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Financial Crisis

Job satisfaction is a general attitude towards one’s job (Robbins, 2005). Job satisfaction was chosen for the reason of it is a great concern in organization (Dharnasarnsilp, Johnson, & Chaipoopirutana 2006). It was found to lead to various employee outcomes, such as absenteeism, turnover, performance, and OCBs (Robbins, 2005). There are diverse factors that can influence a person’s level of job satisfaction. These factors include pay and benefits received, perceived fairness of the promotion system, quality of the working conditions, leadership and social relationships, and the job itself (Steijn, 2002) .

Firms that offer effective HRM practices are more likely to have satisfied employees (Bradley et al. , 2004). Past research has found that HRM practices enhance job satisfaction (Garrido et al. , 2005; Guest, 1999; Saari & Judge, 2004). For example, Garrido et al. found that training is positively related to job satisfaction. The provision of opportunities for training and skill development enhances job satisfaction through the benefits the employee receives by equipping them with the necessary knowledge, skills, and attitudes to function autonomously and responsibly (Guest, 2002).

Moreover, Saari and Judge found that training employees in their potentials enhances employee’s job satisfaction. Implementing training practices aimed at developing human capital positively affects worker satisfaction for the reason that training programs influence employees’ perception on their value to the organization (Garrido et al. , 2005; Ubeda, 2001). At the same time, competitive compensation programs and promotional opportunities positively influence job satisfaction as it gives an employee a sense of security and other extrinsic needs (Igalens & Roussel, 1999; Garrido et al. , 2005; Ting, 1997).

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Similar to the findings of previous studies, it is predicted that HRM practices are positively related to job satisfaction. Organizational Trust Trust is an individual’s expectation, assumption, or belief about the likelihood that another’s future action will be beneficial, favorable, or at least not detrimental to one’s interests (Meyer et al. , 1995; Kramer & Tyler, 1996). Trust has been discussed in literature as an extremely important issue for employment relationship and as a potential tool to improve organizational performance. Several aspects of this definition call for elaboration.

First, trust is a social phenomenon (Blau, 1964; Luhamann, 1988; Sztompka, 1999; Zand, 1972). Second, trust is based on the expectation that another individual will act generously towards one based on history experiences (Meyer et al. , 1995). Third, the definition clearly recognizes the relationship between trust and risk (Zand, 1972). Trust can be affected by three distinct factors. These are ability, benevolence, and integrity (Meyer et al. , 1995). Johnson, George, and Swap (1982) and Meyer et al. (1995) emphasized that willingness to take risks may be one of the few characteristic common to all trust situations.

Trust is not taking risk itself, but rather it is a willingness to take risk. Kee and Knox (1970) argued that to appropriately study trust there must be some meaningful incentives at risk and that the trustor must be aware of the risk involved. Previous studies have shown that HRM practices are related to organizational trust (Chen, 2004; Tzafrir, 2003). Performance appraisal practices increase trust in supervisor and management (Whitener, 2001). In addition, Mayer and Davis (1999) found that implementing effective compensation leads to a significant increase in trust in management.

Trust appears to be an essential intangible resource in organizations (Tzafrir & Dolan, 2004). HRM practices provide organizations with a sustainable source of competitive advantage that are more pronounced when socially complex resources are present like trust, friendship, and teamwork (Barney, 1995, as cited by Gould-Williams, 2003). This study hypothesizes that HRM practices will be positively related to organizational trust. Whitener (1997) argues that the levels of trust inside the organization can influence employee’s perception. Thus, effective HRM practices could elicit employees’ trust in management (Mathebula, 2004; Whitener, 1997).

The social exchange framework could serve as a theoretical explanation linking HRM practices and trust. The giver, object, and the receiver are the elements involved in the social exchange process. The giver is the one initiating the social exchange process. The object is the subject matter of the exchange and the receiver is the one who returns the favor. The social exchange involves employee’s interpretation of managerial practices, procedures, and actions and reciprocates to the organization in the form of organizational trust (Blau, 1964; Whitener, 2001).

When management uses procedurally fair practices, it affects employees’ trust in management because these procedures demonstrate respect for the rights and dignity of individual employees (Folger & Konovsky, 1989). For example, the expectations and obligations that are not fulfilled by the organizations in employment security will decrease and fail to develop organizational trust (Robinson & Rousseau 1994, as cited by Whitener, 1997). Hence, positive interpretation of HRM practices will lead to organizational trust.

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