Do HR practices influence firm performance? Mediating role of employee engagement among Indian executives

Abstract

Purpose – The paper aims to investigate the relationship between human resource practices (HRPs), employee engagement and firm performance, with a focus on the mediating role of employee engagement in its association. Design/methodology/approach – Data for the present study were collected from 281 middle- and senior-level executives representing various Indian industries of different sizes via convenient sampling. The SPSS PROCESS macro (model 4) was employed to analyze the collected data. Findings – The results revealed that human resource (HR) practices have a direct and positive impact on firm performance. Moreover, employee engagement represented a partially mediated effect. The analysis showed that the influence is significantly augmented when employee engagement is factored into this relationship. Practical implications – This investigation highlights the importance of organizations adopting a holistic HR approach that fosters employee engagement at every stage of the HR lifecycle. Training and development initiatives not only equip employees with essential skills but also play a critical role in boosting engagement. Elevated employee engagement leads to increased commitment, job satisfaction and organizational citizenship behaviors, ultimately driving improved firm performance. Originality/value – This study’s findings offer valuable insights for organizations aiming to enhance their HR practices to improve firm performance. Firms that invest in robust HR practices, including recruitment, training and talent management, stand to gain significantly by fostering higher levels of employee engagement.