The world economy has been facing a huge turmoil in the last few financial years. With constant efforts some improvement was observed in the last financial year as the world economic situation strengthened itself with a lingering effect to subside the effects of slump and registering world gross domestic product of 3.2 percent, the highest since 2011. The impact of world economic growth can be clearly seen on the GDP of India. The IMF sees India as the largest growing economy with a GDP of 7.4 percent even outshining the growth of China’s GDP at 6.8 percent. This growth has presented a challenge for the HR managers to focus more on strategic policy formulation and utilize the growth in the right direction. The line managers’ implement HR functions and in doing so they also influence their team and generate response from them. On the basis of extensive review a conceptual model has been proposed to understand the impact of interpersonal trust as a mediating variable on reallocation of HR functions and HR effectiveness. On evaluating the hypotheses values of CFI = 0.909, NFI = 0.745, GFI = 0.762, CMIN/DF = 1.396, RMSEA = 0.060, and PCLOSE = 0.066, which indicate a good model fit, the model shows the impact of the mediating variable, that is, interpersonal trust on reallocation of HR functions and HR effectiveness.
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