Predicting employee engagement, knowledge sharing & OCB.

Gupta, Bindu ; Singh, Ajay

Introduction

In a knowledge economy, organizational development initiatives require a cultural shift by persuading desirable values, collaborative work behavior, reinforcing employee engagement and so forth. Studies suggest that these efforts are supported by and are at the heart of the human resource (HR) function (Hart & Schlesinger, 1991). Scholars share the common belief that HR practices are connected with organizational performance by impelling employee attitudes and behaviors (Huselid, 1995; Wright et al., 2005) and have direct benefits to the achievement of organizational outcomes (Jiang et al., 2012). India is one of the major attractions for global organizations. The TeamLease Indian Labor Report of 2009 suggested that by 2025, 300 million people will enter the labor force, and 25 percent of the world's skilled workers will be Indians. Hence, it becomes desirable for global and Indian organizations to understand how the HR practices influence employees' behaviors.

HR practices utilize human capital to accomplish the strategic objectives of the organizations (Stone, 2009). Out of the two approaches of HR, most of the researchers believe in the "best practice" approach (Gould-Williams & Mohamed, 2010; Paauwe & Boselie, 2005). Regarding the list of best HR practices, researchers suggest a variety of HR practices such as recruitment and selection; training and development; performance appraisals and performance-contingent rewards (Snape & Redman, 2010; Zacharatos et al., 2005). For the present study, we selected two HR practices, namely performance appraisal (PA) and reward and recognition (R&R) and examined the effect of fairness of these practices on employee engagement, knowledge sharing and organizational citizenship behavior (OCB). These behaviors are highly relevant in the current context where organizations emphasize flatter and team-based structures and collaborative behavior of employees. These also positively influence organizational performance and long run sustainable competitive advantage (Andrew & Sofian, 2012; Harter et al., 2006; Lin, 2007a; Organ, 1997).

Performance appraisal is a structured formal process between a subordinate and his/her superior (Latham & Wexley, 1994). Its purpose is to assess employee's performance and give feedback for improvement and development. Murphy and Cleveland (1991) suggested that the context of performance appraisal influence how the employees perceive the organizational practices. When employees view that performance appraisal is impartial, they have a positive perception of the organization which in turn affect their organizational commitment (Konovsky & Cropanzano, 1991).

Reward and recognition refers to financial and non-financial rewards given to employees for their contribution to the organization and influence employee's perception of being valued by the organization. The perception of being valued by the organization leads to lower turnover, improved task behavior and increased OCB (Rhoades et al., 2001). Among the many essential elements of organizational reward suggested by Bartol and Locke (2000), perceived fairness of rewards is the one that motivates employees to perform the desired behaviors. The present study addresses three questions: (1) How fairness of PA and R&R practices influence employees' involvement in knowledge sharing, OCB, and employee engagement? (2) How trust culture influences employees behavior? (3) Whether trust culture moderates the effect of PA and R&R on knowledge sharing, OCB and employee engagement.

This study has used two frameworks-organizational justice and social exchange- to explain employee behavior at the workplace. To elucidate the effect of fair PA and R&R practices on OCB, knowledge sharing and employee engagement, we used the organizational justice framework. The term, 'organizational justice', introduced by Greenberg (1987) refers to people's perceptions of fairness in organizations (Colquitt et al., 2005) and includes three forms of fairness namely, distributive justice, procedural justice, and interactional justice. In aligning with the organizational justice theory, it can be said that the fair and employee-centric HR practices imply a long-term investment in employees. These create a sense of obligation to reciprocate by exhibiting pro-social behavior and by being engaged in an organization (Cardona et al., 2004).

To discuss the effect of trust culture, we used social exchange theory (Blau, 1964). Social exchange includes a sequence of interactions which are perceived as interdependent and dependent on the actions of another person (Blau, 1964). According to Molm (2003), the reciprocal exchange does not involve explicit bargaining. The exchange process starts when one party begins a move, and the other party reciprocates it, and continuation of these exchanges create a self-reinforcing cycle. In the organization, an employee may build-up these exchange relationships with immediate superior (e.g., Liden et al., 1997), peers (e.g., Ensher et al., 2001) and the organization itself (e.g., Moorman et al., 1998). Trust assists in the creation of reciprocity (Garbarino & Lee, 2003). Thus, an individual who perceives trust culture in the organization because of the positive way the organization has dealt with him is likely to feel inclined to support and enrich the organization through desirable behavior.

Organizational Citizenship Behavior (OCB)

Organ (1997) defined the OCB as actions aimed to help in the maintenance and enhancement of the social and psychological framework of the organization that further support task performance. OCB contributes meaningfully to organizational effectiveness by lubricating the social machinery of the organization and minimizing unhealthy conflicts.

The employees create generalized beliefs about the extent the organization acknowledges their inputs and take care of them, and such beliefs influence their involvement in OCB (Eisenberger et al., 1986). Morrisson (1996) suggested that HR management of the organization is an instrument in encouraging OCB. Organizational processes such as employee performance and development planning, performance feedback and career growth stimulate the norm of reciprocity which employees express through OCB (Konovsky & Pugh, 1994; Tepper & Taylor, 2003).The perceptions of fairness also promote OCB and influence employees' willingness to reciprocate the favors received (Organ, 1988). Studies suggest that procedural justice as a better predictor of OCB than distributive justice (Konovsky & Pugh, 1994). Zheng et al. (2012) mentioned that perceived rating-reward link strengthens the direct relationship between appraisal process and OCB. In alignment with earlier studies, we hypothesize that:

H1: Fair PA and R&R practices will positively influence employees' involvement in OCB.

Knowledge Sharing

Davenport and Volpel, (2001) defined knowledge as codified information including insight, interpretation, context, experience, wisdom and so forth. Knowledge sharing is the dissemination of knowledge in the organization (Yang, 2004) and suggests the conscious action of an individual who has the knowledge. Knowledge-sharing behaviors in organization support the knowledge creation (Bock et al., 2005) and facilitates innovation and organizational effectiveness (Lin, 2007a; Wang & Wang, 2012).

Promoting the knowledge sharing behavior is considered to be one of the most difficult tasks (Lin et al., 2012). Employees consider the knowledge as a source of power and control (Chennamaneni et al., 2012). They may not share their knowledge because of fear of criticism and consider their knowledge as imprecise or irrelevant (Ardichvili et al., 2003).Therefore, identifying the variables that can positively influence knowledge sharing behavior has been an area of continuous research. To motivate employees for knowledge sharing there must be a change in the approach of employment relationships in organizations (Thompson & Heron, 2005). HR practices such as recruitment, training and development, performance appraisal, and compensation facilitate knowledge sharing behavior (e.g., Moreland & Myaskovsky, 2000). Bonuses, incentives, and knowledge-oriented promotion promote knowledge sharing activities and flow of knowledge in the organization. (Lin, 2007b; Yu et al., 2007). Liu and Liu, (2011) reported that HR practices nurture knowledge sharing, however, a mediator is the willingness to share knowledge. The present research examines the effect of fairness of performance appraisal and reward and recognition on knowledge sharing behavior and hypothesizes that:

H2: Fair PA and R&R practices will positively influence employees' involvement in the knowledge sharing behavior.

Employee Engagement

Engagement is "the harnessing or the attaching of the employees' selves to the work they do (Kahn, 1990). The engaged employee has a sense of purpose and energy that is revealed in personal initiative, adaptability, effort and persistence in attaining the objective of the organization (Macey, et al., 2009). Employee engagement has a positive influence on customer loyalty, productivity and profitability, sales growth, shareholder return, affective and normative commitment, and organization performance (Abbaas & Ikhlas, 2014; Harter et al., 2006). Organizations use employee engagement as one element in assessing organizational health along with other measures like sales, profit, and customer satisfaction (Piersol, 2007).

The motivators for highly engaged employees are intrinsic factors such as fair treatment, recognition, and opportunities for professional growth and others rather than extrinsic motivators such as compensation, working conditions. (Gebauer et al., 2008; Lehmann, 2009). Some researchers report reward and recognition as one of the important variables in building a high level of employee engagement (Gratton, 2004), and others consider the effect of performance appraisal on employee engagement (Pulakos, 2004). We examine the effect of both PA and R&R on employee engagement and hypothesize that:

H3: Fair PA and R&R practices will positively influence employee engagement.

Moderating Effect of Trust Culture

Schein (1985) defined organizational culture as the beliefs, values, and basic assumptions shared by organizational members. It is an impetus behind all the movements in the organization (Barney, 1986) and creates a sense of loyalty and belongingness among employees and strengthens the organization (Kotter & Heskett, 1992). Culture acts as a social control mechanism (O'Reilly & Chatman, 1996) and aberrations from cultural norms are soon noticed and corrected (Sorensen, 2002).

Scholars opined that when trust is a core value of the organization culture, organization experiences better performance, more innovation, and competitive advantage (Hurley, 2006). Trust is the "willingness to be vulnerable to the actions of another party based on the expectation that the other will perform a particular act necessary to the trustor, irrespective of the ability to monitor or control the other party." (Mayer et al., 1995). Trust is typically built when the trusted party lives up to expectations (Blau, 1964; Mayer et al., 1995). A culture of trust includes various beliefs, norms, and values that focus on trust and which demonstrate it through respect for individuals, sincerity, honesty, etc. Interpersonal trust has robust effect on job satisfaction, stress, organizational commitment, productivity, knowledge sharing, OCB, and employee engagement (Casimir et al., 2012; Kim & Ko, 2014; Rubin et al., 2010; Ugwu et al., 2014).

We examined the effect of trust culture on OCB, knowledge sharing and employee engagement. We also predict that trust culture will moderate the effect of PA and R&R on OCB, knowledge sharing, and employee engagement. Following hypotheses have been proposed for investigation:

H4a: Trust culture will have a positive impact on OCB.

H4b: Trust culture will have a positive impact on knowledge sharing.

H4c: Trust culture will have a positive impact on employee engagement.

H5a: Trust culture will significantly moderate the effect of PA & RR on employees' involvement in OCB.

H5b: Trust culture will significantly moderate the effect of PA & RR on employees' knowledge sharing behavior.

H5c: Trustculture will significantly moderatethe effect of PA & RR on employee engagement.

Figure 1 describes the relationship explored in the study.

Sample & Procedure

We sent an invitation e-mail with a link to an online survey to employed students and alumni of two premier management institutes in India. In total, 217 individuals completed this survey. Of the respondents, 61.4% were from the service sector and 38.6% from the manufacturing industry. 45.5% respondents were the lower level, and 54.5% were the middle-level executives. The average age of respondents was 30.03 years (SD = 4.58) and the average experience, 7.52 years (SD = 4.18). 82% of the sample were males and 18% females.

Measures

Items to measure the fairness of R&R and PA were developed on the basis of existing literature and discussions with working executives. Fairness of R&R was measured using a three-item scale (e.g., I am fairly paid for the job I perform) and the fairness of performance appraisal was measured with four items (e.g., Assessment of my performance is fair and unbiased). Following literature review (Christian et al., 2011), three items were developed to measure employee engagement.(e.g., I feel highly engaged with my organization). Respondents rated the items on 1--strongly disagree to 5--strongly agree. For knowledge sharing behavior twelve items adapted from the work of Lee (2001) were used. Employees rated them for their frequency in the organization (1--very rarely, 5--very frequently).

For OCB, the scale developed by Moorman and Blakely (1995) was used which assessed the four dimensions of OCB: interpersonal helping, individual initiative, personal loyalty, and boosterism. Respondents rated these items with the frequency of their involvement in them (1--very rarely, 5--very frequently).The principal components analysis with oblique rotation on our OCB data indicated that 16 out of the 19 items loaded (> 0.40) on a single factor. Therefore, we used the mean of these 16 items as a single composite measure of OCB. LePine et al., (2002) also suggested that for computing OCB score, researchers should focus on the general concept of OCB.

Five items to measure trust culture were taken from a scale developed by Pareek (2002)(e.g., offering moral support and help to employees and colleagues in a crisis). Respondents rated these referring to the agreement that 'your company thinks it is important' on a 5-point scale (1--strongly disagree, 5--strongly agree).

Control Variables

Gender and work experience that affect knowledge sharing were included as control variables in the analyses.

Results & Discussion

Descriptive and inferential statistical techniques were used to analyze the data. Hypotheses related to moderating relationships were tested using moderated multiple regression analysis (Aiken & West, 1991; Cohen & Cohen, 1983).

PA, R&R and trust culture scores were mean centered before being entered in the analyses. Four steps were followed. First, demographic variables were entered (sex and total work experience). Second, we entered R&R and PA. Third, we added the trust culture and finally interactions term between R&R and trust culture and PA and trust culture. The first block tests the hypotheses from H1 to H3 and the last block test the hypotheses H4 and H5. We conducted this analysis separately for each dependent variable (Table 3).

Table 1 includes the descriptive statistics for the variables of the study that suggest that the employees are involved in OCB and knowledge sharing behavior, and they are moderately engaged with the organization. Table 2 displays zero-order correlations among study variables suggesting that all study variables are positively correlated.

For OCB, the analysis yielded a significant [R.sup.2] with PA and R&R accounting for around eight percent in the prediction of organizational citizenship behavior. PA and R&R have significant positive effect on OCB ([beta] = .17, p <.05; [beta] = .21, p <.001 respectively) and support H1. The effect of trust culture was also significant for OCB ([beta] = .31, p < .001) and support the hypothesis H4a (Table 3).

The results of regression analysis for knowledge sharing and PA and R&R were not significant hence does not support the hypothesis H2. Results suggest that trust culture significantly influences the knowledge sharing behavior in organizations ([beta] = .31, p < .001) and supports H4b (Table 3).

PA and R&R have significant positive effect on employee engagement ([beta] = .36, p <.000; [beta] = .31, p <.000 respectively) and support H3. The effect of trust culture was not significant for employee engagement and does not support H4c (Table 3).

Moderated Effect of TrustCulture

The results of moderated regression analysis for OCB suggested the significant moderating effect of trust culture.The overall model explained about 27 percent of the variance in OCB. Interactions between R&R and trust yielded a statistically significant contribution ([beta] = .23, p < .001) to the explanation of OCB and partially support H5a (Table 3). For knowledge sharing behavior and employee engagement the results for moderating effects were not significant.

Discussion, Limitations & Implications

Employees with positive work attitudes contribute to organizations beyond prescribed or contractually defined roles that work as a competitive advantage for the organization (Podsakoff & MacKenzie, 1997). Organizational researchers have been trying to explore the motivational factors of positive work attitude, and the present research contributes to this area. The distinctive contribution of the study lies in identifying the effect of fairness of R&R and PA on OCB, knowledge sharing behavior and employee engagement in a single study with the same set of employees. Another contribution of the research is in identifying the effect of trust culture on OCB, knowledge sharing behavior and employee engagement in Indian cultural context which exhibits collectivism and affective reciprocity among managers (Chhokar, 2000; Sinha, 1997).

The findings of the survey advise that perception of fairness of PA and R&R significantly influence OCB and support the existing literature (Podsakoff et al., 2000). It also establishes that both procedural and distributive justice encourage OCB. Results also indicate that the trust culture moderates the effect of R&R on OCB.

The results for employee engagement suggests that PA and R&R have a significant effect and contributes to the discipline of employee engagement. Earlier scholars had conflicting opinions about the relative effect of these HR practices. Some reported reward and recognition as one of the important variables in employee engagement (Gratton, 2004), and others reported the effect of performance appraisal (Pulakos, 2004).

The association between R&R and knowledge sharing was not significant in the study that is aligned with the findings of earlier studies (i.e., Gupta et al., 2009; Chee-Yang et al., 2011) and in contrast with the results of Lin (2007b). Trust culture explained variance in knowledge sharing behavior implying trust context has an important effect on the outcome variables. Ardichvili et al.(2003) reported that employees may not share knowledge because of fear of criticism and may consider their knowledge as irrelevant, inaccurate or not important to others. It may be one of the reasons why trust culture enhances the knowledge sharing behavior.When we are confident on someone, we feel safe to share our know how.

For practitioners, the study suggests: first, there is the differential impact of PA and R&R on employees behavior. For OCB and employee engagement both PA and R&R are necessary. However, for knowledge sharing PA and R&R do not contribute significantly. Second, trust culture plays a significant role in promoting knowledge sharing behavior. For practitioners who want to encourage knowledge sharing behavior among employees, this finding suggests that culture of trust is the most important factor for encouraging knowledge sharing. Third, trust culture also significantly influence OCB and also moderate the effect of R&R on OCB, implying trust culture reinforces the impacts of fair R&R practices.

The organizations need to build a trust culture through various processes and practices which can strengthen trust in the organization. A culture of trust may provide the organization with a competitive advantage especially in today's context when organizations are moving to flatter and more team-oriented structures. With more employees, empowerment and limitations of monitoring, high levels of trust in the organization are critical so that organizations of the future will remain successful. The culture of trust can be built up with leadership support. Organizations must be transparent and create a platform for two-way communications with employees.

This paper has some weaknesses in the context of directions for future research. First, as it is a cross-sectional study, it collected data on all variables in the same survey from same respondents. The variables may be highly correlated because of same-source bias (Podsakoff et al., 2003). To avoid this bias future research should collect data on predictor variables, i.e., PA, R&R, and trust culture from employees and gather data on dependent variables: OCB, employee engagement, and knowledge sharing, from colleagues and superiors. Second, cross-sectional design does not explain the causal relationships proposed in the model. Future research could examine the causal relationships using other approaches such as quasi-experimental design and longitudinal design. This study is an attempt to find the moderating effect of trust culture. Future study can include some more moderating variables like national culture, personality, leadership, team cohesiveness, and so forth. This study examined the effect of two HR practices on OCB, knowledge sharing and employee engagement; future studies might include other HR practices and processes such as opportunities for learning, coaching and mentoring. In conclusion, this study established that fairness of PA & RR positively and significantly stimulated OCB and employee engagement. Trust culture significantly influences the knowledge sharing behavior and OCB.

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Bindu Gupta is Professor, Institute of Management Technology, Ghaziabad. E-Mail: bgupta@imt.edu. Ajay Singh is Professor, Indian Institute of Management, Lucknow. E-mail: asingh@iiml.ac.in

Caption: Fig. 1 Model of the Study Table 1 Descriptive Statistics for Study Variables Variables Mean Std. Reliability Deviation Coefficient Reward and Recognition 3.35 .84 .74 Performance Appraisal 3.31 .79 .82 Employee Engagement 3.39 .91 .67 Knowledge Sharing Behavior 3.78 .45 .81 Organizational Citizenship Behavior 3.78 .41 .85 Trust 3.62 .69 .68 Table 2 Correlations among Study Variables R&R PA EE OCB Reward and Recognition (R&R) Performance Appraisal (PA) .544 ** Employee Engagement (EE) .521 ** .520 ** Organization Citizenship .300 ** .309 ** .386 ** Behavior (OCB) Knowledge Sharing (KS) .229 ** .220 ** .260 ** .421 ** Trust (T) .364 ** .429 ** .364 ** .343 ** KS T Reward and Recognition (R&R) Performance Appraisal (PA) Employee Engagement (EE) Organization Citizenship Behavior (OCB) Knowledge Sharing (KS) Trust (T) 417 ** Notes: ** = p < 0.01 Table 3 Moderated Multiple Regression Analyses for Testing Main Effect of HR Practices and Moderating Effects of Trust Value for OCB, Knowledge Sharing Behavior and Employee Engagement Independent Organizational Citizenship Behaviour variables Model 1 2 3 4 Gender -.009 -.015 -.007 -.026 Work .16 * .120 .11 .103 Experience Reward .17 * .11 .107 and Recognition (R&R) Performance .21 ** .12 .08 Appraisal (PA) Trust (T) .31 ** .33 ** RR * T PA * T .007 [R.sup.2] .03 .13 .22 .27 F 2.16 * 7.94 ** 9.68 ** 9.50 ** Independent Knowledge Sharing Behaviour variables Model 1 2 3 4 Gender .171 -.05 -.05 -.060 Work .002 .15 * .13 * .128 Experience Reward .15 .10 .094 and Recognition (R&R) Performance .13 .03 .015 Appraisal (PA) Trust (T) .28 ** .31 ** RR * T .091 PA * T .019 [R.sup.2] .04 .09 .17 .18 F 2.58 * 5.43 ** 6.76 ** 5.42 ** Independent Employees Engagement variables Model 1 2 3 4 Gender -.054 -.054 -.054 -.066 Work .084 .038 .030 .025 Experience Reward .36 ** .34 ** .33 ** and Recognition (R&R) Performance .31 ** .28 ** .25 ** Appraisal (PA) Trust (T) .103 .12 * RR * T .142 PA * T .033 [R.sup.2] .03 .35 .36 .39 F 2.14 28.32 ** 23.39 ** 18.54 ** Note: Entries are beta weights; ** = p < 0.01; * = p < 0.05