BUSINESS RESEARCH METHODS

MID TERM PROJECT

A PROPOSAL

ON

IMPACT OF HRM PRACTICES ON ORGANZIATIONAL

PERFORMANCE IN EDUCATIONAL SECTOR OF

PAKISTAN

An Empirical study in context of developing countries like Pakistan

Submitted By:

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 Impact of HRM practices on organizational performance in
educational sector of Pakistan

1.1 Introductions:

Every organization, whether manufacturing or services, public or private, large or small, for-
profit or not-for-profit must operate with and through other people. For the past 15 years, a
growing consensus has been seen that organizational human resources, if effectively and
efficiently managed, can create a source of sustained competitive advantage through human
resource capabilities that are valuable, rare and imperfectly imitable; thus adding value to an
organization’s performance (Wernerfelt, 1984; Barney, 1991; Grant, 1991; Mahoney and
Pandian, 1992; Huselid, 1995). Therefore human resource has become the most important of all
resources across every type of organization all over the world and particularly in the context of
the educational sector in developing countries such as Pakistan (which is now considered to be
the sixth largest populated country in the world, WPP, 2009). This is because academic
institutions, particularly universities, are responsible for the development of the intellectual
acumen of a nation’s human resource. Furthermore, quality of education is considered as one of
the major factors that accelerate the development of a country and is the most important
instrument in achieving the desired stage of economic development (Economic Survey of
Pakistan, 2005). To achieve this level, the performance of teachers is the key feature of human
resource factor. The leaders of higher education are of the view that the central functions of
higher education i.e. educating people, conducting research and providing community services
must be well-maintained, reinforced and expanded. In this regard, universities are those places
where knowledge and skills are not only transferred to young generation transforming them into
productive and responsible citizens (Gordon and Whitchurch, 2007) but also created.

Although as a developing country, educational system of Pakistan is still facing many problems
yet a tremendous growth is seen in Higher Education Institutions (HEIs) over last decade due to
constant efforts by HEC; an autonomous body which is responsible for allocating funds to
Universities/DAIs, accrediting degree programs and prescribing the guidelines under which all
institutions of higher education may operate. Realistically, it is accepted that the organizations
with good human resource practices can usually satisfy or fulfill the needs of employees and turn
them into more committed personnel of the organization (Slattery & Selvarajan, 2005). Human
Resources Management plays vital role and are critical to the realization of the goal that
universities must attract, develop and maintain an energetic workforce to secure their strategic
position (Olufemi, 2009). This can be done by identifying those specific HR practices that can
prove a hallmark in improving the performance of teachers (Darling-Hammond &Youngs,
2002). Therefore, there is a strong need to conduct research and highlight the kinds of human
resource practices that are viable for HEIs of developing countries particularly Pakistan.

In an attempt to explore this linking process, many researchers propose that HR practices
are not necessarily directed towards a firm’s performance but they influence employees’
competence and behaviour which eventually lead to performance (Delery, 1998; Ferris et
al., 1998; Wright et al., 1994). Researchers have presented different models that
encompass different levels and types of mediating effects in HR practices. Different HR
practices are tested by researchers to get optimal performance outcomes from faculty in higher
education institutions as well. However research on HRM in higher education is confined to
developed countries only. Very few studies in the context of HEIs of developing countries are
found that explore the impact of HRM on the overall performance of institutions (Olufemi, 2009;
Ahmad et al, 2010; Joarder & Sharif, 2011) while none of them have explored the impact of
selected set of HR practices directly on employee performance.

On the basis of the above discussion, this study aims to research and highlight the kinds of
human resource practices that are feasible for developing countries such as Pakistan, with special
reference to the educational sector in order to make their universities rank amongst the top
universities of the world. In consideration of the above issues, this research is meant to explore
the relationship between HRM and performance in the context of an Eastern developing country
(Pakistan), with particular reference to teachers’ performance in higher educational sector.

1.2 Purpose Statement:

In today’s era of dynamic change, expanding needs and competitiveness, it has become
increasingly complex for higher educational institutions to achieve high level performance with
sustainable competitive advantage. In such a case, those professionals, such as teachers, are
needed by HEIs who should not only be able to contribute effectively and efficiently in
achieving desired institutional performance but would also capable of coping with changing
tendencies and ever growing expectations of educational fraternity. Previous research work
indicates that competent employees work as efficient means for the organizations to get optimum
performance (Wright et al., 1994). However, for human capital to be actually able to contribute
to firm’s performance, positive attitudes and behaviors are necessary to be exhibited because the
motivated and committed workers having satisfactory feeling towards the organization are more
likely to perform well (Pfeffer, 1997; Williams, 2004). So the implementation of HRM practices
is one of the ways through which educational institutions can not only enhance competence of
teachers (who are considered as central element of higher educational system holding a range of
diverse and substantial academic roles) but can also develop commitment, satisfaction and
motivation among them to get higher performance. Therefore, the purpose of this quantitative
study is to examine the impact of HRM practices on teachers’ performance integrating resource-
based view and social exchange theory. To achieve this purpose a model describing the
mediating process through which HR practices affect individual performance, is proposed and
tested in the higher educational sector of Pakistan.

1.3 Significance of the study:

This study has made significant theoretical and practical contributions in the following ways:

 A considerable research work has used resource-based-view and social exchange theory
as a theoretical framework to explore the relationship between HRM practices and
performance.
 The sample of both public and private university teachers has allowed this research to
present an understanding of the supervision of knowledge workers (Simmons, 2002).
 One of the potential contributions of this study is the development of conceptual model to
measure the effect of HRM practices on individual performance for the educational
sector.
  The present study contributes to the literature of HRM and performance by examining the
applicability of Western concepts and theories to an Eastern developing country
(Pakistan).
 This study is useful for managers in the education sector to come up with policies that
help them to attract and retain their top-level faculty at their respective universities.
 This research is highly valuable for both academicians and practitioners

1.4 Literature Review:

A literature review is a clear and logical presentation of the relevant research work done before
in the same area of investigation. The human resource management field has changed to the
aspect that it contributes to the benefit of the organization (Delery and Doty, 1996). Now
organizations started the organizations have accepted that their employees are the major source
of competitive advantage (Pfeffe, 1994). According to Pfeffe (1994), HRM practices need to be
implemented to influence the employees for creating the competitive advantage. The present
study selected the four HR practices that are Compensation, Performance management,
recruitment & selection and training & development.

Organizational performance through effective recruitment and selection:

According to Daniel & Metcalf (2001), recruitment is part of the over-all management function
of staffing that serves a major role player in ensuring that company strategies will be
implemented. Spencer (2004) also emphasized that staffing requires both the process of
attracting and selecting prospective personnel’s capabilities and competencies with the company
position. It is perhaps the most important function because it is the starting point in the whole HR
process. Its importance is noted by Drucker (1992) as he said that “every organization is in
competition for its most essential resource: qualified, knowledgeable people” (Drucker 1992).
Recruitment is defined as the process of discovering, developing, seeking and attracting
individuals to fill actual and/or anticipated job vacancies (Sims 2002). It has three general
purposes: to fulfill job vacancies; to acquire new skills; and to allow organizational growth.

There are several factors which influence recruiting efforts namely: organizational reputation,
attractiveness of the job, cost of recruiting, recruiting goals and recruiting philosophy (Sims
2002). Selection is the partner of recruitment in HR planning. It is a critical process for the
organization because good selection decisions ensure the company of their financial investments
in their employees (Dean & Snell, 1993). Recruitment and selection has an important role to play
in ensuring worker performance and positive organizational outcomes. It is often claimed that
selection of workers occurs not just to replace departing employees or add to a workforce but
rather aims to put in place workers who can perform at a high level and demonstrate commitment
(Ballentyne, 2009).

Organizational performance through compensation and reward:

According to Milkovich & Newman (1999) “compensation refers to all forms of financial returns
and tangible services and benefits employees receive as part of employment relationship. Many
researchers revealed the importance of compensation in motivating employees. Bohlander, Snell
and Sherman (2001) narrated that compensation benefits have great importance in human
resource management by providing reward to their employees against their efforts. Sansone and
Hareckiewicz (2000) identified that compensation benefits are very effective to energize and
guide employees in achieving their desired goals. Milkovichand & Newman (2002) and Stone
(1982) indicated that money can be used to motivate employees for different reasons. One can be
motivated by providing them basic necessities of life. According to Daniel and Metcalf (2003)
High-performance companies understand the importance of offering awards and incentives that
gives effective and outstanding work. It has great importance to motivate and is effective
methods of reinforcing company expectations and goals.

Organizational performance through effective training and development:

It is very necessary for the organization to design the training very carefully (Michael
Armstrong, 2000). The design of the training should be according to the needs of the employees
(Ginsberg, 1997). Those organizations which develop a good training design according to the
need of the employees as well as to the organization always get good results (Partlow, 1996;
Tihanyi et al., 2000; Boudreau et al., 2001). It seems that Training design plays a very vital role
in the employee as well as organizational performance. a bad training design is nothing but the
loss of time and money (Tsaur and Lin, 2004).
On the job training helps employees to get the knowledge of their job in a better way (Deming,
1982). People learn from their practical experience much better as compare to bookish
knowledge. On the job training reduces cost and saves time (Flynn et al., 1995; Kaynak, 2003;
Heras, 2006). It is better for the organizations to give their employees on the job training because
it is cost effective and time saving (Ruth Taylor et al., 2004). It is good for organization to give
their employees on the job training so that their employees learnt in a practical way (Tom Baum
et al., 2007).

Organizational performance through effective performance management

system:

In recent years many organizations have been busy in implementing new or improved
performance management systems. Recent research shows that the regular use of these systems
leads to better organizational results (Ahn, 2001; Ittner et al., 2003). There is however little
knowledge about the actual mechanisms which cause the positive effects of performance
management (Bourne et al., 2000; Bourne et al., 2005). This might be because a lot of research
has gone into the design and implementation of a performance management system and into the
effects performance management has on high organizational results or performance (see a.o.
Schiemann and Lingle, 1999; Waal, 2002b; Stratton et al., 2005). There is however a scarcity of
empirical case study works at organizations into the actual workings of performance
management and the factors which actually cause the positive effects. Fortunately this issue has
gotten more attention these past years and researchers are increasingly focussing on the factors
which cause performance management to work (Malina and Selto 2000).
To obtain organizational fitness, an organization needs a clear and explicit performance
management concept which is formulated by its most senior management (Bossert, 1993). This
performance management concept is the basis for long-term development of the organizational
strategy and the strategic objectives.
1.5 Theoretical Frame work:

Recruitment and
selection

Training and
development
Employee’s performance Organizational performance

Performance
management system

Compensation and
reward

1.6 Objective of Study:

Main Objective:

To determine the impact of HRM practices on organizational performance in developing

countries like Pakistan

Sub Objective:

1. To determine the relationship between recruitment and selection and employee’s

performance.
2. To determine the relationship between training and development and employee’s
performance.
3. To determine the relationship between performance management system and employee’s
performance.
4. To determine the relationship between compensation and reward and employee’s
performance.
5. To determine the relationship between employee’s performance and organizational
performance.
1.7 Research Question & Hypothesis:

Question

Following research questions were expected to be answered through this study:

1. To what extent HR practices affect employee’s performance in an organization?

2. To what extent employee’s performance lead to organizational performance?
3. Does employee’s performance of teachers mediate the relationship between HR
practices and organizational performance?

Hypothesis

H1 = There is relationship between recruitment & selection and employee’s performance.

Ho = There is no relationship between recruitment & selection and employee’s performance.

H2 = There is relationship between training & development and employee’s performance.

Ho = There is no relationship between training & development and employee’s performance.

H3 = There is relationship between performance management system and employee’s

performance.

Ho = There is no relationship between performance management system and employee’s

performance.

H4 = There is relationship between compensation & reward and employee’s performance.

Ho = There is no relationship between compensation & reward and employee’s performance

.
H5 = There is relationship between employee’s performance and organizational performance.

Ho = There is no relationship between employee’s performance and organizational performance.

1.8 Methodology and Methods:

The purpose of this study is to explain the impact of HRM practices on the organizational
performance. For this study, I will select close-ended questionnaire as an instrument for data
collection rather than to choose interviews is to verify the relationship between variables and
comparisons between the respondents (Brayman & Bell, 2007). Selecting quantitative approach
on the basis of positivism, I have decided to collect quantitative data by using cross-sectional
technique. Sample size is 100 and the respondents are employees of educational industry.
I will collect the data from Lahore only because there is competitive and complex business
environment in Lahore. Rational of using experimental strategy of quantitative approach is to
establish a relationship between HRM practices on employee’s performance in educational
sector of Pakistan. In this study, simple random sampling technique is used in which equal
chance is given to all respondents to fill the questionnaire. Data will be collected through close
ended questionnaire and statistical analysis will be performed by using SPSS. The concepts will
be operationalized using five point scale likert scale ranging strongly agree = 5 to strongly
disagree = 1

1.9 Limitations and delimitations

Limitations are those characteristics of a study design or methodology that set parameters on the
application or interpretation of the results of the study. Although this study has made several
contributions yet it has a few inherent limitations as well.

1. First is, though the implications of the study are significant for educational sector in
developing countries perspective yet the specific setting in which the study was
conducted limit the direct generalizability of results in other sectors/organizations.
2. Another limitation to this study is the possibility of the occurrence of self-report bias
where respondents are likely to respond positively on their own knowledge, beliefs and
abilities.
 3. The study also includes limitation arising from the use of cross-sectional data inherent in
this approach. Cross-sectional data only provides a snapshot of the outcomes and the
situation may produce different results if studied in another time-frame.

Delimitations refer to all those self-imposed limitations that precisely define and state the
boundary of a research study with regard to its scope. The present study has demarcated its scope
in the following ways:

1. This study is confined to a specific setting of higher education institutes of Lahore,

Pakistan.
2. The model of HRM and performance relationship, proposed in this study, is bounded to
the individual level performance and responses are taken only from the teachers
3. As the area of interest, only HR practices are used in this study to investigate their
impact on employee’s performance.

1.10 Ethical considerations:

The participation in this study would be completely voluntary, which may end at any time within
the survey by the refusal of the participant.

 The purpose of data collection is clearly mentioned.

 Information provided by the respondents is kept confidential.
 While anticipating the data collection, the well being of the Respondents will be ensured
through securing their right to participate and withdraw at any time voluntarily.
 Mutual Consent form, permission letter and any other written approval if needed will be
dually signed by both the researcher and the respondent.
 Prior time adjustment will be made in order to avoid any interruption in the flow at
research site.
 Prior permission will be taken regarding the storage of data after the completion of the
study for a certain time period in the ownership of the researcher.
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