The strength of human resource practices and transformational leadership: impact on organisational performance

The Human resource (HR) strength concept (Bowen, D., and Ostroff, C. 2004, ‘Understanding HRM-Firm Performance Linkages: The Role of the “Strength” of the HRM System,’ Academy of Management Review, 29, 2, 203–221) reflects the capacity of an HR system to transmit messages characterised by high distinctiveness, consistency and consensus. HR systems are therefore affecting perceptions and interpretations of organisational realities, such as climate and culture. Furthermore, Bowen and Ostroff (2004) suggest that organisational climate mediates the relationship between HR strength and performance. The leadership literature advocates that leaders are people who are able to create a social context in which employees are guided towards a shared interpretation, understanding and perception of the organisational climate (Yukl, G.A. 1989, Leadership in Organizations, Englewood Cliffs, NJ: Prentice Hall). In summary, both HR strength and leadership are two environment dimensions shaping and moulding employees' perceptions and interpretations. The current study explores the relationships between HR strength, leadership, organisational climate and performance. 323 questionnaires were used to gather information from a company in the industrial sector. The results show a positive relationship between the variables; however, mediating effects of climate were only observed between leadership and performance.