdins et al., 2004; Chirumbolo & Hellgren, 2003; Hellgren & Sverke,
2003; Ferrie et al., 2001; Barling & Kelloway, 1996; Ashford et al., 1989) found
that employees who have poor feelings about job security may have poor
psychological conditions. This condition may create employee burnout (Probst,
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2003; Dekker & Schaufeli, 1995). In their study, Miller et al. (2001) found that
employees with high level of job security show a high level of job performance.
However, though several studies confirmed job security as a motivational tool for
employee performance, Arabi et al (2013) found the relationship between job
security and employee engagement to be insignificant. These inconclusive results
about the relationship between job security and employee engagement warrant
further study. The current study expects a positive relationship between job
security and employee engagement which leads the Hypothesis 5 as follows:
Hypothesis 5: High job security has a positive and significant
association with employee engagement.
Working Condition
Favorable working condition refers to a safe, healthy and conducive work setting
that may help to enhance the level of employee engagement. Previous studies
found that better working condition is positively associated with employee job
satisfaction (Pejtersen & Kristensen, 2009). Satisfactory working condition
positively affects the psychological health of employees and may increase the
level of employee engagement (Kahn, 1990). Furthermore, Kramer and
Schmalenberg (2008) showed that a favorable working condition is an important
factor in reducing employee stress, and in enhancing employee motivation.
Therefore, this study expects a positive association between favorable working
condition and employee engagement which leads the Hypothesis 6 as follows:
Hypothesis 6: Better working condition is positively related to
employee engagement.
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Journal of Knowledge Globalization, Vol.10, No 1

The Moderating Role of Organizational Culture

Organizational culture is defined as a shared set of characteristics such as beliefs,
values and behaviors by the members of the organizations (Lawson & Ventriss,
1992) that may help to enhance the quality employee performance (Hann et al.,
2007). More specifically, organizational culture encompasses dynamism,
creativity and entrepreneurship to ensure its long-term success (Cameron &
Quinn, 2006). A number of studies (e.g., Albrecht, 2012; Rastegar & Aghayan,
2012) have focused on the direct impact of organizational culture and found that
organizational culture is positively related to employee performance such as
employee engagement, turnover intentions (Timms et al., 2015; Song et al., 2014)
and organizational success (Sorensen, 2002). Although prior studies focus on the
relationship between antecedents and engagement (e.g., Karatepe & Demir, 2014;
Karatepe, 2013), the probability that the relationship can vary with a moderating
variable has not been considered. (Lee & Ok, 2015; Rich et al ( 2010). Parker and
Griffin (2011) suggested that low levels of contextual factors (i.e. HRM practices)
not necessarily always exert low levels of employee engagement because work
environment factors such as, organizational culture may buffer the relationship
between antecedents e.g. HRM practices and employee engagement. Scholars
argue that a moderating variable may play an important role of buffering effect to
modify the relationship (Emmerik, Jawahar & Stone, 2005; Cavana, Delahaye, &
Sekaran, 2001). The study of Chen (2004) showed that organizational culture
buffered the relationship between leadership style and performance. Authors have
stated that leaders with an innovative style may enhance the positive attitudes of
employees. Previous studies (e.g., Lim, 1995; Ogbannan & Harris, 2000) have
also indicated that organizational culture is a harmonious combination of different
variables within an organization which may increase the level of employee
engagement with its positive role in psychological health of employees.
Existing research observed various types of cultures in different types of
organization. For instance, Wallach (1983) identified three types of cultures i.e.
bureaucratic, innovative and supportive culture. Bureaucratic culture is defined as
the rules and regulations that are followed by the employees to perform the task
without any autonomy or freedom while innovative culture inspires employees to
become creative and effective risk-taker. Supportive organizational culture gives
more emphasis on human aspects and personal relationships with trust and
collaboration. Wallach suggests these three cultures to be independent.
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Aktar and Pangil: Human Resource Management Practices and

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As Dikkers et al. (2004) defined optimum organizational culture as a supportive

culture; the present study focuses on the supportive organizational culture to
examine the moderating role of culture on HRM-employee engagement
relationship. In addition, HRM practices are positively related to employee
engagement (Suan & Nasurdin, 2014) and organizational culture plays an
important role in employees’ positive behavior towards their performance (Chen,
2004), it can be expected that organizational culture may buffer the relationship
between HRM practices and employee engagement. Therefore, hypothesis 7 has
been developed as follows:

Hypothesis 7: Supportive organizational culture moderates the

relationship between HRM practices and employee engagement.
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Journal of Knowledge Globalization, Vol.10, No 1

HRM Practices

Training & Organizational Culture

Development
HRM Practices

H7
Compensation

Performance
Appraisal
Employee
Career H11– H6 Engagement
Advancement
Job Security

Working
Condition

Figure 1 Theoretical Framework of the Study

Methodology
Participants
This study focuses on 30 banks listed in Dhaka Stock Exchange (DSE), the major
stock market in Bangladesh, and considers the management trainee officers
(MTO) as the population. In banking industry of Bangladesh, MTOs are recruited
as part of the management succession plan of a bank to create future leaders.
Generally, MTOs need to go on-job and off-job training during their probationary
period which is extended over one to two years. This study uses a sample of 283
MTOs who are working in different listed private commercial banks located in
Dhaka city. Based on the nature of this study, data are collected from the MTOs
who have already completed their probationary period but have not become part
of the top management. This study uses logical area cluster sampling to collect
the data in which the cluster is randomly selected. The area sampling technique is
a well-accepted method in cluster sampling particularly when samples are
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geographically scattered (Sekaran, 2003). Therefore, utilizing the area cluster

sampling techniques, the entire Dhaka city has been divided into fourteen clusters
(Table 1) based on the major economic activities, and then the study selects one
cluster by using simple random sampling.

Table 1: Major Commercial Areas in Dhaka City and

Number of Branches of PCBs

Major commercial areas in No. of Branches of

No.
Dhaka City PCBs
1 Banani 30
2 Baridhara 48
3 Dhanmondi 54
4 Gulshan 46
5 Old Town 130
6 Jatrabari 36
7 KawranBazar 42
8 Malibagh 77
9 Mohammadpur 44
10 Motijheel 86
11 Mirpur 75
12 Ramna 80
13 Tejgoan 35
14 Uttara 69

Source: Annual reports of bank

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Journal of Knowledge Globalization, Vol.10, No 1

Procedure
The data was collected through structured questionnaires. The survey
questionnaire included a cover letter stating brief information to the respondents
about the objective of this study. Respondents were asked to fill up the survey
questionnaire based on their job experiences and behavior. They were also
informed that this is a voluntary participation and responses would be
confidential. A total of 318 structured questionnaires were distributed to the
respondents. Researchers also communicated with the sample MTOs in person to
obtain a higher response rate. Among 387 questionnaires, 295 questionnaires
were returned to the researcher of which 12 questionnaires were not properly
filled up. Therefore 283 usable questionnaires with a response rate of 73 percent
for its purposes were considered in this study.
Measures
This study incorporates the basic measures of HRM practices, organizational
culture and employee engagement. Participants are requested to give their
valuable opinion in a five-point Likert scale ranging from 1 (strongly disagree) to
5 (strongly agree). To measure employee engagement, 17 items Utrecht Work
Engagement Scale (UWES) scale was adapted with a Cronbach’s alpha value of
.80 (Schaufeli and Bakker, 2003). The sample items are “At my work, I feel
energetic; When I get up in the morning, I feel like going to work”.
A total of 22 items measuring all the variables of HRM practices such as
performance appraisal, compensation, career advancement, job security, working
condition and training & development have been considered. This study has
adapted different scales that currently exist and used by other studies. Such as,
performance appraisal has been measured by 3 items with a sample question of
“My institution’s performance appraisals are based on specific objectives” and
adapted from Chang (2005) with a Cronbach alpha value of .73. Similarly,
compensation is measured with 5 items, used by Tessema and Soeters (2006),
Cronbach alpha value of .83. The sample question is “There is attractive
compensation at my institution”.
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Career advancement is measured with 3 items with a Cronbach alpha value of .86
adapted from Gong and Chang (2008) and the sample question is “Individuals in
this job have clear career path within this institution”.
The 3 items scale of job security is adapted from Delery and Doty (1996) with a
Cronbach alpha value of .71. The sample question includes “I can stay in the
institution for as long as I wish”.
Working condition is measured with 4 items used by Edgar and Geare (2005) that
incorporates a sample question “I always feel safe working here in these
conditions”. The Cronbach alpha value is .77.
Lastly, training and development with 4 items scale is adapted from Delery and
Doty (1996). The sample question includes “My institution provides extensive
training for employee development” and the Cronbach alpha value of .88.
Wallach (1983) identified three types of organizational culture such as
bureaucratic, innovative and supportive and each type of culture consists 8 items.
This study incorporates 8 items to measure the moderating variable i.e.
organizational culture considering 8 items scale to measure only supportive
organizational culture form Wallach (1983) with a Cronbach alpha value of .77.
It includes sample questions like “In my organization, we help one another in
performing tasks; in my organization, teamwork is supported in performing
tasks”. The reliability of this scale has also been strongly defended by other
researchers like Taormina (2009) and Ababaneh (2010).
Demographic information includes 6 items. It is important to note that all of the
items used to measure the variables in this study are adopted from previous
research. The scores of Cronbach alpha for the variables range from 0.71 to 0.88
which are above of threshold value 0.60 (Nunnally, 1978). A summary of
variables, authors and total items used to measure the variables are presented in
Table 2.
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Journal of Knowledge Globalization, Vol.10, No 1

Table 2 Measures of the Variables

Variables Authors Total Cronbach

no. of Alpha of
items adapted scale
Independent Variables

Performance Chang (2005) 3 .73

appraisal
Compensation Tessema and Soeters 5 .83
(2006)
Career advancement Gong and Chang (2008) 3 .86

Job security Delery and Doty (1996) 3 .71

Working condition Edgar and Geare (2005) 4 .77

Training and Delery and Doty (1996) 4 .88

development
Dependent Variable

Employee Schaufeli and Bakker, 17 .80

engagement 2003
Moderating variable

Organizational culture Wallach, 1983 8 .77

Findings and Discussion

Demographic Information
Table 3 represents the demographic profile of the respondents. The percentage of
male participants (91%) in this study is much higher than that of female
participants (9%), and the majority (i.e. 83.72%) of the respondents is younger
than 35 years old. In addition, majority of the participants had post graduate
degrees (93.05%) and 4.65% are with professional degrees and 60.47 % of
respondents have been working in the current banks for 3 to 10 years. In addition,
though the work experience of the remaining 39.53% participants in the current
bank is less than 3 years, their average aggregate experience in different banks is
around 5 years.
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Table 3 Demographic Characteristics of The Respondents in %

(N=283)
Male 90.70
Gender
Female 9.30
Married 76.74
Marital Status
Single 23.26
Less than 30 years 34.88
30 to 35 years 48.84
Age
35 to 40 years 13.95
40 plus years 6.98
Less than 3 years 39.53
3 to 5 years 27.91
Experience 5 to 10 years 32.56
10 to 15 years 0.00
More than 15 years 2.33
Bachelor 6.98
Masters or Equivalent 48.84
Education
MBA 44.19
Others 4.65
Mean (in year) 5.00
Total experience
Standard Deviation 3.57
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Journal of Knowledge Globalization, Vol.10, No 1

Descriptive Analysis
Table 4 represents the mean, standard deviation and Cronbach’s alpha of the
variables that are used in this study. The results show that the mean score of
working condition (3.62) is highest among all HRM construct with the standard
deviation of 0.69. The mean score for dependent variable i.e. employee
engagement is 3.75 with the standard deviation of 0.519. In addition, results also
demonstrate that the minimum reliability value is 0.73 (career advancement) is
more than the threshold value (.70), and maximum reliability value is 0.89, which
indicates that there is no concern for the reliability of the questionnaire used to
measure the study variables.

Table 4: Descriptive Statistics

Std. Cronbach's
Variables N Minimum Maximum Mean Deviation Alpha
Employee
Engagemen 283 1.24 4.71 3.7488 .51974 0.871
t (EE)
PA 283 1.67 4.67 3.5349 .78757 0.756
CP 283 1.80 4.80 3.2791 .73955 0.796
CA 283 1.00 4.33 3.0691 .55577 0.734
JS 283 1.00 4.67 3.0074 .79239 0.783
WC 283 1.50 4.75 3.6163 .69297 0.832
TD 283 1.00 4.75 3.3895 .80605 0.886
OC 283 1.86 4.57 3.4688 .63390 0.894
Valid N
(listwise) 283
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Correlation and Multicollinearity Analysis

Table 5 shows the results of Pearson Correlation of the predictor variables of
employee engagement that are not more than 0.69 i.e. all the correlation values
are lower than the threshold value 0.80 (Shannon & Davenport, 2001) which, in
turn, indicates that multicollinearity does not seem to a problem among all the
predictors of employee engagement

Table 5 Correlation and Multicollinearity Results

VIF 1 2 3 4 5 6 7 8
1 EE - 1
2 PA 2.584 .361* 1
3 CP 1.788
.337* .414** 1
4 CA 1.523 .206 .074 .403** 1
5 JS 1.416 .483** .477** .139 .075 1
6 WC 1.670
.572** .320* .530** .277 .298 1
7 TD 1.662 .440** .496** .295 .079 .383* .415** 1
8 OC 2.987 .518** .690** .466** .402** .374* .469** .558** 1

* Significant at the 0.05 level (2-tailed).

** Significant at the 0.01 level (2-tailed).
Moreover, result indicates that all the values of variance inflation factors (VIF) of
independent variables are lower (VIF>2.98) than that of the critical value of 10.00
(Neter et al., 1989). It suggests that the multicollinearity does not cause a serious
problem for the regression analysis.
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Journal of Knowledge Globalization, Vol.10, No 1

Regression Analysis
Table 6 presents the results of regression analysis to test the hypotheses for the
relationship between independent variables (HRM practices) and dependent
variables (Employee Engagement).
Table6: Regression Results

Variables Dependent variable

Employee engagement

Performance Appraisal .154

Compensation .321**

Career Advancement .042

Job Security .307**

Working Condition .304*

Training & Development .078

F value 4.734**

R 0.697

R² .486

Adjusted R² .384

* p< 0.05, ** p < 0.01

The R2 value for the regression line is .486 which indicates that
independent variables can explain 48.6% variance in dependent variable,
and the regression equation is also found as significant (F= 4.734,
p<.001). Results of regression coefficients show that compensation, job
security and working condition have positive and significant association
with employee engagement. Furthermore, compensation is the strongest
(β=.321, p<.001) predictor of employee engagement, followed by, job
security (β=.307, p<.001) and working condition (β=.304, p<.05). Since
the associations of other HRM constructs such as performance appraisal,
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Aktar and Pangil: Human Resource Management Practices and

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career advancement, and training and development with employee

engagement are statistically insignificant, only hypothesis H2, H5 and H6
are supported

Table 7: Hierarchical Regression Analysis using

Organizational Culture as a Moderator
Variables Step1 Step2 Step3
Model Variables
Performance Appraisal .008 -.154 .421
Compensation .017** .021 .287
Career Advancement .055 -.042 .689
Job Security .298* .307* .589*
Working Condition .395** .354** 1.695**
Training & Development .149 .078 .382
Moderator Variable (Organizational Culture) .307 2.202**
Interaction Terms
Organizational Culture x Performance Appraisal .413
Organizational Culture x Compensation .250
Organizational Culture x Career Advancement 1.257
Organizational Culture x Job Security .497*
Organizational Culture x Working Condition .445**
Organizational Culture x Training & .849
Development
R² .455 .486 .680
Adjusted R² .364 .384 .537
R² Change .455 .031 .194
Sig. F Change .001 .001 .000
Durbin Watson 1.527 1.554 1.672

* p< 0.05, ** p < 0.01

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Journal of Knowledge Globalization, Vol.10, No 1

Discussion
From the results presented in the prior section, it can be seen that the banking
employees’ perception about HRM practices specifically about compensation, job
security and working condition are positively related with employee engagement,
and the relationships are also statistically significant. Results of the current study
also indicate that organizational culture partially moderate the relationship
between HRM practices and employee engagement. More specifically, in the case
of relationship between HRM practices and employee engagement, compensation
is found as the strongest predictor of employee engagement. However, the
relationships of other HRM measures such as performance appraisal, career
advancement, and training and development with employee engagement are
statistically insignificant. These findings, therefore, suggests that compensation,
job security and working condition are the most important predictors of the level
of engagement of the banking employees in Bangladesh.
In the case of compensation, the results of this study show a significant positive
relationship with employee engagement which is consistent with findings of other
studies such as Azoury et al (2013), Juhdi et al. (2013), Nasomboon (2014).
Scholars argued that attractive compensation package is a vital attribute that
motivates employees to become more engaged towards their work especially in
the context of developing countries (Bergmann, 2001). For example, Azoury et
al. (2013) found that compensation had significant positive relationship with
employee engagement in Lebanon. They argue that as most of the Lebanese
employees are from poor or middle class background, a good remuneration
package can act as the key factor to lead employees engage more at work. In the
same line, Juhdi et al. (2013) found that employees with high compensation had
level of engagement supported in Malaysia. However, some other studies (e.g.,
Anitha, 2014; Sarti, 2014) did not find a significant relationship between
compensation and employee engagement. Sarti (2014) found that compensation
was an insignificant factor to engagement among the caregivers of Italy. It is
important to note that Italy is developed country and perhaps, in such a context,
compensation is not a priority as in developing countries to enhance employee
engagement.
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This study also finds positive and significant association of job security with
employee engagement which is consistent with some previous studies (e.g.,
Ozyaman, 2007; Domenighetti et al., 2000; and Mauno et al., 2007). Strazdins et
al. (2004) argued that employees with greater feelings of job security generally
engage more at work. However, several prior studies found the contrary
relationship between job security and employee engagement. For example, Aarabi
et al. (2013) conducted a research among Malaysian employees and found the role
of job security to motivate employees towards their work was Insignificant.
The possible reasons for the significant role of job security in employee
engagement in the banking sector of Bangladesh are the high unemployment rate,
abundant supply in labor market and weak legal environment in Bangladesh.
Interestingly, this study found insignificant relationship of performance appraisal
with employee engagement which is inconsistent with the other previous studies
(Suan & Nasurdin, 2014; Sharma & Sharma., 2010). However, there are some
studies that showed an insignificant positive relationship between performance
appraisal and employee engagement (Johari et al., 2012). The possible reasons
could be the problem in the performance appraisal process in the banking sector
in Bangladesh. Latham and Mann (2006), asserted that an organization requires a
fair performance appraisal system so that employees perceive positive about
performance appraisal process which may lead higher level of engagement (Gupta
& Kumar, 2013).
The findings of this study indicate training and development as an insignificant
predictor of employee engagement which is consistent with Batista et al. (2013).
However, this result is contrary to the study of Suan and Nasurdin (2014),
Trinchero et al. (2014) and Karatepe (2013). The possible reasons for this result
could be inappropriate training programs that are inadequate to build career
objectives of employees, so they do not feel the obligation to engage more at
their work. Karia and Hasmi (2006) suggested that HRM practices like training
and development for employees should be appropriate to build employees'
obligation for the organization.
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Journal of Knowledge Globalization, Vol.10, No 1

The results also indicate that organizational culture can partially moderate the
relationship between HRM practices and employee engagement. A prior study
by Chen (2004) found a significant moderating role of organizational culture and
suggested that organizational culture can improve the positive attitudes of
employees, which may ultimately lead the higher level of engagement.
Implication, Limitation and Conclusion
The results of the current research give several important insights about the
relationship of employee engagement with HRM practices. As this study
incorporates various job-related predictors of employee engagement, it will be
worthwhile to examine other potential antecedents of employee engagement. For
instance, HRM practices like job characteristics, justice dimension, and
empowerment could be the critical factors for employee engagement. Thus, future
research may include a wide variety of predictors that are linked to engagement.
In addition, future study may include different dimensions of HRM practices to
identify the most important factors of engagement.
Another area for future study may include different types of personality variables
like hardiness, positivism, self-efficacy as the antecedents of engagement. There
are some studies such as Maslach et al. (2001) that identified self-esteem and locus
of control as important predictors of burnout (opposite of engagement). It has also
been found that employees who have the strong feelings of exchange, they hold
the strong obligation with the rules of reciprocity (Cropanzano & Mitchell, 2005).
Thus, the relationship between various predictors and engagement could be
examined under the rule of social exchange. Future research may attempt to
investigate mediating effects of the reciprocal ideology in the relationship
between different organizational practices and employee engagement. It will be
also valuable to include the work-related social support as a moderating variable
in the relationship between HRM practices and employee engagement under the
tenet of SET.
This study has some practical implications as well. Results of this current study
will assist the management and policy makers of banking sector in Bangladesh to
understand the role of different HRM practices to enhance the employee
engagement. As employee engagement is a critical factor for achieving
competitive advantage for a human resource based business organization like
banks, these results will be helpful for the policy makers and managers to adopt
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Aktar and Pangil: Human Resource Management Practices and

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appropriate HRM practices for improving the level of employee engagement so

that their banks can achieve competitive advantage.
Although the current study makes contributions in several ways, it has some
limitations as well. For example, this study includes only the employees who are
working in the different private commercial banks in Bangladesh. Therefore, the
future research may include other financial institution and insurance companies
as well. Another limitation is that this study considers the cross-sectional and self-
report data in nature which have the limitation to explain the causal relationship
among different variables. Consequently, future research may consider
longitudinal or experiment research design to explain the causality and may use
different survey instrument to mitigate the common method problem. Finally,
since this study has been conducted on the employees who are working in private
commercial banks located in Dhaka city, results of this study may suffer from
limitation to generalize the role HRM practices and organizational culture in
employee engagement form another context.
In conclusion, although employee engagement has been considered as an
important construct among practitioners and academics setting, there is still a lack
of empirical investigation in the literature (Karatepe & Demir, 2014). The study
provides empirical evidence about the relationship HRM practices, organizational
culture and employee engagement which can help to enhance the understanding
of managers and policy makers of Bangladeshi banks about how to enhance
employee engagement with appropriate HRM practices and organizational
culture. Thus, this study may be considered as a strategic tool for the management
of banks to understand that how to increase the level of engagement among
employees.
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Journal of Knowledge Globalization, Vol.10, No 1

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