RELATIONSHIP BETWEEN HUMAN RESOURCE MANAGEMENT, ORGANIZATIONAL CULTURE AND PERFORMANCE: A STRUCTURAL EQUATION MODELING

Purpose – This study investigates the relationship between human resource management (HRM), organizational culture and performance through structural equation modeling. Design – The study was based on a survey design and cross sectional. A total of 137 questionnaires were collected from Malaysian manufacturing organizations, and were used in subsequent statistical analyses. HRM practices include employee hiring, performance appraisal, training and development, performance-based compensation, career management, information sharing, and job security. Organizational culture includes participation, coordination and integration, open communication, trust, improvement, and cooperation. Organizational performance variables include rate of sales growth, operational and human resource outcomes. Findings - HRM construct accounted for about 57 percent of the variance in the organizational culture construct, while both HRM and organizational culture constructs accounted for about 68 percent of the variance in the organizational performance construct. Significance – Structural equation modeling highlighted the role of organizational culture in mediating the relationship between HRM and organizational performance.