How does employee engagement improve the bottom line? Analysis of underlying organizational mechanisms

Decades of research effort have been dedicated to study the relationship between the management of human resources (HR) and firm performance. Research has demonstrated that HR practices, when implemented together as a system (i.e. high-performance work system) have significant and positive impact on organizational outcomes. Yet, the understanding of how such a system achieves the outcomes remains fragmented. The goal of this paper is to review existing empirical and conceptual literature and highlight the various perspectives regarding the mediating relationships between these systems and outcomes. These perspectives are then integrated into a two-layer qualitative model that illustrates the functioning of a highperformance work system at the individual and the collective level. Thesis Supervisor: Hazhir Rahmandad Title: Albert and Jeanne Clear Career Development Professor, Assistant Professor of System Dynamics, MIT Sloan School of Management