Impact of HRM on Productivity

The impact of HRM practices and policies on employee productivity is a significant subject in the arena of human resource management, industrial relations and organizational psychology. The bulk of its work includes the rationale of utilization of High Performance Work Practices, boost up compensation and deliverance in the field of management systems and broader employee participation and training, can better the knowledge, enhance their urge/motivation, decrease avoiding work and improve retaining of quality employees while boosting up idler to quit the organization.

Most of the logic given in the related research topics shows this fact that firm present and prospective human resources are pivotal considerations in the development and completion of its tactical business plan. Although the bulk of this literature is theoretical, concludes that human resource management usage can assist to develop a source of long term competitive benefit, especially when they are associated with a firm’s viable stratagem.

I both this largely hypothetical literature and the rising traditional acumen among human resource professionals there is a emergent agreement that organizational human resource tactic may, if adequately arrange in a particular way, present a vivid/direct and inexpensively noteworthy contribution to firm capability. The assumption is that more effective systems of HRM practices, which at the same time use the potential for complementarities or synergies among such practices and help to implement a firm’s competitive strategy, are sources of sustained competitive advantage. Unluckily, very little pragmatic evidence assists such a notion. What empirical work does exist has largely focused on individual HRM practices to the exclusion of overall HRM systems.

1.2: Background

A number of researchers have reported that HR practices are positively linked with organizational and employee productivity or performance. The focus and thrust of these studies have been towards developed countries. Little research has been done to test the HR-performance link in developing countries like Pakistan. Aycan et al. (2000) termed Pakistan as ‘under-researched’ country in the field of HRM practices.

The present study is an attempt to test the relationship between HR practices and employee productivity or performance in Nestle’ Pakistan Limited, in this situation it is important to find out the determinants which can enhance the employees’ productivity in an organization. The objective of this research is to facilitate the decision makers in an organization to follow the HRM practices which can improve the productivity of employees. The present study could be helpful to human resource managers of public and private sector organizations in Pakistan for formulation and development of HRM practices that will ensure high level of employees’ productivity resulting in increased achievement of an organization.

To evaluate employee productivity as sanctioned by human resource management practice, as HRM practices have significant impact on employee outcomes particular on the productivity. Support for predictions that impact of HR practices on employee productivity, linking to the HR system focused on human capital enhancement was directly related to multiple dimensions of operational performance such as employee productivity, machine efficiency and customer alignment. Hypotheses will be derived from resource-based perspective on strategy. Positive and significant effects on employee productivity are found for organizations that utilize more sophisticated human resource planning, recruitment and selection strategies. The need to examine the output effects of original service practices using data from model of Nestle’ Pakistan Limited employees of diverse departments, efficiency regressions demonstrate set of creative work practices, which include motivational pay, teams, pleasant work assignments, employment safety measures and training, achieve significantly higher levels of yield which includes slight job definitions, stringent work rules and hourly pay with close management. Most of the literature on HRM activities has presumed that employee productivity affects the success and effectiveness of HRM activities.

1.3: Objectives

• Determining use of productivity in comparison to performance and recognize productivity level on work performance
• Finding out employee productivity impact from HRM based functions
• Relating to several theories and applications of HRM practices in accordance to employee productivity

The aim of the proposed study is to explore the relationship between HRM practices and employee productivity. The researcher will try to answer two questions, i.e., How do Human Resource Management (HRM) practices affects Employee productivity? And how an organization can improve its productivity through effective HRM practices? The present research will be conducted through survey questionnaire technique. The questions will be close ended with five point Likert type scale. For calculation and manipulation on the primary data, statistical tools will be used. In this research, Nestle’ Pakistan Limited a food processor, one of the largest organization in Pakistan will be the target population. In order to select the sample, non-probability convenience sampling technique will be used. The sample will contain 100 respondents including both male and female. This research will be of quantitative type because the quantitative research is more result oriented than qualitative research. The present research will be applicable in almost all areas private and public sectors because it identifies the basic key i.e. Human Resource Management (HRM) practices and employee productivity.

Problem statement

What is the problem?

There are many and varied reasons why managers are continually under distress in organization. Resources, human and material, technology are but a few issues confronting managers daily. More importantly the human aspect has questions that have perplexed and fascinated managers for a long time. These questions include:

• How can they improve the performance of their employees?
• Which factors make some employees better productivity in their jobs than others?
• What makes some employees perform better than others?

There are no easy answers to these questions, yet they plague managers in their day-to-day running of organizations. The reality is that the level of employee motivation affects their morale, performance and overall job satisfaction.

Research question and research objective

Research questions

• How an organization can improve its productivity through effective HRM practices.
• How does HRM practice effect employee productivity?

Hypothesis

Human Resource Management Practices are positively correlated to Employee’s productivity.

H1: Selection is positively correlated to Employee’s productivity.

H2: Training impacts Employee’s Performance positively.

H3: Performance appraisal is positively correlated to Employee’s Performance.

H4: Career planning is positively correlated to Employee’s Performance.

Scope and Limitations of research

• Scope

Scope of the current research study is limited to the Nestle’ Pakistan Limited. The current study touches those recruitment areas of private sector organization which are still neglected, but have its own importance. The proposed study will throw light on such hiring areas to improve the efficiency of the employees of Nestle’ Pakistan Limited will increase. The results of the present study will be able to be implemented in the private sector organizations well.

• Limitations

The research study will must have to be completed in November 2010. Time limit is a critical factor because it will have to complete with the normal job routine. Respondents may not be able to respond properly because of their tight schedule. Respondents may not have the proper knowledge about the variables and their relationship which are under study.

Personal likeness and dislike-ness of the respondents may create biasness in the study. Respondents may feel hesitation while attempting the questionnaire and may produce ambiguous results.

Conceptual framework of research

In the past Human resource management (HRM), was known as personnel management, which includes all the activities performed by an organization to make sure the efficient employment of employees towards the accomplishment of individual, group, and organizational objectives. A firm’s HRM working concentrates upon the people side of administration. It is made of usages which help the company to deal efficiently with its people throughout the different steps of the employment cycle, as well as pre-hire, recruitment, and post-hire. The pre-hire step includes planning tactics. The business must take this decision that what types of job initiation will survive in the future period and focus the required qualifications for performing these jobs. During the hiring steps, the organization chooses its employees. As for as the selection criteria techniques are concerned they include recruiting applicants, judging their diploma, and finally choosing those who are deserved to be the most competent.

In the post-hire phase, the business makes HRM policies for efficiently managing persons once they have come to them. These techniques are formed to enhance the performance and contentment levels of employees by giving them with the required knowledge and capabilities to fulfil their job assignments and by developing such occasions that will boost up their energy, guide and help the employees’ in their efforts to meeting the business’s goals.

HRM practices and implementation

There is always HR department in a firm which implements its policies and the responsibilities of this department are associated with HR professionals and line managers. The interaction b/w managers and HR professionals guide them to make efficient and productive HRM policies. Firm’s success depends upon the performance of its worker and methodology of its appraisal method. HR professionals originate the system, while managers present the criteria to judge the standards of making performance evaluations in their right perspective.

As far as the nature of these roles is concerned they vary from company to company making its dependence on the size of the business. This conversation presumes large company with highly developed HRM department. Similarly, in small companies without extended HRM departments, line managers must presume an even greater role in efficient HRM practices.

HR professionals commonly presume the following four areas of obligations: establishing HRM policies and measures, developing/choosing HRM methods, monitoring/evaluating HRM practices, and advising/assisting managers on HRM-related matters. HR professionals usually make the decision (subject to upper-management approval) what actions to follow when imposing HRM policies. For example, HR professionals may decide that the selection procedure should include having all applicants (1) complete an application (2) give an employment test, and then (3) be ready for the interviewed by an HR professional and line manager.

Generally the HR professionals adopt specific methods to implement a firm’s HRM policies. For example, in selection the HR professional may presume the application empty, develop a prearranged interview guide, or select an employment test. HR professionals also make ensure that the firm’s HRM practices are adequately implemented. Evaluating and monitoring are involved in this obligation. For example, HR professionals may evaluate the usefulness of employment tests, the success of training programs, and the cost effectiveness of HRM outcomes such as selection, turnover, and recruiting. They also may monitor records to ensure that performance appraisals have been properly completed.

HR professionals also consult with management on an array of HRM-related topics. They may assist by providing managers with formal training programs on topics like selection and the law, how to conduct an employment interview, how to appraise employee job performance, or how to effectively discipline employees. HR professionals also provide assistance by giving line managers advice about specific HRM-related concerns, such as how to deal with problem employees.

The development of HRM procedures and methods often requires input from line managers. For example, when conducting a job analysis, HR professionals often seek job information from managers and ask managers to review the final written product. Additionally, when HR professionals determine an organization’s training needs, managers often suggest what types of training are needed and who, in particular, needs the training.

Significance of the study

The proposed study is directly related to the human resource management (HRM) practices and its related effects on an organization. A positive or negative correlation will be created between the variables of the HRM practices and employee productivity and performance with in the target population i.e., Nestle’ Pakistan Limited.

The impeding significance of the research can be found at the ideal composition of research of how it can go or not go beyond the scope of research as the research findings could be at most useful in terms of instilling awareness to HR personnel and other involved parties that it is important to have right amount of productivity adhering to performance, research is significant in providing ample basis towards theory and conceptual sense of HR ways, productivity level as well as application and accepting HR practices research and development as reference tool.

The proposed study will also attract the attention of the management of the private sector organization to reduce the rate of turnover of the contractual employees.

The present study will also highlight the importance of good and satisfactory HRM practices in saving the time of management and the co-workers.

The findings of the study will help the organization to improve the productivity and efficiency of employee and provide a speedy start up for the new employees, save the time, reduce start up cost, minimize the anxiety and reduce the turnover of contractual employee in a private sector organization.

The study will also help the organization to optimize the abilities of the employees and assign the responsibilities accordingly. In this way the organization will be able to achieve its objectives in a better cost effective way by making a confident and strong workforce. The findings and recommendations will be proof more effective through out the organization.

LITERATURE REVIEW

HRM practices and productivity of employees

Guest (2002) has argued that the Impact of HRM on performance depends upon worker’s response to HRM practices, so the impact will move in direction of the perception of HRM practices by the employee. Wood (1999) and Guest (2002) has stressed that a competent, committed and highly involved work force is the one required for best implementation of business strategy. Huselid (1995) have found that the effectiveness of employees will depend on impact of HRM on behavior of the employees. Patterson et al (1997) 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. Their research has found that HR practices have powerful impact on performance even if measured as productivity. Huselid (1995) stressed that by adopting best practices in selection, inflow of best quality of skill set will be inducted adding value to skills inventory of the organization.

He also stressed on importance of training as complement of selection practices through which the organizational culture and employee behavior can be aligned to produce positive results. Cooke (2000) has included efficiency and effectiveness as ingredients of performance apart from competitiveness and productivity. He or she further argued that training is the tool to develop knowledge and skills as means of increasing individual’s performance (efficiency and effectiveness). Singh (2004), whose observations are more relevant in our cultural context, argues that compensation is a behavior aligning mechanism of employees with business strategy of the firm.

Career planning is a tool that aligns strategy with future HR needs and encourages employee to strive for his personal development (William et al, 1996). By increasing employee participation, the firm will benefit from increase in productivity of the employee due to increased commitment of the employee. Financial participation schemes were more beneficial for the organizations than the associated cost (Summers & Hyman, 2005). Use of best HR practices shows a stronger association with firm’s productivity in high growth industry (Datta et al, 2003). This finding has significance in our case as we have shown that the telecom sector of Pakistan is a high growth industry.

Wright et al (2003) have argued that an employee will exert discretionary effort if proper performance management system is in place and is supported by compensation system linked with the performance management system. Job definition is combination of job description and job specification. It clearly outlines duties, responsibilities, working conditions and expected skills of an individual performing that job (Qureshi M Tahir, 2006). Ichniowski (1995) while observing productivity of steel workers have found that complementary HR practice System effects workers performance. Majority of previous research has verified significant relationship between HR practices and Employee Outcomes (Sels, 2006) Collins (2005) in a research of similar nature targeting small business have found that effective HR practices impact employee outcomes significantly (employee outcomes used by them were different than ours). A research was conducted by Mr. Tahir Masood Qureshi (2006) regarding Impact of HR practices on organizational performance in Pakistan. His findings were supportive of our assumption that HR practice system effect Organizational Performance through employee outcomes.

METHODS AND PROCEDURES

Methodology

The present research will be a survey type cross sectional quantitative research. The research methodology will be as follows:

Research population

In the given research study, the population will be all employees of Nestle’ Pakistan Limited. The number of female staff in the population will be very small but their efficiency of work is greatly affected.

Research sample

The sample will consist of both males and female, upper, middle and lower level staff from the target population. According to the designations of the respondents their qualifications, professional experience, age will vary.

Sample size

The sample will contain 100 respondents including both male and female.

Type of research

This research will be of quantitative type because the quantitative research is more result oriented than qualitative research.

Sampling technique

In order to select the sample from the target population i.e. Nestle’ Pakistan Limited “Non-probability convenience (purposive)” sampling technique will be used.

Questionnaire

A questionnaire will be designed to collect the necessary information. The questions type will be close ended. A cover letter highlighting the purpose of the study and instructions to fill in the questionnaire and a demographic data sheet will be prepared and attached with the questionnaire as well.

DATA ANALYSIS AND REPRESENTATION

Available research software and manual calculation will be uses while making analysis on the data collected for the proposed research study if needed. Statistical and arithmetical formulae will be applied as per demand and need of the study. Statistical tables and graphical representations will also be drawn.

FINDNIGS, CONCLUSION AND RECOMMENDATIONS

Findings

In order to achieve the basic purposes and objectives of the proposed research study, research findings based on data analysis will be discussed generally and specifically.

Conclusion

Conclusion will be constructed after analysis.

Recommendations

At the end finally Recommendations will be given for further improvements.

Research Plan and Time Schedule

Time is an important element of any research design, to measure the time span.