At present, high-performance work systems (HPWSs) are widely believed to be a potential source of sustainable competitive advantage for organisations. However, although there is sufficient evidence to indicate the positive relationship between the HPWS and organisational performance, it remains unclear precisely how such a system affects organisational performance. Accordingly, there have been calls in the literature to access the level of individual employees in order to examine this relationship through their perspectives and perceptions regarding HPWSs because, at the end of the day, their experiences and interactions with such systems are what determine their subsequent attitudes and behaviours, which ultimately affect customer satisfaction and enhance the service climate in the organisation or vice versa. The current study, which is funded by the Shura Council*, aims to fill this gap by empirically examining the effects of the HPWS, employee outcomes (measured in terms of job satisfaction, commitment, trust, motivation and intention to remain) and service climate on customer satisfaction in the Omani public sector. This study contributes to our understanding of the ‘black box’: the mechanism by which perceptions of an HPWS affects customer satisfaction. The study examines the direct effects of employee outcomes and service climate on customer satisfaction as well their mediating effects on the relationship between the HPWS and customer satisfaction. Furthermore, this study explores the moderating effect of agencification on the HPWS-customer satisfaction link. In so doing, it not only provides insight into how the HPWS affects customer satisfaction through its direct and indirect impacts on employee attitudes and behaviours as well as service climate but also contributes to the literature of the two fields of strategic human resources management and new public management (NPM). Using a sample of 521 professionals in 15 government entities in the public sector in Oman, a partial mediation model was identified and tested using structural equation modelling. The study results indicate that an HPWS has significant positive relationships with employee outcomes and service climate. The findings also reveal that both employee outcomes and service climate partially mediate the relationship between the HPWS and customer satisfaction. Furthermore, the employee outcomes were found to have both direct and indirect effects on customer satisfaction via the service climate. Therefore, the study findings suggest that public-sector officials should seek to adopt and invest in HPWSs to enhance positive employee attitudes and behaviours and to cultivate a favourable service climate that will ultimately enhance the level of customer satisfaction. On the other hand, the results of this research did not support NPM’s claim that agencification is an effective way to render public bureaucratic institutions more effective in achieving customer satisfaction. The study, therefore, raises concerns about the persistence of many international organisations, such as the World Bank and IMF, in calling on governments to implement this trend, particularly in developing countries.

At present, high-performance work systems (HPWSs) are widely believed to be a potential source of sustainable competitive advantage for organisations. However, although there is sufficient evidence to indicate the positive relationship between the HPWS and organisational performance, it remains uncl...