Public Management Review

ISSN: 1471-9037 (Print) 1471-9045 (Online) Journal homepage: http://www.tandfonline.com/loi/rpxm20

Using social exchange theory to predict the effects

of hrm practice on employee outcomes

Julian Gould-Williams & Fiona Davies

To cite this article: Julian Gould-Williams & Fiona Davies (2005) Using social exchange theory to
predict the effects of hrm practice on employee outcomes, Public Management Review, 7:1, 1-24,
DOI: 10.1080/1471903042000339392

To link to this article: https://doi.org/10.1080/1471903042000339392

Published online: 18 Feb 2007.

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Abstract
USING SOCIAL
This article empirically tests the effects of
exchange relationships between managers EXCHANGE THEORY
and public sector employees working in
seven local government departments. Social TO PREDICT THE
EFFECTS OF HRM
exchange theory is used as a framework for
predicting three outcomes of Human Re-

PRACTICE ON
source Management (HRM) practice:
employee commitment, employee motivation
and desire to remain with the organization.
The statistical models were found to predict
58 percent of the variation in employee
EMPLOYEE
commitment, 53 percent variation in motiva-
tion and 41 percent of the variance in
OUTCOMES
respondents’ desire to remain with the
organization. Consistent with social exchange An analysis of public sector
theory, the results highlight the importance of
trust in management, which was found to
workers
predict positively all three outcomes. Team-
working was found to predict employee Julian Gould-Williams and
commitment and motivation, with employee
Fiona Davies
involvement, empowerment, the offer of fair
rewards and job security having significant
effects on worker motivation. The implica- Julian Gould-Williams
tions of these findings for management Cardiff Business School, Cardiff University
practice and theory are discussed. Colum Drive, Cardiff, CF10 3EU
Tel: + 44 (0) 29 20 876146
E-mail: gouldwilliams@cf.ac.uk

Key words Fiona Davies

Commitment, desire to remain, high commit- Cardiff Business School, Cardiff University
ment, HRM practices, motivation, social Colum Drive, Cardiff, CF10 3EU
exchange, trust Tel: + 44 (0) 29 20 875700
Email: daviesfm@cf.ac.uk

Vol. 7 Issue 1 2005 1 – 24

Public Management Review ISSN 1471-9037 print/ISSN 1471-9045 online
# 2005 Taylor & Francis Group Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/1471903042000339392
2 Public Management Review

INTRODUCTION

Increasingly organizations are seeking to develop committed workers in an effort to

drive down employee turnover and absenteeism, while improving individual
performance and job-related attitudes (Walton 1985; Morris et al. 1993). There is
growing awareness that employees’ positive work attitudes and discretionary behaviors
are important factors affecting organizational performance (Podsakoff and MacKenzie
1997). Gaining a better understanding of the motivational basis for such work attitudes
and behaviors is now regarded as an important component of research agendas relating
to management practice (Aryee et al. 2002). This is of particular relevance in public
organizations where approaches to management practice in the private sector form the
basis of the New Public Management regime (Loeffler 1997).
Wayne et al. (1997) assert that positive worker attitudes depend on employees’
perceptions of how committed the employing organization is to them (see also
Eisenberger et al. 1986, 1990; Romzek 1990). For instance Eisenberger et al. propose
that ‘positive discretionary activities [performed] by the organization that benefit the
employee would be taken as evidence that the organization cared about one’s well-
being’ (1990: 51). This view is consistent with social exchange theory which, in
contrast to economic exchange, is reliant on voluntary actions rather than formal
contracts (Blau 1964; Pearce and Peters 1985; Tsui et al. 1997; Aryee et al. 2002).
Specifically social exchanges are those where

the voluntary actions of individuals are motivated by the returns they are expected to bring from others
. . . [with the] exact nature [of the return] never specified in advance but . . . left to the discretion of the
one who makes it.
(Blau 1964: 91 – 2)

On this basis, where organizations give evidence of ‘goodwill’ toward employees,

this engenders an ‘obligation’ on the part of employees to reciprocate the ‘good deed’
(Gouldner 1960; Aryee et al. 2002: 268). It has been generally noted that reciprocating
behaviors go beyond contractual agreements behaviors (Organ 1988; Tsui et al. 1997).
As such, positive social exchanges can result in mutual benefits to both the employing
organization and the workforce.
Managers and supervisors have been found to be critical agents in social exchange
processes (Graen and Scandura 1987). It has been observed for instance, that
employees interpret management behaviors as indicative of organizational responses
(Wayne et al. 1997). If management actions are viewed positively by employees,
they reciprocate with attitudes and behaviors valued by the organization. This is
consistent with the findings of previous research, where Human Resource
Management (HRM) practices signal managers’ commitment to and trust in
employees (Guzzo and Noonan 1994). Although two distinct approaches to HRM
have been identified (Storey 1989), it is the ‘soft’, ‘high commitment’ (Walton
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 3

1985; Arthur 1994) or ‘high involvement’ (Lawler 1986) approaches that are
consistent with social exchange theory. For instance, Arthur (1994) and others
(Walton 1985; Iles et al. 1990) suggest that ‘high commitment’ HRM practices shape
employee behaviors and attitudes by developing ‘psychological links’ between
organizational and employee goals. Arthur argues that managers using ‘high
commitment’ practices are essentially endeavoring to ‘develop committed employees
who can be trusted to use their discretion to carry out job tasks in ways that are
consistent with organizational goals’ (Arthur 1994: 672).
To date, research on the effects of HRM practice on employee attitude is limited in
that it has primarily focused on the experience of private sector workers, with the
effects on public sector workers remaining largely unknown (Legge 1995; Wood
1999). It is the aim of this article to begin to address this gap by evaluating such effects,
with specific regards to employee commitment, motivation and their desire to remain
with the organization. The motivational processes of social exchange (Blau 1964) will
be used to explain the links between HRM practices and employees’ attitudinal
outcomes. This focus is particularly appropriate in light of growing pressure for public
organizations to adopt private sector practice and demonstrate continuous improve-
ment in service delivery.
The first part of this article describes social exchange theory and highlights the role
of management and supervisors as key organizational representatives in exchange
relationships. Following this, the importance of trust in initiating and developing
effective exchanges is noted, and the collective effects of HRM practices described.
The third section outlines the research context and methodology used to collect data,
with the final section providing the results of the empirical analysis together with the
implications for theory and practice.

SOCIAL EXCHANGE THEORY

When viewed as an exchange, the employment relationship can be characterized as

consisting of social and/or economic exchanges (Aryee et al. 2002). According to Blau
(1964) social exchanges are ‘voluntary actions’ which may be initiated by an
organization’s treatment of its employees, with the expectation that such treatment
will eventually be reciprocated. The exact nature and extent of future returns are
dependent on the discretion of the person making them and are thought to be a
function of personal obligation, gratitude and trust in the organization (Haas and
Deseran 1981). However, such is not the case with economic exchanges, which are
characterized by contractual arrangements enforceable through legal sanctions. Thus,
according to Aryee et al.: ‘Social exchange is premised on a long-term exchange of
favors that precludes accounting and is based on a diffuse obligation to reciprocate
[forming the basis of] the conceptual underpinnings of research on work attitudes and
behaviors (2002: 267 – 8).
4 Public Management Review

Eisenberger et al. describe how the process of social exchange is initiated by

organizations when ‘a general perception concerning the extent to which the
organization values [employees’] general contributions and cares for their well-being’
(1990: 51) is achieved. On this basis, where employees perceive that organizations
value and deal equitably with them, they will reciprocate these ‘good deeds with
positive work attitudes and behaviors’ (Aryee et al. 2002: 268; Haas and Deseran
1981). This view is consistent with Gouldner’s (1960) argument that social exchanges
are dependent on actors orienting themselves toward a general norm of reciprocity.
For instance, Settoon et al. propose ‘that positive, beneficial actions directed at
employees by the organization and/or its representatives contribute to the
establishment of high quality exchange relationships that create obligations for
employees to reciprocate in positive [and] beneficial ways’ (1996: 219). For example,
it has been noted that where organizations invest in individual training and
development programs, employees reciprocate through desirable work-related
behaviors (Graen and Cashman 1975; Haas and Deseran 1981; Wayne et al. 1997;
Moorman et al. 1998).
According to Rousseau and House focusing on the ‘organization’ as a party in the
exchange relationship is unhelpful as details of the ‘routines and activities employed to
achieve the organization’s task and to manage its relationships’ (1994: 25) will not be
discovered. This view concurs with Wayne et al.’s observation that

the employee does not have a relationship with one individual representing the ‘organization’ that is
comparable to the relationship with a leader. Nonetheless, employees consider the organization
to be an entity with which they have exchange relationships . . . feelings of obligations . . . are
based on a history of organizational decisions, some of which were made by an individual
employee’s immediate supervisor . . . generating feelings of obligation toward the organization as a
whole.
(1997: 85)

Whitener further asserts that organizations do not and cannot ‘perceive, hold beliefs
or develop trust in its members’ (1997: 400). As such, researchers tend to focus on
exchange relationships between supervisors and employees (Greenberg 1993; Deluga
1994; Aryee et al. 2002).

TRUST – A CRITICAL COMPONENT IN DEVELOPING SOCIAL EXCHANGE

RELATIONSHIPS?

Trust is regarded as a critical factor underpinning social exchanges in that the act of
initiating social exchange relationships requires the originator to trust that the recipient
will respond in kind (Blau 1964; Haas and Deseran 1981; Aryee et al. 2002).
According to Mayer et al. trust is:
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 5

the willingness of a party to be vulnerable to the actions of another party based on the expectations that
the [recipient] will perform a particular action important to the trustor, irrespective of the ability [of the
trustor] to monitor or control [the recipient].
(1995: 712)

In other words, trust underpins dyadic relationships between two or more

individuals where a certain degree of vulnerability or discretionary effort is
encountered (Whitener 1997).
Haas and Deseran view trust as ‘a problem that arises in social exchange because
of the unspecified nature of the reciprocal obligations . . . and . . . the often long
time that must elapse between the receiving of a favor and the repaying of it’ (1981:
3). Relationships based on economic exchanges do not encounter such ‘problems’ as
failure by either party can be challenged through legal representation. As formal
contracts would undermine social exchange relationships, partners to the exchange
must ‘persuade’ each other of their trustworthiness, which may of necessity take
some considerable time (Haas and Deseran 1981: 3). Nevertheless, building trust is
an important consideration as a lack of trust has been found to lead to dysfunctional
outcomes, such as cynicism, low commitment, low motivation and a lack of
confidence between parties (Kanter and Mirvis 1989; Carnevale and Wechsler 1992).
Diffie-Couch further reported that mistrust reduced levels of commitment and led to
‘an unquantifiable cost in untapped potential’ (1984: 31). Consequently, Nyhan
(2000) proposed that managers should strive to develop trust where employees are
required to share in co-operative working practices or deal directly with service
users. Such views are consistent with those advocating that trust is the ‘lubrication
that makes it possible for organizations to work’ (Bennis and Nanus 1985) and the
source of increased efficiency and effectiveness (Zand 1972; Culbert and McDonough
1986).

HRM PRACTICES AND SOCIAL EXCHANGE

Traditionally HRM practices have been classified as either ‘hard’ or ‘soft’ (Storey
1989). The ‘hard’ approach focuses on increasing efficiency and reducing labor costs
through the application of rules and procedures that place emphasis on controlling
workers. According to Legge:

the human resource, the object of formal manpower planning, can be just that, largely a factor of
production, along with land and capital and an expense of doing business, rather than the only resource
capable of turning inanimate factors of production into wealth. . . . In essence, the ‘hard’ model
emphasises the quantitative, calculative, and business strategic aspects of managing the headcount
resource in as rational a way as for any other economic factor.
(1995: 66)
6 Public Management Review

In contrast, those adopting a ‘soft’ or ‘high commitment’ approach to HRM

endeavor to enhance worker performance by empowering, developing and trusting
workers to achieve organizational goals on the basis of mutuality of interests.
Essentially, the ‘soft’ approach focuses on HRM practices where employees are
‘proactive rather than passive inputs into productive processes; [are] capable of
development, worthy of trust and collaboration, to be achieved through participation
and informed choice. [Here the emphasis is on] generating commitment via
communication, motivation and leadership’ (Legge 1995: 67). Thus, ‘high
commitment’ HRM practices are those that signal management’s trust in employees.
As such they include (1) greater worker empowerment and involvement in decision-
making processes; (2) extensive communication programs where employees are given
information relating to the functioning and performance of their service; (3) training
programs that offer employees opportunities to gain task-related skills and personal
development; (4) selective hiring based on techniques capable of identifying suitable
candidates; (5) team-working activities where ideas are pooled and creative solutions
encouraged; (6) provision of adequate reward packages commensurate with worker
effort; and (7) reduction of status between management and staff, blue collar and white
collar workers, with all workers valued regardless of their role within the organization
(Pfeffer 1998; Marchington and Grugulis 2000).
Guzzo and Noonan (1994) suggest that employees often interpret HRM practices
in unintended and idiosyncratic ways. For instance, the same HRM practice can
have different consequences depending on the employee’s predisposition. As such,
it is important to collect employees’ views of HRM practices rather than relying on
HRM policy directives. However, it does appear that team-working has a collective
role in such interpretations, as employees discuss their views and concerns with
others, or even use colleagues as ‘sounding boards for individual opinion’ (Guzzo
and Noonan 1994: 456). If this is so, worker groups become responsible for
shaping employee attitude, and thus effect exchanges between organizations and
workers (see also Rentsch 1990). Recent studies have found that high levels of
employee involvement and job security have contributed to increased employee
commitment (Patterson et al. 1997; Guest et al. 2000; Whitener 2001; Gallie et al.
2001). There is also now emerging evidence that trust affects the relationship
between HRM practice and employee commitment (Guest and Conway 1997;
Aryee et al. 2002; Gould-Williams 2003), with a lack of trust identified as the
‘primary culprit in the failures of management activities . . . and human resource
activities’ (Whitener 1997: 389). These findings are consistent with social exchange
theories, with employees using the ‘currency’ of work-related behaviors to
reciprocate management behavior as enacted through specific ‘soft’ HRM practices
(Aryee et al. 2002: 280).
On the basis of the above review, it is our intention to test the effects of
individual HRM practices on three individual employee outcomes: employee
commitment, motivation and employees’ desire to remain with the organization.
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 7

Social exchange theory will be used as a framework for predicting the effects of
management practice on worker attitudes. We anticipate that where employees trust
managers and perceive that managerial actions are based on individual performance,
then employees will respond with positive work attitudes and want to remain with
the organization.

METHODS AND RESEARCH CONTEXT

The research setting for this empirical analysis is local government in Wales. This was
considered to be a particularly appropriate context to analyze the relationship between
HRM practices and employee attitude as recent best value legislation requires local
authorities in England and Wales to demonstrate ‘continuous improvement’ in
performance (DETR 1999; NAfW 2000). The best value regime places a statutory
duty on local authorities to review the processes used in delivering services in an
attempt to enhance the effectiveness and efficiency of service provision. Staff
consultation and involvement are considered important elements of the review
process. Government expectation is that staff involvement will lead to a fundamental
shift in cultural values where quality and continuous improvement are the dominant
attributes. More recently, best value in Wales has been superseded by the Wales
Programme for Improvement (NAfW 2002), which differs in some ways to the best value
regime, but staff involvement and continuous improvement remain central components
of the framework. However, based on our literature review, staff involvement is only
likely to be effective if positive social exchanges have occurred between employing
organizations and staff. Thus, an empirical assessment is needed to establish whether
this is so. In other words, data are needed to analyze the extent to which HRM
practices have led to positive employee attitudes.

Data collection

A postal survey was used to collect empirical data from a cross-section of public sector
workers. A total of 320 questionnaires were distributed to frontline workers,
supervisors and middle managers working in seven service departments across two
local government organizations in April 2001. The departments covered community
services, school meal catering, engineering, central support services, social services,
highways and environmental services. Two weeks following the distribution of
questionnaires, reminder letters were sent to the sample. Respondents returned their
completed questionnaires directly to the researcher by ‘Freepost’. A total of 206
questionnaires were returned in this way, providing a good response rate of 64.4
percent. Following the statistical analysis of the quantitative data, a small number of
individual and group interviews were conducted with a range of respondents in an
8 Public Management Review

attempt to achieve a better understanding of the results. Individual interviews were

conducted with the person responsible for human resources. Two group interviews
were each held with line managers and frontline staff. The group interviews consisted
of a mixture of workers from each of the service departments. The duration of each
interview was between one hour and one-and-a-half hours.

Sample

The sample of 206 employees had the following characteristics: 39.3 percent male;
75.7 percent union members; 16.1 percent were between the ages of 18 and 30 years,
41.4 percent between 31 and 45 years, 40.8 percent between 46 and 60 years and just
1.7 percent were over 60 years. The average length of service was 7.57 years (standard
deviation 6.98). In total 17.8 percent had no formal qualifications whereas 22.5
percent had a university degree; 52.6 percent were frontline workers, 26.3 percent
supervisors and 21.1 percent middle managers.
Respondents worked in the following departments: Engineering (17.0%); Highway
Property and Works (4.0%); Social Services (17.0%); Community Services (15.5%);
Environment and Economic Development (11.5%); School Meals Catering (11.5%);
Support Services (23.5%).

Measures

HRM practices
Although there is a growing body of research evidence examining the links between
HRM and performance, there is little consensus as to which practices should be
included in the analysis, nor how these should be measured (Legge 2001). This
analysis uses those HRM practices identified by advocates of the ‘high commitment’
approach (Wood and Albanese 1995; Guest 1997; Guest and Conway 1997; Pfeffer
1998; Marchington and Grugulis 2000). Recent attempts to identify more robust
measures of HRM practices proved to be problematic (Truss et al. 2001 ).
Respondents were asked to indicate the extent to which they strongly agreed or
disagreed with eight statements relating to HRM practices using a seven-point Likert
scale. As noted by Guzzo and Noonan (1994) and Meyer and Allen (1997)
employees’ perceptions of ‘reality’ are likely to influence their performance more so
than formal policy documentation. Therefore individual perceptions of HRM
practices were collected. Furthermore, it was anticipated that HRM practice would
vary from one department to another depending on the direct supervisor or manager
responsible for each section. This is consistent with HRM theory where it is
proposed that managers should recognize the importance of employees and behave in
ways consistent with such beliefs (Guest 1987).
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 9

Trust
Measures of employee trust in management were based on four items adopted from the
Cook and Wall (1980) trust scale. These measures focused on fulfilled promises and
management concern for employees’ best interests.

Organizational commitment
Mowday et al. (1979) distinguished between commitment-related behaviors and
commitment as an attitude. Kanter defined commitment as: ‘the attachment of an
individual’s fund of affectivity and emotion to the group’ (1968: 500). Similarly,
Buchanan states that commitment is: ‘a partisan, affective attachment to the goals and
values of an organization, to one’s role in relation to its goals and values, and to the
organization for its own sake, apart from its purely instrumental worth’ (1974: 533).
Affective commitment is viewed as an employee’s positive attachment to the employing
organization and a willingness to contribute toward the attainment of organizational
goals (Mowday et al. 1979). It is proposed that such active relationships are evident in an
individual’s expressions and subsequent behavior. According to Peccei and Guest (1993)
the British Organizational Commitment Scale (BOCS) (Cook and Wall 1980) should be
considered the main measure of affective organizational commitment in the UK. The
mean of the perception scores for each of the items comprising the BOCS was calculated
to give an overall organizational commitment score.

Empowerment
The dimension of empowerment that was used in this study focused on the extent to
which workers were given increased scope for autonomous decision making. In other
words, where individual workers are given responsibilities and powers that were
previously held by management (Rosenthal et al. 1997). Three items were used in the
survey questionnaire to evaluate use of personal judgment, decision making and job
content.

Work constraints
There is evidence to suggest that workers will feel less motivated where situational
constraints occur. These include, among other things, an inadequate number of staff to
provide services (Wood and Peccei 1995; Hebson et al. 2003). Therefore a variable
controlling for the potential effect of under-staffed departments is included in this analysis.

Worker motivation
Two items were used as measures of worker motivation. These were: I work hard
because I want to; and I am very motivated in my present job. Essentially these items are
10 Public Management Review

intended to capture the discretion a worker has to exert him/herself, the behavior by
which we infer motivation. Also, motivation tends to be viewed by workers as
willingness to perform an act that is within their grasp (Muchinsky 2003).

Intention to remain
There is growing evidence that committed and motivated workers are less likely to
want to leave the organization. Therefore, a measure was included to evaluate the
extent to which the factors leading to commitment and motivation also impact
respondents’ intention to remain with the organization. To this extent, a single item
measure, ‘I do not intend to leave this department’ was included in the questionnaire.

RESULTS

Table 1 provides the mean scores, standard deviations and t-test results of the
differences between the mean and mid-point. The standard deviations for each of the
scores indicate that respondents’ views varied considerably across the sample.1 Overall,
the difference between the mean scores and the mid-point indicates that respondents
perceived they were not informed about business issues (mean, 3.27, SD 1.81), nor
did management involve them in decision-making activities (mean, 3.46, SD 1.97).
These findings are consistent with the interview data where a frontline worker
reported, ‘Not a lot permeates down although we do have departmental meetings. We
are not told much as each manager distils information so that by the time it gets down
to us, we’re hardly told anything.’ Another worker stated: ‘of course, when we’re not
told all that we need to know, it affects our performance . . . it really cracks me up!’
Respondents perceived that there was not much of a status differential between staff
and management (mean, 4.30, SD 1.86). Team-working activities were encouraged
(mean, 4.70, SD 1.80), and respondents felt empowered (mean, 4.56, SD 1.03) in
that they were able to use their personal judgment (mean, 5.49, SD 1.44), had
freedom in deciding what to do on the job (mean, 4.32, SD 1.50) and were able to
make their own decisions in carrying out their jobs (mean, 4.85, SD 1.53).
The mean scores for the items measuring trust between management and workers
were low, with most of the indicators significantly below the mid-point. This was most
notable with regards to management being prepared to gain advantage by deceiving
workers (mean, 3.49, SD 1.93 – reverse score) and breaking promises about job
demands (mean, 3.67, SD 1.75). Nevertheless, supervisors did provide workers with
support in performing tasks (mean, 4.45, SD 1.84).
Overall respondents felt committed to the department (mean, 4.56, SD 1.03).
Especially noteworthy here were the two items assessing ‘effort on behalf of the
department’ (mean 5.74, SD 1.08), and ‘contribution to the good of the department’
(mean, 6.08, SD 1.10). However, respondents indicated that the offer of more money
Table 1: Means and standard deviations

Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes
Items N Mean SD t-test +

HRM practices
1 I am provided with sufficient opportunities for training or development 204 4.14 2.05 .99
2 This department keeps me informed about business issues and about how well it is doing 199 3.27 1.81 75.72***
3 There is a clear status difference between management and staff in this department 200 4.30 1.86 2.29*
4 Team working is strongly encouraged in our department 201 4.70 1.80 5.54***
5 A rigorous selection process is used to select new recruits 197 3.91 1.69 7.76
6 Management involve people when they make decisions that affects them 197 3.46 1.97 73.82***
7 I feel my job is secure 203 4.45 1.65 7.71
8 I feel fairly rewarded for the amount of effort I put into my job 205 4.10 1.68 .87

Support
9 My immediate boss/supervisor supports me in getting my job done 202 4.99 1.84 7.64***

Management trust (Cronbach alpha .72) 204 3.92 1.49 7.76

10 I trust management to look after my best interests 185 3.61 2.24 72.0*
11 Promises are kept about my career development 201 3.89 1.82 7.85
12 I trust managers to keep promises made to me 202 3.89 1.82 72.48**
13 Promises are kept about job demands and amount of work required 202 3.67 1.75 72.69**
14 Our management would be quite prepared to gain advantage by deceiving the workers (r) 196 3.49 1.93 73.75***

Empowerment (Cronbach alpha .85) 200 4.90 1.32 9.60***

15 I can use my personal judgment in carrying out my job 199 5.49 1.44 14.60***
16 I have the freedom to decide what I do on my job 198 4.32 1.50 3.03**
17 I can make my own decisions in carrying out my job 194 4.85 1.53. 7.77***

11
(continued)
 12 Public Management Review
Table 1: (continued)

Items N Mean SD t-test +

Commitment (Cronbach alpha .74) 205 4.56 1.03 7.74***

18 I am proud to be able to tell people who it is I work for. 205 4.09 1.86 .72
19 Even if the department was not doing too well, I would be reluctant to change to another employer 203 3.87 1.80 71.01
20 In my work I like to feel I am making some effort, not just for myself but for the department as well 200 5.74 1.08 22.78***
21 The offer of more money with another employer would make me think of changing my job (r) 204 2.81 1.86 79.18***
22 I would not recommend a close friend to join our staff (r) 202 4.41 1.91 3.04***
23 To know that my own work had made a contribution to the good of the department would please me 200 6.08 1.10 26.73***

Work Pressure
24 I am under a lot of pressure in my job 202 5.31 1.54 12.08***

Work constraint
25 This department is under-staffed 201 5.40 1.76 11.26***

Motivation (Cronbach alpha .66)

26 I work hard because I want to 203 5.58 1.22 18.51***
27 I am very motivated in my present job 203 4.98 1.44 9.63***

Intention to remain
28 I do not intend to leave this department 203 4.03 2.00 .18

Key: Difference between mean and mid point (4); * statistically significant at .05 level; ** statistically significant at .01 level; ***statistically significant at 5 .001 level.
+
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 13

would encourage them to think about changing their jobs (mean, 2.81, SD 1.86 –
reverse score).
The mean scores indicate that respondents experienced pressure at work (mean,
5.31, SD 1.54), had heavy workloads (mean, 4.76, SD 1.69) and departments were
under-staffed (mean, 5.40, SD 1.76). Nevertheless, respondents felt motivated to
work (mean, 4.98, SD 1.44) and worked hard because they wanted to (mean, 5.58,
SD 1.22). There was little evidence suggesting that they wanted to leave their jobs
(mean, 4.03, SD 2.00). However, it would appear that many found the increasing
workloads stressful: ‘I think back to just a few years ago, staff have gone, the work
hasn’t. Everyone now has to work hard.’ There were instances where workers did not
take days off even though they had accumulated time off in lieu, as it was ‘difficult
enough to take annual holidays’. Other workers felt ‘guilty’ if they took leave, or felt
‘hassled’ knowing their workload would be even heavier on their return. Comradeship
was identified as a factor influencing discretionary effort, as workers reported, ‘I
simply think about my colleagues’. Furthermore respondents highlighted that service
delivery processes were now more transparent with poor service reported in the
media. Where workers were seen to be under-performing, they felt threatened:
‘There’s so few staff working in local government, there’s now nowhere to hide. Also,
people are more willing to complain about poor service. So we now have no choice but
to work hard.’ As such, it appears that local government workers view working harder
with fewer resources as the norm simply due to the increasing demands placed on
them.
In summary, the mean scores suggest that managers have not initiated extensive
social exchanges with workers. However, the impact of the mixed pattern of low trust,
high empowerment, low communication and high team-working, needs to be explored
in more detail. The following section will do this by first considering the bivariate
relationships between the dependent and independent variables. Thereafter the results
of multivariate analyses between the three dependent variables and the independent
variables are presented.

Correlation analysis

Table 2 shows the bi-variate relationships between the independent and dependent
variables used in this study. The results show that committed workers were more likely
to want to remain with the organization (r = .63, p .001), along with those who trusted
managers (r = .45, p .001) and engaged in team-working activities (r = .37, p .001).
The most significant correlates of worker motivation were trust in managers (r = .46, p
.001), team-working (r = .45, p .001), employee involvement (r = .42, p .001) and
perceptions of fair rewards (r = .40, p .001). A similar pattern of findings is reported
for commitment, with the size of the correlates being greater than those reported for
motivation, with the exception of employee involvement (r = .41, p .001).
 14 Public Management Review
Table 2: Correlation matrix of variables

n Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

1 Remain 202 4.01 2.01

2 Motivation 200 5.28 1.19 .34***
3 Commitment 202 4.52 1.02 .63*** .59***
4 Support 199 5.05 1.80 .27*** .26*** .44***
5 Trust 201 3.87 1.47 .45*** .46*** .64*** .49***
6 Fair rewards 202 4.05 1.68 .28*** .40*** .49*** .28*** .52***
7 Training and 201 4.03 2.03 .31*** .31*** .43*** .43*** .41*** .38***
development
8 Team working 198 4.65 1.81 .37*** .45*** .50*** .39*** .41*** .24*** .46***
9 Selection 195 3.88 1.70 .13 .26*** .33*** .27*** .27*** .25*** .28*** .45***
10 Empowerment 198 4.92 1.28 .15* .32*** .19** .21** .14* .21** .19** .09 .17*
11 Informed 196 3.32 1.79 .23*** .33*** .31*** .36*** .41*** .27*** .45*** .39*** .34*** .25***
12 Involved 195 3.37 1.93 .25*** .42*** .41*** .36*** .46*** .24*** .29*** .37*** .32*** .18** .40***
13 Security 200 3.99 1.79 .24*** .14* .33*** .17* .35*** .30*** .24*** .19** .17* .18** .23*** .13
14 Status 197 3.76 1.82 .08 .18** .18** 7.01 .22*** .03 7.10 7.04 7.01 .08 .10 .26*** .10
15 Under pressure 199 5.24 .157 7.09 .10 7.13 7.13 7.26*** 7.22*** .04 .07 .10 .18** 7.03 7.07 7.17** 7.12
16 Under staffed 198 5.50 1.76 7.09 7.09 7.08 .08 7.21** 7.23*** 7.05 .04 .10 7.06 7.00 7.01 7.07 7.18* .31***
17 Job position 188 1.88 .97 7.03 .12 .10 7.10 7.01 .11 .05 .03 .19** .11 .06 .10 7.02 .13 .30*** .18**
18 Professional 197 .55 .50 7.05 .03 7.09 7.24*** 7.28*** 7.19** .01 7.01 .10 7.01 7.08 7.09 7.07 .04 .20** .11 .06
status
19 Tenure 181 6.97 6.45 .11 7.01 .03 7.01 7.01 .13 7.00 7.07 7.09 .09 7.02 .02 .03 .04 .16* .01 .17* .01
20 Gender 197 1.56 .50 .05 .15* .03 .02 .05 7.00 .17* .24*** 7.00 7.17* .02 .01 .05 7.13 7.01 7.01 7.38*** .26*** 7.14*
21 Age 189 2.26 .71 .21** .13 .22** 7.01 7.00 .16* .04 .16* .20** .08 .10 .18* .05 .13 .15* .14 .29*** .06 .26*** 7.01

* statistically significant at .05 level; ** statistically significant at .01 level; ***statistically significant at = .001 level.
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 15

In the main these relationships are consistent with social exchange theory, with the
direction of the associations being in the anticipated directions. However, prior to
making any substantive conclusions based on these results, we will consider the relative
impact of each of the independent variables on the three individual worker outcomes.

OLS regression analyses

Table 3 provides the results of ordinary least squares regression analyses whereby the
net effect of each independent variable is considered while controlling for the effects of
the other explanatory variables. Overall, the independent variables explained a
significant degree of variance in the dependent variables, with the explanatory variables

Table 3: Regression analyses

Independent variables Dependent variables

COMMITMENT MOTIVATION INTENTION TO REMAIN

Standard b Tolerance Standard b Tolerance Standard b Tolerance

Training and development .11 .53 7.12 .53 .08 .53

Informed 7.12 .55 .06 .55 7.06 .54
Involved .09 .62 .20** .62 .01 .60
Rewards .09 .54 .19* .54 7.20* .51
Status difference (reverse coded) .10 .71 .13 .71 7.05 .71
Team working .24** .53 .27*** .53 .17 .53
Selection processes 7.00 .60 7.06 .60 7.09 .60
Empowered .08 .77 .24*** .77 .14 .77
Security .06 .75 7.14* .75 .04 .76
Work pressure 7.02 .59 .10 .59 .01 .59
Under staffed 7.04 .72 .02 .72 7.04 .72
Trust .32*** .39 .19* .39 .51*** .38
Supervisory support .10 .55 7.03 .55 .00 .55
Job position 7.01 .66 .07 .66 7.17* .66
Tenure 7.07 .81 7.07 .81 .16* .81
Professional status .04 .73 .11 .73 .07 .73
Gender 7.04 .68 .22** .68 7.09 .68
Age .16 .80 .07 .80 .28*** .78

R2 .58 .53 .41

F value 10.59*** 8.37*** 5.13***
n 153 196 153

* statistically significant at .05 level; ** statistically significant at .01 level; ***statistically significant at = .001 level.
16 Public Management Review

explaining 58 percent of variance in commitment, 53 percent of variance in worker

motivation and 41 percent variation in respondents’ desire to remain with the
organization. These results show that the predictor variables have captured a significant
proportion of change in the dependent variables.
When undertaking regression analyses, it is important to check the extent to which
the independent variables are correlated with each other. If the inter-correlations
between the independent variables are found to be high, then both the nature and
power of the individual variables will be altered. The tolerance values as noted in Table
3 show that the independent variables are not collinear and can therefore be considered
conceptually and empirically distinct (Allison 1999).

Predictors of commitment
The explanatory variables explained 58 percent of variance in commitment (f value,
10.59, p .001). The most significant predictors of commitment were trust in
management (b .32, p .001) and team-working (b .24, p .001). Thus, where
employees trusted their managers they were more likely to be committed. Even
though this finding is consistent with social exchange theory, responses from the
interview program suggest that managers may have reason for concern. For instance,
several respondents stated that they felt as though managers were ‘watching us, waiting
for us to make a mistake and then pull us over the coals for it. There’s certainly a big
brother feel around here.’ This observation is consistent with the low ratings for trust
in management as outlined in Table 1. On this basis, given that trust is a significant
positive predictor of commitment, managers need to be aware of the implications of
their actions. For instance, if workers are not convinced that management trust them,
they, in turn, will be less likely to display committed behaviors. This will then make it
even more difficult for managers to achieve increased efficiency and effectiveness in
service delivery (Zand 1972; Culbert and McDonough 1986).
Team-working was also found to be a powerful predictor of commitment. In what
way is this significant effect consistent with social exchange theory? There are several
possible explanations for this finding. First, individuals working in teams are likely to
be empowered to undertake certain, defined actions (as indicated by the high
empowerment scores). As such, the organization is initiating exchange relationships
with team members, in anticipation that they will reciprocate in kind. Thus, workers
may feel more committed as a consequence of this exchange. Second, team-working
may involve managers acting as team facilitators. If so, it would be likely that managers
would be more willing to release ‘valued’ information to workers in order for the team
to function effectively. As such, these interactions would be unique to each team
group, being attributed to the actions of the group leader rather than the department.
And third, greater comradeship may arise between managers and team members. The
exchanges between individuals within the team are likely to be far greater when
compared with the frequency of exchanges that take place within the department.
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 17

Therefore, individuals may become more committed simply because of positive

exchanges within the team. This effect was noted earlier in the interview statements,
where respondents reported doing extra work simply to help their work colleagues.
Many of the anticipated explanatory variables had no statistically significant effect on
commitment. In this instance it may simply be due to the global application of the
practices, such as training and development programs and recruitment and selection.
For instance, it would appear that respondents perceived such practices as being
available to all workers, thus the value of the exchange is perceived to be lower than
had the employee been offered an individualized training program. Nevertheless,
further research is needed to explore whether these variables are indeed important
factors in predicting commitment on the basis of social exchange and reciprocity.

Predictors of motivation
The independent variables explained 53 percent of change in motivation (f value, 8.37,
p .001). Six of the independent variables were found to be significant predictors of
employee motivation. These were team-working (b .27, p .001), empowerment (b
.24, p .001), gender (b .22, p .001), involvement (b .20, p .01), fair rewards (b .19, p
.05) trust in managers (b .19, p .05) and job security (b – .14, p .05). In general these
results are consistent with social exchange theory, with the exception that those
workers feeling less secure in their jobs were more likely to be motivated. Prima facie this
is counter-intuitive, as we have already noted that exchange relationships develop over
time and are reinforced by positive interactions. Thus we would expect workers to be
less motivated if organizations fail to provide them with secure employment. However,
employees may feel that there is more chance of keeping their jobs if they work hard.
Either the department will continue to provide the service, or individuals within the
departments will be selected on the basis of their personal effort at work. So, it appears
that a certain degree of insecurity leads to more motivated workers (as noted in Table
1, respondents tended to feel that their jobs were relatively secure).
A further three of the eight HR practices identified in this study were found to be
positive predictors of worker motivation. Thus, team-working activities, involving staff
in decision-making processes and providing fair reward packages all had significant
effects on motivation. The analysis suggests that these practices should be underpinned
by empowering workers and trust between management. In fact, giving workers the
opportunities to use their own judgment and providing them with a degree of freedom
to decide what they want to do on the job, will have a greater effect on their
motivational levels than the receipt of, for example, fair rewards.

Predictors of employees’ intention to remain with the organization

The final regression equation considered the extent to which the independent
variables successfully predicted change in respondents’ intention to remain with the
18 Public Management Review

organization. Overall the independent variables predicted 41 percent of change in

respondents’ desire to remain (f value, 5.13, p .001). Five independent variables
were found to have the most significant effects. These were trust in management (b
.51, p .001), respondents’ age (b .28, p .001), rewards (b – .20, p .05), job
position (b – .17, p .05) and job tenure (b .16, p .05). On this basis we would
anticipate that if workers trusted management, they would be more likely to remain
with the organization. Also, respondents’ intention to remain increased with
respondents’ age and organizational tenure. Furthermore, those working in more
senior positions within the organization were less likely to want to remain. This most
probably reflects the greater job opportunities available to those with more
experience.
The significant, negative effect of respondents’ perceptions of fair rewards and their
intention to remain was not as anticipated according to social exchange theory. In other
words, respondents were more likely to want to leave when they felt their reward
package was fair. However, as seniority is positively associated with perceptions of fair
rewards (see Table 2), it is possible that the finding reported in this analysis simply
confirms that senior persons are more likely to want to leave than their more junior
counterparts.

CONCLUSIONS

This study sought to evaluate the effects of HRM practices on employee attitudes and
behaviors. Social exchange theory (Blau 1964) was used to predict the outcomes of
different management practices on public sector workers. It was proposed that where
workers were valued and their individual contributions rewarded in ways that were
perceived as fair, they would, as a consequence behave in a manner commensurate
with such exchanges (Wayne et al. 1997). Furthermore, individual trust in
management was identified as an important component of exchange with mistrust
leading to low levels of commitment and motivation (Carnevale and Wechsler 1992).
In the main our results were consistent with social exchange theory supporting the
proposition that positive exchanges result in reciprocal individual responses. For
example, trust in management consistently predicted change in employee commit-
ment, motivation and desire to remain with the organization. The intimate exchanges
occurring within teams resulted in more powerful effects being reported for team-
working and respondents’ levels of commitment and motivation. Involving and
empowering workers further strengthened their motivation, as did offering workers
fair rewards. These outcomes are consistent with recent government policy, which
seeks to promote staff involvement in decision-making processes through best value
reviews (DETR 1999; NafW 2000).
However, our empirical analysis uncovered tensions and contradictions between
management practices forming exchanges. For instance, the survey found that the
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 19

overall uptake of ‘high commitment’ HRM practices was low (with the exception of
team-working), as too was trust between managers and workers. Workers tended
not to be involved in decision-making activities, nor were they informed of key
business-related issues. Nevertheless, management did empower workers to use their
discretion in making job-related decisions and supervisors provided them with
support when necessary. This appears to suggest that management have so far not
succeeded in consistently applying an integrated ‘high commitment’ approach.
Possibly this may reflect the time lag between the introduction of some HRM
practices and not others. Furthermore, two questions relating to staff involvement
remain. First, do staff have a preference as to how they should be involved? For
instance, do they prefer to be involved in focus group meetings, staff surveys or
informal face-to-face discussions? Alternatively staff may be content to receive
information from managers via e-mail or internal memos. Whatever approach is
used, it is important that managers attempt to identify workers’ preferences if they
are to affect motivational levels.
Second, the current status of best value within the research organizations should be
regarded as preliminary. The program was ‘piloted’ in Wales between 1998 and 2000
with the survey data collected in early 2001. Thus, the reported incidents of
management reluctance to communicate effectively and openly with staff may either
reflect the re-adjustments managers were making in line with best value policy
directives, or even the varying extent to which services had embraced best value
reviews. Alternatively, this study may have captured critical implementation issues,
with the possibility that management resistance will be a perennial problem in that
managers are reluctant to relinquish ‘cherished’ managerial responsibilities or put
themselves in a vulnerable position, a key pre-requisite of developing trust between
parties (Mayer et al. 1995). If so, policy-makers should give careful thought to what
training programs are needed in an attempt to re-address management reluctance to
engage and inform workers.
Given the accumulating evidence supporting the positive effects of investing in
social exchange relationships, and central government’s drive to achieve continuous
improvement in service delivery, it may now be timely for public sector managers
to review their HR policies and individual management practice. They should
ensure that consistent signals are conveyed to employees in terms of HRM
practices, management trust and resource allocation. For instance, management may
begin by demonstrating trust in workers through enhanced communication systems,
whereby information is not ‘distilled’ to the extent of being ‘meaningless’ but used
to inform and support frontline staff. Given the drive toward increased employee
consultation and the use of staff surveys through best value reviews and other
quality initiatives, the information gained relating to staff views of management
practice and reward packages should be acted upon and conveyed to workers.
These actions are likely to have further implications for management training and
development programs to ensure that middle management and supervisors have the
20 Public Management Review

skills needed to communicate effectively with workers as well as deal with staffing
issues.
The two factors that were anticipated to reduce workers’ commitment and
motivation were work-related pressure and under-staffed departments (Wood and
Peccei 1995). In all instances, the effects of these were insignificant. In other
words, these constraints had no apparent impact on workers’ commitment,
motivation and intention to remain. Nevertheless, the interview reports noted the
strain felt by many respondents, who were experiencing the consequences of
reduced workforce numbers and additional workloads. It is possibly only a question
of time before the effects of these constraints may affect employee commitment
and motivation, an outcome consistent with the findings reported by Hebson et al.
(2003).
These results should be interpreted with the following limitations in mind. First, the
data presented are based on self-completed questionnaires and may suffer from
common method variance in that respondents may have a ‘jaundiced’ view of
management practice and quality constraints affecting their own perceptions of work-
related attitudes (Podsakoff and Organ 1986). Thus the conclusions would be more
robust had peer or supervisory evaluations of individual attitudes and behaviors been
used. However, previous attempts to use management perceptions of employee
attitude were found to be problematic and biased (Organ and Ryan 1995). Therefore, a
way forward would be for future studies to consider objective measures of
performance based on quantifiable outputs rather than evaluations based on individual
perceptions. In this way audit checks could then be made in a limited number of cases
to validate the data provided.
Second, the measures of HRM practices were based on individual perceptions of
practice rather than policy documentation. It was acknowledged at the outset that due
to the idiosyncratic manner in which employees interpret HRM practices, their view
should be considered rather than rely on policy documentation (Guzzo and Noonan
1994). Also, formal directives do not capture management practice, which ultimately
affects employee views (Meyer and Allen 1997; Gallie et al. 2001). As such, most
studies differentiate between the ‘rhetoric’ of policy and the ‘reality’ of practice (Truss
2001).
Third, the generalization of these results may be limited in that they are based on
data collected from a regional sample of authorities with seven participating
departments. However, the evidence provides important initial insights into the
effects of social exchange relationships between managers and workers. Fourth,
perceptions of HRM practice and employee outcomes were collected simultaneously,
whereas to establish causality, a sufficient time lapse should occur between practice and
subsequent outcomes. Nevertheless, the results suggest that workers’ response to
management practice is consistent with social exchange theory. However, the issue
regarding the sustainability of exchanges needs to be explored in conjunction with
spiraling pressures for employees to achieve higher standards of performance in a more
 Gould-Williams & Davies: Predicting the effects of HRM practice on employee outcomes 21

transparent setting. Will this lead to the attainment of outstanding levels of public
services or employee burn-out?

NOTE
1 An ANOVA revealed significant differences between departments. However, due to the limitations of our
sample size, the results will be considered at the aggregate level. Future studies may wish to disaggregate
responses to generalize at the departmental level.

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