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American Journal of  Economics and 
Business Innovation (AJEBI)

The Mediating Role of  Job Satisfaction on the Relationship Between Human 
Resources Management Strategies and Employees Performance in 

Waha Oil & Gas Company in Libya
Manal M B Marhil1*, Khairi Ahmed R Masaud1, Nahg Abdul Majid1

Volume 2 Issue 1, Year 2023
ISSN: 2831-5588 (Online), 2832-4862 (Print)

DOI: https://doi.org/10.54536/ajebi.v2i1.1437
https://journals.e-palli.com/home/index.php/ajebi

Article Information ABSTRACT

Received: February 28, 2023

Accepted: March 20, 2023

Published: March 25, 2023

The structure of  planned human resource deployments and activities intended to help an 
organization accomplish its objectives is known as strategic human resource management. 
This study aims to investigate the relationship between HRM strategies and employee 
performance in the Libyan oil and gas sector. Accordingly, 321 survey data were 
collected from Waha Oil Company employees in Tripoli, Libya. The structural Equation 
Modelling (SEM) technique was used to analyze the data as well as hypotheses testing. 
The findings demonstrated that human strategies significantly affect both job satisfaction 
and employee performance. Job satisfaction influences employee performance. Besides, 
training and development, recruitment and selection significantly affect job satisfaction, 
while performance appraisal significantly influences employee performance. The findings 
are beneficial to HRM department to enhance their emphasis on the crucial factors that 
boost employee performance through improving job satisfaction. 

Keywords
HRM Strategy, Human 
Resource Management, Employee 
Performance, Job Satisfaction, Oil 
and Gas Industry

1  University Geomatika Malaysia, Malaysia
* Corresponding author’s e-mail: manal.mrhil@gmail.com

INTRODUCTION
Strategic human resource management is the structure 
of  planned human resource deployments and activities 
intended to help an organization accomplish its 
objectives (Booze & Hachicha 2018). As per Cooke & 
Xiao (2020), the past three decades have seen the concept 
of  strategic human resource management (HRM) playing 
a significant role in management research and practice, 
with the sustained analysis in the field typically focusing 
on how strategic HRM can add value and, consequently, 
contribute to organizational success. Thus, human 
resource strategies and employee performance are closely 
related. Human resource strategies refer to organizations’ 
plans and actions to attract, retain, and develop their 
workforce. On the other hand, employee performance 
refers to the extent to which employees meet or exceed 
the performance expectations set by their organization.
Effective human resource strategies have a significant 
impact on employee performance. for instance, 
recruitment and selection, training and development, 
performance management, compensation and benefits 
influence employee performance (Aburumman et al., 2020 
& Siddiqua et al., 2022). The most important resource for 
any organization today, regardless of  how prosperous or 
developed it is, according to Rigby & Ryan (2018), is its 
human resources because these employees have helped 
the organization become prosperous and developed. 
Human resource management (HRM) strategies are 
critical for organizations to attract, develop, and retain 
their employees. The oil and gas sector in Arab region 
are a highly competitive industry, and organizations 
need effective HRM strategies to remain competitive. 
However, there is a gap in the literature on how HRM 
strategies impact employee performance in the oil and 

gas industry.
This study aims to investigate the relationship between 
HRM strategies and employee performance in the Libyan 
oil and gas sector. Oil and gas sector play an important 
role in an economy (Bakare et al., 2018). Specifically, 
the study will explore how recruitment and selection, 
training and development, performance management, 
and compensation and benefits impact employee 
performance in the oil and gas sector. The findings 
of  this study will contribute to the literature on HRM 
strategies and employee performance in the oil and gas 
sector. It will provide insights into how organizations 
can improve their HRM strategies to enhance employee 
performance and their overall business performance. The 
study will also be useful for policymakers, researchers, 
and banking sector practitioners interested in improving 
HRM practices and enhancing employee performance.

LITERATURE REVIEW
Human resource management (HRM) strategies 
have become increasingly important in enhancing 
employee performance. HRM strategies include 
various practices such as recruitment and selection, 
training and development, performance management, 
and compensation and benefits. These practices have 
been found to have a significant impact on employee 
performance. Job satisfaction has also been identified as a 
crucial factor in enhancing employee performance. 

SHRM and Job Satisfaction 
According to Ogbonnaya and Valizade, (2018), job 
satisfaction is a mediating variable on the relationship 
between strategic HRM and employee performance. 
Besides, many scholars and practitioners stated that 

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efficient strategic HRM will lead to higher job satisfaction. 
Mehreza and Bakria (2019) explained the impact of  
strategic HRM on job satisfaction and its likely positive 
relationship with some of  the aspect of  job satisfaction. 
According to various authors, strategic HRM influences 
employees’ ability to find meaning in their work and be 
satisfied with it. It is anticipated that strategic HRM, 
such as, upward communication systems, teamwork, and 
problem-solving groups. These allow employees chances 
and autonomy to assist in decision-making, will favor 
various aspects of  job satisfaction.
Additionally, Al Damoe, Hamid, & Sharif  (2017) found 
that in New Zealand, strategic HRM will impact employee 
attitudes such as organizational commitment, fairness, 
and work satisfaction. The findings demonstrated a 
substantial association between strategic HRM and 
work satisfaction, organizational commitment, and 
organizational fairness. Guest (2017) asserts that HRM 
will increase workplace stress levels. It could also have 
an effect on extrinsic factors of  job satisfaction, such 
as salary satisfaction. For instance, a worker who earns 
a high salary may have greater job satisfaction but may 
also experience greater stress due to the higher salary. 
According to research by Langer, Feeney, and Lee (2019), 
strategic HRM has a positive association with employee 
work satisfaction in the Dutch public sector, although 
personal differences had no bearing on job satisfaction. 
These characteristics include gender, age, and educational 
attainment. According to this study, strategic HRM is 
linked to improved levels of  workplace dedication, trust, 
job satisfaction, and effort in the United Kingdom.
According to some academics, implementing strategic 
HRM in Britain would result in higher levels of  work 
intensity but lower job satisfaction levels (Ashton, 
2018), Additionally, Zhang et al. (2019) stated that HRM 
practices are not primarily designed to higher levels of  
job satisfaction, but can impact the individual aspects 
of  job satisfaction like satisfaction with pay or sense of  
achievement. Hence, this study proposes as follows:  
H1: Human resources management strategies have a 
significant influence on the job satisfaction in oil and gas 
companies in Libya.

HRM Strategies and Employee Performance
Several studies have examined the relationship between 
HRM strategies and employee performance. For Instance, 
Hassan (2016) evaluated the effect of  HRM strategies on 
employee performance in the Pakistani textile industry. 
The findings show that these strategies positively impact 
performance because independent variables have been 
proven to positively influence change and because 
the training methods (formal and informal) used by 
organizations assist employees develop communication 
skills. The study also found that performance appraisals 
are a significant component that influences employees’ 
organizational commitment. Makhamara, (2017) focused 
on all permanent staff  members in the health industry, 
including senior management, middle management, 

lower management, and ordinary workers (hospitals). 
Findings of  the study indicated that human resources 
management strategies influenced employee performance 
in the health sector in Kenya. The result reveals that the 
said human resources management strategies, averagely or 
lowly influence employee performance, implementation 
and sensitization of  human resources management 
strategies contingent to the sector that will steer up 
employee performance. In a sample of  Iraqi public 
universities, Kareem and Hussein (2019) investigated 
how HRM strategies affect organizational effectiveness 
and employees’ performance. The findings demonstrate 
a statistically significant association between employee 
performance and organizational effectiveness in HRM 
strategies. The findings of  this study greatly aid in the 
development of  HRM strategies that will allow for the 
improvement of  employee competency and an increase 
in the ability of  the workforce to accomplish desired 
organizational goals and objectives. 
H2: Human resources management strategies have a 
direct influence on employee performance.
H2a: Recruitment and selection have a positive relationship 
with the employee performance in oil and gas companies 
in Libya.
According to Janjua and Gulzar (2014), there is a strong 
correlation between the hiring and selection practices and 
employee performance. Successful firms recognize the 
value of  the recruitment and selection process as well 
as the organization’s remuneration structure as a crucial 
element to achieving success. Findings by Osman & 
Al-Qudah (2014) could also be used as a factor in the 
planning process for HRM and the implementation of  an 
associated program to increase management awareness 
and another employees’ involvement. Management can 
also use the findings to make decisions about hiring, 
selection, and compensation. The results showed a 
significant correlation between employee performance 
and these factors at Malaysian Skills Institute (MSI).
H2b: Training and development have a positive 
relationship with employee performance in oil and gas 
companies in Libya.
Sal and Raja (2016) stated that there is a relationship 
between employee performance and training because the 
employees are aware of  the training and are motivated 
by it; hence, training and development lead to higher 
performance. They also state that staff  training and 
development should be actively pursued and made 
mandatory, and employers should provide the required 
training courses for all employees to achieve this. Tahir, 
Yousafzai, Jan, and Hashim (2014) reported a substantial 
association between the factors; the study also reported 
an impact of  the study on employee performance because 
it revealed that HRM is more crucial to organizational 
management. Employees will be more than competent 
when they possess the knowledge and skills necessary 
to complete the task. Staff  training and development 
provides the chance to improve their professional lives 
and secure better positions within the organization, 

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which will improve effectiveness. However, if  employees 
are skilled, they become the major resource and assets of  
the organization.
H2c: Performance appraisal has a positive relationship 
with the employee performance in oil and gas companies 
in Libya.
According to Andoh-Mensah Mensah and Kusi, (2019), 
there is positive relationship between performance 
appraisal and employee’s performance. It can further be 
concluded that performance appraisal enhances staff  
performance. Performance appraisal also helps to provide 
the opportunity for growth and development, address 
the areas of  deficiency, provide feedback on employees’ 
degree of  efficiency, and serve as a tool for control. 
Ugoani (2020) noted a favorable relationship between 
performance evaluation and employee performance; 
employee behavior greatly affects how much an 
organization works. It is a crucial management activity 
and approach for effective management because every 
firm pays its employees based on their performance.
H2d: Compensation has a positive relationship with 
employee performance in oil and gas companies in Libya.
Baledi and Saed (2017) found a positive relationship 
between compensation and employee performance 
because employers show interest in financial and non-
financial compensation by giving employees more 
bonuses and annual bonuses, increasing job satisfaction 
and productivity. Additionally, undertaking a number of  
research in the future that will examine how other aspects 
of  compensation structures affect how well employees 
perform when other aspects of  job satisfaction are used. 
According to Susanto & Siswoyo (2020), compensation 
has a favourable linkage with employee performance as 
it encourages subordinates’ participation in decision-
making and the development of  positive relationships. 
The managers must think about balancing financial 
remuneration like bonuses and other benefits with non-
financial advantages like health insurance, prizes for 
exceptional managers, etc.  It takes highly motivated 
managers to increase members’ trust.

Job Satisfaction and Employees’ Performance
According to Abdulkhaliq & Mohammadali (2019), 
job satisfaction positively and significantly impacts 
employees’ performance at Al Hayat Company. This is 
because the employees are the most expensive part of  
any firm but also have the potential to boost productivity 
and increase profitability. Khan et al (2016) found a 
positive relationship between employee performance and 
job satisfaction because higher-level employees who are 
satisfied in their jobs will carry out their responsibilities 
with the utmost care. Adetunji et al (2018) looked at how 
selected microfinance banks in Oshogbo Metropolis’ 
employees performed in terms of  job satisfaction. Because 
employers raise employees’ occupation status levels at the 
appropriate times and help them gain experience through 
internal and external training, the results of  regression 
studies revealed a favorable association between employee 

performance and job satisfaction.
The association between job satisfaction and employees’ 
performance was also explored by Inuwa (2016). This 
relationship is significant and positive as job satisfaction 
also serve as a catalyst for HRM and organizational 
behavior. The impact of  job satisfaction on employee 
performance is also examined by Ndulue & Ekechukwu, 
(2016) using Nigerian Breweries. The results of  the study 
showed a linear association between job happiness and 
workers’ productivity. Because of  the study’s findings, it 
was advised that the management of  the business should 
offer its employees comfortable working environments to 
raise morale.
H3-There is a significant relationship between job 
satisfaction on employees’ performance.
Job Satisfaction as Mediating Between SHRM and 
Employees’ Performance
Job satisfaction has been identified as a critical mediator 
between HRM strategies and employee performance. 
Khauoe et al. (2015) examined how HRM methods affected 
job satisfaction at FELCRA Berhad. Workers will benefit 
from the study’s findings because management will be 
more focused on their needs. As a result, employees will 
be more motivated to work and devoted to the company 
that consistently looks out for their welfare. This study 
will help firms retain workers and reduce turnover rate 
due to improved job satisfaction. Employees are also 
expected to help firms realize their goals and should not 
just resign.
According to Mira, Choong and Thim (2019), human 
resources management strategies play a great role in 
leading organizations to competitive advantage in a 
dynamic global market. The study observed a positive 
relationship between HRM strategies and employee 
performance. Rodjam, Thanasrisuebwong, Suphuan, 
and Charoenboonm, (2020) stated that HRM strategies 
have a positive correlation with job satisfaction because 
it strongly affects the profit margin of  the industries, but 
still, there is a need to implement HRM in developing 
economies. Vabi et al. (2020) noted a positive and 
significant relationship between employee performance 
and job satisfaction. The study provides management 
with guidance in areas where employee performance can 
be improved through job satisfaction. It also advanced 
the fields of  organizational behavior and HRM.
H4: job satisfaction has a significant mediating 
influence on the relationship between human resources 
management strategies and employees’ performance.

METHODOLOGY
Data Collection
A total of  361 survey data was selected and distributed 
based on the G power calculations to represent the total 
population in the dataset. Data were collected from 
Waha Oil Company employees in Tripoli, Libya. HRM 
strategies in this study was measured by 4 items developed 
and recently used by (Gupta, 2020) 6 items were used to 
measure training and development, 5 items were used to 

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measure recruitment and selection, 5 items to measure 
performance appraisal, and 6 items were used to measure 
compensation.

Data Analysis technique
The SEM technique was used due to the nature of  the 
abstract analysis model utilized in this study and the 
fact that SEM is one of  the typical tactics employed by 
researchers in SHRM analysis, especially to evaluate the 
causal analysis model and study/research hypotheses 
(Hair et al., 2019). In this work, AMOS version 24 was 
used to estimate model activity and structural models. 
SEM enables the researcher to simultaneously test a 
number of  complex hypotheses by assessing the impact 
of  numerous independent and dependent components in 
an extremely structural model (Gefen, 2000).

Reliability and Validity
The coefficient alpha method evaluates the scale’s internal 
consistency, determines whether the scale’s items measure 
the same underlying constructs, and determines whether 
the scales are error-free (Pallant, 2011; Sekaran, 2010). 
The reliability of  the scales used in this study is assumed 
if  the Cronbach’s coefficient alpha value of  each tool are 
more than the minimal values of  0.60 to 0.70 suggested 
by researchers (Hair et al., 2010; Pallant, 2011).
Convergent validity is tested by assessing the factor 
loadings and the constructs’ associated T-values and AVE. 
The rest of  the items for all the constructs have factor 

loadings greater than 0.50 and statistically significant (C.R. 
> 1.96). All constructs’ AVE values were higher than 0.05, 
as indicated by Fornell & Larcker (1981). Consequently, it 
may be said that convergent validity was confirmed.

FINDINGS
Model fit
The empirical analysis displayed a favorable fit statistic 
and a strong standardized factor loading, both of  which 
point to a perfect fit of  the measurement model to the 
data. A well-fitted model was produced by focusing on 
the combination of  methods for evaluating standardised 
factor loadings and residual covariance (Hair et al. 2010). 
The data in Table 4.14 showed that the CMIN has 482 
degrees of  freedom and is 937.817. The observed p-value 
of  0.000 (< 0.05) indicated that the structural model 
failed to perfectly fit the population (Hair et al. 2010). The 
Bollen-Stine bootstrapping process, however, revealed 
a strong path and that the model was supported with a 
substantial degree of  confidence (p > 0.05). The structural 
model demonstrated a close fit in the population, with a 
PCLOSE (P-value of  the population RMSEA) of  0.941. 
The model is significant with the exact fit as supported 
by the results (PCLOSE > 0.05) (Arbuckle 2011). An 
excellent parsimonious fit for the structural model was 
indicated by the normed x2 value of  1.950, which is < 
3.0 (Jöreskog & Sörbom, 1993). The RMSEA value (less 
than .08) was also within the limit of  0.057 which is another 
evidence for a model fit and within the RMSEA value range.

Table 1: Model fit indices
Measure Estimate Threshold Interpretation
CMIN 937.817 -- --
DF 482 -- --
CMIN/DF 2.073 Between 1 and 3 Excellent
CFI 0.941 >0.95 Acceptable
SRMR 0.069 <0.08 Excellent
RMSEA 0.057 <0.06 Excellent
PClose 0.158 >0.05 Excellent

Hypotheses Testing
Path analyses are used to evaluate the proposed 
hypotheses in this study; they also simultaneously estimate 
the mediation model equations (Fairchild & McQuillin, 
2010). The first hypothesis, H1, asserted that the HRM 
strategies have a significant impact on job satisfaction. 
The analysis showed that job satisfaction and HRM 
strategies are significantly correlated, as shown in Table 2. 
“The standardized estimate value of  0.404 *** indicates 
a positive link, and the p-value of  0.000 with a standard 
error of  0.071 and a critical value of  5.665 (which offer 
a significant model at p = 0.001), indicate a significant 
relationship between the tested variables”. Hence, H1 is 
supported.
The  next hypothesis,  H1a, postulates a positive relationship 
between recruitment and selection and job satisfaction in 
Libyan oil and gas firms; these variables were shown to 
have a strong positive impact on job satisfaction based 
on the analysis as evidenced by the coefficient value 

of  0.211 ***, a critical ratio of  3.883 (higher than 2.0), 
a standardized error of  0.054, and a significant p-value 
of  0.001. Hence, H1a is supported. In confirming H1b; 
Training and development have a positive relationship 
with the job satisfaction in oil and gas companies in Libya. 
The result showed that the coefficient value is 0.169*** 
with the standardised error .037 and critical ratio 4.546, 
which presents a significant model at p < 0.001. Based 
on the coefficient value, there is a significant relationship 
between training and development and job satisfaction in 
oil and gas companies in Libya. Thus, the analysis showed 
that H1b is supported.
Hypothesis H1c proposed that performance appraisals 
have a positive relationship with job satisfaction. The 
results showed that performance appraisals have a 
coefficient estimate of  0.060, critical ratio (C.R) = 1.459, 
and standardised error of  0.041 (p = 0.145); hence, 
performance appraisals have a negative relationship with 
job satisfaction and H1c is not supported. Hypothesis H1d 

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proposed that compensation has a positive relationship 
with job satisfaction in oil and gas companies in Libya. 
The results showed that compensation has a coefficient 
estimate of  0.122, critical ratio (C.R) = 2.422, standardised 
error = 0.050, and p = 0.051. Hence, compensation has a 
negative relationship with job satisfaction and H1d is not 
supported. Hypothesis H2 proposed that Strategic human 
resource management directly influences employee 
performance. The results showed that human resources 
management has coefficnent  value of  0.335***, critical 
ratio of  5.483 which is greater than 2.0, standardised error 
of  .061, and  p = .000. Therefore, H2 is supported.
Hypothesis H2a predicted that recruitment and 
selection have a positive relationship with the employee 
performance in oil and gas companies in Libya. The 
results showed that recruitment and selection have a 
coefficient value of  0.055, with a critical ratio of  1.363 
which is less than 2.0, standardised error of  0.041 and p> 
.005. Therefore, H2a is not supported. Hypothesis H2b 
predicted that training and development have a positive 
relationship with employee performance in oil and gas 

companies in Libya. The results showed that training and 
development have a standardised estimate of  0.120**, 
p < 0.001, standardised error = 0.030, and critical ratio 
> 2.0 (in this case; 3.974). Therefore, H2b is supported. 
Hypothesis H2c predicted that performance appraisal 
has a positive relationship with employee performance. 
The results showed that performance appraisal has  a 
standardised estimate of  0.089**, p = 0.005, standardised 
error = 0.032, and critical ratio > 2.0 (in this case; 2.807). 
Therefore, H2c is supported.
Hypothesis H2d predicted that compensation has a 
positive relationship with the employee performance in 
oil and gas companies in Libya. The results showed that 
compensation has a standardised estimate of  0.068**, p 
> 0.005, standardised error = 0.038,critical ratio < 2.0 
(in this case; 1.783). Therefore, H2d is not supported. 
Hypothesis H3 proposed a significant relationship 
between job satisfaction and employees’ performance. 
The results showed that job satisfaction has a coefficient 
estimate of  0.268, critical ratio (C.R) = 3.500, standardised 
error = 0.069, p = 0.004. Thus, H3 is supported. 

Table 2: Hypotheses Results
H Path-B Path-A Estimate S.E. C.R. P
H1 Human resource strategies Job satisfaction 0.404 0.071 5.665 *** Supported 
H1a Recruitment selection Job satisfaction 0.211 0.054 3.883 *** Supported 
H1b Training and development Job satisfaction .169 0.037 4.546 .*** Supported 
H1c Performance appraisal Job satisfaction 0.060 .041 1.459 0.145 Not supported 
H1d Compensation Job satisfaction .122 .050 2.422 .051 Not supported
H2 Human resource strategies Employee performance .335 .061 5.483 *** Supported
H2a Recruitment and selection Employee performance 0.055 .041 1.363 0.173 Not supported
H2b Training and development Employee performance 0.120 .041 3.974 *** Supported
H2c Performance appraisal Employee performance 0.089 .032 2.807 .005 Supported
H2d Compensation Employee performance 0.068 0.038 1.783 .075 Not supported
H3 Job satisfaction Employee Performance .268 .069 3500 .004 Supported

Mediating Effect
As seen in Figure 4.13, the predictor variable (HRM 
strategies) significantly influences the mediator variable 
(job satisfaction), which in turn significantly influences 
the dependent variable; the predictor also significantly 
influences the dependent variable when the mediators’ 
influence is absent (Barron & Kenney,1986).
Additionally, Figure 4.13 demonstrated that a single 
mediator model was used for the mediation analysis in this 
study (MacKinnon et al., 2010). According to the single-
mediator model, managers’ intentions to retain older 
staff  are directly impacted by their stereotypical beliefs. 

There is also an indirect effect between human resources 
management strategies and Job satisfaction, and Job 
satisfaction and employees’ performance. These results 
showed that this study illustrated a necessary empirical 
condition recommended by Baron and Kenny (1986);
1. Human resources management strategies is significantly 
related to job satisfaction.
2.  Job satisfaction is significantly related to employees’ 
performance.
3. The relationship of  human resources management 
strategies with employees’ performance exists through job 
satisfaction.

Table 3: Mediation results
Estimate SE CR P

Job satisfaction <--- Strategic human resource management 0.573 0.071 5.658 ***
Employee performance <--- Job satisfaction 0.262 0.069 2.870 .004
Employee performance <--- Strategic human resource management 0.632 0.061 5.485 ***

CONCLUSION
The research demonstrated that both subjects human 
resources management strategies and job satisfaction 

were viewed as major factors to the success of  employees’ 
performance, nevertheless, this study was concerned with 
two critical concerns in the fields of  job satisfaction and 

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human resources management strategies, The results of  this 
study also showed a substantial relationship between job 
satisfaction and human resources management strategies, 
we discovered that job satisfaction significantly improved 
the link between human resources management strategies 
and employees’ performance, and it was demonstrated 
that as job satisfaction climbed, so did performance. The 
significance of  human resources management methods 
for determining has thus been supported by this finding, 
which also highlighted the connection between employee 
satisfaction and performance.
As a result, it is clear that a key element in sustaining and 
improving employees’ performance is job happiness. 
Additional evidence that the job satisfaction is crucial 
for improving the connection between human resources 
management strategies and employee performance. 
Without a doubt, job satisfaction and human resources 
management strategies were found to be effective 
partners in boosting employees’ performance.
In conclusion, HRM strategies have a significant impact 
on employee performance, and job satisfaction plays a 
crucial mediating role in this relationship. Recruitment 
and selection, training and development, performance 
management, and compensation and benefits are 
all essential HRM practices that impact employee 
performance. These practices also affect job satisfaction, 
which, in turn, influences employee performance. The 
findings of  this literature review suggest that organizations 
should focus on improving HRM practices to enhance 
job satisfaction and, ultimately, employee performance. 
Further research is needed to better understand the 
mechanisms through which HRM practices impact job 
satisfaction and employee performance.

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