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Psychological Climate and Organizational

Effectiveness: Role of Work Engagement
Aakanksha Kataria*, Pooja Garg** and Renu Rastogi***

This study contributes to our understanding of the mediating mechanism of work
engagement through which psychological climate of an organization is linked with
the organizational effectiveness. We developed and tested a mediation model
associating between the latent constructs of organizational effectiveness. Our model
evaluates the premise that employees’ favorable perceptions of the organizational
settings are directed towards increased organizational effectiveness through an
individual-level construct, work engagement. Overall, data from 300 employees in
different service organizations in India support this model. Data analysis, performed
using Structural Equation Modeling (SEM) approach, revealed that work engagement
fully mediates the relationship between psychological climate and organizational
effectiveness, suggesting that employees’ engagement with their work plays a
significant role in shaping the effectiveness of their organization.

A positive and supportive context is needed for human resources to achieve sustainable
growth and performance (Luthans and Avolio, 2003; and Luthans et al., 2008). In fact,
culminating effectiveness in the light of global economic fluctuations, and fierce
competition necessitates the espousal of positive perspective at workplace. A growing
body of literature on positive psychological climate suggests that the development of work
context designed to enhance employees’ motivational and affective reactions at work,
is profoundly associated with sustained organizational effectiveness.
Contemporary business organizations are facing many challenges to effectively
manage their human capital more than ever before. It is not easy to attract and retain
skilled and motivated employees as they have several other job options. Another major
difficulty in conquering this challenge is the expectations of the organizations from their
employees. Organizations require employees to be proactive, show initiative while
engaging with their role and remain committed to performing at high standards (Bakker

* Research Scholar, Department of Humanities and Social Sciences, Indian Institute of Technology, Roorkee
(IITR), Roorkee, India; and is the corresponding author. E-mail:
** Assistant Professor, Department of Humanities and Social Sciences, Indian Institute of Technology,
Roorkee (IITR), Roorkee, India. E-mail:
*** Professor, Department of Humanities and Social Sciences, Indian Institute of Technology, Roorkee (IITR),
Roorkee, India. E-mail:

© 2013 IUP. AllClimate and Organizational Effectiveness:
Rights Reserved. 33
Role of work Engagement

For instance. individual differences are likely to function as regulative aspect of workplace attitudes and behaviors.. Garner and Hunter (2012) found that psychological climate relates positively to employees’ work attitudes and their subsequent behavior in organizations. though climate perceptions influence organizational effectiveness. In this connection. XII. they are more likely to be involved in their work and invest greater time. In fact. 2012). it is a two-way process. the relationship between psychological climate and organizational effectiveness may not be straightforward. they tend to exhibit positive attitudes and proactive behaviors at workplace (Schaufeli et al. Brown and Leigh (1996) observed that when employees perceive positive psychological climate at workplace. individual attitudes and other temporary generalities of employee sentiments (such as organizational commitment and job satisfaction) have recently been criticized for not providing an inclusive view of an individual’s self which encompasses a simultaneous activation of personal energies at work (Alfes et al. effort and energy to achieve work goals. they need to be functioning at the peak level of their potential. Surprisingly. Cho and McLean (2009) also suggested that it is not sufficient that they just show up. psychological climate can have an important influence on organizational effectiveness. Biswas and Varma (2007) also observed that employees’ climate perceptions have significant impact upon employees’ citizenship behaviors and job satisfaction and thus positively impact their job performances. Much effort is needed on the part of organizations to help their employees thrive at the workplace. 2002). 2011). No. In other words. and influence the extent to which they choose to augment organizational effectiveness. fulfilling work environment conducive to their work-related wellbeing is of significance where they can improvise and consequently help their organization to flourish in the present scenario. Hence. Vol. and Chughtai and Buckley. organizations need to manage not only the physical and cognitive energies of employees at work but also the psychological connection with their work and organization. to impact upon organizational performance. 3. However. away from contextual factors to individual attitudes and behaviors that might be critical for organizational effectiveness. such as work engagement. positive climate perceptions must first lead to individual level outcomes. To be more specific.and Leiter. employees desire positive feelings about their work experiences that go beyond global attitudes of job satisfaction or commitment (Wagner and Harter. providing employees a positive.. However. 2006). that is. 2010. There has been a shift in emphasis within the organizational behavior literature. such as employee willingness and capability to invest their positive energies at work and working in consonance with organizational objectives. this does not necessarily imply that employees experiencing favorable organizational environments will uniformly perform in ways to benefit the organization. For instance. Engaged employees are optimistic and spontaneous. the notion of engagement signifies more stable persistent and pervasive 34 The IUP Journal of Organizational Behavior. 2013 .

e. 1996). and if provided a climate of psychological wellbeing. Hence. This illustrates that the appraisal of organizational environments has important implications for organizations and that psychological processes that accompany employee perceptions of work climate can affect organizational effectiveness. the effect of psychological climate on organizational effectiveness might be due in part to work engagement.. 2010). drives organizational effectiveness.. practices and procedures which are recognized and rewarded in the organization (Schneider. measured in terms of how employees perceive and interpret their organizational environments (Brown and Leigh. or the policies. we attempt to identify psychological climate as organizations’ attempt to facilitate engagement at work which. Within this context. involvement and commitment (Wagner and Harter. as presented in the framework (Figure 1). that is. Figure 1: The Conceptual Model Associating the Latent Constructs of Organizational Effectiveness n. 2006. employees’ psychological perceptions of their work environments have received magnified attention in the management discourse of 21st century. proactive and happier at work. It is concerned with the employees’ perceptions of virtually all aspects of their work environment (Parker et al. the prominence of which goes beyond the temporary generalities of previously established constructs such as job satisfaction. 1974). work engagement)—and contextual factors (i. 1990). and Shuck. our study seeks to uncover the joint psychological influence of personal (i. Psychological climate is an individual attribute (Hellriegel and Slocum. engaged employees are enthusiastic.e. 2003). psychological climate) on organizational effectiveness. and interpretation of them in relation to their wellbeing (Brown and Leigh. exhibiting OCB’s) that substantiate organizational effectiveness (Saks. 2002). The aim of the current study is to examine whether the psychological climate has an indirect impact on organizational effectiveness through work engagement. In specific. psychological climate refers to the perceptual and experiential components of a reciprocal interaction between the organizational environment and the Psychological Climate and Organizational Effectiveness: 35 Role of work Engagement . 1996).s Psychological Work Organizational Climate Engagement Effectiveness Theoretical Genesis Psychological Climate Though organizational climate research has long been substantiated in organizational sciences for more than 50 years. in turn.. 2006).affective-cognitive state (Schaufeli et al.. they are more likely to do things (such as. Furthermore.

room for self-expression. Although previous researches suggest that engagement is related to workforce efficiency and productivity.employee (Michela et al. engagement has been recognized as a 36 The IUP Journal of Organizational Behavior. Dedication explicates the emotional framework of engagement. Furthermore. dedication and absorption. 1990). designing development plans. Vol. effort. due to its well-researched consequences. 2013 . Schaufeli et al. This way. and positive energy while performing job tasks. 2002. and surveying their employees to explore what they need to take first (Wollard and Shuck.. Biswas and Varma. Burke et al. friendliness and warmth. XII. it serves as a favorable condition to facilitate their wellbeing. commitment. efforts. which in turn determines the extent to which employees drive their personal energies into their work role (Kahn. 1995). 3. (c) leadership facilitation and support. (1990) described a four-dimensional model of climate perceptions incorporating (a) role stress and lack of harmony. positive psychological climate has been found positively associated with several work-related attitudes and behaviors such as job involvement. No. Vigor.. Recent studies have posited engagement as the most influential business driver of organizational success and performance. organizations are seeking ways to embrace the concept. 2007). a high level of positive core affect. (2002) defined engagement as a positive. James et al. very little empirical research exists that explains the processes through which engagement develops. 2011). satisfaction. affective-motivational state of wellbeing that is characterized by vigor.. and (d) work-group cooperation. appropriate levels of job challenge and ability to contribute to organizational success (Wollard and Shuck. safe and resourceful. (b) job challenge and autonomy. Absorption is the cognitive aspect of engagement whereby employees tend to be happily involved and experience their work as engrossing and something to which they can devote their full concentration (Bakker et al. Furthermore. consisting of supportive management. Based on Kahn’s (1990) recommendations of positive workplaces. This implies. 1996. productivity and OCBs (Brown and Leigh. dedicated and psychologically involved are better able to invest their active physical strength and emotional energy towards the fulfillment of organizational goals. employee performance. Engaged employees being enthusiastic. Saks (2006) has suggested that employees are likely to exchange their engagement as a state of reciprocal interdependence for economic and socio-emotional resources from their organization. role-clarity. when employees’ perceive their organizational environments as meaningful. Brown and Leigh (1996) have identified various factors of positive workplace climates that are emotionally fulfilling and supportive. 2011). Work Engagement Engagement is one such higher order positive psychology construct which is concerned with the employees’ experiences of work and organization that further determines the extent to which they work in consonance with the organizations’ objectives. significant and challenging. in which employees experience their work as meaningful. 2011). fulfilling. refers to the employees’ willingness to devote their time.

1972). this study proposes the following hypotheses. Organizational effectiveness is ‘a company’s long-term ability to achieve consistently its strategic and operational goals’ (Fallon and Brinkerhoff. their employees tend to be engaged at high levels while feeling obliged to respond in kind way. Engagement of one person may transfer to others and indirectly improve composite performance of teams (Bakker. which consequently helps organizations to achieve its goals. Organizational Effectiveness The underlying goal of most research on organizations is to improve their effectiveness (Noruzi and Rahimi. 2011). job-fit. and found to be most frequently used in various models pertaining to effectiveness (Steers. Psychological Climate and Organizational Effectiveness: 37 Role of work Engagement . p. In fact. etc. and Bakker and Demerouti. positive psychological climate creates engagement-friendly psychological conditions whereby individuals are more likely to invest greater efforts. challenge. rewards. if an organization is able to provide fair economic rewards. Thus. organizational citizenship behaviors. yet there are less empirical evidences that support the role of positive psychological climate and a nascent approach to work engagement in augmenting organizational effectiveness. 1977. 2007). and viewed as a vital element in elevating organizational effectiveness (Cameron et al. including training climate and individual positive attitudes and behaviors such as commitment. etc. 1996. 2007). most of them revolve around enhancing the employees’ positive psychological experiences at workplace. On the basis of the above discussion. 2011). and Sharma and Samantara. 2006. 2003). As discussed earlier. Wollard and Shuck (2011) have identified 21 organizational factors that aid in the development of employee engagement. Mott (1972) defined organizational effectiveness as ‘the ability of an organization to mobilize its centers of power. commitment... effective organizations tend to produce better quality products and are resilient in the face of adversities. 1995). positive workplace climate. for instance. and a climate of mutual trust. engaged employees work harder and are more committed to achieve task proficiency.two-way relationship between employer and employee (Robinson et al. 2010). Three major aspects—productivity. and Welch. Several other studies have also reported a positive association between positive organizational climate and increased engagement level of employees (Hakanen et al. It has often been described as the extent to which an organization is able to achieve its strategic and operational goals. adaptability and efficiency—have been identified as primal to evaluate the organizational effectiveness (Mott. engagement has been recognized as a key to organizational success and performance. In fact. for action. 2011. 1994.. and participation. and Gelade and Gilbert. (Organ. role clarity. In this connection. The concept of organizational effectiveness has been the central focus of researchers for more than 30 years (Cho. Podsakoff and Mackenzie.. 1988. feedback. 2004). production and adaptation’ (p. 14). Though a good deal of research has shed light on the significant factors affecting organizational effectiveness. time and energy in work roles (Brown and Leigh 1996). 1988. Luthans et al.17).

. All items relating to these three sub- dimensions were measured on a seven-point scale ranging from 0 = ‘Never’ to 6 = ‘Always’. The reliability measure of this scale was 0. Cronbach alpha () for this scale was 0.g. e.0 (SPSS 17.. ‘Thinking now of the various things produced by the people you know in your division.35 years and around 67% were educated at post graduation level (management and engineering backgrounds). H1: Positive psychological climate will significantly and positively influence work engagement. ‘At my work. 3. ‘My job inspires me’). contribution. recognition. Vol. The Cronbach’s alpha () was 0. namely.g. I feel bursting with energy’). measured on a five-point scale ranging from 1 to 5. H2: Work engagement will significantly and positively influence organizational effectiveness.0) were used. how much are they producing? Their production is.g. Each item needed a different adjective as its response.g. 2013 .. Organizational Effectiveness: An 8-item scale developed by Mott (1972) was used as a measure of organizational effectiveness. Methodology Participants and Procedures The respondents in our study were executives/supervisory level employees nested within different service organizations.87. Eighty one percent of our sample population was male and the average age of the respondents was 34 years. XII.0) and the Analysis of Moments Structure (AMOS 18. doing my job well really makes a difference). so the scaling of the items was different. Absorption (e. The scale consists of 8 items. H3: Work engagement will mediate the relationship between positive psychological climate and organizational effectiveness. self- expression and challenge. management makes it perfectly clear how my job is to be done.. The scale consists of 9-items and measures three sub-dimensions of engagement. No.81. Dedication. (e. the Statistical Package for Social Science version 17. and includes a total of 21-items (e.84. Measures Psychological Climate: Psychological climate was measured using the Psychological Climate Measure developed by Brown and Leigh (1996). Vigor (e. role-clarity. The scale consists of six subscales. Work Engagement: Work engagement was measured using the Utrecht Work Engagement Scale (UWES-9) developed by Schaufeli et al. ‘I get carried away when I am working’). supportive management. Organizational tenure averaged 5. (2006).g. Data Analysis Technique For the purpose of data analysis. Data were collected from 300 participants via mail or in- person. The path 38 The IUP Journal of Organizational Behavior.. namely.

Table 2: Regression Estimates Unstandardized Coefficients Standardized Coefficients CR Remarks Standard   Error Psychological climate  0.01). c. Therefore. 2011).53.87) Work Engagement 4.95.20 0. a value less than 0.01). a nonsignificant  2 indicates a good model fit (Qian and Daniels. work engagement and organizational effectiveness (r = 0.79 8. However.57 0.86 0. Correlations and Reliability Indices of the Key Variables Variables Mean SD 1 2 3 Psychological Climate 4. 2008).47. standard deviation. the key variables were significantly correlated: psychological climate and work engagement (r = 0. acceptable value 0. reliability coefficients are presented in parentheses on the diagonal. The  2 test—tests the difference between the predicted and observed correlations. As evident from Table 1.02 H1 accepted Work Engagement Psychological Climate and Organizational Effectiveness: 39 Role of work Engagement .analysis technique was used in this study to test the proposed model.01 level.11 0. The Normed Fit Index (NFI).47** (0. p < 0.53** (0.08 is deemed as a good fit (Wijhe et al. b. 2010). p < 0. 2010). the standardized regression estimates (denoted by ) presented in Table 2 explicate a positive and significant association between the study variables. Appropriateness of the model has been assessed by applying the following indices: a. acceptable value 0. The Comparative Fit Index (CFI).07 0.41. inter-item correlation and reliability indices for the key variables. psychological climate and organizational effectiveness (r = 0.01).47 0.. Table 1: Descriptive Statistics.  2 has its limitations in rejecting the good-fitting models on the basis of poor evaluation (Giorgi. p < 0. a number of other fit indices have been recommended to assess the good-fit of the model (Giorgi.63 (0.54 0. and d. Results Table 1 presents the mean. Besides. with regard to large sample base.95.84) Organizational Effectiveness 5. The Root Mean Square Error of Approximation (RMSEA).41** 0.81) Note: **correlation is significant at 0.

the procedures of Baron and Kenny (1986) were followed. No. 2013 . 3. psychological climate and work engagement. p < 0. the following two conditions were set: (a) whether the direct path from psychological climate to organizational effectiveness was greater than the path under the condition of mediation (M1). specifying the mediated path of work engagement in M2 reduced this relationship to  = 0.972 0. Table 2 (Cont.11.48 7. results provide full support for H4. p > 0.49 0. to the criterion variable under the mediated condition was significant (M2).79** Work 0.01 Accordingly.998 Model (M2) Independence 379 51 7. Psychological climate was significantly and positively related to organizational effectiveness ( = 0.54 0. work engagement has been found to be significantly mediating the relationship between the predictor variable and criterion variable.) Unstandardized Coefficients Standardized Coefficients CR Remarks Standard   Error Work engagement  0. with the aim of placing engagement as the mediator variable. the original relationship between these variables disappeared.14 0.96 0. Table 3: Fit Indices of the Proposed Model 2 Fit Indices 2 df  df p GFI AGFI RMSEA NFI CFI Proposed 102 52 1.43 0. When we loaded work engagement into the relationship model of psychological climate and organizational effectiveness.06 0. and (b) whether the direct path from the predictors.38.995 0. e. Thus. the results (see Table 3) showed that work engagement is a full mediator between the relationship of psychological climate and organizational effectiveness.51 H2 accepted Organizational Effectiveness To test the mediation of employee engagement between the relationship of psychological climate and organizational effectiveness.605 0.520 0..996 0. Therefore.05. XII. Figure 2: Standardized Regression Coefficients Psychological 0.01). i. Vol.395 0.09 0.48** Organizational Climate Engagement Effectiveness Note: **p = 0. Since condition (a) was negative and condition (b) was positive.00 0.523 Model (M1) 40 The IUP Journal of Organizational Behavior.

2003. Formulation of HRM interventions around these factors will lead to a better return on investment on human capital management for the IT organizations and will make the HRM interventions more effective for managers and employees in general. Psychological Climate and Organizational Effectiveness: 41 Role of work Engagement . 2003). which lead to the positive activities in organizations like helping behavior. and behaviors and organizational effectiveness (Gelade and Gilbert. and Martin et al.. Specifically. and create an upward spiral of positive feelings (Cameron et al. 2002). are more likely to enhance organizational effectiveness. enjoyment of the work. and Bakker et al. 2011).. and thereby contribute to the effective functioning of organization. and Cameron et al. The findings show that work engagement fully mediates the relationship between psychological climate and organizational effectiveness in the IT context. 2003). The positive gain spiral of constructive emotions increases employees’ pride in organization. recognition. Although a few studies have investigated relationships between climate. employee attitudes. which consist of the above-mentioned climate considerations. through their positive psychological experiences and positive attitudes. 2005). 2010. These factors can be incorporated into strategic HRM interventions of organizations. role-clarity. The study explored the role of psychological climate as an engagement enhancing strategy directed towards efficaciously culminating organizational effectiveness.Discussion Theoretical and Managerial Implications The study makes multiple contributions to both theory and practice. because of employees experience higher work engagement. Organizational environments. Engaged employees.. and contribution) are positively related to work engagement. This list of positive climate aspects can be of immense help to practitioners who often struggle with the task of identifying workplace factors that can ensure employees’ favorable climate perceptions... 2001) and greater business unit performance (Harter et al. self-expression. these studies have happened in the western context and a careful and detailed identification of work engagement in the IT context has been surprisingly absent from consideration. suggesting that employees’ engagement with their work play a significant role in shaping the effectiveness of their organization. which in turn is positively related to organizational effectiveness. job challenge. The findings of the study provide support to the extant literature that has shown the value of engaged workforce in impacting variables such as financial profit (Harter et al. could further enhance the psychological climate of an organization (Wollard and Shuck. The findings suggest that the safe and meaningful working environments (supportive management.. 1996. and satisfaction with the job which are indispensable ingredients to the managerial success and organizational excellence (Fineman. 2011). managerial effectiveness (Luthans and Peterson. The study tested a conceptual model that links psychological climate in IT domain to employee wellbeing and organizational effectiveness. engaged employees often experience positive emotions (Bindl and Parker. 2003).

Engagement and Employee Behavior: A Moderated Mediation Model”. pp. First. Additionally. An important measure of future research is to evaluate organizational effectiveness with more objective data.D. Bakker A B and Demerouti E (2007). However. 42 The IUP Journal of Organizational Behavior. pp. as organizations constantly seek to augment their emotional attachment with work and achieve organizational effectiveness. data are based on self-reports. “An Evidence-Based Model of Work Engagement”. 20. Journal of Managerial Psychology. Truss C and Soane E C (2012). other indicators of organizational effectiveness like profitability. Shantz A D. in addition to the subjective measures. 309-328. Current Directions in Psychological Science. References 1. 2. 3. Roorkee.Conclusion The management of IT professionals has increasingly become important in the face of vying contemporary realities of business environment. Vol. “The Link Between Perceived Human Resource Management Practices. like experiments and longitudinal studies. 2013 . output and managerial effectiveness can be included in further studies to maximize the scope of measurement of the variable. Bakker A B (2011). No. 1-22. This study yields some relatively specific suggestions for human resource managers whose job involves maximizing workplace efficiency for enhanced organizational effectiveness. Limitations and Future Studies The study carries certain limitations that can be addressed in future research. Vol. it is likely that the method variance inflated the relationship among the study variables. Future studies should test the relationship between psychological climate and organizational effectiveness through other study designs. and thus does not provide a concrete and objective assessment. “The Job Demands-Resources Model: State of the Art”. conclusions and recommendations are those of the authors and do not necessarily represent those of the funding body. 3. The measure of organizational effectiveness captures employees’ perceptions of effectiveness in terms of productivity. Secondly. XII. the implications. 265-269. Alfes K. pp. 22. Vol. the cross-sectional design of the study does not allow for the causal inferences to be made. from the Indian Institute of Technology. The study emphasized significant climate factors that may impact organizational effectiveness and explores the mediating role of work engagement for psychological climate and organizational effectiveness in the IT context. The International Journal of Human Resource Management. Acknowledgment: The funding agency for this study was the University Grants Commission which provided a grant in the form of Junior Research Fellowship to pursue a full-time Ph. adaptability and flexibility of their firm.

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