The Relationship between Human Resources Practice, Work-Life Balance, and Employee Engagement: An Empirical Study in Indonesia

Abstract

This study examines the role of effective human resource practices and work-life balance in various organizations and their relationship with employee engagement. The data for this study were obtained from 723 employees from various industries in Java. The result suggests that human resource practice alone did not influence employee engagement. However the human resource policy helps develop a sense of WLB for an employee, which in the long run will affect the level of engagement. Thus, work-life balance enables the relationship between employees and their workplace. This study also encompasses current literature regarding huan resource policies in understanding employee engagement through work-life balance. This study provides exploratory findings regarding HR function practices, WLB, and employee involvement in service organizations. It proved that participants from four organizations reported very positive impressions about HR practices and they were also very involved in their work and organization. While their balance still needs to be improved, this may imply that the participants are not happy with their work lives. The main finding of this study is that WLB plays a mediating role in the relationship between HR practices and employee engagement. This means that organizations need to find ways to help employees achieve a better WLB.

1. Introduction

The organization has to keep up with business challenges which become more demanding every day (Nguyen & Pham, 2020), particularly in times like this when most businesses are slowing down due to the pandemic. They must adapt to the current situation and apply unique strategies and different products that will distinguish them from their competitors (Fakhri et al., 2020). Human resources (HR) are a crucial aspect of an organization because they affect the company’s success the most. Staff performance will always reflect in the organization’s performance. To display outstanding performance people need to develop a positive work attitude and behavior. One such attitude is engagement. Strom et al. (2014) explain that engaged employees are the essence of the most productive and functional companies. Kennedy and Daim (2010), state that some of the literature suggest that engagement was crucial for business success. Engaged employees result in several other benefits for the company such as lower turnover (Haivas et al., 2013), higher organizational citizenship behavior (Rasheed et al., 2015), and higher performance (Buil et al., 2018). Falkoski (2012) discusses the negative and positive consequences of employee engagement. There are numerous negative consequences resulting from low engagement such as: decrease in sales and profit, customer satisfaction, workplace safety, and retention. On the other hand, the positive side of engagement can include increase in personal accomplishment and less stress. Considering the importance of engagement, it should be given the main attention of the company. To cultivate higher employee engagement, an organization needs to determine which factors affect them (Sekaran and Bougie, 2016) .

Earlier studies have shown various factors that positively influence employee engagement. Juan et al. (2018) found that the interaction and communication between employees in sharing knowledge about their job will increase employee engagement. Inclusive leadership, where supervisor awareness can lead them to exercise openness, accessibility, and availability to their employees is also considered a crucial factor that can build engagement. Meanwhile, a study from Choi et al. (2015) mentions that affective organizational commitment facilitated the relationship between leadership style and employee engagement, which means affective commitment can maximize the effect. Furthermore, human resource practices (HRP) in terms of positive working conditions, encouraging skills enhancement and developing employees’ motivation can help increase the engagement level (Aybas & Acar, 2017). Support from an organization in helping the employee to balance their work and life can also enhance employee engagement. Nishanti and Thalgaspitiya (2015), found a positive correlation between work-life balance (WLB) and engagement. Other variables that influence employee engagement levels are job satisfaction (Chhetri, 2017), trust (Tabak & Hendy, 2016), perceived organizational support (Jin & Donald, 2016), and compensation (Saks, 2006). These findings indicate the importance of engagement to be studied, especially in Indonesia, which still has very limited research that discusses and relates employee engagement to HRP and WLB. This study will fill that gap and additionally, the authors will examine the possible mediating effect of work-life balance in the relationship.

The researchers point of view is based on theories of social exchange (Blau, 1964) and conservation of resources (Hobfoll, 1989). People will behave in a manner to protect their interests and to accumulate as many resources as possible. In doing so, considering they interact with other human beings, they also apply to give and take (exchange). Employees work to earn money, develop their skills, improve their standard of living, and also provide for their families. They need to create wealth/assets that might be needed in the future. The focus of social exchange theory is that when one party performs a favor or does something valuable for another party, the other will reciprocate. Of course, the value of the favor or conduct is not quite the same. But at least both parties perceive them as being equally valuable. For example, an organization runs an HR practice which caters to the employees needs and creates a sense of support for employees to manage their work and private life. The supportive environment will trigger employees to give back to the organization, in this case, enhancing their engagement. Employees reciprocate positive support to the organization with an affirmative work attitude.

2. Theoretical Background and Hypotheses

2.1. Human Resources Practices (HRP)

Snell and Bohlander (2013), consider HR management as a process to manage individual talents to achieve organizational goals. Processes in HR include the responsibility to analyze and design jobs, conduct manpower planning, recruitment, training and development, manage performance, set up compensation programs, develop mutual and positive relationships with employees, and make sure that all functions are aligned to local labor regulations. If these functions are managed effectively they will bring positive consequences like improving job satisfaction, developing organizational commitment, enhancing employee WLB, promoting employee engagement, and improving performance (Mayes et al., 2016; Tang et al., 2006; Anshuja & Sodhi, 2015; Marescaux et al., 2013; Ahmed et al., 2016).

2.2. Work-Life Balance (WLB)

Frone (2003), defined WLB as a condition when there are no conflicts or interferences between work and family/private life roles. Which means that an individual can perform their work duties and private life matters without having to face conflict. Even better, both activities might support each other. Though this is difficult, some organizations can provide such support to create this positive work environment. On the other hand, the role of the individual also plays a significant part in achieving this condition. Organizations can introduce programs which support WLB so that employees can focus on their work. People are becoming more aware of the importance of WLB. Thus both parties need to negotiate a path towards balance. Organizations can promote flexible HR policies, introduce transformational leadership styles, and reconsider the workload (Anshuja & Sodhi, 2015; Conway & Monks, 2006; Nordenmark et al., 2012). Achieving WLB can result in improved employee performance (Mendis & Weerakkody, 2017) and organizational performance (Ainapur et al., 2016).

2.3. Employee Engagement

As explained, employee engagement is becoming a critical discussion especially when the organization is faced with issues regarding the current economic slowdown. It has prompted many researchers to examine how employee engagement is developed in a business organization. An engaged employee usually shows high involvement and enthusiasm about their job and organization. They are passionate about their work, more motivated and willing to make a greater contribution to helping the organization. Employee engagement is a concept that describes the employee’s effort to act according to their organization’s interests (Kennedy & Daim, 2010). Engagement is also defined as a form of emotional and logical motivation, where individuals strongly focus on their job which leads to the achievement of ultimate goals (McShane & Glinow, 2017). However Macey et al. (2009) viewed engagement as an inspiration to be united and immersed, striving to work hard, showing perseverance, focus, and involvement. In short, strongly engaged employees will bring about a positive outcome for the organization. Scholars need to identify important factors which can be applied in a business organization in boosting employee engagement. HRP, WLB, intrinsic motivational, transformational leadership style, perceived organizational support, job satisfaction, and affective organizational commitment are some of them (Putra et al., 2015; Kovjanic et al., 2013; Ang et al., 2013; HetalJani & Balyan, 2016; Dai & Qin, 2016; Choi et al., 2015). In this study, the HRP and the arrangement of WLB to enhance employee engagement was studied. We believe that by improving the program and implementation of HRP, which also creates more balance between job and private life, the employee will reciprocate and show a positive engagement attitude.

2.4. The Relationship Between Human Resources Practice, Work-Life Balance, and Employee Engagement

To build this model, the researchers projected the relationship between HRP, WLB, and employee engagement. Since the concept and study which discusses all those three variables is still limited, they tried to display the pattern of relationships between each variable. The researchers established that each variable has a significant effect on the other. First, they brought results from previous studies which analyzed the effect of HRP on WLB. They studied from five countries that provide evidence that effective HRP will increase a sense of balance between work and life (Bui et al., 2016; Garg & Lal, 2016; Carvalho & Chambel, 2015; Miao & Cao, 2019; Babic et al., 2019). Thus, the first hypothesis was determined to be:

H1: Human Resource practice will have a significant and positive effect on employee WLB.

Regarding the effect of HRP on engagement, the researchers found that most studies related to this matter reveal there is a significant and positive effect. If the organization implements HR policies which contain an element of fairness and show great commitment to employee needs, then such program will drive a level of engagement and participation towards organization interest and goals. The second hypothesis states that:

H2: Human resource practice will have a significant and positive effect on employee engagement.

Following the idea of previous studies from Aybas and Acar (2017), Alfes et al. (2013), Guan and Frenkel (2018), Glarino (2013), and Babic et al. (2019). Finally, the authors conducted a study directed towards several previous scientific articles which examine the effect of WLB and employee engagement. Results show a positive effect on engagement level if employees perceived a higher balance between work and private life. An organization which exemplifies caring for employees listens to the employees’ voice and takes notice of their interests or needs, provides flexibility in performing their job will benefit due to the increasing engagement level (Alvi et al., 2014; Babic et al., 2019; Luturlean et al., 2020). Of course, engagement is not an easy matter that can be changed overnight, the organization needs to implement a comprehensive program and policy that could maintain the perception regarding work-life balance to help improving employee engagement. therefore, for the third hypothesis, it was determined that:

H3: WLB will have a significant and positive effect on emp loyee engagement.

Based on the overall discussion regarding the effect of an independent variable on dependent variables, our fourth hypothesis is:

H4: WLB will mediate the relationship between effective human resource practice and employee engagement.

3. Methodology

3.1. Participants

The participants for this study came from employees of four Indonesian companies which operate in the services industry (banking, telecommunication, healthcare, and hospitality). Each company had branches across Java but only branches in Jakarta were contacted for data collection because it has the highest population and also employee concentration is high.While 52.6% of the participants were male, 61.7% were aged below 30 years. Regarding the level of education, 63.5% had college degrees. Most respondents, 80.5%, reported they worked 40 hours a week at the most. About 31.3% of the respondents had a working tenure between 1 to 3 years in the organization, and 25.2% between 3 to 5 years. Finally, 67.1% of participants were officers (supervisory role). The questionnaire was distributed to 1, 200 potential participants, 810 were returned and for the final data analysis 723 useable responses were obtained. An internet-based self-report survey was used to gather the data for this study. The researchers maintaintained appropriate levels of confidentiality and anonymity for all participants (Pradana & Wisnu, 2021). All research communication was forwarded through the chief point of contact (HR personnel) in each organization.

3.2. Measurements

Each measure used was a self-report measure that utilized participant perceptions to answer a series of questions. All measures were scored using a 6-point continuum from 1 (“strongly agree”) to 5 (“strongly disagree”). HR practice was measured using thirty-three items based on the work of Djatmiko et al. (2020). The Cronbach’s alpha reliability estimate was 0.955. Sample items include, ‘Compensation provided fulfills my needs’, ‘The results of performance appraisal are used as the basis for decisions on training and career development, and ‘Career development is based on employee performance.’ For WLB, the authors used nine items from Prasetio et al. (2017). The Cronbach alpha was 0.848 and sample items including ‘I have a heavy workload which makes it difficult for me to live my personal life, ‘My personal life make it difficult for me to do a good job’, and ‘Personal life & work complement each other.’ Finally, for employee engagement, fourteen items were developed based on Schaufeli et al. (2002). Several sample items were ‘Enthusiastic about my job’, ‘Proud of the work that I do’, and ‘My work is full of meaning and purpose.’ Cronbach Alpha for these items was 0.914.

4. Results and Discussion

4.1. Results

Data collected reveal an average of 4.61 for HRP, which means it falls into the effective category. Participants perceived that the HR function in the organization was implemented well. As for the WLB, we have an average of 4.29 which falls into the moderate category. It means that participants were satisfied yet less happy with the current WLB. For employee engagement, we had an average of 4.5, which is considered strong. This is a good sign for organizations, however there is room for improvement.

Table 1 shows the value for means, standard deviations, and correlations for all variables. The correlation between HR practice and WLB is 0.673. This is in line with an earlier study (Baptiste, 2008) and since it is above 0.500, we can consider this is a strong relationship. The correlation between HR practice and WLB with employee engagement is 0.238 and 0.337. Those results support the studies from Guan and Frankel (2018) and Babic et al. (2019). Both show a value under 0.500 which means it has only a weak relationship.

Table 1: Mean, Standard Deviation, & Correlations

Macro Process program developed by Hayes (2018) was used to examine the effect of the independent variable (HR practice and WLB) on the dependent variable (employee engagement). The researchers applied this approach because it has benefited from the application of the bootstrap approach. According to Sekaran and Bougie (2016) bootstrap is a statistical method based on building a sample distribution for a statistic by re-sampling of existing data. The advantage of bootstrap is that there is no need for a normality distribution assumption which in the real world is difficult to emerge. Costa et al. (2014), Gray et al. (2015), Oh and Oh (2017), and Luturlean et al., (2020) are amongst scholars who used such an approach. In this study, WLB will be consider as mediating variable if the Confidence Interval value from the Upper Level and Lower Level (ULCI and LLCI) did contain 0.

Before we discussed the mediation analysis, we examined the effect between variables. Table 2 provides the regression coefficient and it showed that HR practice becomes a predictor of WLB (coefficient, 0.742; p-value < 0.001). This result is in line with the findings of Garg and Lal (2016) and Carvalho and Chambel (2015). But, in this study, we found that the employee engagement level was not determined by the HR program (coefficient, 0.024; p-value > 0.05). This means our result differs from previous articles that were used as references (Guan & Frenkel, 2018; Glarino, 2013). The further result, WLB predicts employee engagement (coefficient, 0.346; p-value < 0.01) and this is following the findings of the previous articles (Babic et al., 2019; Luturlean et al., 2020). All in all, hypotheses H1 and H3 were accepted, while rejecting H2.

Table 2: Regression Coefficient and Model Summary

Table 3 describes the direct and total effect of HR practice on employee engagement. There is no direct effect because p > 0.001. Our study found that no matter what type of HR program or policy was implemented in organizations, it did not affect the level of engagement directly. However, with the introduction of WLB as a mediator, we have a significant total effect (p-value < 0.001). WLB proved as an effective mediator in the relationship between HR practice and employee engagement. The H4 hypothesis was accepted. Figure 1 displays the relation flow between variables.

Table 3: Effect of Human Resource Practice on Employee Engagement

Figure 1: Meditation Model of Work-Life Balance

4.2. Discussion

The current study provides new insight into the examination of the relationship between studied variables. While we support the result regarding the significant effect of HR practice on WLB and between WLB and employee engagement, the results we acquired reveal there is no effect from HR practice on employee engagement directly. We understand it takes time to build stronger engagement. Not only time but also specific programs which often have no direct effect, or can not be felt immediately. Yet, organizations need to have and implement comprehensive HR programs which include the opportunity to enhance employee’s skills and knowledge, provide a fair and clear career path, flexible and competitive remuneration packages that can be chosen by employees, supportive and friendly work environment which is marked with full attention and care from the management.

People are the most valuable assets especially in service oriented organizations. Hotels, hospitals, telecommunication, and banking rely on people to provide services. A highly engaged employee will serve better, and this can have a positive impact on customer satisfaction. Especially those organizations that operate 24/7 handling customer problems. They can not predict what kind of requests or problems need to be answered, fortunately, employees in these organizations are already considered to be highly engaged. They can overcome work problems with support from management. But as results showed, it still has room for improvement. Employees feel that organizations can improve their role. Management can carry out an internal survey to identify individual needs regarding the HR program. It must be ascertained that such programs will have an impact on employee’s perceptions regarding WLB. That can be achieved by utilizing effective HR practice which will help improve employee engagement through the experience of better WLB. The organization must adapt its HR practice so it can provide flexibility, care for individual needs. One important thing that organizations must understand is that HR practice is not a short-term goal. It needs time to change employee perceptions. Management should carry out the program with commitment and consistency.

5. Conclusion

This study provides exploratory findings regarding HR function practices, WLB, and employee involvement in service organizations. We study the role of work-life balance as a mediator in relationships. It proved that participants from four organizations reported very positive impressions about HR practices and they were also very involved in their work and organization. While their balance still needs to be improved, this may imply that the participants are not happy with their work lives. The main finding of this study is that WLB plays a mediating role in the relationship between HR practices and employee engagement. This means that organizations need to find ways to help employees achieve a better WLB.

Based on these findings, organizations can optimize their HR policies and apply various techniques to improve WLB and ensure employee well-being. Policies that can reduce the tension between work and life such as flexible working hours, special leave for family matters, helping them provide help with children or elderly parents. The cross-sectional approach is one of the weaknesses of this study because it is difficult to determine how the variables affect each other in the long term. In this case, longitudinal studies should be applied to further studies to cover a broader perspective. Participants from all regions of Indonesia or at least covering Java Island and from various industries should also be considered for future studies if they want to gain a broader and deeper understanding of employees in Indonesia.