This study addresses the issue of whether positive employee attitudes and behaviors influence business outcomes or whether positive business outcomes influence positive employee attitudes and behaviors. We hypothesize that employee satisfaction, organizational citizenship behavior, and employee turnover influence profitability and customer satisfaction. Data were gathered from the units of a regional restaurant chain via employee surveys, manager surveys, customer surveys, and organizational records. Cross‐lagged regression analyses show that employee attitudes and behaviors at Time 1 are related to organizational effectiveness at Time 2. Additional cross‐lagged regression analyses show no significant relationship between organizational effectiveness at Time 1 and the employee attitudes and behaviors at Time 2. These results add to the evidence that HR outcomes influence business outcomes, rather than the other way around.

Eight summary dimensions of psychological climate, i.e., autonomy, trust, cohesiveness, pressure, support, recognition, fairness, and innovation, were derived from over 80 differently labeled dimensions reported in the literature. Five item scales of each summary dimension were developed and tested in a sample (n = 367) of managerial employees. Coefficients alpha for the scales ranged from 0.80-0.89. When the 40 items were submitted to a factor analysis with an oblique rotation, eight factors were produced, generally corresponding to the eight summary dimensions. These results were validated by using a separate sample (n 84) of managerial and professional employees.

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