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Abstract Purpose – This paper aims to clarify the meaning of empowerment concept and determine its role in the HRM‐performance linkage. Design/methodology/approach – A survey of 211 customer‐contact employees at 30 upscale hotels in Lithuania was conducted to study organisational empowerment, as a bundle of HRM activities, and its association with employee attitudes and behaviour. Findings – A distinction was made between organisational empowerment, as a bundle of HRM activities, and psychological empowerment, as an employee work‐related attitude, and their role in the HRM‐performance linkage was defined. Organisational empowerment was positively related to psychological empowerment, job satisfaction, and affective commitment. Psychological empowerment and affective commitment were found to mediate the impact of organisational empowerment on customer‐oriented behaviour. Research limitations/implications – Data were collected in a single industry in Lithuania; therefore, further research in other services needs to be conducted to make generalisations on the applicability of the proposed empowerment‐performance model to other industries. Practical implications – In the upscale hotel context, where employee turnover reduction and service quality improvement are critical, organisational empowerment can enhance employee job satisfaction, commitment, psychological empowerment and customer‐oriented behaviour. Originality/value – The paper provides empirical evidence of the positive effect of employee perceived HRM practices (organisational empowerment) on HR‐related performance outcomes ‐ employee attitudes (psychological empowerment, job satisfaction, affective commitment) and customer‐oriented behaviour. Besides the role of empowerment in the HRM‐performance linkage is defined and empirically tested.