THE IMPACT OF HUMAN RESOURCE MANAGEMENT AND WORK CLIMATE ON ORGANIZATIONAL PERFORMANCE

This paper examines relationships between human resource management (HRM), work climate, and organizational performance in the branch network of a retail bank. It extends previous research on group‐level climate‐performance and HRM‐performance relationships and examines how climate and HRM function as joint antecedents of business unit performance. Significant correlations are found between work climate, human resource practices, and business performance. The results show that the correlations between climate and performance cannot be explained by their common dependence on HRM factors, and that the data are consistent with a mediation model in which the effects of HRM practices on business performance are partially mediated by work climate.