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Employees’ performance and human resource management practices

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(A study of Pharmaceutical companies in Pakistan)
Muhammad Bilal' Muhammad Naeem² Saleem Arshad³ Abstract In developed countries most of the research work and empirical studies have been done on the subject of employees’ performance and human resource management practices and found a significant relationship between HR practices and employee performance. This research is conducted to check whether those results are also applicable in the under researched country like Pakistan. Most of the previous studies have been proved that there is a strong relationship between HR practices and perceived employee performance. The aim of current study was to find a relation between employee performance and four HR practices including Training, Job Description, Career planning, and compensation in the pharmaceutical industry of Pakistan. 200 questionnaires were distributed to medical representatives of the pharmaceutical companies operating in Pakistan. The results indicate that three of the chosen practices of HR training, job description, and compensations have a significant influence on the performance of medical representatives in Pakistani environment. However career planning practices have insignificant impact on perceived employee performance. Key words: Human resource management (HRM), training, job description, career planning, compensation, employee performance. Introduction At present there are 207 pharmaceutical companies operating in Pakistan out of which 19 companies have their head offices in Islamabad and Rawalpindi. It has been seen that there is an intense competition between pharmaceutical companies of Pakistan. Medical representatives are the main strength of these companies and the performance of the company is directly dependent on the sales force of the company. (Esra Nemli, 2010) stated that HRM practices are one important source of competitive advantage among Organizations. To compete successfully in this environment, organizations continually improving their performance, by improving HRM practices. (Horgan & Mo’hlau, 2006) discussed that HR management system is associated with higher employee performance. The authors contributed equally and are listed in alphabetical order. Muhammad Bilal'| Research fellow at international Islamic university Islamabad, MS finance, email-id: bilalmba029@gamil.com Muhammad Naeem² | Research fellow at international Islamic university Islamabad, MS finance, email-id: mnaeem@gamil.com Saleem Arshad³ | Research fellow at international Islamic university Islamabad, MS finance, email-id: saleem.arshad@gamil.com 1

Skills management. (Delery and Doty. maintaining and compensating their services in tune with the job and organizational requirement. (Datta K. Personnel cost planning. These processes can be performed in an HR department. The country has four provinces Punjab. Payroll . In 2010 Esra Nemli gave his opinion that the way an organization manages its human resources has a significant relationship with the organization’s performance. Performance appraisal and Labor relations. Employee benefits . Recruitment means selection Induction. The prior studies have shown that those firms and organizations which are practicing HRM in their organizations have better results in overall performance of the firm. but the evidence is proved that some tasks can also be outsourced or performed by line-managers or other departments. (Singh K. Pakistan is situated in South Asia having a population of about 170 million people. Literature Review HRM is defined as employing people.Many researchers have proved that HR practices have a positive relationship with employees’ performance. career planning. Importance of this study is that a few researches have been done in this region of Pakistan with these Independent variables. 1996) argued that there are significant relationships between HR practices and accounting profits among a sample of banks. In 2005 Wright & Gardner argued that correlations with performance measures at all 3 times (past. Khyber Pakhtunkhwa and Baluchistan. Literature relevant to HRM practices and employees’ performance provides different factors which have direct impact of human resource management practices on employees’ performance. Compensation. HRM practices involves Workforce planning. Travel management. Time management. The Study shows that Human resources management involves processes to deal with employees and personnel. Personnel administration. Islamabad has a mixed population of all provinces. concurrent. The purpose of this paper is to study the relation between HR practices and performance of the employees of pharmaceutical companies in Pakistan. the capital of Pakistan. Each province has its own emotional and cultural environment while the Federal region. and that controlling for past or concurrent performance virtually eliminates the correlation of HR practices with future performance. The current study is conducted in this city and its nearby to get generalized results. and compensation with employees’ performance. and future) are both high and invariant. Training and development. Orientation. (Marwat. When all process is performed effectively and integrated they provide significant economic benefit to the company. Hence finding will help the organizations to improve or revise their strategies for HRM practices. enhancing their capabilities. Qureshi & Ramay. There are several factors which affect on employees’ performance but present study focuses on the relationship of four HR practices including training. 2004) argued that Training and compensation are having positive effects on organization and employee’s performance. Guthrie J. Wright P. 2003) argued that use of best HR practices shows a stronger association with firm’s productivity in high growth industry. Whenever we study the relationship between HRM practices and employees’ performance one question came into mind that how can we compute HR practice. 2009) have found that HRM practices are positively correlated with employees’ performance. utilizing. Sindh. job description. In 2000 Gerhard et al argued that employees are the preferred source of information for assessment of the actual (as opposed to the official) HR 2 .

H1: There is a significant relationship between training and employees’ performance in pharmaceutical companies of Pakistan. performance evaluation and compensation practices have a significant impact on perceived employees performance of the banking industry in NWFP Pakistan. management and leadership training.M in 2003 provides examples that employee perceptions and evaluations of the existence. supervisor skills development and team building skills training. in 2003 Wright et al use survey questions on four domains of HR practices: selection and staffing. No established model yet exists in this research literature. & N. computer and technical skills training. Dewe. Job definition is combination of job description and job specification. training. It also provides individuals with stimulating and interesting work and gives them the autonomy and flexibility to perform their jobs well. As an example.. In 1995 Huselid found that training of employees can be helpful to produce positive results. responsibilities. Gardner. but in 1997. H2: There is a significant relationship between job definition and employees’ performance in pharmaceutical companies of Pakistan. In 2000 Cooke argue that training is the tool to develop knowledge and skills as means of increasing employees’ performance. In other words we can simply say that job description is what to do and how to do. diversity training. 3 . P. P. safety training. pay for performance. Job Descriptions Job descriptions are written statements that describe the duties... communication skills training. 2003 research taken by Guest. which encourages high performance and productivity. films. role playing. case studies. working conditions and expected skills of an individual performing that job. Job description enhances job satisfaction and flexibility. D. Training Programs include harassment training. In 2006 Qurush. required qualifications of candidates and reporting relationship and coworkers of a particular job. Training Training Methods include On-the-job as well as Off-the-job training.M & Moynihan. Off-the-job training techniques include lectures.practices. and Wright.M. implementation and operations of HR practices are useful in the context of HR and performance research. promotion. In 2010 Qadar Baksh et al found the three hr practices. It clearly outlines duties. television conferences or discussions. Conway. programmed instruction and laboratory training. most important contributions and outcomes needed from a position. conflict management. T. On-the-job training is delivered to employees while they perform their regular jobs. L. In 1997 Patterson et al while discussing impact of people management practices on business performance has argued that HR practices in selection and training influence performance by providing appropriate skills. simulation. Their research has found that HR practices have powerful impact on performance. special study. workplace wellness. and participation. responsibilities.

4 . A number of researches suggest that the role of employers and employees is changing with reference to career e. Career planning is a tool that aligns strategy with future HR needs and encourages employee to strive for his personal development (William et al. which in turn. Gardner showed some results of a meditated model that suggests that pay level affects employee self-esteem. affects employee performance. H4: There is a significant relationship between compensation and employees’ performance in pharmaceutical companies of Pakistan. Borgen. Amundson. It seems that the organization may benefit from increasing commitment across all career stages. work. In 2004 Donald G. “Organizations are expecting employees to assume greater responsibility for their own future as well as for organization’s success. H3: There is a significant relationship between career planning and employees’ performance in pharmaceutical companies of Pakistan. in 1997 Ball argues that as employers take less responsibility. Singh (2004) argued that compensation is a behavior supporting mechanism of employees with business strategy of the firm. 1996). 2002). Highlighting its benefits for the organizations. People create career patterns as they make decisions about education.Career Planning Career Planning involves to conduct regularly career-information events that to inform your workers about their options regarding continuing education and further qualifications. in 20002 Hartzenberg argues. in 2005 Johns suggests that employees that have advanced would put more effort into their work. family and other life roles (Post. Most compensation managers entirely assume that high pay levels will maintain and enhance future performance of employees. “Career development has a direct influence on the achievement of job satisfaction and career commitment. Similarly. But on contrary (zaini Abdullah. Compensation Compensation means paycheck issued by an employer in order to satisfy the compensation commitment that employer has with the employee.g. 2009) concluded in his research that compensation or incentives have no influence on overall performance in the Malaysian business organizations. In 2003 Wright et al have argued that an employee will exert unrestricted effort if proper performance management system is in place and is supported by compensation system linked with the performance management system. employees need to take control of their own development in order to maintain and enhance their employability. In 2006 Puah & Ananthram suggests. The company policies play an important role in providing career opportunities. &Washburn.

2007). training. senior territory manager and product specialist of several pharmaceutical companies. Due to cost constraint a convenient sampling was chosen and 200 questionnaires were distributed among medical representatives of nine pharmaceutical companies located in Islamabad and Rawalpindi region. 2004) and (Qureshi et al. Questions regarding independent variables (job description. 5=strongly agree. sales promotion officer. Training Job descriptions Employees’ performance Career planning Compensation Independent variables Dependent variable Research Methodology Questionnaire The questionnaire developed for this study was used in the past researches by (kuldeep singh. career planning..Figure-1 According to the existing literature the conceptual model in this study is shown in Figure-1. However 191 questionnaires were returned back out of which 5 were discarded due to uncompleted response. and compensation) were not changed but some new questions were added on the subject of employee performance and some modifications were made in demographics. Participants Sample of the study are the medical representatives including territory manager. sample was of 186 members 5 . As a whole. The questionnaire required a response to all questions except demographics on five point Lickert scales having extreme points: 1=strongly disagree. who used to find out the impact of HR practices on employees performance.

6 .45455 Job Description 186 3.3785 .7812 0.03333 3.9 3..49643 Training 186 3. Standard Deviations and Other Statics Employee performance 186 3. Table-3 Mean.71 0.9 0.72453 Compensation 186 3.e. Employee performance shows that employees are performing very well. Table-1 shows the demographic characteristics of the respondents.6382 0. Error of Mean Median Mode Std. Descriptive Analysis The highest mean of 3.74226 Career Planning 186 3.8 was calculated for training and Job Description which shows that employees feel that they are well trained and knows what to do and how to do their job.A/B.8002 0.Sc Master Other = 26 (14%) = 83 (45%) = 59 (32%) = 18 (09%) Salary “000” 10-25 26-40 41-55 56-70 71-above = 79(42%) = 46(25%) = 37(20%) = 18(10%) = 06(03%) Experience 01-10 = 72(39%) 11-20 = 58(31%) 21-30 = 45(24%) 31-40 = 11(06%) Statistical Analysis Pearson Correlation and Multiple Regression were used for measuring the impact of HR practices on Perceived Employees' Performance.A B.35717 Valid Mean Std.6 and 3. The mean value of 3.05312 3.0364 4 4. Deviation 6 .25 0.3 respectively.83 0. The calculated mean for other independent variables compensation and career planning are 3.02619 3.7143 3. which indicates that employees are some what convinced with these factors.8 for the dependent variable i. Data was operated by using SPSS 16.6 3.05442 3.showing a response rate of 93 percent.8199 0. Table-1 Demographics Gender Male = 186 (100%) Age 20-30 = 59 (32%) 30-40 = 68 (37%) 40-50 = 43 (22%) 50-60 = 16 (09%) Marital status Married Unmarried = 078(42%) = 108(58%) Education F.8333 3.

510). This shows that by conducting proper training sessions for the employees. Career Planning.551 2.2 0.7 0. Job Description has a positive and significant relationship with employee performance and its value is .668** . which shows that by clarifying outlines duties.613 Correlation Results The results of Pearson correlation as shown in table-4 indicate that there is a statistically significant relationship between the dependent variable Employee performance and the independent variables Job Description. high level of employee performance can be obtained.723** 1 Job Description .668.646 Job Description 0.791 Career Planning 0. Training. Table-4 Correlations Employee Job Career performance Training Description Planning Employee performance Pearson Correlatio n Pearson Correlatio n Pearson Correlatio n Pearson Correlatio n 1 Compensation Training .846 Compensation 0. working conditions and expected skills a firm can get better performance from their employees.86 0.17 Table-2 Scale Reliability Variables Cronbach’s Alpha Employee performance 0.510** .166* 1 Career Planning .498** . responsibilities.723 which is highly significant and there is a positive correlation between them. and Compensation. Correlation of Training with employee performance is 0.5 0.752 Training 0.207 1.Variance Range 0. Compensation also showed a significant correlation with perceived employees' performance (0.246 1.128 1.525 2.145 1 7 .

Correlation is significant at the 0.31761 a. We can say that Career Planning does not affect the performance of employees to a larger extent. career planning may not be a significant factor for the employees to perform well. change in employee performance is 0. career planning. The most influential variables are job description and training (highest value of 0. The regression results show that the independent variables job description. career planning has a negative relationship with employee performance. The change in employee performance is 0. training. Table-5 Regression Analysis Adjusted Std. *. training. Training. the other three variables description. The estimated average value of employee performance is 1.223 and -0.Compensation Pearson Correlatio n .209** . training.071 1 **. career planning. Correlation is significant at the 0. Job Description.522 0. and compensation are significantly connected to the dependent variable employee performance. Career Planning Model 1 Model Coefficients Un standardized Standardized Coefficients Coefficients t Sig. This shows that factors like better training. providing opportunities for better career raise the level of performance. Except for career planning. Error of the R R Square R Square Estimate a . in the reported method.09 when job description. Changes in employee performance are 0.723 0.288** .2% of the variation in the dependent variable employee performance can be explained by variations in the independent variables job description.05 level (2-tailed). and compensation. Compensation.385 respectively for Beta). Predictors: (Constant).385 when training increases by 1. which indicates that there is a very minor probability that the independent variables do not influence the dependent variable employee performance.209 with employee performance.317** .495 and 0. clarifying their duties and responsibilities. which is positive but mildly significant. Career Planning has a correlation of 0. All the significance levels are well over .. Negative value of Beta for career planning indicates that in our culture.e. and compensation are zero. training.512 0.01 level (2-tailed).05. and compensation have positive relationship with employee performance.099 when career planning and compensation change by 1. Similarly.495 when job description increases by 1. 8 . Regression Results The value of adjusted R square i.512 indicates that 51. career planning. respectively. .

264 9.298 Training 0. efficiency and performance.178 5. For that a number of pharmaceutical companies were selected in Islamabad and Rawalpindi region. their performance level rises. Error 0 0. 9 .054 Compensation 0. HR practices should be taken seriously regarding employees training. to achieve better employee performance.099 0. Correlation analysis found the highest correlation for job performance and training which indicates that if the employees are offered trainings timely and on need basis through fair decision-making and sound policies.467 0.089 0. while training. Error 1 (Constant) 1.208 0 0 0.66 7.495 0. job description.039 a. The employees are not satisfied with the pay and the benefits that they get but they are performing well. A job should be well descriptive on paper. there compensation factor matters less to their job performance.385 0.B Std. Suggestions: Referring to the empirical evidence obtained from this study. following factors must be taken into account: 1.013 In this study we used perceived employee performance as a dependent variable to check the HR practice.223 0. Compensation has also a role to play in an employee’s job performance.042 Career Planning -0. We used correlation matrix and regression analysis. A feedback of 186 questionnaires was analyzed in SPSS 16. On the job and off the job training programs should carry out as it help employees to improve their skills. they want to ensure their position at the job rather to give preference to income they earned. career planning has not significantly high correlated with employee performance which specifies that the employees with low career planning and development also performed well depending on their trainings and job description. Statistical analysis indicates that the employees working in the pharmaceutical companies feel that their jobs performance is improved by the factors like training and job description. Regression analysis indicates that the dependence of training and job description on employee performance is significant.365 -0. and it must be included in HR practices to tell the employee his/her duty clearly so that number of errors and mistakes would decrease. following are conclusion and suggestions. 2.158 B 3. whereas it is not significantly dependent on Career planning.345 -2. Therefore. The reason behind this fact can be explained as most of the employees are having 1 to 10 years experience.54 0.51 Std. thus. Dependent Variable: Employee performance Conclusion Beta 0.068 Job Description 0. career planning and compensation are independent variables.

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