Performance at the Cost of Well-being? Testing the multi-level effects of HR practices on organisational performance via employee experiences and well-being

Purpose: While the potential for HR practices (HRP) to improve organisational performance is well-established, the mechanisms by which this occurs are complex. Individual HRP may affect organisational performance either by mutual gains (improving both organisational performance and employee well-being) or by conflicting outcomes (organisational performance is improved at the expense of employee well-being). Models which combine HRPs may mask these differences and we therefore test pathways for four individual HR practices. Method: HR practices (employee involvement, pay, performance management, and training) were hypothesised to influence organisational performance directly and indirectly via employee experiences of work (communication, autonomy) and employee well-being. The study used a large secondary dataset, the UK Workplace Employee Relations Survey 2011, to test these relationships in a multi-level model. Findings: Employee experiences of work strongly predicted well-being. In addition, we identified three different pathways from HRP to organisational performance. Pay showed indirect negative effects, involvement had direct positive effects and performance management had a mixture of both positive direct and negative indirect effects on performance. Originality: Using a disaggregated analysis of HRP and demonstrating their differing effects, this study questions the feasibility of a universal model of HRP effects. By using multi-level modelling, we develop understanding of employee perspectives and integrate these into organisational-level models, demonstrating that performance effects are partially mediated by both employee experiences of work and employee well-being. Finally, we highlight the complexity of performance effects achieved via both employee benefits and an intensification of employee experiences