05. HR practices and organizational effectiveness

Dear Gentle Reader,

Welcome back to my 5th article I hope your would enjoy.

 

It has become clear that firm performance has important implications for employees and organizations as confirmed by past researchers. This study examines human resource practices and the impact of incentives on manufacturing companies in the Malaysia context. Three types of human resource practices namely, performance appraisal, training, and information technology have been chosen as the focus of this research with the presence of incentives as moderator on organizational performance. This is imperative in order to ensure the successful management of employees and also to improve productivity and achievements of an organization. The research uses a sample of eighty-five firms in Sarawak, Malaysia, voluntarily participated in this study. The results have indicated that the two components of human resource (HR) practices namely, training and information technology have direct impact on organizational performance. It was found that incentive is positively related to organizational performance but did not moderate the relationship between both HR practices and organizational performance. Implications of the findings, potential limitations of the study, and directions for future research are suggested.

 

1. INTRODUCTION

The major tool to enhance performance have been considered the HRM practices. This paper provides information about the HRM practices and their impact on performance of manufacturing enterprises in Kosovo. Many manufacturing enterprises in our country operates in market without any HRM practices, very few of them gives HRM practices their importance. To see how much, they use those practices/how they manage their employees, and their relationship with performance of enterprises we have

considered 100 owners/managers from this sector. Even though some initial results indicate that some

human resources practices can have significant positive relationship with organizational performance, most savantrecommend that further empirical work is required (Cardon & Stevens, 2004; Givord & Maurin, 2004; Brewster,2004).

To elaborate HRM practices we have chosen five of these practices to analyze: recruitment and selection,

training and development, flexible reward, participation of employ and work condition and we hypostatized that they have a positive relationship with the organizational performance. These practices capitalize on the strength of the human capital for sustained competitive advantage (Jackson & Schuler, 2000). Also, Kutllovci (2004) pointed that “...critical to the success of an organization have always been human resources and their importance has been always grown”.

 

2. METHODOLOGY

To investigate the relationship between these two variables we have collected data by using questionnaire. Owners/ managers of manufacturing enterprises was contacted to fulfill the questionnaire. We have explained the importance of the study in of them, and we guaranteed that all the data they provide will remain confidential.

Table 1. Registered enterprises in Kosovo based on number of employees – 2010

(source: SME Development Strategy for Kosovo 2012–2016) SME’s support Agency 2011

 

 

The table above (Table 1) shows that 98.37% of enterprises in Kosovo are micro-enterprises, 1.35% are small enterprises, 0.22% are medium-sized enterprises, while the large enterprises are 0.06%.

 

According to the statistical yearbook of Kosovo TM1, 2019, the number of active manufacturing enterprises in Kosovo is 277. Knowing that the population size of this study was 277 enterprises, based at the 95% confidence level and error margin 5%, the sample size has resulted in 161 enterprises. Out of a total of 161 enterprises involved, surveys were conducted in 100 of them, which means that the overall rate of return resulted 66.22%, as 10 of them interrupted the completion of the questionnaire while 51 of them were inaccessible. Data were collected through structured questionnaires. Based on Polkinghorne (2005) suggestion that the experienced participants should be chosen rather than randomly selected, we decided to have face-to-face meetings with people who have direct access to the level of human resource management who were well informed about the HRM process in general and about HRM practices in particular.

 

3. MEASURES OF HR PRACTICES 

Human resource management was measured through 30 items. Thirty items were used to measure the human resource management practices. All those items were drawn from Guest et al. (2003) and Triguero et al. (2012). The 5-point Likert Scales options where used to answer these questions: Recruitment and selection: a) Our company has processes of recruitment and selection that can fill up all available vacancies, b) Your recruitment process generate good qualified applicants as you need?, c) As part of the selection process, applicants are informed about the negative aspects of the job, d) in our company we have developed systems to select personnel (in addition to interviews and / or curriculum analysis), e) Our company has processes of recruitment and selection that can fill up all available vacancies. Training and development: a) Our firm offers training for those considered to be “key positions”, b) All employees receive training for their jobs (without any legal requirement), c) When employees receive training, their performance improves, d) When employees receive training, it is often relevant for their future / career in the company. Flexible reward: a) Employees are remunerated according to their individual performance, b) Employees are remunerated according to their group performance, c) employees have the right to receive monetary incentives, d) Employees have the right to receive other types of incentives such as profit-sharing, bonuses, recognition. Employee involvement: a) The firm provides its employees with regular information about business operations and business behavior, b) employees are consulted to know their views and opinions, the firm provides c) employees with information about the business plan on a regular basis. Work conditions: a) The organization gives employees the opportunity to engage in problem-solving situations, b) The organization has a strong presence of quality circles, d) The organization facilitates the involvement of its employees in improving teamwork, e) Employees feel committed when assured the quality of their work.

 

4. MEASURES OF ORGANIZATIONAL PERFORMANCE.

Organizational performance was measured through a total 9 items. One of the most commonly used metrics for measuring enterprise performance is that developed by Delaney and Huselid (1996) which includes: marketing, sales growth, profitability and market participation. Further this scale has been adapted and enriched by other authors such as Vickery et al. (1999), Stock, Greis, and Kasarda (2000) and Li et al. (2006) adding other units such as return on investment (ROI), increased return on investment, increased market share and overall competitive position. Consequently, in order to measure performance over the last three years, Delaney and Huselid (1996) metrics have been adapted, for marketing, sales growth, profitability and market participation. Three measurement units have been adopted by Vickery et al. (1999), Stock et al. (2000) and Li et al. (2006): return on investment (ROI), increased market share and overall competitive position. These questions measure the performance level of the enterprise with a five-point Likert scale. Respondents were asked: How do you compare your performance over the last three years with your competitors, with answer alternatives 1 = significant decline, 2 = decline, 3 = same as before, 4 = growth, 5 = significant growth.

 

5. DATA ANALYSIS & DEMOGRAPHIC ANALYSIS

The data gathered was analyzed using the statistical analysis software. The Statistical Package for Social Sciences

(SPSS) version 25. Correlation technique was used to analyze the data and to test the relationship between HRM

practices and organizational performance.

In this study we explore the following hypotheses:

1. Recruitment and selection have a significant relationship with organizational performance.

2. Training and development have a significant relationship with organizational performance.

3. Flexible reward has a significant relationship with

organizational performance.

4. Participation has a significant relationship with organizational performance.

5. Work conditions has a significant relationship with

organizational performance.

 

These manufacturing businesses were being managed by

74 males and 24 females, two of them did not want to respond in this question (Figure 2). Their age ranged between 18 and 65 years old. 55 respondents, or 55% were at the age of 26–35, 46–55 years old were 31 respondents and 55–65 years old were about 5 respondents. With lower education there were 8 respondents, with secondary education 23 respondents, while with higher education 43, with master 22 and 4 of the managers were with a doctorate.

 

Based on our results, there are very often 7 respondents attending trainings, often attending 23 of them, sometimes 44 respondents, while rarely 23 and 3 of them do not attend training sessions. Also, the results showed that 15 of the surveyed respondents were owners of these businesses, 26 of them were owners and managers, while 24 respondents were senior executives, 17 middle managers and 18 of them were human resource managers.

 

Results

From the table above (Table 2) we see the values of Mean and St. Deviation values, standard deviation  is a number used to  tell  how measurements for a group are spread out from the average (mean) or expected value. A low standard deviation means that most of the numbers are close to the average. A high standard deviation means that the numbers are more spread out. Also values of Cronbach Alpha are presented in this table for each of the practices included in the study as well as the organizational performance. Items have relatively good internal consistency.

 

 

By knowing that the most valuable assets in an enterprise are employees, this paper presents the condition of Kosovo’s manufacturing enterprises in terms how they manage their employees by using specific practices. From our results we can see that the managers of those 100 enterprises in Kosovo recognize the importance of having qualified employees and they use HRM practices to make them feel equal and motivated for wok. Interpretation of the correlation analysis shows that each of the selected practices for the study has a significant relationship with performance. Based on the results of our research we suggests that HR practices should be implemented with the intent of maximizing employee’s results that in turn will enhance the organizational performance through transparent recruitment & Selection, Training & Development opportunities for employees, performance based reward of competent employees, participation of employees on the strategic objectives and decision making process and work conditions which will help the employees to feel secure and motivated to work. Also, previous empirical studies have indicated that there is an increasing link of between HRM practices and performance. This study matches with Wright et al. (2005) who emphasize that HRM practices are strongly related to the firm’s performance. Of course, this study has its limitation, first this study is depended on cross sectional data which are generally limited by the virtue of being collected at one point in time and do not give sequence of events. Secondly, due to the difficulty of collecting data, we did not consult the voices of employees who experience the HRM practices and are so intimately involved in translating practices into performance. Future research on manufacturing firms in Kosovo should not only consult the implementers of policies, but it should also consider the voices of employees. In this study only quantitative methods have been used in empirical research, while according to Creswell and Clark (2007) the mixed method provides a better understanding of research problems than a single method.

 

 

 

CONCLUSION

 

Based on the findings of the study, a few key points can be developed to conclude this research paper. It is very much important that the managements of the colleges must understand these factors and should provide what is suitable and best for the college development. The results of the study imply that compensation practices are the crucial element of HR practices and have a significant impact on the organizational effectiveness. Hence it is concluded that the management of engineering colleges should pay more attention on this aspect to enhance the effectiveness in functioning the college.

The other important practice of HR is to strengthen the employee performance evaluation procedures as it not only identifies the weakness of the faculty but also strengthen them in meeting their career and personal development to suit with the present day environment. Hence it is necessary to develop a proper mechanism to identify the training needs of faculty and update them in all aspects. Similarly, management must concentrate on maintaining proper recruitment and selection procedures by giving more importance on merit in appointing right kind of faculty. Employee recognition is identified as another crucial factor for the organizational effectiveness followed by employee encouragement and personal development. A properly recognized employee shows his respect on management and involvement in his work, the managements of the colleges must focus on these aspects by giving them an opportunity in decision making and support for the work done. This can be done through entrusting them with more power, larger delegation of authority and incentives for their achievements. As organizational policies and procedures and organizational structure also play an important role in organizational effectiveness, the managements ought to focus on developing a good working environment with well defined policies and procedures along with role clarity for extracting maximum contribution from the faculty.

 

Thank you for taking time to read my Blog hope it helped to gain some knowledge. 

 

References 

Obeidat, S.M., 2016. The link between e-HRM use and HRM effectiveness: an empirical study. Personnel review, 45(6), pp.1281-1301.

Chang, E., 2005. Employees’ overall perception of HRM effectiveness. Human relations, 58(4), pp.523-544.

Ruel, H.J., Bondarouk, T.V. and Van der Velde, M., 2007. The contribution of e‐HRM to HRM effectiveness: Results from a quantitative study in a Dutch Ministry. Employee relations, 29(3), pp.280-291.