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Table of content

Acknowledgementi
Executive Summary.ii
List of Tablesiii
List of Abbreviation.....iv
Chapter:

introduction........................................1
1.1

Background............

1.2

..1
Problem

1.3

Statement............................3
Research
Objective...

1.4

...3
Significance

1.5

Study.............................3
Scope Of The

of

Study..........................4
Chapter: 2 Literature
Review..5
2.1

Strategic
HRM........................................................................................................

2.2

5
Dimensions of Strategic
HRM........................................6

2.3

Formal Training System, Result Based Appraisals, Employment Security


as Determinant of Managerial

2.4

Capabilities...............7
Result Oriented Appraisal, Employment Security, and Formal Training
System

as A Determinant of Social Capital.


.......................8
2.5

Social
Capital...................................................................................................

2.6

..8
Relationship between SHRM & Social Capital.

2.7

.10
Managerial Capability

2.8

11
Relationship between Strategic HRM and Managerial Capabilities...

2.9

.......11
Relationship between Social Capital and Managerial

Capabilities...................13
2.10 Theoretical Framework.
.16
CHAPTER: 3 Research Methodology.
.......17
3.1 Sampling Process.
................17
3.2 Research
Design...............17

3.3 Sampling
Population........17
3.4 Sample
Size.17
3.5 Research
instrument......18
3.6 Data Collection
methods18
3.7 Measurement Scale
18
3.8 Data
Analysis.................18
3.9 Time
horizon........18
3.10 Variables......
19
3.11 Independent
variables..................19
3.12 Dependent
variables................19
3.13 Hypothesis......
20
Chapter 4 Data Analysis and
Discussion..................21
4.1 Finding and Data Analysis..
...21
4.2 Reliability Statistic..............21
4.3 Testing Hypothesis...
..21

4.4 Linear Regression Analysis..


....22
4.5 Multiple regression analysis..
23
4.6 Correlation Analysis25
4.7 Discussion
28
Chapter 5 Conclusion and
Recommendation...........29
5.1 Conclusion..........
29
5.2 Recommendations..
30
5.3 Limitations...........
30
Bibliography
Appendix-1

EXECTIVE SUMMARY
The man objective of research project is to examine the impact of strategic
HRM on Managerial Capabilities and Social Capital in public sector of
Pakistan. After extensive literature review and research it is conjectured that
there is significance positive relationship between Strategic HRM and
Managerial Capabilities and Social Capital.
In order to measure the impact of strategic HRM on managerial capabilities
and social capital, a sample of 100 employees from different public
organizations

was

drawn

through

convince

sampling

technique

.Questionnaire was adopted, starting from strongly disagree to strongly


agree.
Data analysis was carried out through SPSS software package (SPSS Inc,
2000) version 13.correlation and linear and multiple regression analysis were
carried out to test the predictive nature of independent variable i.e. strategic
HRM and its dimensions and its impact on dependent variable i.e. managerial
capabilities and social capital.
The research concluded that the strategic HRM having different dimensions
indicate positive influence on managerial capabilities and social capital.

Different dimension such as return on appraisal, training, internal career


opportunities and employee security, participation has significant impact on
managerial capabilities.
The dimensions of strategic HRM such as training, participation, internal
carrier opportunities, return on appraisal, employee security has significant
impact on social capital. But participation has no significance impact on
managerial

capabilities.

opportunities

shows

The

value

of

climate

highest

value

and

they

and

internal

influence

carrier

managerial

capabilities, however in the case of social capital, employees security and


climate shows highest value it means that these two variables influence
social capital.

List of Tables
Table 4.1 Reliability Statistic............................33
Table 4.2 Linear regression analysis of strategic HRM and managerial
capabilities34
Table 4.3 Linear regression analysis of strategic HRM and social
capital......35
Table 4.4 Relationship of training, internal career opportunities, employee securities,
Result

oriented

appraisal

and

participation

with

Managerial

Capabilities36
Table 4.5 Relationship of Training, Internal Career Opportunities, Employee Securities,
Result

Oriented

Appraisal

and

Participation

with

Social

Capital.....37
Table 4.6 Correlation Analysis.....38

List of Abbreviations
SHRM

Strategic Human Resource Management

MNCS

Multinational Companies

TR

Training

ES

Employee Security

ROA
PT
ICO

Return on Appraisal
Participation
Internal Carrier Opportunity

CHAPTER 1
INTRODUCTION
1.1 Background
Success seems to be connected with actions. Successful people keep
moving. They make mistakes but they dont quit.
Conrad
Hilton

Employees are the asset to organization and investment on employees is the


source of making them valuable for the firm, enhancing organizational
performance, retain employees and motivate them as well. One of the main
factors that can increase organizational performance through its employees
is SHRM, and by providing employees a favorable/learning climate lead the
organization towards success. Most of the organizations use SHRM but they
fail to implement the main reason is they fail to align organizational strategy
to SHRM and employees practices to organizational practices. Being a
successful organization, it needs to align organization strategy to SHRM.
It can also be source of competitive advantage for the organization by
aligning employees practices to organizational practices. SHRM has been
tested using 1945 employees in more than 10 countries has showed that
employees or the managers who are committed are more likely to use and
implement HR practices.

In Asian countries like china and Japan they heavily invest on employees to
motivate

them

and

to

make

organizations

successful

through

their

employees. Japan is focusing on their employees and in china it has been


increasingly observed that China is focusing on trainings in MNCs and the
results are positive.
In Malaysia employees turnover is higher in 2004 as compared to 2003; the
organizations are providing attractive salaries but research has revealed that
salary is one of the factors to retain an employees but SHRM is very
important in reducing employees turnover.
PAKISTAN having a population of about 160 million people in Asia and most
interestingly public sector have the same structure after independence in
1947, the structure and the strategies are the same up till now there is no
development in public sector and is a main factor of inefficiency according to
Coggburn (2005). HR department will be identifying by its norms of being
rigid, slowness, complex and unresponsiveness.
In Pakistan SHRM is practicing in private companies and in private companies
the main focus is on SHRM as well as employees to retain their employees in
comparison public sector is not focusing on SHRM and there is no
performance evaluation so private is developing day by day and their
employees are motivated to work. In Pakistan employees face multifaceted
business environment thats why employees need different capabilities that
match to the environment complexities and attainment of strategic goals.
This study is an attempt to find the effect and influence of SHRM on social
capital and managerial capability by using a moderator employees
relation/climate which includes the effect of trainings, employees motivation,
benefits and perks and the effect of these factors on managers and its effect
on society in terms of communication, joint ventures and departmental and
non departmental relations.

Managerial capabilities can be enhanced by sharing skill and knowledge,


friendly environment as well as learning environment, keen thinking, growth
and trainings. Managerial capabilities can be enhance by proving trainings
and SHRM practices to motivate them by providing a learning environment
and have a good employee relation/climate.
Social capital is sharing of resource, and it can be strengthen by providing
collaborations and joint ventures. it is very important for the organization to
have good relations with other organizations because maintenance of
relationship with employees and outside the organization is of great
importance and mostly structural and personal dimension is both are
necessary.

1.2 Problem statement:


What is the impact of strategic human resource management on managerial
capabilities and social capital by using the employee relation/climate as
moderator?

1.3 Research objective:


The main objective of our research is to know the impact of SHRM on social
capital and managerial capabilities by using employee relation/climate as a
moderator in Pakistan and to find:

The integration of HRM to SHRM.


Importance of strategy and SHRM.
The importance of alignment of organizational strategy and SHRM.
The effect of implementing SHRM on organizational performance.

1.4 Significance of study:


The study has following significances:

It will help us to know that either SHRM help in enhancing managerial


capabilities or not.
How SHRM is applicable in organizations and how it will help the
organizations

to

make

their

employees

motivated,

committed,

innovative etc.
It will also help us to know either SHRM help to enhance social capital
or not.
It will also help in identification of different dimensions of SHRM and
SOCIAL CAPITAL which will give incentive to understand their impact on
employees relation and climate.

1.6 Scope of the study

SHRM is useless without implementation and alignment with organizational


strategy so it is beneficial when it is properly implemented, help
organizations to achieve desired goals, for that human resource department
should identify the key areas where man power is require and only
identification is not only enough but identifying the best person who fill the
vacancy by ideal candidates who will helpful in achieving organizational goal.
In this research we are going to study telecommunication sector ,whether
this sector implement SHRM and align organizational strategy to SHRM and
how managerial capabilities and social capital is enhanced to increase
organizational performance

,the firm from where we can collect data

includes:

OGDCL
Telecommunication sector

CHAPTER 2
LITERATURE REVIEW

2.1 Strategic HRM


Strategic HRM can be defined as the organizational plans that an
organization wants to achieve its goal through people and alignment of HRM
with the organizational policies and consider employees as strategic resource
for competitive edge. The main focus of strategic HRM is the actions that
make a differentiation from its competitor (purcel, 1999).Its systematically
linking of employees with the firm it includes trainings, recruitment and
selection, development, compensation etc (Ashok Swarup Jan, 2007).

In 1980 scholars need to add word strategy to HRM the idea behind this
concept is to upgrade the position of HRM professionals in companies (Purcell
and Ahlstrand, 1994). And there is an alignment between organizational
practices and policies with the strategy to have a competitive advantage.
The last 25 years of development in business sector is the proof of
implementing

HRM

which

result

in

the

increase

in

organizational

performance and increasing competition among organizations.


According to Henry and Pettigrew (1986) Strategic HRM also known as:

Employment of management skill(planning)


An approach that is orderly and consistently related to each other
Alignment of business strategy to HRM policies
Employees are strategic resource for organizations competitive edge

Aim of strategic HRM must consider both employees and owners, basically
there are two aspects: soft strategic HRM and hard strategic HRM
Soft strategic HRM is important for continuous development, quality
maintenance,
Etc and hard strategic HRM consider investment in human resource (storeys
1989).
Resource based view has a direct link between firm strategy and HR Capital.
Organizational development and strategy management is directly linked to
resource based view (Barney 1991, Conner 1991, Penrose 1959, Wernerfelt
1984), it can be represented in the form of figure as:

Firm strategy

HRM Practices

HR Capital

RESOURCE BASED VIEW


Resource based view can be differentiated from the traditional one only on
the basis of RBV assumption that all resources of the organization i-e.
physical, capital, human and how different from other organizations as well
that will lead an organization to have a competitive advantage and it is the

ability that an organization invest more on human capital by making superior


human resource management is basically a source of attaining competitive
advantage.

2.2 Dimensions of SHRM


Researchers worked on 456 Chinese enterprises to check the effect of SHRM
on organizational performance. It has been clearly mentioned that there are
seven dimensions of SHRM (Delery and Doty (1996), its effectiveness and the
overall impact of these dimensions to organizational performance. The
dimensions include Internal Career Opportunities, Formal Training Systems,
and Results-Oriented Appraisals, Employment security, Participation, Job
Descriptions and Profit Sharing. These are universally practiced and the
approach is called as best practices.
So according to research it has been showed that some dimensions effect
service and product performance while some contributes to financial
performance of an organization. It has been observed that training,
participation, results-oriented appraisals, and internal career opportunities
increases financial position and it also have a positive relationship on the
productivity. And some dimensions effect only productivity i-e, employment
security and job description and one last dimension that are profit sharing
that increases the financial position. (Syed Akhter, Daniel Z.ding and Gloria
L.Ge 2008).This dimension laid very important effect on the organizational
performance it defines the priorities that an organization should focus while
appointing or hiring employees (Delery & Doty, 1996).
All seven dimensions affect organizational performance and when there is
positive employee relation and a learning environment the relationship or the
effect of dimensions on social capital and managerial capabilities will be
strengthen.

2.3 Formal training system, Result based appraisals,


Employment security as a determinant of managerial
capabilities
In multinational companies trainings is the key stone for the competitive
edge. In research it has been shown that in china SOEs spend some little
money on trainings it was about less than RMB30 per employee (U.S. $1 =
RMB8.07) which is equivalent to nothing and the results are obviously the
same that good employee relationship with peers and have a learning
environment can strength the effect and relationship of training system to
both social system and managerial capabilities.
Employment security is one of the determinants that affect motivation level
of employees which ultimately effect managerial capabilities, (Ariff 2004).
United States is the second largest investor in Malaysia and Japan is third
largest invest despite of that the employees working in Malaysia are not
willing to stay with the organization for more than three years. The reason
behind this attitude is low motivated staff and no job security, a survey by
Malaysian employers federation (2001, 2005) annual turnover rate
in 2003 is higher than 2004. Employees must have given as employment
security to retain them and to motivate them.
A research has been taken by (Yin Teng Chew 2005) that

Japanese

employees show a positive behavior towards work and this positivity is due
to the employees training through which the employees become motivated
towards work ,they have emergence of different cultures and due to increase
in the number of interactions with different people thats why Japanese firm
invest heavily on their employees to motivate them so that the effect of
trainings on employees as well as managers is positive (Hashimoto
1990,Mueller 1992).

2.4 Result oriented appraisal, employment security, and


Formal training system as a determinant of social capital
A research has been made in china in 2004 there were an increase in
opening foreign investments Enterprises the amount is of 43,000 more
investment have been made and according to research there was a 6.29%
increase over 2003 and hence there was an increase in direct investment
and that increase is about 13.3% over last year. These changes occur due to
the reasons of three factors introduction of labor contracts, performancerelated reward system and contributory social security (Warner 2004),
according to research new investments were due to HRM practices which
positively affect social capital (Warner 2004).
Training system is an important part of human resource management
through which employees are trained and polish to increase the skill, abilities
and expertise. Secondly through trainings employees will be more confident
and have communication skills that will have a positive effect on social
capital while building and maintaining employees relationship and bridging
with other organizations and this sharing of values shows a positive step of
making, building and maintain relationships with other organizations that will
help to have a diversity in the work group and multi talented group of people
will lead to success of organization (Syed Akhtar, Daniel Z.Ding and Gloria
L.GE 2008).

2.5 Social capital


Social capital is defined as it is a process of socially interaction and
communication within groups and other group and is defined firstly by
Bourdieu (1980:2), for example two companies have a joint venture they
share their values and its a way of development.

Social capital can be differentiated from other capitals due to the reason that
it considers the maintenance of relationship but not the ownership of
property because if the parties have a joint venture but no relationship in this
case social capital ends.
According to past research it has been observed that the drawback of social
capital is that the situation may worse if there is any intergroup conflict
(Labianca et al., 1998), black holes (Hedaa, 1999), dark side of social capital
(Gargiulo & Benassi, 1999).
It has been observed that in china guanxi is built on the basis of trust that
managers have with other people. (Li and Atuahene-Gema 2001, Park and
Luo 2001, Peng and Luo 2000).
Hence social capital is basically a mixture of resources that increase
productivity and organizations can avail the chance of convert their ideas to
innovation which ultimately is a source of achievement and success for the
organization. (Adler & Kwon 2002, Nahapiet & Goshal 1988, Pfeffer & Slancik
1978, Sandefur & Laumann 1998).
Social capital is further divided into two parts (Granovetters 1992)
1-structural dimension
2-relational dimension

i.

Structural dimension

This type of dimension shows a relationship in which the relationship is


based on non personal terms between peoples it may be within or with other
groups or parties.

ii.

Relational dimension

This type of dimension identifies a relationship based on personal terms


based on historical interactions. Example: friendship.

Social capital of both dimension are very important for the organizations to
be innovative joint ventures, development and new forms of associations.
This leads to an innovative and developed organization (fukuyama1995,
Jacobs 1965, Putnam 1993).

2.6 Relationship between SHRM & social capital


In the past research it has been noted that SHRM effected social capital,
when organization train their employees provides bonus and give them a
learning environment where they have to maintain their relationship with or
within groups. It motivated employees and they have known that they have
been trusted in return employees became more committed, trusted and
appreciated and this will increase work commitment and decrease the
turnover. In past research bridging has given importance because the main
focus is exchange relationship, within the organization between the
departments and with other Organizations and it is the social capital
(Marielle Sonnenberg, Bas Koene, and Jaap Paawe 2011).
According to exchange relationship it has been noted that employees must
have a balance in their relationships. The main focus of this theory is the
maintenance of communication in the employment relationships (Blau 1964,
Shore et al 1995).
According to some scholars for the organizations to gain a competitive edge
it is very important to have a social capital (Chung and gibbon 1997) .Hence
through employees training ,motivation ,providing bonus etc leads to a have
a competitive human resource in return the employees will be committed to
work, decrease the turn over and employees have a learning environment
have a sustainable relationship and communication within their organization
and outside the organizations as well, this will result in a social capital to be
a competitive edge.
Social capital

leads to

competitive edge

SHRM

leads to

competitive edge

Social capital leads to competitive edge and SHRM also leads to competitive
edge in the way that firm capabilities and resources are shaped through
certain strategies of development leads to sustain competitive edge (Barney
1991,Hill and Jones 2001).

2.7 MANAGERIAL CAPABILITY


Managerial capabilities are the skills and knowledge of manager and it
should be improved and developed continuously to employ it in the
organizations. (Abraham, Karns, Shaw, & Mena, 2001; Adner & Helfat, 2003;
Caldeira & Ward, 2003; Helfat & Peteraf, 2003). Managerial capabilities
appear to form a vital aspect for survival and the achievement of
competitive advantage (Habbershon, Williams, & MacMillan, 2004). It is an
important ability of managers which are useful to create a strong workplace
and environment which help the employees to grow and engage and with
this the goals and objectives of the business are achieved. It can be defined
as: how manager applied their skills and knowledge at the workplace and is
therefore important to show how managers skills and knowledge applied in
the organizations to give life to these managerial capabilities.
In broad terms, managerial capabilities are skills, understanding and
familiarities that are basic and broadly-based. It has been recognized as that
search individuals those have skills and knowledge that they need to carry
out managing activities. (Massey, et al., 2005, p. 2) for example, a
constellation of people such as a team can give extra services as the ones
rendered by individual managers, because working with each other capable
them to offer services that are exclusively important for the operations of
the particular group with which they are associated (Penrose, 1959: 46).
Managerial capabilities are in the form of competences these are as follow:
High performance competences
Cognitive competences

Interpersonal competence
Presentational competences
Motivational competences

2.8 Relationship between Strategic HRM and Managerial


Capabilities
The different context that we can identify within organizational learning
capability (e.g. learning, growth, keen thinking, knowledge sharing) may be
positively affected by solid human resources policies. Thus, human capital
becomes a strategic factor, and human resource management a basic tool
for leading the organization towards a culture of learning and knowledge
transfer (McGill et al., 1992; Jones and Hendry, 1994; Koch and McGrath,
1996; Kamoche and Mueller, 1998).
In global market there are high competitions between companies therefore
companies are trying to search out the ways to improve managerial
capabilities (productivity and quality) therefore the Strategic HRM helps them
to enhance their capabilities.
In the prior research there are two types of managerial capabilities that
effect human capital.
Professional HRM capability
Business related capability
Strategic HRM effectiveness will be associated with both capabilities.
Professional HRM capabilities describe those skills and expertise that helps to
perform excellently traditional HRM functions .Business related capabilities
are business experience of HRM staff have had outside the function specialty.
These capabilities help them in choosing and accomplishment of strategic
policies and practices that match the attribute of the organization like size,
structure, culture. (Jackson & Schuler, 1995).

Resource based view also help the employees to enhance managerial


capabilities and assert the organization to gain competitive advantage
(Wernerfelt, 1984; Barney, 1986, 1991; Peteraf, 1993). It identifies that
employs (human capital) can be power to provide a source of competitive
advantage.(cf.Barney, 1991; Wright McMahan, & McWilliam, 1992).

How managerial capabilities are formed?


In past research little evidence has been found about formation of
managerial capabilities according to (Adner and Helfet (2003) any firm can
attain managerial capabilities through interrelation between three vital
pillars: social capital, social managerial capital, cognitive managerial capital.
Human managerial capital comes from knowledge and individual capabilities
(van Den Bosch & Van Wijk, 2000).
Social managerial capabilities are the abilities of senior most employees
(CEO) to share and promote knowledge to develop social relations. (Gupta
and Govindarjan, 2000).
Cognitive managerial capital is related to attainment of the information
whether through logic (Adner & Halfat 2003).
All above capabilities are developed through strategic human resource
management and managerial science into organization behavior. SHRM help
to develop human skills and knowledge of Individual within the firm. A theory
named strategic management theory given by different authors focuses on
intangible resources. According to them, human resource is a source of
competitive advantage. (Collis, 1994; Hamel & Prahalad, 1996; Prahalad &
Hamel, 1990; Werner felt, 1984, 1995).

2.9 Relationship between social capital and managerial


capabilities
Past research has been shown that managerial learning capability is directly
linked to the social capital. If social capital is provided to manager then their
managerial capabilities will improved they become more competent and
perform their work more effectively. Everyone can use their own experience
and related understanding

to understand the information and their

implications in a particular situation and to determine what are the actions to


take in particular situation. Social capital can increase the ability of individual
within a firm to identify who to make contact for related information. This
means that internal social capital help in the development of novelty through
the accomplishment of information and knowledge from internal and external
networks.
According to the Coleman, Social capital can be consider as the result of
such phenomena as mutual reliances, social interaction, social groups, work
group in a social system. All these features separate social capital from other
capital and it help the organization to achieve competitive advantage and
success.
Those firms which have higher level of social capital can be more successful
as compare to those firms which have low level of social capital. (Nahapit &
Gushal,1998,p 250). Managerial capabilities can b developed through social
capital and communication with individual in such a way individual can share
the knowledge and skills through interaction and in this ways it increases the
capability of individual (Oorschot, 2010, p. 180).
In past research shows that there s a positive relationship between social
capital and employee loyalty, management of different task that perform
within the firm, firms flexibility, and develop high level of intangible capital.
Therefore social capital can increase firms performance. (Bolyno et al, 2002,

507).Social capital can be used as an asset for both for the firms (through
formation of importance) and for the employees of the firms (increasing skills
of staff). (Lina and Von Bern, 1999, p.538).
Social capital can help us in following ways
Increase profession success.
Help the employs to find job and give a better group of works for the
firm.
It provides the facility to exchange tangible resources and intangible
resources.
It also increases motivation, loyalty, logical capital formation and
efficiency and effectiveness of teams.
It also helps in the decline of job changes.
It also gives strength to relationship between employees, staff and
firms learning.
That organization who focuses on Social capital it gives the opportunity of
freedom and flexibility to the employees to follow their plan without any
specific pattern (Stoner et al, 1995, p.170). Therefore people who have
higher social capital can utilize more resources and information and it can
affect the process of development and progress of the business.
Those people who have less interaction with people and have limited
capability they face difficulty in decision making regarding any task therefore
they need to make external relations and connections to get necessary
information

for

decision

making.

According to the Roof (2002) social capital has an important role in


innovation people in social environment expected to provide valuable ideas
that is directly linked with innovation therefore innovation is depend upon
social relations.

2.10 THEORETICAL FRAMEWORK

MODERATOR
Employee relation/climate

Managerial
capabilities

STRATEGIC HRM

1-internal career opportunities


2-formal training systems
3-results-oriented appraisals
4-employment security
5-participation
6-job descriptions

Social capital

CHAPTER 3
RESEARCH METHODOLOGY
3.1 Sampling process
Sampling is the act, process, or technique of selecting a representative part
of a population for the purpose of determining the characteristics of the
whole population and authenticity of outcome is only possible when there is
proper technique development used for sampling. For our research we have
chosen convenient sampling technique to get ideal results so the number of
employees who will participate is not predetermined employees are given
questionnaire and given complete information and guidance to fill that
questionnaire so that the outcome of results are authentic.

3.2 Research Design


This

study

is

conducted

in

the

natural

work

environment

of

the

organization .variables are neither controlled nor manipulate.

3.3 Sampling Population


In this study the population of study includes the employees of OGDCL and
Tele communication in Islamabad.
Sample size is nether too large nor too small we are running test on the
employees of telecommunication sector and OGDCL only .sample size was
not pre determined thats why convenient sampling technique was used.

3.4 Sample Size


Sample size of our research consists of 60 employees from OGDCL and 60
employees

from

telecommunication

operating in Pakistan.

sector,

these

organizations

are

3.5 Research instrument


Questionnaire is used to collect data which is filled by the employees of
OGDCL and telecommunication sector in Pakistan.

3.6 Data Collection method


The data is collected through questionnaire, in which there are 34 questions
to know the affect of strategic human resource management on managerial
capability and social capital using employee relation/climate as a moderator.

3.7 Measurement Scale


For this study a five point LIKERT scale is used this scale is started from
strongly disagree to strongly agree (1-5).

3.8 Data Analysis


SPSS software is used to run the data in which we used different statistical
methods in order to check the data some of the techniques we used are
correlation analysis and regression analysis to check the impact of Strategic
human resource management on managerial capability and social capital by
using an employee relation/climate as a moderator.

3.9 Time horizon


All the employees have given questionnaires and after filling these
questionnaires by the employees we will not be consulted again to them so
this study is a cross sectional.

3.10 Variables
3.10.1 Independent variables

STRATEGIC HUMAN RESOURCE MANAGEMENT


SHRM is an independent variable that affects the dependent variables like
turnover, employees commitment and loyalty, organizational performance
and employees motivation and competitive edge.

3.10.2 Dependent variables


i.

Managerial Capabilities

This is a dependent variable if employees have given a formal trainings, job


security and participation then moral of employees increases, employees
will show good performance they will be more attached to their work,
competent, give importance to their work so managerial capabilities will
increase.
if the human capital is best utilized so if an organization has given more
training to their employees, in return employees perform well hence
organizational performance increases. And it is also important to know that
whether SHRM increases managerial capabilities or not.
ii.

Social capital

Social capital is basically sharing of resources and form of networking in this


article this is a dependent variable, as in joint ventures organizations merge
and share their values and resources to get multiple benefits like
maintenance of relationship and to achieve the objective. Mostly SHRM has a
positive relationship with social capital.

3.11 HYPOTHESIS

Following hypothesis will be based on tested against the objective set in the
study:
(H1) Internal career opportunities have positive impact on managerial
capabilities.
(H2)

Formal

training

systems

have

positive

impact

on

managerial

capabilities.
(H3) Results-oriented appraisals have positive impact on managerial
capabilities.
(H4) Employment security has positive impact on managerial capabilities.
(H5) Participation has positive impact on managerial capabilities.
(H6) climate has positive impact on managerial capabilities.
(H7) Internal career opportunities have positive impact on social capital.
(H8) Formal training systems have positive impact on social capital.
(H9) Results-oriented appraisals have positive impact on social capital.
(H10) Employment security has positive impact on social capital.
(H11) Participation has a positive impact on social capital.
(H12) climate has a positive impact on social capital.

Chapter 4
DATA ANALYSIS AND DISCUSSION
4.1 Finding and Data Analysis

Before analyzing the data, it would be appropriate to have a look at the descriptive statist
of the sample.

4.1.1 Reliability Statistic


Table 4.1
Reliability Statistics

Cronbach's
Alpha
.873

Cronbach's
Alpha Based
on
Standardized
Items
.867

N
Items
40

of

Source: Researchers Own Processing

In above table the Cronbachs alpha value is 0.873, which is the indication of
high level of internal consistency for the selected scale.

4.1.2 Testing Hypothesis


Once of the major objective of research is to find out the impact of strategic
HRM on managerial capabilities and social capital. Research hypothesis
develop earlier for the observation of strategic HRM on managerial
capabilities and social outcomes testing of hypothesis and analysis is
organized under the following heading:

4.1.3 Linear Regression Analysis


For empirical testing of the model, the researcher used strategic HRM as
independent
opportunities,

variable

having

formal

training

different

dimensions

systems,

internal

results-oriented

career

appraisals,

employment security, participation, job descriptions, profit sharing and


managerial capabilities and social capital as a dependent variable. Testing of
hypothesis is performed through linear regression analysis.
Following are the finding of linear regression analysis:

Linear

regression

analysis

of

strategic

HRM

and

managerial capabilities
Table 4.2
Model Summary
Std. Error of
Model
1

R
.569(a)

R Square
.324

Adjusted

the

R Square
.288

Estimate
.61081

a. Predictors: (Constant), ROA, participation, employee security, training, internal


carrier opportunity

R value
It indicate the correlation coefficient between strategic HRM and managerial
capabilities the value of R should be in the range from 1 to -1 .in this study
the value of R =.569 which shows that there is positive relationship between
strategic HRM and managerial capabilities.

Adjusted R Square value


The value of adjusted R square is .288 which shows that there is 28% of
variance is the dependent variable.

Linear regression analysis of strategic HRM and social


capital
Table 4.3
Model Summary
Std. Error of
Adjusted

the

Model
1

R
R Square R Square
Estimate
.513(a)
.263
.224
.55474
a. Predictors: (Constant), ROA, participation, employee security, training, internal carrier opportunity

R value
The value of R =.513 which shows that there is also positive relationship
between strategic HRM and social capital

Adjusted R Square Value


The value of adjusted R square is .224 it means that there is 22% of
variance in the dependent variable

4.1.3 Multiple regression analysis


Multiple regressions show the association between multiple independent
variables on a single dependent variable. The researcher used training,
internal career opportunities, result oriented appraisal, employee security
and participation in strategic HRM as independent variables and will check
the impact of managerial capabilities and social capital as dependent one by
one. Testing of these hypotheses is performed through multiple regression
analysis.
Relationship of TR, ICO, ES, ROA and PT with Managerial Capabilities

(H1) Internal career opportunities have positive impact on managerial


capabilities.
(H2)

Formal

training

systems

have

positive

impact

on

managerial

capabilities.
(H3) Results-oriented appraisals have positive impact on managerial
capabilities.
(H4) Employment security has positive impact on managerial capabilities.
(H5) Participation has positive impact on managerial capabilities.
(H6) climate has positive impact on managerial capabilities.
Table 4.4

Coefficients (a)

Model
1

Un
standardized
Coefficients

Standardized
Coefficients

B
1.005
.194

Std. Error
.460
.098

Beta

(Constant)
Training
Participation

-.041

Employee security

.003

Internal
opportunity
ROA

carrier

Sig.

.190

2.183
1.971

.032
.052

.094

-.037

-.435

.665

.094

.003

.032

.975

.450

.123

.367

3.654

.000

.164

.087

.195

1.898

.061

a. Dependent Variable: managerial capabilities

Source: Researchs Own Processing

In above table the beta values illustrate that there is positive relationship
between training, internal career opportunities, and return on appraisal,
employee security and managerial capabilities. And it also shows that
internal career opportunities has greater impact on managerial capabilities
as compare to other independent variables while participation has less and
negative effect on managerial capabilities.

Relationship of TR, ICO, ES, ROA and PT with Social Capital


(H7) Internal career opportunities have positive impact on social capital.
(H8) Formal training systems have positive impact on social capital.
(H9) Results-oriented appraisals have positive impact on social capital.
(H10) Employment security has positive impact on social capital.
(H11) Participation has a positive impact on social capital.
(H12) climate has a positive impact on social capital.
Table 4.5
Coefficients (a)

Model
1

Un
standardized
Coefficients

Standardized
Coefficients

B
1.172
.039

Std. Error
.418
.089

Beta

(Constant)
Training
Participation

.135

Employee security

.216

Internal
opportunity
ROA

carrier

Sig.

.044

B
2.802
.441

Std. Error
.006
.660

.086

.142

1.578

.118

.085

.268

2.538

.013

.079

.112

.074

.710

.479

.163

.079

.221

2.069

.041

a. Dependent Variable: social capital


Source: Research Own Processing

The beta value shows that there is a positive impact of training,


participation, employee security, internal career opportunities and return on
appraisal on social capital and it also shows that employee security has
greater impact on social capital as compare to other independent variables.

4.1.4 Correlation Analysis

Correlation

measures

how

variable

are

related.

Pearson

correlation

coefficient variable has been used to determine the magnitude of the


relationship between each of the variables. The variables with this
magnitude greater or equal to .20 are significant at p<0.01 level and greater
than or equal to .12 are significant at p<0.05

Correlations
Table 4.6

trainin
g
Training

Participa
tion

employe
e
security

Internal
carrier
opportuni
ty

Pearson
Correlatio
n

Pearson
Correlatio
n

.120

Employee
security

Pearson
Correlatio
n

.
342(**
)

.123

Internal carrier
opportunities

Pearson
Correlatio
n

.187

.045

.463(**)

Social capital

Pearson
Correlatio

.
262(**

.215(*)

.417(**)

.305(**)

Participation

social
capit
al

Manageri
al
capabiliti
es

climat
e

ROA

Managerial
capabilities

Pearson
Correlatio
n

.
339(**
)

.030

.306(**)

.483(**)

.
366(*
*)

Climate

Pearson
Correlatio
n

.
332(**
)

.052

.333(**)

.361(**)

.
398(*
*)

.503(**)

Pearson
Correlatio
n

.
429(**
)

.142

.372(**)

.413(**)

.
391(*
*)

.424(**)

.
411(**
)

ROA

** Correlation is significant at the 0.01 level (2-tailed).


* Correlation is significant at the 0.05 level (2-tailed).
Source: Research Own Processing

The above correlation indicate that there is a quite strong and significant
relationship exist between climate and managerial capabilities (.503**)
then the relationship between internal career opportunities and managerial
capabilities (.483**) is weak but it is also highly significant

then

the

relationship between return on appraisal and managerial capabilities


(.424**) is significant then the relationship between training and managerial
capabilities (.339**) which shows that it is weak but very significant
relationship

then

the

relationship

between

employee

security

and

managerial capabilities (.306**) is weak but it is also significant and the


relationship between

participation and managerial capital (.030) is weak

and less significant.


The result also shows that the relationship between social capital and
employee security (.417**) is quite strong and highly significant then the
relationship between social capital and climate (.398**) is weak but it is also
significant then the relationship between social capital and return on
appraisal (.391**) is weak but it is also significant then the relationship

between social capital and internal carrier opportunities (.305**) is weak but
significant then the relationship between social capital and training (.262**)
is too much weak but significant and the relationship between social capital
and participation (.215*) is also very weak and less significant as compare
to other variables.

4.2 Discussion
Companies are the assets of the any country and it also play a vital role in
the establishment of the economy and Pakistan has no exception.
Government plays a vital role to establish these assets.
The major objective of the study is to investigate the impact of strategic HRM
on managerial capabilities and social capital and to explore whether strategic
HRM is best strategy to adopt and is it beneficial for employees and
organization as well. Is it helpful to achieve the objective, to fulfill the target
and satisfaction of employs?

After a broad literature review, we concluded that strategic HRM having


different dimension such as return on appraisal, training, internal career
opportunities and employee security, participation has significant impact on
managerial capabilities
The dimensions of strategic HRM such as training, participation, internal
carrier opportunities, return on appraisal, employee security has significant
impact on social capital. But participation has no significance impact on
managerial capabilities.
According to the framework, we empirically tested this in public sector of
Pakistan. The data is collected from OGDCL, PTCL and SONERI BANK. After
the collection of data, the analysis is carried out through SPSS software
(SPSS Inc.2000) version 13.In analysis we run correlation and regression to
test the analytical nature of independent variables.
The value of climate and internal carrier opportunities shows highest value
and they influence managerial capabilities, however in the case of social
capital, employees security and climate shows highest value it means that
these two variables influence social capital.
.

Chapter 5
CONCLUSION AND RECCOMENDATION
5.1 Conclusion
The above study has been conducted to examine the impact of strategic
HRM on managerial capabilities and social capital in the public organization
of the Pakistan. For that survey we choose OGDCL, PTCL and SONERI BANK.
The result of survey show different perception regarding strategic HRM.
It is obvious from the result and discussion that there is a positive
relationship between strategic HRM and managerial capabilities and social
capital.
When any organization adopt any strategy like training, return on appraisal
etc. it increase the motivation of employees and it also enhance the
commitment of employees toward their organization.
The finding of the survey shows that different dimensions of strategic HRM
have different impact on managerial capabilities and social capital. Such as
training, internal carrier opportunities, return on appraisal and employee
security has supplementary impact on managerial capabilities and social
capital. And participation has impact on managerial capabilities but it does
not contribute in social capital.
In public organization these dimensions like participation does not work to
enhance social capital because top management or supervisors

does not

allow them to take any help from their subordinates regarding any problem
or to make any decision. In public organization normally all decisions have
been done by the top management that way there is negative correlation
exist between participation and social capital.

If the organization provide climate and give their employees carrier


opportunities and give them job security then their managerial capabilities
and social capital can increase and they become more motivated and
become loyal with the organization which in return increase the productivity
of the organization .if the manager treat their subordinates with care, trust
and motivate them then they shows greater level of commitment and
innovative behavior. Therefore it is necessary to create a friendly and
disciplined environment in the organization to get better outcomes.

5.2 Recommendations
According to the study, following are the recommendations that can be given
to all organization either public or private in order to enhance their
managerial capabilities and relationship between employees, manager and
subordinates which will lead to maximize employees outcomes, employees
loyalty toward the organizations etc.
These recommendations are:
i.

Managers should give the opportunity to their subordinates to

ii.

participate in decision making.


Manager should not be very rigid with their employees he should have
to be supportive and trust worthy which will help them to achieve

iii.

maximum outcomes.
There is too much competition in the organization therefore there
should be a training program for their employees that will give them the

iv.

awareness about new technology, different strategies to compete etc.


Give incentives and benefits to their employees that will also increase
their motivation to achieve maximum outcomes.

5.3 Limitations
Following are the limitation we have face while doing that research:

i.

The sample size of 100 is small to examine the impact of strategic HRM

ii.

in public organizations.
Limited access to employees of organization and having limited time

iii.

for the research work.


As the result has been drawn on the basis of the information provided

iv.

by the respondent therefore there are high chances of errors.


Each respondent may have different perception regarding

v.

questionnaire that ways gap of perception may be occurred.


The research is based on selected variables which are mentioned in the
questionnaire any other variable are not taken into the investigation.

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APPENDIX-I