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Tensay, A.T and Singh, M. (2020). The Nexus between HRM, Employee Engagement and
Organizational Performance of Federal Public Service Organizations in Ethiopia. Heliyon 6
(2020) e04094. https://doi.org/10.1016/j.heliyon.2020.e04094.

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Department of Management, University of Gondar, Ethiopia
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School of Applied Management, Panjabi University, Patiala, India

Establishing the link between HRM practices and organizational performance has long been
considered the most important and central study subject in HRM studies. HRM specialists in the
past concentrated on the influence of HRM systems on organizational outcomes as as
productivity and corporate performance. More study into the effects of HRM interventions on
employee-level outcome variables, which are more proximal indicators and can be viewed as an
intermediary result in the HRM-performance link, has lately been advocated for by experts. In
this respect, Tensay, A.T. and Singh, M. (2020)'s article, "The nexus between HRM, employee
engagement, and organizational performance of federal public service organizations in Ethiopia,"
intends to investigate the impact of the HRM system on employee engagement and
organizational performance. It also investigates the intervening influence of employee
involvement in the HRM-performance link, drawing on Social Exchange Theory.

The study focused on federal public service institutions in Addis Abeba, Ethiopia. Using a multi-
stage random selection technique, nine federal public institutions were chosen at random as
sample organizations. The study tested the hypothesized three-factor model on 340 federal
agency employees using structural equation modeling. A survey was employed as a research
approach because the study is quantitative in nature. Data was obtained using confirmed and
established standard questionnaires from earlier studies conducted in the public sector to measure
all study variables. All questionnaire items were scored on a five-point Likert scale, with 1
representing "strongly disagree" and 5 representing "strongly agree." The majority of the survey
questionnaires included in the study were for demographic data, human resource management,
employee engagement and organizational performance.

The human resource management index was measured using 31 items that revealed the three
AMO (Ability-Motivation-Opportunity) model dimensions of HR practices: ability enhancing

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practices (Recruitment, Selection, Training and Development), motivation enhancing practices
(Performance Appraisal, Compensation, and Reward), and opportunity enhancing practices
(Autonomy and Employee Participation), and finally form the HRM System by combining
scores of each item of all the indicators. The short version (9 items) of the Utrecht Work
Engagement Scale was utilized to measure employee engagement. Furthermore, 12 questions
covering several elements of organizational performance, such as productivity, quality, goal
accomplishment, and customer pleasure, are utilized to assess perceived organizational success.
All three criteria were tested and proved to be extremely dependable.

The findings were analyzed using descriptive statistics, Pearson correlation, CFA, and SEM.
Descriptive statistics and Pearson correlation were employed to analyze the reliability and
connection between constructs. It was also used to compute the mean and standard deviations for
variables and sub-dimensions. To assess the construct validity and appropriateness of the
measurement models, CFA with Maximum Likelihood Estimation was utilized. Finally, SEM
was used to evaluate hypotheses about the direct and indirect impacts of HRM on public service
performance. Using AMO and social exchange theory, the current study hypothesized that HRM
Systems affect employee engagement and perceived organizational performance, as well as the
mediating function of employee engagement in HRM-Performance research. Every hypothesis,
in this regard, were accepted.

It was observed that, as projected, human resource management had a positive and significant
influence on organizational performance. When government organizations invest in and cherish
their employees, they perform better. Public service organizations in Ethiopia are government
entities that supply and play a key role in delivering basic services to the country's people, such
as education, health, transportation, telecommunication, power, and water. Employees provide
such essential services, hence strong HRM is required to deliver increased performance levels to
their clients in terms of productivity, quality, satisfaction, fairness, efficiency, and equity.

Employee engagement is linked to HRM, according to the study's findings, revealing that
workers become active when they believe they are appreciated, valued, and trusted. The AMO
and SET's claim that the amount of engagement is greatly reliant on the response to their
organization's activities is clearly supported by this data. Employees who are treated as strategic
partners and assets, according to the social exchange hypothesis, are happier and more engaged.

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Employee engagement and performance were also found to have a positive and statistically
significant association in the study. Employee engagement is a strong predictor of public-sector
success because an engaged workforce is happier and more driven, which can improve
organizational performance. The study's findings verified partial mediation in terms of mediation
impact. Employee engagement, as predicted, seemed to moderate the association between HRM
and organizational success. This shows that a well-thought-out and well-executed HR system
fosters the development of an engaged workforce, which improves organizational performance.

Ultimately, the research looked at how the six HR strategies affected employee engagement and
organizational success. The outcomes of the study backed up the idea that all six human resource
strategies in the public sector had a significant and positive influence on employee engagement
and organizational success. Autonomy has been proved to be a fundamental driver of employee
engagement and business performance in individual HR practices. This means that if workers are
given the flexibility and chance to participate in decision-making, express their opinions, and
provide input on how companies are run, their level of engagement will rise.

As a consequence, the authors stated that the findings of the study add to the continuous
objective of HR specialists of understanding the link between HRM and organizational
performance. As a result, the study is one of the few in the HRM-Performance debate that
applies a mediation model in public sector organizations in developing-country environments.
Overall, the paper suggests a positive and significant relationship between human resource
management, employee engagement, and organizational success. Furthermore, to some extent,
employee engagement mediated the relationship between HRM and performance. In terms of the
influence of individual HR practices, the study revealed that HR practices had a positive and
varying impact on both engagement and performance.

Furthermore, the study drew both theoretical and practical implications from the findings. The
study's findings, according to the authors, give considerable evidence for the direct and indirect
effects of HRM systems on the performance of Ethiopian public sector firms. Furthermore, the
study advances HRM research by bolstering the systems approach, which demonstrates that the
whole is greater than the sum of its parts. Individual HR practices are more successful in this
regard when complementary HR practices are combined than the individual practices alone.

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In practice, because the study discovered that HRM is a strong predictor of both employee
engagement and organizational performance, good HRM practices and their proper
implementation will provide employees with the necessary skills and knowledge to perform their
jobs, as well as the motivation and opportunity to do so. As a consequence, the authors firmly
believe that workers will contribute to the development of an engaged workforce that is satisfied,
motivated, and devoted to providing the desired service in government organizations with
efficiency, effectiveness, and justice.

The article was successful in terms of addressing crucial outcomes, but it was not without errors.
One of these limits is that it is cross-sectional in nature, with all data needed for all research
topics being gathered at the same time. Furthermore, the study was constrained in that it only
looked at HRM as a predictor of employee engagement and obtained data from the same sources
for all dimensions, which may contribute to common method variance. As a result, the authors
proposed more research to address these limitations and complete the study's conclusions.

The next section gives a primary takeaway that a reader may take from this review paper, which
is to evaluate and appraise the article. As an MBA student, I'd want to talk about four important
characteristics: theoretical basis, variables, emphasis, and approach.

The article's theoretical base was Social Exchange Theory, which was used to explain the link
between HRM practices and organizational outcomes. The notion of social exchange is founded
on reciprocity standards in social connections. Employees who obtain economic or socio-
emotional advantages from their employer are said to feel bound to reciprocate. As a result, the
article created frameworks to describe the link between HRM practices and employee
engagement as well as organizational performance.

Furthermore, another insight from the article is that the type of HRM practices used as an
independent variable. The papers looked at the impact of HRM practices in groups. This concept
explains why individual HR activities are more successful when they are combined with
complimentary HR practices than being done independently. That is to say, the impact of HRM
as a system/bundle on individual and organizational performance is significantly bigger than the
impact of individual HR practices. Tensay and Singh focused on investigating the effects of
HRM bundles, or combinations of HRM strategies, on employee and performance outcomes in
this regard. Ability-enhancing procedures (Recruitment, Selection, Training, and Development),

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motivation-enhancing practices (Performance assessment, pay, and Reward), and opportunity-
enhancing practices (autonomy and employee participation) are all included in these HRM
packages.

Another interesting aspect of this paper is the emphasis on person level results when examining
the impact of HRM methods. The impacts of HRM interventions on employee-level outcome
variables, which are more proximal indicators and intermediary outcomes in the HRM-
performance link, were studied in this paper. Importantly, rather than relying on explanations of
the intents behind HRM practices at a strategic level as stated by HRM experts, the paper focuses
on how workers perceive such practices in order to analyze the effect of HRM practices on
employee behavior. The publication used a cross-sectional survey approach to obtain data for the
study technique. In addition, the paper used structural equation modeling (SEM) to test
hypotheses about the direct and indirect effects of HRM on outcome variables.

To sum up, the paper attempted to investigate the direct and indirect impacts of perceived HRM
practices on individual and organizational-level outcome variables using empirical methods. It is
a well-established and theoretically based research that may help any business attain its
objectives.