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challenges and prospects of hrm practices in developing countries

challenges and prospects of hrm practices in developing countries



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Published by: kashif salman on Jul 08, 2009
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Challenges and prospects of HRMin developing countries: testing theHRM–performance link in the Eritreancivil service
 Mussie Teclemichael Tessema and Joseph L. Soeters
In this article, the authors examine how, when and to what extent HR practicesaffect performance at the employee level. As performance is a multi-faceted andcomplicated concept, HRM outcomes were used as mediating factors between HRpractices and employee performance. The data were collected among civil servants inEritrea, Africa’s youngest and poorest country. Although the results generally are in linewith previous studies using Western data, their implications in this particular country maybe different. Therefore, the challenges and prospects of HR practices in Eritrean civilservice organizations are critically analysed and discussed. In the authors’ opinion, that theEritrean economic and political environment within which HR practices operate has notbeen conducive in maximizing the impact of HR practices on performance. These findingshighlight the situation of most developing countries.
Human resource management; HRM–performance link; civil serviceorganizations; Eritrea; developing countries.
Every organization, whether it be a public, private or NGO, must operate with andthrough people. Public organizations in particular are judged on the basis of theperformance of their human resources. Ingraham and Kneedler (2000: 245) underlinethat ‘government activities are typically highly personnel intensive. And thus, HumanResource Management (HRM) practices are central to improving the quality of servicesoffered by the governments.’ In the words of Pfeffer (1994: 33), ‘having good HRM islikely to generate much loyalty, commitment, or willingness to expend extra effort forthe organization’s objectives’. Moreover, Stone (1998: 4) remarks that ‘HRM is eitherpart of the problem or part of the solution in gaining the productive contribution of people’.The above quotes suggest that organizations need to effectively manage their humanresources if they are to get the maximum contribution of their employees. But thequestion is,
how and when does HRM affect performance?
Recently, the dominant focus
The International Journal of Human Resource Management 
ISSN 0958-5192 print/ISSN 1466-4399 online
2006 Taylor & Francishttp://www.tandf.co.uk/journalsDOI: 10.1080/09585190500366532
Mussie Teclemichael Tessema, Tilburg University (IVO), the Netherlands and University of Asmara,Eritrea:POBox90153,5000LE,Tilburg,TheNetherlands(e-mail:M.T.Tessema@uvt.nl).Joseph L. Soeters, Tilburg University and Royal Netherlands Military Academy, the Netherlands:PO Box 90002, 4800 PA Breda, the Netherlands (jmlm.soeters@mindef.nl).
 Int. J. of Human Resource Management 17:1 January 2006 86–105
on HRM literature has been to demonstrate the importance of effectively managinghuman resources of organizations. Management scholars and practitioners alikehave become increasingly interested in learning more about HR practices to enhanceemployee and organization performance (e.g. Boselie
et al.
, 2001; Den Hartog andVerburg, 2004; Ferris
et al.
, 1999; Guest, 1997; Huselid, 1995; Paauwe, 1998, Powerand Boselie, 2003; Pfeffer, 1994). In particular, the last ten years have seen anincreasing research interest in the HRM–performance relationship, although the focus of the research is in the developed world as well as in the manufacturing industry. Thecurrent study aims to test empirically the impact of eight HR practices on employeeperformance in a developing country: the Eritrean civil service organizations.Eritrea, being the youngest African nation, became a sovereign nation in 1993. Since1993, Eritrea has embarked on a multifaceted nation-building and reconstruction processin which the civil service is one aspect. The critical challenge that faces Eritrea today isthe establishment of economic, social, administrative and political institutions and thedevelopment and utilization of human resources to enable these institutions to operateeffectively (Gafer, 1996; Haregot
et al.
, 1993; UNDP, 2002; UOA, 1997). Thus, Eritreatoday is experiencing a growing need for civil servants who are capable of efficiently,effectively and creatively mobilizing the available scarce resources to achieve nationalobjectives.Eritrea, just like most developing countries (DCs), introduced civil service reforms(1995–7) that led to (1) streamlining of about 34 per cent of the Eritrean civil servants(UOA, 1997); (2) the establishment of the Eritrean Institute of Management (EIM) in1995; (3) the introduction of a new salary scale in 1997; and (4) the launching of theEritrean HRD Project (1998–2003) (EHRDP, 2003). However, the critical challenge thatfaces Eritrea today is the utilization of human resources to enable civil serviceorganizations to operate effectively. Generally speaking, the
within whichEritrean civil servants are employed does not seem to attract, motivate and retaincompetent civil servants. In this connection, the availability and utilization of capablecivil servants is of utmost importance. The main research questions of this study aretherefore:
How, when and to what extent do HR practices affect HRM outcomes (HRcompetence, motivation, role clarity and retention)?
How do HRM outcomes in turn affect employee performance in the context of Eritrean civil service?
Literature review
Effective HRM now more than ever before is a crucial ingredient in the developmentprocess of DCs. However, HRM has come under strong criticism in many DCs with theireffectiveness thrown into considerable doubt (Bennell, 1994; Budhwar and Debrah,2001; Hilderbrand and Grindle, 1997; Kiggundu, 1989; Praha, 2004; World Bank,1994b).Decades of declining real incomes, deplorable working conditions, politicalinterference and poor management have created cadres of civil servants in many DCswho are chronically demoralized and de-motivated (e.g. Das, 1998; Jaeger
et al.
, 1995;Kiggundu, 1989). The civil service, on the one hand, is increasingly unable to retaintrained personnel wherever other employment opportunities exist. On the other hand, itutilizes poorly the expertise of those civil servants who do not leave. Even worse,moonlighting and corrupt rent-seeking practices have become a way of life for civilTeclemichael Tessema and Soeters:
HRM in developing countries
servants in many DCs (Bennell, 1994; Budhwar and Debrah, 2001; Das, 1998; Grindle,1997; Prah, 2004). More than anything else, thus, it is the
personnel crisis
in the civilservice organizations in DCs that has to be addressed if meaningful improvementsin service delivery are to be realized.Cohen and Wheeler (1997) as well as Hilderbrand and Grindle (1997) summarized thecurrent situation of HRM in many DCs as follows: low salary levels, lack of effectiveperformance standards, inability to fire people, too few rewards for good performance,recruitment procedures that do not attract appropriately trained people, promotionpatterns based too much on seniority or patronage and too little on performance, slowpromotion and lack of reward for hard work and initiative, inadequate and demoralizingmanagement by supervisors (ineffective leadership), underemployment and lack of stimulating assignments. Moreover, Bennell (1994) and Budhwar and Debrah (2001)disclosed that many DCs are trapped by outdated and ineffective HRM systems that putunintended roadblocks in the way.The situation discussed above being the existing situation of many DCs, one maywonder how HR practices affect performance under such conditions. Recently, thedominant focus on HRM literature has been to demonstrate the importance of effectivelymanaging human resources of organizations (e.g. Ahmad and Schroeder, 2003; Delaneyand Huselid, 1996; Ichniowski
et al.
, 1997). Many scholars have identified a number of HRM-related practices that greatly affect performance. For example, Pfeffer (1994)advocated the use of 16 HRM-related practices to achieve higher performance; Deleryand Doty (1996) identified seven HRM-related practices. More recently, researchershave found that bundles, or systems, of HR practices had more influence on performancethan individual practices working in isolation (Arthur, 1994; Baron and Kreps, 1999;Huselid, 1995; MacDuffie, 1995). In other words, a greater use of those specifiedpractices results in higher performance across all types of organizations or countries. Aswill be discussed, in this study, we used eight HR practices that we assume affectperformance.Performance, as underlined by Paauwe (1998) and Guest (1997), is a multifaceted andcomplex phenomenon. It is difficult to clearly know to what extent HRM affectsperformance. When it comes to measuring public sector performance, the problem iseven moredifficult (Guest, 2001:1100;Hays and Reeves, 1984:290; Ozgediz, 1983:59).Performance is, therefore, not the direct result of any one factor such as HRM. Rather,HRM is only one important component of a diverse set of influences that determineperformance level. If we are to speak with any certainty about the extent (net effect) towhich HRM affects performance, one would first need to isolate HR practices effects bycontrolling the rest of the variables bearing on performance. Only when we have madeprogress in measuring the independent and dependent variables can we begin to give fullattention to the way in which they are linked (Guest, 1997: 274). As remarked by Legge(2001: 30), ‘there is a need to open up the “black box” of the process that links HRM andorganizational performance’. This is mainly due to the existence of intervening variables.Unless very careful controls are used to take account of all factors affecting performance,it is possible that the results may overstate or understate the influence of HRM onperformance (Fey
et al.
, 2000; Guest, 1997; Wright
et al.
, 2003). What has so far beenachieved is a skeletal finding and we need to put a lot of flesh on the bones (Boxall, 2003;Guest, 1997; Paauwe, 1998).Although our knowledge of the net impact of HRM functions on performance is stillincomplete, there is no shortage of assumptions and theories regarding the role that HRMplays in positively affecting performance. In other words, despite the absence of unambiguous proof or net impact of HRM on performance, there is evidence that a88
The International Journal of Human Resource Management 

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