According to Guest et al. (2003) the link between HRM and performance is based on two arguments. First is presented by Barney (1995) cited by Guest et al. (2003) that HRM offers one of the most powerful bases of competitive advantage and secondly that effective deployment of HR depends on the unique set of practices, which is also defined as bundles or ‘best practices’ or as HRM systems (Huselid, 1995). Delery and Doty (1996) cited by Wright et al. (2003) found that HR practices have a positive impact on profitability. Among the most noted studies in this field, is presented by Youndt et al. (1996) who uses the ‘human capital theory’ according to which people have knowledge and skills which is of high economic value to the firm and a firm should invest in it, to make efficient use of it, he makes use of two indexes, reflecting two different bundles. The result findings report HR practices to be positively related to operational performance. Panayotopoulo and Papalaxendris (2004) base their research on the model described by, Cameron and Quinn (1999) (cited by Panayotopoulo and Papalaxendris, 2004) which has four elements, Human relations model (internal focus and flexibility), Open system model (flexibility and external focus), Internal process model (control and internal focus), Rational goal model (control and external focus), balancing the four models leads to an increase in performance. One of their interesting finding is that, the financial performance is least likely to be related to HRM and only in a negative way. They found that, some combination of the three models seemed to be better predictors of market performance e.g., the internal focus and flexibility combined showed a positive result on organizational performance. In this study human relations and open system model alone did not contribute to organizational performance but had to be combined with the internal process model to gain a synergic affect.
The findings linking HRM and performance have been subject to criticisms. Purcell (1999) presents the argument of diffusion that, if HR is the core to competitive advantage then why many firms fail to understand the importance of HR and if the universalistic approach is true then there is a need to find the bundles and or HR policies, this rather leads us to a ‘cul-de-sac’ and ignores the internal changes in the organization. Marchington and Grugulis (2000) questions the problems associated with the methodologies used and data sets and regards them as ‘inter alia’, problems in choosing the right measures of performance. In the literature of HRM and corporate performance, the concept of performance has been addresses in numerous ways. The most obvious is the financial performance and measures used include return on investment Tobin’s Q (firm market value/book value) (Huselid, 1995) whereas, Guest et al.(2003) used labour turnover and other aspects of productivity such as scrap rates and sales per employee and financial performance was measured by the company’s profit per employee. According to Wall and Wood (2005) there is a lack of consistency within studies. Majority of the studies used performance indicators and many studies also made use of multiple HRM measures. Although in Huselid’s (1995) seminal study employee motivation scale was found to be statistically and significantly associated with Tobin Q’s and productivity “against the fact that the employee skill and structures HRM scale was not significantly related to either of these performance outcomes” ( Wall and Wood, 2005, pp. 451). Similarly in the study by Delary and Doty (1996) only 4 out of 14 relationships were statistically notable (Wall and Wood, 2005).
Marchington and Grugulis (2000) also talk about employee opinion and their missing voices, also there are hard to measure items and the data is relied to be filled by a single person. For example, Huselid (1995) interviewed the HR executives and seniors. Marchington and Grugulis (2000) made use of the bundle provided by Pfeffer (1998), such as employment security, selective hiring, self-managed teams, high compensation contingent on organizational performance, extensive training, reduction of status differences and sharing information. According to Guest (1992) cited by Marchington and Grugulis (2000) ‘these ideas might be right enough to be dangerously wrong’.
Ramsey et al. (2000) test ‘the linkages from HPWS (High performance work systems) to employee outcomes and hence to organizational performance which was untested previously. They share their version of Labor Process (LP) approach with Braverman’s (1974) version of LP theory, that in order to increase the labor output, managers constantly look for ways to make employees work for longer hours or work harder. They focus their attention on employee outcomes, in their research they take 24 HPWS practices and then test their results. They confirm the relationship of HPWS-style practices and a number of measures of workplace performance. But they regard the assumption ‘HPWS through employees to organizational performance questionable’.
Truss (2001) presents with the research conducted on a specific organization over a two year period. Rather testing best practices HRM on the company, Truss (2001), takes the HR practices used by the company in a notion to say that successful companies don’t necessarily use best practice HRM. The research findings propose the difference between ‘rhetoric and reality’(legge, 1995) e.g., despite the value of training and development, less than half of the employees felt that they received the training to fir the requirements of the job, although the company aimed to pay in the upper quartile few than one third felt their pay was fair. There were also conflicts on organizational and individual level. There was a feeling of increased level of stress and word intensification also mentioned by Ramsey et al. (2000).
Guest et al. (2003) carried out a research study on manufacturing and service firms, the result findings suggest that, greater use of HR practices can lower labor turnover and increase profitability but relationship between HR and productivity was absent. The link between HR and performance was higher in manufacturing firms than in service firms. One of the reasons being explained was that some of them were large multinationals. This study failed to form a positive link with HR practices associated with a change in performance.
Chang (2005) studied "commitment HR bundle effects", and found that commitment was achieved through an enhanced workers' perception of HR effectiveness. Chang (2005) investigated the effect of company’s commitment HR bundle on the overall employee’s view of the HR bundle and ‘the effects of employees’ overall perception on their attitudes’ (Chang, 2005, pp. 535). The results revealed that employee perception of overall effectiveness was influenced by the HR bundle. This study contributes to the current literature in a way that where, other studies claim that commitment practices lead to improve employee commitment to the company by reducing staff turnover, this study adds to these findings by revealing that ‘such effects, at least in part, occur via employees’ overall perceptions of HR effectiveness (Chang, 2005, pp.536).
In the literature, HPWS do not influence firm performance directly but through a chain of different variables (Sels et al. 2006). Although the literature differs in the level of outcomes, but HPWP has direct impact on satisfaction, commitment, behaviours and performance (Sels et al. 2006). According to Ramsay et al. (2000) there is room for differences in literature regarding HPWS. Meyer and Allen (1990) cited by Ramsay et al. (2000) HCM or ‘high commitment management’ focuses on affective and normative rather than merely continuance commitment which leads to reduced turnover, absenteeism and reduction in cost due to the elimination in needs for control and monitoring (Meyer and Allen, 1990). Hence High commitment approach is expected to increase organizational performance (Wall and Wood, 2005).
HPWS practices Commitment Organizational performance
(Adopted from: Ramsey et al. (2000) p.506)
According to the model illustrated above, HPWS (High performance work practices) leads to commitment of employees which in turn affects organisational performance. In this study by Ramsey et al. (2000) the score of HPWP (High performance work practices system) was found to be positively related to management reports of ‘greater comparative labour productivity, financial performance and product service area’ where as absence rate was found to be unrelated to high performance work systems score. This research was carried out using data from the 1998 Workplace Employee Relations survey (WERS98). For the current research project the model provided by Ramsey et al. (2000) of High commitment management is being used but with alterations. The study of Ramsey et al. (2000) was purely a survey based quantitative study and the data was collected from employees where high performance work practices existed. However one of the limitations of the study was that it was based on the WERS98 data which is not adequate enough to capture ‘employee voice’. This study will make use of the same model as provided by Ramsey et. al (2000) of HPWS leading to employee commitment leading to performance but in the absence of HPWS practices or HRM. However, as already a quantitative study is conducted to check the affect of commitment on organizational performance, so in this project a qualitative study will be conducted in order to have a detailed analysis to put employees view point upfront and to review the reasons behind the employees being committed to the firm and what leads them to perform and stay in the organization. And then it will assess if the implementation of a human resource system could act as a stimulator to increase commitment and performance.
Chapter 3: Methodology:
3.1 Research Methodology:
For the sake of this research qualitative research style was used. According to Frankfort-Nachmias and Nachmias (1996) qualitative study seeks to discover, and identify underlying concepts and relationships between them. Qualitative research is all about exploring issues, understanding phenomenon and answering questions. Qualitative research provides an inductive view of the relationship between theory and research (Bryman, 2001). Qualitative research according to Bonoma (1985) cited by Hyde (2000) ‘explore beyond mere snapshots of events, people or behaviours’.
For the research inductive reasoning method is used:
‘Inductive reasoning is a theory building process, starting with observations of specific instances, and seeking to establish generalisations about the phenomenon under investigation’
(Hyde, 2000, p. 83)
Qualitative research is often criticised for lacking scientific rigour, being subjective lacking reproducibility and finally it is also criticised for lacking generality (Mays and Pope, 1995). It is said that qualitative methods tend to generate large amounts of detailed information about a small number of settings. However, Qualitative research is termed as being less prescriptive and codified by instead exhibiting more of a descriptive tenor by outlining different ways and stimulating responses (Bryman, 2001). It has also been argued that the use of tick box questionnaire is not always suitable to tap the complex relationship between HRM and performance (Purcell, 1999 in Truss, 2001). Qualitative research methods are suggested to get a better understanding of people, social and cultures within which they live (Tellis, 1997). According to Kaplan and Maxwell (1994), ‘the understanding of social and institutional contexts from the participants view points is largely lost when data is quantified’.
“More qualitative research is needed to study the phenomenon of HRM, utilizing multiple sources that tap into the rationale behind decisions that are made”.
(Becker and Gerhart, 1996; Boxall, 1991; Gerhartm 1999; Guest, 1997 in Truss, 2001, p. 1127)
The research was carried out using a case study approach. A case study method is justified in terms of greater suitability of tasks and as the presentation, interpretation of a single subject, as being a detailed examination of an event. It is also defined as developing context-specific predictions, plans and decisions (Platt, 1988).
A qualitative case study approach is the most appropriate in order to gain insight knowledge of the influencing factors of ‘how’ and ‘why’ of employees commitment, in how and what ways commitment can be linked to firm performance and it’s impact on the presence or absence of a human resource function. Qualitative research is also useful to establish links, understand HR processes, and to answer question such as how and why people do things, which surveys do not necessarily pick up. According to Yin (1994), case study is the ideal research approach when “how” or “why” questions are being posed. Case study draws attention to the question of ‘what can be learned from a single case’ (Stake, 1998).
Case studies tend to be selective, focusing on one or two issues that are fundamental to understanding the system being examined (Tellis, 1997). In the literature researchers have used different types of case studies according to the need of their research. According to Yin (1994) revelatory cases are ideal when conducting single case studies. Revelatory studies as described by Yin (1994) ‘are the ones where an observer may have access to a phenomenon previously inaccessible’. Qualitative case study research that takes into account inductive approach to theory treats single case studies as revelatory (Bryman, 2001). Tellis (1997) argue that external validity can occur as a problem when a single case study is undertaken. However researchers argue that single case study is undertaken in order to generate an intense examination and to relate it with theoretical analysis (Bryman, 2001). According to Yin (1984) and Mitchell (1985) cited by Bryman (2001) ‘the question is not whether the findings can be generalized but how well the researcher is able to generate theory out of the findings’. The research was carried out in a firm without a human resource function. Employees were interviewed and then according to the inductive reasoning generalizations were made and linked to theory.
Most of the researches in the literature are based on survey based quantitative studies. Therefore, this research focused on a qualitative method by taking interviews. Guest et al. (2003) notes Huselid and Becker (2000) that in many instances, HR-executives are the best placed to provide answers as they have the knowledge but Ramsey et al. (2000) and Marchington and Grugulis (2000), highlight the ‘missing voices’. According to Wall and Wood (2005) the main weakness among existing studies is the ‘reliance on single source measures of HRM practices (e.g. from CEO or HRM manager) of unknown reliability, sensitivity and validity, often from the same source as the measures of performance’
(Wall and Wood, 2005 pp. 455)
Therefore in order to gain insight knowledge of the overall scenario, data was gathered from managers and non-managers to have a richer understanding of different influencers of commitment that leads to performance. The interviews were conducted from the following two levels of employees working in the organisation.
- Managers/ Senior Managers
- Non-Managers
3.2 Semi-Structured Interviews:
Interview is the most employed and favourite method adopted in qualitative research (Fontana and Frey, 1998). Qualitative interviews are less structured than in quantitative research methods. In qualitative interviewing more emphasis is given on the interviewee’s point of view (Bryman, 1995).
Semi-structured method of interviewing was used for the research project. This method was specifically chosen to engage the interviewee to remain in the specific topic to be covered (Bryman, 1995 cited by Bryman, 2001). Interviews were conducted from 10 non managers and 4 managers. They were selected from different departments based on their availability. The interview process was flexible and allowed the interviewee to express their ideas around the topic. Questions were made after reading the relevant literature and theories that surround the proposed research project. The questions did not follow the same pattern in every interview as it was largely dependent on the discussion between the interviewer and the interviewee. Same questions were asked to every interviewee, in order to compare answers. Although same questions were posed but they were asked in different manners to gain an insight and to trigger various points and to keep the interviewee engaged in the discussion.
The qualitative nature of the process allowed the interviewees to reflect their ideas and view points and the semi-structured nature of the interview allowed the interview to be followed in the right direction. Furthermore, the demand of the research project was to make the interviewees think and explain stimulators of their commitment to the firm and how this leads to firm performance in the absence of a human resource function. Additionally, interviewees view point regarding the likely affect on the presence and absence of Human resource function on the above was also taken into account. At couple of instances the interviewees were unaware of the stimulators or influencers towards commitment, so the question was then asked in an indirect way to stimulate a response.
Although in the proposal, the interviews were suggested to be live face to face by the researcher. However, this was not possible for the reason of Karim Associates being in Pakistan, but it was then tackled with an online video face to face interview. The interviews were recorded in order to keep a complete record of what have been said and how it has been said. As it is often the tone of the interviewee, that is important (Bryman, 1995 cited by Bryman, 2001). Recording the interview was also preferred over taking notes, as it can distract the researcher from focusing on the important points.
3.3 Sampling:
The interviews were conducted from non managers and managers. This was done in order to access not only the ‘rhetoric’ but also the reality and to take into account employee opinion (Truss et al. 1997). In order to get a view from all level of employees the interviews were conducted from 10 non managers and 4 managers. The non managers and managers were chosen after careful selection of a total mixture of employees working in sales, accounts, engineering and recovery departments. This was done in order to gain an overall picture of the opinion of various departments of the organization. These employees were working for different projects in the same organization. The employees were randomly chosen within their departments based on their availability.
The interviews were conducted in different time frames with non managers and managers. This allowed the researcher to add on further points previously gained from non managers. Also it helped in building a tempo of the research and to add on points and get a wider picture of the whole scenario.
3.4 Interview Questions:
The interview questions were developed keeping in mind the general and specific objectives of the research study. They were designed keeping in view the possible responses the interviewer can receive. As the study was based on a semi-structured interview, the questions were designed to be open-ended, allowing the interviewee to think and relate to their experiences of incidents occurred during their tenure in the firm.
The questions were designed keeping in view the objectives of the research along with the survey of the literature. Most of the studies in the literature are focused on quantitative research, whereas this study was based on a qualitative method. After careful review of the literature and the objectives of the study, questions were designed anticipating responses and then the following questions were prepared. This helped the researcher to think ahead and allowing the researcher to pose the next question quickly. The questions were designed keeping in view the nature of the interview to allow the respondents to express their feeling and view point.
The questions were carefully aligned with the objectives. Firstly the interviewee was made aware of the overall aims and objectives of the research study. Then a couple of questions such as their name, their job title were asked in order to make the respondents comfortable. Then the questions linked with the research were posed.
The first two questions were related to the number of years the employees were associated with the firm and the main reasons behind their association with the organization. These questions were asked in order to know why they have served in the organisation and their particular reasons behind it.
Then the respondents were asked the main factors that made them committed to the organisation. This question was aligned with the first objective of the study. And it was asked in order to gain information of the main influencers of their commitment with the organisation. This question was also asked in order to link which level of commitment led the employees to be attached to the firm. The main problem that occurred during the interview was, that often the interviewee was not aware of the
main reasons behind their commitment with the organisation, to avoid this problem and to tackle the situation, further clarification was given and the questions were posed in the indirect manner such as by asking them ‘what keeps you with the organization’ or what is it that that you like the most and that keeps you committed. This really helped to ease the situation, make the interviewee comfortable and speak more about the area.
Then the respondents were asked of how their commitment to the organization led them to perform well for the firm. This question was asked not in order to see ‘how they performed well (in terms of figures)’ but to access what made them perform for the organisation and stick to the organisation. This question was aligned with the second objective of the research which was to analyze in how and in what ways employee commitment was linked to any increase in firm performance. This was an open ended question and allowed the employees to think and answer what exactly motivated them to be committed and to perform for the firm. This question was asked in order to gain knowledge of the reasons behind the employee being with the organisation. The next two questions were asked in order to check if any basic human resource functions such as, appraisals, performance based pay, and or training existed in the firm. The next three questions were asked in order to assess if the employees felt a strong sense of belonging to the firm and wanted to continue with the firm for the rest of their career and if they would recommend this firm to their colleagues and friends. The reason for asking these questions was to analyse if the employees felt proud and wish to continue with the organization under current circumstances for the rest of their career.
The last set of questions was linked to the third objective of the study, which was to study and access if the presence of a human resource function would have a beneficial affect on the commitment and performance of employees or if they wish to stay with the current system. Lastly they were asked if they recommended any high performance work practices such as training, appraisals, employee involvement programs, fringe benefits, participation in decision making, employment security, performance based pay, team based work, high wages (Huselid, 1995) to be implemented and adopted by the firm. This question gave the employees a chance to express their view point about such a system. This question was also asked in order to prepare a recommendation for the firm to adopt.
3.5 Data analysis and interpretation:
Qualitative research driving from interviews produced a large amount of data (Bryman, 2001). Data gathered from the interview was compiled according to the questions categories and level of employees. For examples, the interview data of managers and non managers was analysed separately. Then they were analysed across each question, this allowed the researcher to clearly see the differences or similarities between the answers. It allowed the researcher to compare answers between the same level of workers and across the level of workers within the same question. They were analysed according to the question categories so that the data was analysed and interpreted in detail. Then the data under the two category levels, based on the level of employees was compared and linked to the theory. Interpretations were then be generated and would be taken into discussion followed by the conclusion.
The interviews were recorded on the computer. It helped the researcher to fully engage in the interview. It was suggested in the research proposal that the data will be analysed with the help of QSR software. However, as according to Hunter et al. (2005) manual process cannot be replaced as it is linked with an intense thinking process. The researcher used an excel form and typed in all the conversation of the interview. They were then analysed according to the employee level and question categories. This allowed the researcher to think while arranging all the information and the excel forms eased the process to compare on and across each category.
Chapter 4:
4.1 Company Background:
Karim Associates have grown dramatically from being a small firm in 1970 to one of the largest construction companies of Pakistan. It is responsible for more than 30 projects of houses, residential flats and shopping malls in a span of over 37 years. It has gained a wide amount of respect and reputation in the field of construction. This organization works under a centralized structure of power and authority as major decisions making powers lies with the directors themselves.
Although the company is very successful and has over 70 employees working on different projects under various departments, there is still an absence of a human resource department there is no HR director, manager or HR policies being implemented. Apart from once or twice a yearly bonus this company does not offer any special perks or benefits to the employees. The employees are also not appraised on a regular basis or based on their performance but it is often subject to the project they are working on and the circumstances of the working situations. Also to date the company has never had any special or specific recruitment or training facilities. Most of the employees are hired on a referral basis by the employees or through personal contacts of the directors. Despite all this, over 95 percent of the employees have been with the firm for more than 5 years with the employee turn over rate being extremely low.
4.2 Findings:
The interviews were conducted in a very friendly atmosphere where employee opinion was given more priority. The non managers were interviewed firstly. The interviews lasted for about 20 to 25 minutes each. This allowed the employees ample time to think and answer questions. One of the problems was to intervene, the inner intentions of the employees behind their real motive to work for the organization, to be committed and to perform. However, the interviews were able to reveal some insights.
The data of non managers and managers is thus going to be analyzed. They will then be cross analysed between non managers and managers to see any similarities or differences in their opinions.
The first question posed was regarding the number of years the employees have been working for the organization. 4 out of the 10 non managers were working for more than 15 years with the organization, with 5 working for over 10 years and 1 working for over 5 years (please refer Appendix A). One of the four managers was working for the organization for over 25 years, with the other three working for over 10 years (please refer Appendix B).
The second question was regarding the main reasons of the employee being with the firm. This question received a mixed and overlapped responses. Out of 10, 5 non managers said the main reason behind their working with the organization was their understanding with their owners. According to one of the non managers the main reason of him being with the firm was “personal interaction with the employers” and that the owners have never said ‘no’ to him in times of need “they have always helped in times of need”. For this reason he felt a moral obligation to work for the prosperity of the organization. While another commented, that the owners have shown trust in them and that’s the main reason of them being with the organization. Good management and company culture was also mentioned by 4 interviewees as the reason for being with the firm. One of the interviewee said, that the company has an extremely good and friendly management in place which provides the overall good working environment. 3 interviewees also mentioned salary and flexibility to be the main reasons for their association with the firm.
According to one non manager “I have continued my education along with my work here in Karim Associates as the management is extremely friendly and have provided me with enough flexibility to work on the timings I desire to. And this has helped me greatly to balance both”. (Please refer Appendix C)
Whereas with the managers, 2 mentioned company culture according to one manager, he belonged to the same culture community as the employer and this made it easier for him to work in the similar environment. The other two managers mentioned personal relationship with the bosses, relations with peers and subordinates and career prospects to be the main reason. (Please refer Appendix D).
The next question was then regarding the factors that made the employees committed to the firm. Most of the non managers gave similar reason for their commitment to the organization as the main reasons of them being with the organization. 6 non managers said that they were committed to the organization because of their employers. That they understood the employers and that the employers were always there in times of need. Two respondents also mentioned that the employers ‘treated them like a family member’ and were always ‘there in times of need’ and that is what made them most committed to the organization. 4 interviewees mentioned good management, 3 mentioned company culture and 2 mentioned good salary and flexibility of time. (Please refer appendix E)
Figure 4.1: Factors leading to employee commitment generated from data collected by non managers.
With respect to the managers, one mentioned the honesty of the employer that made him committed to the firm which was somewhat similar to the response of another manager who mentioned, ‘fair dealings of the company and sense of gratitude’. Other two mentioned, environment of the company, relationship with bosses, and flexibility. (Please refer appendix F)
Figure 4.2: Factors leading to employee commitment generated from data collected by managers.
The next question was asked in order to fulfil the next objective of the study which was to assess how the commitment leads the employees to perform for the firm. This question prompted different answers. One non manager said that the owner’s trust and treatment like a family member drove him to perform better for the firm. A similar response was attained from another non manager saying that the employers treated them not like an employee, rather a family member and this led him to perform not just for monetary reasons but he performed as he felt a personal sense of belonging to the firm. Another response was the loyalty of the employer and the expectations of the management pushed the interviewee to put his 100%. According to a interviewee “the directors have always been there for me in times of need, this leads me to perform for the firm as I feel I need to pay them back by showing good results” (Non manager, 2007). Flexibility in timings was also mentioned, according to one of the interviewees, he was more productive as he was not clock controlled and still got the same pay for completing his tasks that was assigned in little time. “The owners treat us like family and have been there in times of need and flexibility of time leads me to perform for the firm as I am not bound to stay till a specific time”. One of the interviewees said that the directors listened to his suggestions and took them into consideration which motivated him to perform and think for the betterment of the firm (Please refer appendix G)
Figure 4.3: Factors influencing commitment to performance generated from the interview data of non managers.
According to one of the managers, he was performing due to “self dedication and the need to excel”. According to others, the environment of the firm made them committed to perform also “expectations of the employer” was mentioned as in the case of non managers, to be a reason for them to perform for the firm.
“Company’s trust and loyalty leads me to perform well as I feel, I need to give them back in the same coin reciprocally” (Manager, 2007). (Please refer Appendix H).
Figure 4.4: Factors influencing commitment to performance generated from the interview data of managers.
The next question was asked in order to access if any high performance work practices are being performed at the basic level. To stimulate a response question was asked regarding any formal training the employees have received for commencing the job, all the employees said that they have not received any formal training, but were always helped by their managers and or colleagues when in any problem. The managers also said that they “had not received any formal training”, but it came through experience or by “asking colleagues or managers” and one mentioned that as a retired army officer he had already gained enough skills to manage employees. One manager mentioned that due to the nature of business that they are in, it is at times not possible to give training but one learns by experience (please refer Appendix I & J).
The following question was if the employees received any appraisals or bonuses, all 10 non managers and 4 mangers responded that they did not receive any appraisals based on performance. In one instance a non manager even mentioned that his salary has been stagnant for over 5 years. But all were getting once or twice a yearly bonus on ‘Eid’ (a special Islamic occasion). According to one employee “we don’t get appraised based on performance, if we perform well we only get verbal appreciation from our bosses” (non manager, 2007). A manager also commented “I had been on a stagnant salary for over 9 years, then now just 4 months back I was given an appraisal as I was moved to a new project” (Please refer Appendix K & L).
Then the employees were asked if they would give consideration to work outside the firm. This question was asked in order to see employees’ intentions to stay or leave the firm, and the basis they would consider working for any other firm. All 10 non managers said that they would not like to leave the firm. According to one non manager “I have spent 17 years working for this firm, I would not give consideration to work for any other firm due to change in environment and also the position I have received in this firm, I won’t receive the same elsewhere” (Please refer appendix M).
3 out of 10 said, they have spent enough time with the organization and did not want to consider any other firm to work for as they would not get the same credibility as they have received in this one and would not want to go to a new firm and start everything from the beginning. One non manager said that although he had received offers to work from other companies but he would not give them consideration because he liked the work environment and the ‘honesty of the employers’. Another employee said that he had been with the firm for a long time and have developed a bond with the employers and co workers. According to one non manager “The owners trust me and are very friendly that is why I have never thought about leaving this firm as I feel a personal sense of belonging to this firm”. One employee said “Although I have had given consideration to work outside the firm, but other firms are not as flexible in approach with respect to timings as this one is”.
Out of 4 managers only 1 manager said that he would like to leave the firm if he gets a good salary package. But he would leave only if the directors would allow him to, as he had spent ample time with them and would not like to leave if they would be unhappy by the decision. One manager mentioned that although he had ‘received offers from outside’ to work for them but he had declined those as he like the ‘work atmosphere and the bosses’. According to another manager “Yes I have received so many offers from the market but I paid very feeble consideration on it just because of my long commitment and association with the company” (Please refer appendix N)
The next question was if the employees felt a strong sense of belonging to the firm (please refer appendix O & P). All 10 non managers and 4 managers said that they did feel a strong sense of association and bond with the firm as they have spent such a long time with it. “I do feel a strong sense of association and belonging to the firm. I take it as my family (Non manager, 2007).
Then they were asked if they would like to be with the firm for the rest of their career, 10 non managers and 2 managers strongly said that they would like to be with the firm for the rest of the career whereas, one manager said he would like to leave the options open as he is not sure of what the future holds for him while another commented “If I get a good salary package that meets my expectations and if the bosses agree to accept my resignation I would leave the job else I would like to continue”.
Then they were asked if they would recommend their friends to work for the firm all 10 non managers and 4 managers said that they would recommend their friends to work for the firm for different reasons, which included, environment of the work place, flexibility and one employee said that he has recommended a lot of his friends to work for the firm as it is a very good place to ‘gain some experience’ as it has a lot of experienced people. One of the managers mentioned that he would only recommend it to a friend if a vacancy existed and if he was capable enough to join the firm (Please refer appendix Q & R).
Then the employees were asked if they felt their commitment could be increased by any human resource management system to influence their performance for the firm. 9 out of 10 non managers and 4 managers felt that a human resource management function could increase their commitment further for the firm influencing their performance. According to some, a proper human resource system would ease up the entire process and make things simpler as it gets difficult at times to reach to the employers in times of need. One of them quoted, “Yes I feel that human resource management system can help in increasing commitment, as although the employers are very helpful it can become difficult at times to get through them directly”.
According to one non manager such a process would help in distinguishing between the employees performing well and employees not doing well and as a result this will help to increase the performance of the employees. According to the other non managers, such a system would define a “career path” and it would increase their commitment and performance as they would be clear as to what they want to achieve and would allow personal and professional growth. However, according to one non manager he was already committed and performing his 100 percent for the company but according to him such a system would be highly beneficial for the organization as it is the demand of the upcoming employees and to match up with the demand of today’s world. “I do not think it would increase my performance or commitment for the firm as I am already committed and performing to the fullest but I think such a system is very important to increase the commitment of new prospects and employees to match up with the demands of today’s world” (Please refer appendix S).
One of the non manager commented “I had been on a stagnant salary for over 5 years until I received an appraisal 9 months back. I strongly feel such a system would eradicate this and will increase commitment and performance”. According to one manager “right now all the employee get equal status whether they perform or not, with such system in place the performance will be monitored and everyone will get a fair appraisal, which would instil a good feeling in the employees and they wont be counter productive and strive hard to perform the best for the firm” (Please refer appendix T).
Then for the recommendations part they were asked if they would recommend any high performance work practices such as, training, appraisals, employee involvement programs, fringe benefits, participation in decision making, employment security, performance based pay, team based work, high wages to be adopted by the firm and if yes what would they suggest to be implemented first.
In response to the above question all 10 non manager and 4 mangers agreed to have a human resource system with the majority emphasizing on a strong need for appraisal and performance based pay system, 3 employees also highlighted the need to have a proper training system. According to one manager “there is a great need for a proper appraisal and performance based pay system for the company, it could really increase the commitment of the employees and avoid any counter productive behaviour” (Please refer appendix U & V).
Figure 4.5: Recommended policies for the firm to increase employee commitment leading to performance generated from the interview data of non managers.
Figure 4.6: Recommended policies for the firm to increase employee commitment leading to performance generated from the interview data of managers.
4.3 Discussion:
The discussion is based on three main areas. Firstly the discussion will focus on how the employees of Karim are committed to the firm, secondly how their commitment is linked to performance, and finally if the presence of ‘high performance work practices’ can have an affect on employee commitment leading to performance.
From the data we have seen that despite the absence of high performance work practices, almost 95% of the employees of Karim Associates are with the firm for over 5 years. Out of the 10 non managers interviewed, 4 have been associated with the firm for over 15 years, 5 for over 10 years and 1 for over 5 years. One of the four managers was working for the organization for over 25 years, with the other three working for over 10 years. The employees seemed to be highly committed and felt a strong sense of association and bond with the firm. If we analyze the data, more than half of the employees said they would like to be with the firm as they like the work environment and have spent enough time with the firm and did not want to start everything from the beginning. This makes them fall into continuance commitment according to which, employees stay with the organization as they have developed an attachment with the organization due to the time and effort contributed to the organization or they fear they won’t get the similar level of recognition or employment alternatives elsewhere ( Meyer and Allen, 1990).
More than half of the respondents mentioned their relationship and understanding with their bosses to be the main reason of them being with firm. Few also mentioned that the employers were always there for them in times of need and always helped them both morally and financially. This made them feel that they had an obligation to work for the firm and to put in their best. This category of employees fall into normative commitment, according to which employees stay with the organization as they feel it is morally the right thing to do (Meyer and Allen, 1990). Good management structure and organizational culture was also mentioned to be the main reasons of the respondents to be with the firm while, 3 interviewees mentioned salary and flexibility of time. Again more than half of the employees said that they were committed to the organization because of their employer. Relationship with the employer was also mentioned by one of the managers. One employee mentioned that the employer treated them like a family member and this really pushed him to be committed to the firm. All the managers and non managers felt a strong sense of association and bond with the firm and said that they would strongly recommend their friends and peers to join the firm.
To sum up, all employees feel a strong sense of association with the firm, seem to be highly committed to the firm and organizational effectiveness is enhanced where employees display a high level of commitment to the firm (Redman and Snape, 2005). One of the main reasons of their commitment was found to be their association and relationship with their employer. They liked the company culture and felt a strong bond with the firm. As mentioned by an employee, the employer personally looks into their matter when they need any help this makes the employee psychologically feel he is important as given personal consideration. This is thus found to be the main reason of the association with the firm and this is also the reason why most of the employees are committed to the firm and want to be with the firm for the rest of their lives.
The next main of discussion is to see how the commitment of employees makes them to perform for the firm. More than half of the interviewees mentioned the trust and expectations of the employer pushed them to perform well for the firm. While a few mentioned flexibility of time, made them perform for the firm. While one also mentioned that the employer listened to his suggestions and this made him put his 100% in the organization and kept him committed and motivated.
All the respondents said that they were fully committed and did put their 100% effort for the firm. This was not just for monetary reasons but because they felt a personal relation with the employer and took the organization as their family and wanted the best for it. The staff seemed to be very loyal and also showed low intentions to quit with just one manager saying that he would like to leave the organization if he gets a better opportunity with good prospects to work for. One manager said that although he had no intensions to leave the organization he was not sure what the future had stored for him. But all the non managers said that they would like to be with the organization for the rest of their career.
It is found from this that Karim Associates works under an informal rather than a formal structure as the employers help the employees in an informal rather than a formal way. This can also be seen as a paternalistic approach which means fatherly protection in return for loyalty and obedience (Fleming, 2005). It can be drawn that Karim Associates is currently working under a paternalism approach of managing employees which organizes the employment relationship as a parental/child, master/servant or teacher/pupil arrangement of authority (Fleming, 2005). Such kind of a managerial approach is found to be common in non western organizations where life time employment is found to be a typical feature of organizational life (Hunter, 1995; Johnson and Gill, 1993). It can thus be drawn that such kind of a management approach has been able to keep the employee commitment level by fulfilling their needs leading them to perform well for the firm and this in turn has so far eliminated the need to have a high performance work system.
All the employees mentioned that they received little or no training for work but whenever they were in a problem their colleagues or managers would always help them. Employees also did not receive any appraisals except once or twice a year bonus which was not based on their performance rather it was only on a special Islamic occasion twice a year called ‘EID’. While few also mentioned that their salary had been stagnant for over 5 years before getting an appraisal which was based on them moving to a new project and getting a promotion.
However despite all this, almost every employee said that they were fully committed and putting in their 100% effort and that they were happy to be with the organization. However, all said that a high performance work system is highly recommended for the firm. When asked what benefits the company can get by implementing high performance work practices, when all employees seemed to be 100% committed and performed their 100% and did not want to leave the firm. The answers varied with one employee saying that although such a system would not help to increase his commitment or performance for the firm, it would be highly beneficial for the company to adopt as it is the demand of the new upcoming employees and of today’s world. One mentioned that although, all of them were committed and all their needs were fulfilled they were not aware of how much they would get and when in time of need. It all depended on the discretion of the employer. And according to a manager, if for instance, the employee is new and the employer does not know him very well it may be difficult for him to ask for help. With such a system, everyone will know how much benefit they are going to receive. According to another employee, there was always a level of uncertainty if they would or wouldn’t be helped. Although in the end they would be helped but it was not possible for everyone to go through the same process. According to them such a system would eliminate this problem. Also another answer was that it was difficult to get hold of the employer all the time. The absence of an appraisal or performance based pay system was another element that was mentioned, according to a employee if he worked harder than the other employee of the same level, both would get the same salary except him getting more of verbal appreciation than the other. This at times, pushed some of the employees to be counter-productive, bribe and steal.
This raises two potential problems, firstly, although most of them were obliged that their employer was always their in times of need, they did had a factor of uncertainty if they would be helped or not. It was felt that it was difficult for lower level or for new employees to get in touch with the employer in times of their problems. And even if they were helped, the employer was not always there to help them.
Secondly it was also felt, that the major issue of concern with some of the employees was of salary and appraisals. Despite mentioning that they were performing well, few employees mentioned that their stagnant salaries and lack of an appraisal system pushed ‘some employees’ to be counter-productive and that some employees would try to ‘earn money’ the other way round as the increasing inflation rate of the country and the demands of their family would no longer accept the same salary for so many years. The other thing which was found to trigger this kind of response was the fact that the salary of a person inputting more effort and the salary of one inputting less effort at the same employment level was given the same salary except some verbal appreciation. This triggered the response in the person inputting more effort and discouraged him to put in the same the next time. They felt their effort was seen at the same level as the employee putting in less effort and this thus made them put less effort next time. More than half of the employees mentioned that there was a strong need to have an appraisal and performance based pay system. The managers also felt that such a system would decrease the employee turn over rate further. Therefore after analyzing the current interview data it seems like the demand of the employees to have high performance work practices as HR is expected to increase organizational performance (Wright et al. 2003). High performance work practices are expected to increase the commitment and the performance of employees as according to the resource based theory that unique, inimitable resources and the effective deployment of these resources is the key to achieving sustained competitive advantage (Barney, 1991).
Thus it can be said that when employees will be managed from high performance work practices they are likely to become more committed to the organization (Wright, et al. 2003) and this in part can lead the employees to exhibit proper on job behaviour and avoid counter productive and dysfunctional behaviour which the employees may be engaged in (Wright et al. 2003). Thus high performance work practices are likely to stimulate or act as a catalyst to increase commitment of employees leading to increase in performance.
The current structure of Karim illustrates that employees are committed to the organization without any high performance work practices system and also thrive to perform for the firm. The employees feel that there ‘needs’ are being met whenever required, that their ‘bosses’ always help them when in need and for this they feel a moral obligation to work for the firm and to pay back in the same way by showing their commitment and performance for the firm. The current structure of Karim is hence:
Commitment of Employees performance without HPWS
It can be seen from the model illustrated above, that the main reason of employees being committed is their employers, as mentioned by a majority of employees, the employers are always there to help them for this they feel a moral obligation to work and be committed to the firm. Another reason for the commitment of employees was found to be flexibility and the work atmosphere. It can be seen that the employees are committed and are performing well for the firm without any high performance work practices, so one argument can be that there is no need to have such a system and to increase the expense of having an ‘additional department’ comprising HR managers and directors and implementing HR strategies.
However, the interview data suggests that the commitment of employees is expected to increase, by the inclusion of high performance work practices. According to the interview data the stagnant salaries of employees pushed some of the employees to be counter productive, ‘bribe’, steal and make money the ‘other way’. Also it often discouraged the employees putting in more ‘effort’ as he only received verbal appreciation. Also according to one employee, such a system will encourage prospect employees to join the firm. Such a system is also expected to increase the feeling of goodwill in employees as they are expected to feel that their efforts are being ‘rewarded’ and the company is working for their benefit, such a system is also expected to guide the employees with their career path, all this collectively, is expected to increase the performance.
To increase goodwill in employees
Avoid counter-productive behaviour
Encourage new prospects to join the firm
Hence the new and altered model as adopted by Ramsey et al. (2000) is expected to increase the goodwill in employees, avoid any counter productive behaviour which was stimulated by stagnant salaries and encourage new prospects to join the firm by offering them a career path and a good salary package and a reward system. This model is prepared after giving consideration to the data collected from the interview.
This is expected to increase the commitment of employees with ‘added goodwill’ as they will feel that their efforts are being rewarded, they are being trained which will benefit them professionally and this is in turn is expected to increase the performance of employees and encourage other people to join the firm.
Chapter 5:
5.1 Conclusion:
This study revealed that although the organization was very successful the employees said that they were fully committed and performed to their 100% a high performance work practices system is highly recommended and should be adopted by the firm in order to increase the level of commitment leading to increasing performance and avoid any counter productive behaviour by the employees. It can be concluded that the high performance work practices system can act as a catalyst to increase the commitment and performance of the employees.
The interviews reveal that the management and the working culture of Karim Associates are very friendly. Employees like the work atmosphere and are comfortable to work for the organization. It also reveals that the management is flexible enough to cater any special needs of the employee. For most employees what makes them more committed is their employer. According to some employees the employer has always been there for them in times of need. It was also seen that the employees share a personal relationship with the employer and for some they have always treated them like a family. This gives rise to a paternalistic approach of work as well. For the same reason the employees have been associated with the firm for a long time and a majority of the employees said that they did not want to leave the firm.
Despite the fact that no appraisal or performance based pay system was being implemented the employees seemed very much committed to perform. The major reasons behind the employees performing well for the firm were their understanding with their employer, that the employer listened to their suggestions and implemented them as well. Another reason was found to be a moral obligation as mentioned earlier as told by the employees the employer was always there in times of need to help them, for this they felt a moral obligation that they need to return and pay back the employer in the same coin by showing good output and good results. Also the expectation of their managers and colleagues pushed the employees to perform.
However, all the employees did feel that there was a need to have a high performance work practices system, according to them such a system would help to clearly distinguish and discriminate those performing better than the others and this will push the employees to put in more effort also with such a system, health benefits and other perks would be clearly highlighted and employees will become clear of the benefits they can claim if need be. This will thus make them feel that the management further cares for them and they are likely to be with the firm for longer. According to the managers such a system will help in reducing employee turn over as well and according to a non manager ‘it is the demand of the modern world’.
Although, the employees seemed to be fully committed and seemed to perform well for the firm, such a system may arguably raise the barrier and is expected to put the employees one step forward to strive more hard and achieve their best. Right now the employees do feel that if the employer helps them, they are certainly doing a favour on them and some feel a moral obligation to return that favour and put in more effort. However, if such a system is in place they will get to know that it is instead as a reward for the ‘effort that they put in’ to make the organization successful. Also with such a system, their career path may become clear and which may allow mental growth of the employees and they may perform well. It can be concluded that a high performance work practices system could act as a catalyst to increase the commitment and performance of the employees.
5.2 Recommendations:
Although it is suggested that a HPWS should be implemented by Karim Associates, however, all the high performance work practices cannot be implemented they need to be altered to suit the need of the organization. As the “claim that the bundle of best practice HRM is universally applicable, leads us into a utopian cul-de-sac and ignores the powerful and highly significant changes in work, employment and society” (Pucell, 1999, pp. 36). It is recommended that in order to increase the commitment and performance of employees the company needs to implement a high performance work practices system particularly altered keeping in mind the needs of the organization.
The employees were asked what they would like to see first being implemented out of these: training, appraisals, employee involvement programs, fringe benefits, participation in decision making, employement security, performance based pay, team based work, high wages of Huselid’s model. Most of the employees felt that there was a strong need to have appraisal system and a training system. It is therefore suggested that the company should first implement a quarterly or semi-annualy appraisal system. Such a system is expected to increase competition among employees and may drive them to perform much better and avoid any counter activity that may be happening right now in the organization. Such a system may also ensure that the employees are being appraised on a semi or quarterly basis which may avoid their salary being stagnant which is expected to further increase goodwill of the employees and this is expected to make them more committed to the organization. Such a system is also expected to encourage employees to improve their performance. Secondly there is also a need for the firm to adopt a training system and a clear career path. Although the employees are currently being helped by their colleagues and managers, giving an initial training is expected to avoid mistakes, and they this is expected to help them to perform better if they were given a little introduction about the job and an orientation of the overall firm. There is a lack of the career path that the employees are following, the employees currently seemed to have little idea of what they can achieve being in the organization for long term. Such a system is thus expected to be highly beneficial as it might give the employees a clear picture of where they can stand after 5 or 10 years. This is expected to increase their motivation and level of commitment and they may strive more hard to achieve the best they can. Performance based pay and fringe benefits were also recommended by the employees to be introduced by the company. Performance based pay is expected to distinguish between employees performing on different levels and according to a manager “I suggest to design performance based pay system on the philosophy of first deserve then desire” and fringe benefits are expected to increase good will in employees and remove any in security regarding the ‘amount’ of help they are likely to receive.
5.3 Limitations:
This research used was based purely on a qualitative study. This research can thus be criticized for using only one method of study and for lacking scientific rigour and being based solely on the researchers view points. However qualitative method was done in order to capture a detailed analysis of how commitment can lead to performance and how a human resource function can have an affect on employee commitment leading to performance. It can also be criticized for not using any measurements or building relationships such as previously adopted by studies in the literature. The study did not use any Tobin Q’s measurement techniques or measured performance or commitment by the level of output produced by the employee or number of sales generated rather it was only based on their view point of their bond and commitment with the firm and how they thought this had an affect of their performance. A weakness of this study is its failure to measure items and suggest that by the implementation of a human resource function, productivity can be increased ‘x’ times and counter productive behaviour of employees can decrease the productivity ‘y’ times. It can thus be criticized for being based on the interpretations and assumptions of the researcher and thus it can vary from the view point of someone else reading the research.
The study was based on a 3 months period which imposed additional limitation that the study had to be focused and based on a single firm analysis. Further limitation, embedded in the ‘sample’ should be noted. Interviews were conducted from 10 non managers and 4 managers. While collecting the data only those employees were interviewed, which were available at that time. It was suggested in the research proposal that the interviews would be conducted face to face by the researcher however, due to the firm’s geographical location constraint this was not possible and the interviews were thus conducted through online video conference. In this research consideration was given to get a view point of employees working in various departments of the firm, however, the sample used in the current research should be interpreted as a convenience sample, and the results should be cautiously generalized. As this research was conducted in Pakistan and thus it may not be interpreted the same way for the firms in U.K.
5.4 Suggestions for Future Research:
Further research can be conducted in similar areas in two or more ways. Firstly, researcher can make use of both qualitative and quantitative data in order to add scientific rigour and validity to the results. Further more, researchers can also make use of actual measures of performance such as, sales per employee revenue generated etc. which are already being used in previous researches. Apart from this there is still a lack of comparative study. Researchers can do a comparative analysis, by basing the case on a firm not having a human resource function and comparing it with a firm having a human resource function and then can compare results of how commitment can lead to performance without a human resource function and then can compare how human resource function can also have a negative effect on employees’ commitment and performance.
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Appendices:
Appendix A: (Non managers)
Question: How many years have you been working for the organization?
Appendix B: (Managers)
Question: How many years have you been working for the organization?
Appendix C: (Non managers)
Question 3: What are the main reasons of you being with the company?
Appendix D: (Managers)
Question: What are the main reasons of you being with the company?
Appendix E: (Non manager)
Question 2: What are the main factors that keep you committed to the organization?
Appendix F: (Managers)
Question: what are the main factors that keep you committed to the organization?
Appendix G: (Non Managers)
Question: How do you think your commitment drives you to perform for the company?
Appendix H: (Managers)
Question: How do you think your commitment drives you to perform for the firm?
Appendix I: (Non managers)
Question: Have you ever received any formal training to work for this organization?
Appendix J: (Managers)
Question: Have you ever received any formal training to work for this organization?
Appendix K: (Non managers)
Question: Do you receive any appraisals or bonuses based on you performance?
Appendix L: (Managers)
Question: Do you receive any appraisals or bonuses based on your performance?
Appendix M: (Non managers)
Question: Have you ever given consideration to working outside the firm?
Appendix N: (Managers)
Question: Have you ever given consideration to working outside the firm?
Appendix O: (Non managers)
Question: Do you feel a strong sense of belonging to the firm?
Appendix P: (Managers)
Question: Do you feel a strong sense of belonging to the firm?
Appendix Q: (Non managers)
Question: Would you recommend to your friends to work for the firm?
Appendix R: (Managers)
Question: Would you recommend to your friends to work for the firm?
Appendix S: (Non managers)
Question: Do you think your commitment could be increased by any human resource management system to lead to your performance for the firm?
Appendix T: (Managers)
Question: Do you think your commitment could be increased by any human resource method to lead to your performance for the firm?
Appendix U: (Non managers)
Question: Would you recommend the company to have a HRM system such as training, appraisals, employee involvement programs, fringe benefits, participation in decision making, employment security, performance based pay, team based work, high wages?
Appendix V: (Managers)
Question: Would you recommend the company to have a HRM system such as training, appraisals, employee involvement programs, fringe benefits, participation in decision making, employment security, performance based pay, team based work, high wages?
