Using social exchange theory to predict the effects of hrm practice on employee outcomes

This article empirically tests the effects of exchange relationships between managers and public sector employees working in seven local government departments. Social exchange theory is used as a framework for predicting three outcomes of Human Resource Management (HRM) practice: employee commitment, employee motivation and desire to remain with the organization. The statistical models were found to predict 58 percent of the variation in employee commitment, 53 percent variation in motivation and 41 percent of the variance in respondents' desire to remain with the organization. Consistent with social exchange theory, the results highlight the importance of trust in management, which was found to predict positively all three outcomes. Team-working was found to predict employee commitment and motivation, with employee involvement, empowerment, the offer of fair rewards and job security having significant effects on worker motivation. The implications of these findings for management practice and theory are discussed.