204 Int. J. Indian Culture and Business Management, Vol. 12, No.

2, 2016

Relation between human resource development

climate and organisational commitment: empirical
study in Indian banking sector

Shweta Mittal*
Institute of Management and Research,
8th Milestone, Delhi-Meerut Road,
Ghaziabad, UP, India
Email: shwetamittal11@gmail.com
Email: f12shwetam@iimahd.ernet.in
*Corresponding author

Vishal Gupta
Indian Institute of Management Ahmedabad,
Vastrapur, Ahmedabad, 380015, Gujarat, India
Email: vishal@iimahd.ernet.in

Manoj Motiani
Indian Institute of Management,
Prabandh Shikhar, Rau Pithampur Road,
Indore, Madhya Pradesh, 453556, India
Email: manojm@iimidr.ac.in

Abstract: The present study examines the relationship between the three
subsets of HRD climate i.e., HRD mechanisms, general climate and
OCTAPAC with the organisational commitment in the Indian banking sector.
Data was collected using a survey questionnaire from 203 bank employees
working in the public and private Indian banks. Data analysis was performed
using structural equation modelling and study found that there is a positive
relationship between HRD mechanisms, general climate and OCTAPAC with
organisational commitment. So, the organisations which have a favourable
HRD climate are more committed in their organisation. Implications for
research and practice are discussed.

Keywords: HRD climate; HRD mechanisms; general climate; OCTAPAC; HR

practices; organisational commitment and banking sector.

Reference to this paper should be made as follows: Mittal, S., Gupta, V. and
Motiani, M. (2016) ‘Relation between human resource development climate
and organisational commitment: empirical study in Indian banking sector’,
Int. J. Indian Culture and Business Management, Vol. 12, No. 2, pp.204–223.

Biographical notes: Shweta Mittal is an Assistant Professor of HRM in the

Institute of Management and Research. Her research interests include HRD,
performance management system, employee commitment, compensation and
banking management.

Copyright © 2016 Inderscience Enterprises Ltd.

 Relation between HRD climate and organisational commitment 205

Vishal Gupta is an Assistant Professor in the organisational behaviour area at

the Indian Institute of Management Ahmedabad, India. He obtained his
Doctorate in Human Resource Management from the Indian Institute of
Management Lucknow, India in 2013. His research interests include leadership,
creativity, organisational justice, R&D management and high-performance
HRM.

Manoj Motiani obtained his FPM from IIM Ahmedabad. He is currently

working as an Assistant Professor at Indian Institute of Management,
Indore. His research interests include Sales management, service marketing and
neuro-marketing.

No company, and no country, can afford to ignore the need to compete.

Every company, and every country, must try to understand and master
competition.
Porter (1998, p.1)

1 Introduction

Kent (1996) defined a bank as “an organization whose principal operations are concerned
with the accumulation of the temporarily idle money of the general public for the purpose
of advancing to others for expenditure”. The banking sector in the 21st century will play
a crucial role in the economic wellbeing of a country as well of the world. Khan (2004)
argued that the banking sector is the one of the most sensitive business all over the world
and plays a significant role in contemporary world of money and economy of any country
and India is no exemption (Bollard et al., 2011). Latest reforms in the banking sector
(Reddy, 2005) and globalisation in totality is influencing all industry in India including
banking (Subbarao, 2008). The whole Indian banking industry is going through a
paradigm shift and requires a new HR competencies and capabilities to face the new
challenge (Jalan, 2002; Leeladhar, 2005; Nair, 2006).
Today there is a need to build skilled and knowledgeable employees in the banking
sector who can not only satisfied existing customers but can also attract new base of
customers, which in turn will leads to long term sustainable profits for the bank (Nguyen
et al., 2011). Several studies have suggested that human resource (HR) is the key factors
for establishing the competitive advantage and responsible for the success or failure in
organisations (Guthrie, 2001; Huselid, 1995; Wood and de Menezes, 1998). Specifically,
in banking sector, HRM practice play a significant role in making banking systems
efficient and lucrative, prerequisites for enhanced services for customers (Haines and
St-Onge, 2012; Vemić-Đurković et al., 2013). Strategic HRM practices, ensures that
employees become more competent which can provide a competitive advantage to the
organisation (Quresh et al., 2010). HR is of paramount importance in the service sector
like banking compared to a manufacturing sector because of the distinguished service
characteristics of intangibility, inseparability, heterogeneity and perishability
(Parasuraman et al., 1985). These service characteristics do affect the service business in
terms of the operation aspect as well as HR issues.
Berger and Humphrey (1991) have found that inefficient human resource in the
banking sector is a bigger problem than the scale and scope of activities. In the past,
206 S. Mittal et al.

managers stress on improving the output ignoring the development and training of their
employees which is essential for efficient and satisfied employees (Barrows and Wesson,
2000; Gazioglu and Tansel, 2006). But now both employees and employers have realised
the need for employee development and are focusing toward developing an environment
where employee can develop themselves to meet the changing need of business
environment. The results of a survey of London University graduates conducted by
Prickett (1998) have found that 90% of employee expect their employer to help in them
in their self-development. Holbeche (1998) found that one third of her sample of
high-fliers would join another company if they did not get an opportunity to enhance their
skills in existing organisation.
Organisations are also making considerable efforts and investments to meet the
development needs of their employee due to its important role in overall business
strategy. For example, Losey (1999) and Spangenberg et al. (1999) has found that
organisations with human resource development (HRD) and workplace learning
strategies have become efficient in responding to dynamic business needs. In the context
of banking sector there is a need for focused effort in human capital development, to help
public sector and old private banks to become competitive (McKinsey, 2010). Today
banking sector needs to realign their HR practices like recruitment, career development
and strong staff management, to match the new challenges in banking sector (Deolalkar,
2010). Banking sector needs to build staff morale, organisational culture and training,
retraining to make their employee competent to achieve productivity excellence (Bhasin,
2011; Ghosh and Singh, 2010).
Introduction of new technology has brought several challenges and opportunities to
banking sector (Nair, 2006, 2006). HRM will play a significant role in effective
implementation of new technology by helping in development of required competence in
their existing employees (Leeladhar, 2005). In spite of new technology the quality of
banking is largely dependent on the employees who deliver the services (Khandelwal,
1996). So, the banks require engaging the human capital with the appropriate skills to
utilise the opportunities, adapt and rise above the challenges (Bhatt, 2013; Ernst &
Young, 2013).
Effective and efficient management of the HRs, requires streamlining HR practices
(BCG et al., 2011). For example, banks in the country need a makeover in their HR
practices. HR practices employed by organisation will eventually determine the
competence level of employees which in turn can be the source of sustainable advantage
for organisations (Barney and Wright, 1998). Drucker (1993, p.180), laid the stress on the
importance of HRD when he said that “employing organisations of all kinds – businesses,
government agencies, non-profits – must become institutions of learning and teaching as
well”. The term HRD was first given by Leonard Nadler in 1969 who defined it as a
series of learning experiences organised within a specified time to bring about the
possibility of behavioural change (Nadler, 1969). Vollenweider (2010) has laid stress on
the importance of investing in the human capital development for the banks. Ignoring the
importance of HRD approaches has led to the financial losses of the banks (Ramu, 2008).
Rao (1987) defined HRD as the process by which people are helped to acquire
competencies which possibly include knowledge, skills, abilities and values. According
to the author, HRD in the organisation context is a process by which employees are
helped in a continuous and planned way to:
 Relation between HRD climate and organisational commitment 207

a perform functions with respect to their present or expected future roles

b develop their own capabilities as individual and exploit their own potentials for their
own and organisation development
c develop an organisational culture where supervisor – subordinate relationships,
teamwork and collaboration among subunits is high and contribute to the employee
motivation, welfare and pride.
The HRD activities of the organisation work for the development and enhancement of the
employee’s competencies.
The HRD climate of an organisation plays a vital role in the development of
employees to make sure that they become competent and motivated (Patel, 1999). HRD
climate is an important variable in converting HRD practices into organisational
performance, that is, HRD practices leads to the efficiency of the organisation with the
help of HRD climate and HRD outcomes (Mufeed and Gurkoo, 2006). Thus, HRD
practices and processes provide foundations for developing HRD climate. To be
competitive and dynamic, it is important for the organisation to have an optimal level of
development climate. It is HRD climate that aids in the efficient execution of the HR
systems so the development and management of a congenial HRD climate is a must
(Krishnaveni, 2008). Rao and Abraham (1986) has argued that for the facilitation of HRD
processes it is essential to create HRD climate.
The present study is based on the banking/service sector where HRD is imperative for
the success. A key determinant of bank success lies on how efficiently they manages its
HRs and responds to changes to meet the criterion of global standards (Gupta, 2003). A
successful firm in banking should evaluates itself on an ongoing basis with the focus on
continual up gradation (Gupta, 2003). In such situation HRD practices become
imperative to achieve bank’s long term goals. The importance of HRD has lately been
realised even in developing countries like India. A report on global employee
engagement by White (2011), found that 23% of the employees in Indian rated
development avenues and training as the most important parameters for improving their
performance, followed by 21% who rated the periodical feedback about their
performance (Blessing, 2011). These findings indicate the importance of developmental
climate in Indian organisations. However, there is a lack of studies conducted on this
topic in the Indian context. The present study attempts to address this gap.
The present study explores the relationship between HRD climate and organisational
commitment by first exploring the concepts of HRD climate and organisational
commitment, then justifying the relationship by placing it in the social exchange theory
framework (Gouldner, 1960). Finally, the relationship is tested on a sample of 203 bank
employees. The findings support the hypothesis that HRD climate has a positive impact
on organisational commitment.
The study has been organised as follows. Following the introduction, the first section
presents the literature review. The second section describes the hypothesis development.
The third section presents the methodology, data analysis and results. The fourth section
concludes the study.
208 S. Mittal et al.

2 Literature review and hypothesis development

2.1 HRD climate

Denison (1990) has defined climate as a set of conditions that exist and have an impact
on individual’s behaviour. This he believed is different from the culture, which is deep
rooted in the organisation as the values, beliefs and assumptions held by the employees of
the organisation (Denison, 1996). French et al. (1985) has said that the climate is “the
relatively persistent set of perceptions held by organisation members concerning the
characteristics and quality of organisational culture”. In this way the authors explain the
difference between the culture, which they see as the real or existing situation and
climate, which they describe as perceptions reality as perceived by the employees. HRD
climate is the perception of employees towards the development climate prevalent in the
organisation (Rao and Abraham, 1986).
The HRD climate, which is developmental in nature considers the employees as the
most important resource, enhancing the skills of the subordinates is the job of every
manager, having a faith in the capabilities of the employees, open communication,
fostering risk taking and experimentation, taking interest to help employees knowing
about their strengths and weaknesses, providing a climate of trust, collaboration and
autonomy, supportive personnel policies and HRD practices. An optimum level of
development climate is required for facilitating HRD activities (Rao and Abraham,
1986). The positive HRD climate refers that the existing systems becomes more effective
and the organisations become more open to the new relevant additional system (Athreya,
1988). A healthy HRD climate certainly strengthens the entire internal environment and
fosters employee commitment, involvement and satisfaction with the job (Mishra et al.,
1999).
HRD climate can be broadly classified into three dimensions: general climate,
OCTAPAC and HRD mechanism by Rao and Abraham (1986). The general climate
shows the concern which the top management has towards the development of their
line managers. OCTAPAC is an acronym comprises of openness, confrontation,
trust, autonomy, proactivity, authenticity and collaboration. HRD mechanisms measures
the extent to which the HRD mechanisms like performance appraisal, potential
appraisal, career planning, performance rewards, feedback and counselling, training,
employee welfare, job rotation, etc. are used effectively in the organisation (Rao and
Abraham, 2010). Abraham (1989) conducted a survey in 68 Indian organisations
to find the perception about the HRD practices. He measured the various elements of
HRD including performance management practices, training, career planning,
promotions, rewards, etc. and the HRD climate (openness, collaboration, trust,
authenticity, proaction, autonomy, confrontation). He prepared the growth profile of the
company’s profitability as a construct of organisational performance. The research
showed that the HRD profile is not related with the company’s performance but the HRD
climate is positively related to it. It logically follows that the HRD climate is an important
tool to convert HRD practices into profit. A series of studies have been undertaken to
understand the impact and state of organisational HRDC.
Many researchers have studied HRD climate in Indian organisations. The researchers
have found OCTAPAC culture, integrity, participation, training and development, fair
 Relation between HRD climate and organisational commitment 209

compensation, corporate philosophy, superior-subordinate relationships and respect for

the individual are some of the essential parameters impacting the HRD climate in
different business organisations like hospitals, educational institutes and banking and
finance (Alphonsa, 2000; Jain et al., 1997; Kalburgi, n.d.; Kumar and Patnaik, 2002;
Mishra and Bhardwaj, 2002; Murthy and Gregory, 1989; Rodrigues, 2005; Rohmetra,
1998; Srimannarayan, 2009; Venkateswaran, 1997). The recent researches in the banking
sector taking HRDC in consideration. The study done by Mittal (2013) has found that
HRD climate in public banks in India is better than private banks. She found that two
subsets of HRD climate i.e., general climate and HRD mechanisms of public banks are
better than private banks. The study done by Akinyemi (2014) about the assessment of
HRDC in selected commercial banks in Nigeria found that it is perceived at an average
level by respondents and also by gender categories. Mittal (2014) reported the perception
of employees towards HRD climate according to age, income and experience in the
Indian banking sector. The study found that employees with different age and experience
have different perceptions towards the general climate, HRD mechanisms and
OCTAPACE. In OCTAPACE it differs with income too. In an another study done by
Mittal and Verma (2013) found that perception of employees towards general climate in
SBI bank in Bhopal does vary according to the age, experience and qualification,
OCTAPACE according to the age and experience whereas HRD mechanisms according
to experience.
In addition, several studies found favourableness of development climate in different
forms of organisations (Erramilli et al., 2002; Jain et al., 1997; Mishra and Bhardwaj,
2002; Rao and Abraham, 1986; Rohmetra, 1998; Srimannarayan, 2009). Recently several
studies have investigated the relationship between HRD climate and attitudinal and
behavioural outcomes (Ahuja, 2002; Jain et al., 1997; Kumar and Patnaik, 2002; Purang,
2008; Rohmetra, 1998). Purang, (2008) studied the relationship between various
dimensions of HRD climate and organisational commitment in Indian organisations. The
study measured HRD climate using the instrument developed by Daftuar (1996) which
has ten dimensions of the HRD climate. Result of the study suggested that four
dimensions of HRD climate, namely, career planning, appraisal, job enrichment and
organisational development are significant predictors of Organisational Commitment of
middle level managers. Benjamin (2012) from Nigeria has done a research on HRD
climate and employee commitment in recapitalised Nigerian banks. He has used
regression and correlation by SPSS to find the predictor effect and relationship between
the subsets of organisational commitment and HRD climate. His research shows that
HRD climate influences affective commitment more than it does for continuance and
normative commitment. In our study we have analysed the three subsets of HRD climate
i.e., HRDG, HRDO and HRDM on organisation climate. In this research structural
equation modelling (SEM) a quantitative research technique has been used which is more
robust than other techniques. The convergent and discriminant validity has been
measured for both the construct. The unit of analysis is the banking sector in India and
the results shows the positive effect of HRDG, HRDO and HRDM on the organisational
commitment. Our study is first of its kind to measure the subsets of HRD climate with
organisational commitment in the banking sector.
210 S. Mittal et al.

2.2 Organisational commitment

Organisational commitment is a concept or construct which is highly researched. So,
certain category of authors have cautioned that it should not be misunderstood with
‘motivation’ or ‘attitudes (Brown, 1996; Scholl, 1981), has suggested that commitment
work independently in impacting the behaviour of employees apart from its personal
motivation and interests. So, the organisational commitment leads to loyalty as well as
identification with the organisation has given a very crisp and clear definition of
organisational commitment; he rates the committed employee as the one who identifies
and has a strong involvement in an organisation. He has stressed those three different
components – a strong conviction and acceptance in the organisation’s principles and
aims, a considerable readiness to work hard for your own organisation and willingness to
remain a part of it. With the changing times the employee and employer relationship has
undergone a change. The employees in today’s scenario cannot find the lifelong security
in a job and becomes imperative to change the job. These global trends are acting as a
challenge to research on how the employees perceive the workplace and behaviour,
including, the concept of organisational commitment (Allen and Meyer, 1990; Klein
et al., 2012; Meyer and Allen, 1997; Mowday et al., 1982). The commitment is also
considered as a driver of high service levels (Clark et al., 2009).
In general terms, organisational commitment is the attachment an employee has
towards its organisation. Meyer and Allen (1997, p.3), stated, that a “committed
employee is one who will stay with the organization through thick and thin, attends work
regularly, puts in a full day (and maybe more), protects company assets, and who shares
company goals” (p.3). There are three subsets of organisational commitment namely
affective, continuance and normative commitment.
Meyer and Allen (1991, p.1) have defined “affective commitment refers to the
psychological attachment to the organization, continuance commitment refers to the costs
associated with leaving the organization, and normative commitment refers to a perceived
obligation to remain with the organization” (p.1). Meyer and Allen (1997) have suggested
that the employees with a strong commitment to the organisation will be more valuable
than the employees who have a weak commitment. Randall (1990) has found a positive
relationship between organisational commitment and attendance, punctuality, long tenure
with the organisation, efforts and job performance. The research studies have found a
strong positive relation when the focus is on role – performance (key performance areas)
and extra – role – performance (behaviours which are beyond the work profile of an
employee) (Leong et al., 1994). Many studies support the results that organisational
commitment is inversely related to turnover (Becker, 1992; DeConinck, 2010; Meyer and
Stanley, 2002). Therefore, the relationship between organisational commitment and
desired workplace outcomes are of great interest to HRD managers.

2.3 Hypothesis development

The role of HRD is to contribute and build a value – creation, developing capabilities so
that firm can sustain in a fluid economy and utilises the resources of the organisation
(Lengnick-Hall and Lengnick-Hall, 2003). HRD’s stress is to build learning and
knowledge oriented environment. Its main concern should be action-learning and the
executives should be driven in dialogue about the challenges which the organisation’s is
facing (Breitfelder and Dowling, 2008). HRD in a knowledge-based economy plays a
 Relation between HRD climate and organisational commitment 211

very important role as its main concern is learning and development initiatives. It fosters
the innovation and creativity in organisation, develop the leaders and competent work
force and higher growth with enhanced employee commitment.
These HRD practices are important predictors of HRD climate with organisations
who have a better learning, training and development systems, reward and recognition
and information systems in promoting HRD climate (Hassan et al., 2006). It is of the
paramount importance to have the optimal level of this ‘developmental climate’ for
facilitating HRD. Researchers have done considerable research how the different aspects
of HRD climate are related with the performance as well as the attitude of employees.
For, e.g., Kuvaas and Dysvik (2010) reported that employee’s perception of the
management’s commitment to develop employees by acquisition of new skills and
competencies are positively related with the performance and desirable work place
attitudes. HRD climate makes the organisation effective by resulting in better outcomes
in terms of competent, satisfied, committed and dynamic workforce (Mohanty and
Routray, 1999). In addition, Srimannarayan (2009) cited that a favourable HRD climate
strengthened the overall internal environment of the organisation, makes employee
commitment, involvement and satisfaction with the job enhanced (Mishra et al., 1999).
Giving the stress on HRD have resulted into various positive individual and
organisational outcomes such as higher performance (Sandberg, 2000); high quality
individual and organisational problem solving (Schroder, 1989); enhanced career plans
and employability (Raider and Burt, 1996); sustainable competitive advantage
(Nordhaug, 1998; Winterton and Winterton, 1996); higher organisational commitment
(Iles et al., 1990) and enhanced organisational retention (Robertson et al., 1991).
Nordhaug (1989, p.373) had earlier noted that “HRD activities in work organizations
may have a substantial rewarding potential and are thereby an implicit part of reward
systems” (p.373). HRD climate provides the climate in which the development of the
employees takes place. Drucker (1999) said that that the knowledge workers should be
considered assets by their managers and provides them with the occasions so that they
develop and be creative by the constant professional education. The enhancement of the
skills and proper utilisation instils the confidence and the urge to maintain long term
relations between employees and the organisation and apart from it, it fosters the feeling
of organisational support (Meyer and Smith, 2000). These developmental activities,
makes the employees belief in the organisational support, which will enhance the
relationship between knowledge workers and the organisation. Whitener (2001) has
researched and found an important relationship between the degree of organisational
commitment and employees’ perception of organisational support. Employees get obliged
for the support and in return are more committed towards their employer and intention to
quit. This link has been researched by various authors (Eisenberger, 1990; Hutchison,
1997; Shore and Tetrick, 1991; Shore and Wayne, 1993). As per the social exchange
theory if the organisations takes care of the employees, develops them and enhance their
skills this is in turn fosters feeling of gratitude or obligation and in this process they
become more committed with the organisation. The study done by Liu and Wang (2001)
found that personal development opportunity are positively related to organisational
commitment towards their organisation and even organisation can affect employee
commitment by recognising and gratifying their development (Weng et al., 2010). The
studies done by Chew and Chan (2008), Scott-Ladd (2006) and Sharma and Chandra
(2011) has found that recognition plays an important role in improving organisational
212 S. Mittal et al.

commitment. Similarly, HRD and HRD climate suggest that HRD climate makes the
environment favourable, developing the committed workforce.
The HRD climate is comprised of three subsets HRD mechanisms, OCTAPAC and
general climate. HRD mechanisms refers to the HRM practices. HR management
practices are important parameters for influencing the psychological contract (Lucero and
Allen, 1994; Parks and Schmedemann, 1994); some theorists have pointed that “a major
function of HRM is to foster an appropriate psychological contract” [Rousseau and
Greller, (1994), p.385].
Guzzo and Noonan (1994) believed that an organisation’s HR practices influence
demployee commitment as they were communications employees gets from the
employer. The way employees understood their employer’s practices affected their
psychological contract with their employer and, hence, their commitment towards that
employer. An employee’s commitment towards an organisation fosters due to an
exchange relationship (Gouldner, 1960; Shore and Tetrick, 1991). This exchange
relationship has been examined in the light of social exchange theory (Blau, 1964;
Gouldner, 1960). Social exchanges possibly will include reciprocity (Blau, 1964).
Reciprocity has been defined where the recipient of benefit is obligated to pay back to the
donor in some manner (Gouldner, 1960). The employer/employee relationship can be
judged as social exchange. The employer recognises the efforts provide good prospects
and in return employees’ feels obligated to pay back and becomes more committed to the
organisation (Tansky and Cohen, 2001). HRM practices and policies have been found to
be reason to increase OC among employees (Agarwala, 2003; Arthur, 1994; Meyer and
Smith, 2000; Ogilvie, 1986). Landau and Hammer (1986) found that employees who
perceived the better prospects in their organisation are more committed. Bartlett (2001)
found that the OC has a positive relationship with training. The research done by
Slocombe and Bluedorn (1999) and Chang (2005) has found that performance appraisal
has positive influence on organisational commitment. According to Edgar and Geare
(2005) it was found that staffing (recruitment and selection), training and development,
equal employment opportunities and working condition shave positive influence on
organisational commitment. In fact, OC has a positive influence on training (Bartlett,
2001), salary levels (Ritzer and Trice, 1969) and performance reward contingencies
(Rhodes and Steers, 1981). Ogilvie (1986) conducted a study and found that the HRM
practices of an organisation have a direct influence on commitment. It was examined that
the perception of the precision of the merit system and the justice of promotions
accounted for the most variability in commitment.
H1 HRD mechanism positively affects the organisational commitment.
“Perceptions of work conditions, supervision, compensation, and advancement,
relationships with colleagues, organization rules, decision-making practices, and
available resources comprise the climate of an organization” [Pace, 2002, p.40]. Such
perceptions basically denote employees’ assessment about the relationships with their
supervisors. So, the immediate supervisors, leading hands and foremen will be crucial in
forming a positive climate that will enhance commitment to the organisation. The HRD
general climate also comprises of supervision, work conditions, organisation rules and
etc.
H2 HRD general climate positively affects the organisational commitment.
 Relation between HRD climate and organisational commitment 213

Based on the concepts of social exchange (Blau, 1964) and the norm of reciprocity
(Gouldner, 1960) several authors found that, investing in employees’ development
encourages a climate characterised by trust, cooperation, socio-emotional attachment and
long-term orientation (Bowen and Ostroff, 2004; Collins and Smith, 2006; Shore and
Barksdale, 1998; Tsui and Pearce, 1997). Social exchange theory suggest that
(Cropanzano and Mitchell, 2005), employees want to do well to their organisation
(Batson, 1990). Hall et al. (1970) have found that autonomy is positively related to
organisational commitment. Mayer and Schoorman (1998) have suggested that
participation positively influences organisational commitment. Steers (1977) also
suggested that there is a positive relationship between the autonomy and trust dimensions
of organisational climate and commitment. These dimensions are part of OCTAPAC.
H3 OCTAPAC is positively related to the organisational commitment.

3 Method

3.1 Sample and data collection

The sample size is 203 which are taken from both public and private banks of India. The
target population consisted of managerial and non-managerial personnel of the banks.
The survey was conducted between January–August 2014. The questionnaires were
distributed randomly among the employees, in consideration of their availability in the
organisation. The sample consisted of 172 males (75.1%) and 31 females (13.5%),
104 employees (45.4%) were graduated, 91 employees (39.7%) were post graduated and
8 employees (3.5%) were others.

3.2 Measures
The measures used in the study are described below, along with the results of
confirmatory factor analysis (CFA) done for the each measure. All measures were
self-reported by the employees.

3.2.1 Organisational commitment

The perception of employees towards the organisational commitment was measured with
the self-report organisational commitment questionnaire (OCQ) developed by Meyer and
Allen (1997). OCQ has 18 items (six items for each sub-scale called affective, normative
and continuance) andresponses to the items are rated using a seven-point Likert scale and
ranging from 1 strongly disagree to 7 strongly agree. In this questionnaire, items 2, 8, 10,
12 and 14 got the reversed score. We choose Meyer and Allen (1997) scale because
several studies have assessed its construct validity (Meyer and Stanley, 2002) and it was
also found valid in Indian context (Namasivayam and Zhao, 2007). The response was
measured using a seven-point Likert scale ranging from 1(strongly disagree) to 7
(strongly agree). The model comprising of the first three – order factors plus one
second-order factor of organisational commitment showed good fit with the data (χ2[130]
= 170, CFI = 0.99, RMSEA = 0.03, SRMR = 0.06, NFI = 0.97, GFI = 0.91).
214 S. Mittal et al.

3.2.2 HRD climate

Rao and Abraham (1986) developed survey to measure HRD climate using the 38-item
HRD climate survey developed by. The 38 items used in the questionnaire can be
grouped into three categories such as general climate, OCTAPAC culture and HRD
mechanisms. The OCTAPAC items in the questionnaire tells to what degree openness,
confrontation, trust, autonomy, proactivity, authenticity, collaboration and
experimentation are valued and promoted in the organisation. The items comprising HRD
mechanisms measures to what extent HRD mechanisms are taken seriously. The general
climate items deals with to what extent top management is concerned about their
employees.
The HRD climate questionnaire uses a five-point scale (almost always true, mostly
true, sometimes true, rarely true, and not at all true) with a middle score of 3 indicating a
moderate tendency on that dimension existing in that organisation. Scores around 4
indicate a fairly good degree of that dimension existing in the organisation. In order to
make interpretations easy the mean scores can be converted into percentage scores using
the formula percentage score = (mean score – 1) × 25. This assumes that a score of 1
represents 0%, 2 represents 25%, 3 represents 50%, 4 represents 75% and 5 represents
100%. Thus, percentage scores indicate the degree to which the particular dimension
exists in that company out of the ideal 100 (Rao and Abraham, 1986). The model
consisting of the three first-order factors showed good fit with the data (χ2[662] = 1697,
CFI = 0.95, NNFI = 0.95, SRMR = 0.04, RMSEA = 0.066).

4 Results

4.1 Discriminant and convergent validity

The average variance extracted (AVE) for the general climate, OCTAPAC culture and
HRD mechanism , Affective Commitment, Normative Commitment and Continuous
Commitment are .54, .57, .59, .61, .64 and .60 respectively while the composite reliability
is .93, .94, .95, .90, .91and .90 respectively (Bagozzi and Yi, 1988). Further the
composite reliability is greater than the AVE and AVE is greater than .50 for all the
factors supports that the items represents the same construct (Fornell and Larcker, 1981).
To further test the discriminant validity, the AVE for each factor was compared with and
exceeded the squared correlations between that factor and all other factors (Fornell and
Larcker, 1981) (see Table 1).
The study was conducted at the individual level of analysis. The Pearson correlation
among the study variables are given in Table 1. Table 1 provides correlations among the
two constructs and reliabilities. All the correlation coefficients were significant. All
measures showed the adequate levels of reliability (.80–.90).
The data for this study has been taken from the single survey, due to this, common
method variance was possible (Podsakoff and Organ, 1986). Harman’s one – factor test
was used to check for common method bias. For this test, we hypothesised to load on a
single factor that represented the common method. All the 56 items were included in a
one factor model using the IBM SPSS Statistics 22. The result showed that, the first
factor accounted for 37% of the variance. Therefore, common method bias was not a
serious concern in this study.
 Relation between HRD climate and organisational commitment 215

Table 1 Correlations and descriptive statistics

HRDG HRDO HRDM CA CC CN

HRDG (.92)
HRDO .49** (.94)
HRDM .46** .46** (.95)
CA .73** .50** .45** (.91)
CC .52** .73** .41** .47** (.92)
CN .36** .38** .66** .38** .28** (.90)
Mean 3.5 3.6 3.6 5.4 5.1 5.7
SD .79 .83 .84 1.1 1.3 0.95
AVE .54 .57 .59 .61 .64 .60
CR .93 .94 .95 .90 .91 .90
Note:** Correlation is significant at the 0.01 level (two-tailed)

4.2 Hypotheses testing

The study was conducted at the individual level of analysis and LISREL 8.52 was used to
analyse the data. The latent variable structural equation modelling (LVSEM) was adopted
to test the hypothesis. LVSEM tests the relationship between the number of independent
and dependent variables in a single analysis and provides us with the specifications of the
measurement as well as structural relations.

Figure 1 Structural path model with standardised coefficients

HRD 1
AC 1

HRD 12
General AC 6
climate AC
HRD 13
CC 7

Employee
OCTAPAC CC
commitment

HRD 24
CC 12
HRD 25 NC
HRD
mechanism NC 13

HRD 38
NC 18

Note: All paths are significant at p < .01

216 S. Mittal et al.

The results of LVSEM are given in Figure 1. The fit indices of the structural model
showed the good fit with the data (χ2[1,471] = 2,206.80, p < .01, CFI = .97, RMSEA =
.05, NFI = .94 , GFI =.72 ). The model showed that all the paths are significant. HRDG is
significantly related to organisational commitment (β = .51, p < .01), HRDO (β = .51, p <
.01) and HRDM (β =0.30, p<0.01) both are positively related to organisational
commitment. The results show the positive effect of HRDG, HRDO and HRDM on the
organisational commitment and support the entire three hypotheses.

5 Discussion

5.1 Implication for research and practice

The results of our study have strong implications for both research and practice. The
study shows that HRD climate can significantly predict the organisational commitment.
Organisations that have a favourable HRD climate are more likely to have a committed
workforce. Researchers have found the different aspects of organisational climate to be
associated with organisational commitment (Steers, 1977). In our study we have found
that all three subsets of HRD climate i.e., HRD general climate, HRD mechanisms and
OCTAPAC are positively related to organisational commitment in the Indian banking
sector.
Given that HRD mechanisms are positively related to OC, , the organisations should
have high-performance HR practices like performance appraisal, potential appraisal,
career planning, performance rewards, feedback and counselling, training and job
rotation and should ensure that they are well executed. This will lead to a committed
workforce in the organisation which will be more dynamic in the market.
HRD general climate consists of top management, line management’s support with
the positive attitudes towards development. It helps the employees to grow in their career
in turn making them committed towards their organisation. Finally, we have found that
OCTAPAC is positive related to employee commitment. If the organisation culture
comprises of openness, confrontation, trust, autonomy, proactivity, authenticity and
collaboration, the employees will be committed as they can voice their ideas and take the
responsibility of executing it with their colleagues. Drucker (1999) has observed that the
organisation’s managers should consider their knowledge workers as an asset, by
providing them appropriate opportunities to be innovative in their work by continuously
giving them professional training and education. The HR department should improve the
HRD climate especially the support of the top management and line managers and should
stress on the fair and successful implementation of the HRD mechanisms like career
planning, performance appraisal, training, job rotation and potential appraisal. Even the
OCTAPAC should become the part of the existing culture as all the three dimensions of
HRD climate are found to most significantly predicted organisational commitment as
shown by the study results. Gründemann et al. (2005) has said that the organisations are
differentiated on the basis of open and respectful culture where it is coupled with
developmental opportunities and one to one employment relationship so that the talented
professional can opt for it. The support the top management coupled with the HRD
mechanisms and OCTAPAC culture is likely to increase the dedication and commitment
of employees. This could be an important parameter that these resources could trigger
 Relation between HRD climate and organisational commitment 217

motivational process through which they satisfy their needs such as the need for
autonomy, competence and relatedness (van den Broeck et al., 2008).

5.2 Scope for future research and limitations

The present study analysed the impact of HRD climate on employee commitment there
can be more variables which can influence employee commitment. The nature of
industries could be changed and even the sample size can be increased for the
generalisation of the results. The study had several limitations. First, the sample was
drawn from a limited number of organisations. To understand the developmental climate
and its influence on the employee commitment a larger sample size is required. Secondly,
this study does not incorporate how the changes in HRD climate will influence employee
commitment. To overcome this limitation a longitudinal study could be an interesting
area to be researched.

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