Background of Study
Human Resource Management can be defined as the process of analysing and managing an organisation’s human resource needs to ensure satisfaction of its strategic objectives’ (Hellriegel, Jackson, Slocum and Staude, 2009).
In general, Human Resource Management (HRM) affects the employee’s behavior, effort and interaction as they carry out the mission and strategy of the firm in order to extend organization’s survival period (Wright & McMahan, 1992). Strategic human resource researchers have argued that companies can effectively influence the interaction, behaviors and motivation of employees through different human resource practices (Huselid, 1995; Wright, Dunford, & Snell, 2001).
According to Hallberg and Schaufeli, 2006; Paul and Anantharaman, 2003, HR practices are important for development of organization since human capital is the assets that cannot be duplicate and imitate.
Some of the important HR practices include recruitment and selection of new employees, market oriented training (Tessema and Soeters, 2006; Macey and Schneider, 2008), career development, developmental appraisal (Stone, 2009), and compensation Ruwan (2007). On the other hand, Qureshi (2010) categorize HR practices into selection system, training, job definition, performance appraisal system, compensation system, career planning system and employee participation.
This is a few explanations regarding HR practice’s area:
Recruitment and selection
Recruitment and selection is the most important step to obtain a right employee for the right job at the right time in order to help the organization achieve the objective, mission and vision (Rehman, 2012). Cheng and Cheng (2012) said that, there have 2 methods for recruitment which is formal and in formal. Formal recruitment including advertise the job vacancy, put it on bulletin and poster. In opposite, informal recruitment is through connection of the individuals.
Market oriented training
Training program is a must in any companies in order to value-added their employees with more advance technology and achieving a strong capabilities and skills to handle a newly introduced technical equipment (Robert &Arocas, 2007). As stated by Devins, Johnson and Sutherland (2006), training program are not only aimed to develop an employee mentality but also make their social life more health in order for them to have an active mind thus become more productive in doing their work. Above statement are agreed by Herold and Fedor (2003) as they said training is intended to modify individual skills or attitudes.
Career developmental appraisal
This requires giving a positive and negative feedback about an employee’s effectiveness and a discussion session regarding problem arises (Marescaux, Winne&Sels, 2012). It is aimed to discussing a problem in order for the employees to make improvement in the future without binding them to rewards or punishment (Snell and Dean, 1992). According to Marescaux, Winne&Sels (2012), career developmental appraisal can foster an effective interaction between employees and supervisor or HR manager. Performance appraisal is a time for manager and employee to have a face to face discussion in annual interview (John and Steven, 2000)
Compensation
The general purposes of the compensation policy covers respecting employees’ performance, maintaining a competitive labour market conditions, maintain justice employee salaries, motivating employee performance and reduce employee turnover (Zinghein, 2000).
Compensation performance is the result work of employee because it is the strongest link for the planned goal and economy (Devins, Johnson & Sutherland, 2006). Providing respectful compensation to the employees of an organization has soothing effect of both organization and employees’ performance.
The purpose of this study is to fill existing research gap by empirically establishing a model to explain the linking between HR practices and employee’s job performance: Job Satisfaction as moderator.
This paper is organized as follows:
i. Providing a literature review on the linking between HR practices and employee’s job performance: Job Satisfaction as moderator.
ii. Developing a research model based on literature review.
iii. Addressing the research methods.
iv. Discussing the research findings; and
v. Discussing the practical and managerial implications of this study.
1.2 Problem Statement
Human Resource (HR) practices are vital for development of organizations (Hallberg and Schaufeli, 2006; Paul and Anantharaman, 2003). This requires adoption of a suitable HR practices to encourage employee to be more satisfied towards their job thus improve their performance. However, uncertainty remains as to how HRM practices affect employee’s performance, whether some practices have stronger effects that others (Baird &Meshoulam, 1988; Jackson & Schuler, 1995; Lado& Wilson, 1994; Milgrom& Roberts, 1995; Wright & McMahan, 1992).
According to Masliza (2016), even the employees are sent to attend the training program, their behavior towards their job remained unchanged. Other than that, she also said that compensation package is the controversial issues since only senior employees (working before 1998) will get gratuity thus it give an impact towards employee’s job performance and job satisfaction of a new employee (working after 1998). Besides, according to Norlia (2016), some of the manager in the company rated the employee performance less than the best or less than the level at which employee personally perceives based on his or her contribution, which this is viewed as being biased.
In responding to this research problem, this study sought to understand the linking between HR practices and employee’s job performance: Job Satisfaction as moderator.
This current research addresses the following research questions:
i. What are the areas of HR practices that have low impact on job satisfaction?
ii. How job satisfaction impact on employee’s job performance?
This current research addresses the following research objectives:
i. To investigate the relationship between HR practices and job satisfaction
ii. To find out the relationship between job satisfaction and employee’s job performance.
1.3 Significance of Study
From our opinion, there are parties that will gain advantages from this study such as organization, employees and researcher.
1.3.1 Organization
The employee’s job performance is a serious challenge to the service sector since it will give an overall view of the organization culture to the customers such as suppliers and distributor. There had various factors that may affect the employee’s job performance within the organization and issues for instance the HR practices used in the organization and level of job satisfaction among the employees. YPJ Holdings Sdn. Bhd. and IRDA and other similar sector will likely gain advantage from this research as they will become more alert regarding the factors that affect employee’s job performance towards the organization. In addition, the organization will be knowledgeable and create some creativity to make the employee stay longer in the organization.
1.3.2 Employees
The studied on the employee’s job performance among the employees may be advantages to the employees themselves. This is because when they increase their job performance eventually they are increasing their commitment towards achieving the organization’s strategic planning, objectives and goals and as a return they will gain an advantage. At the end, the percentage of employees that perform well in their job will be high.
1.3.3 Researcher
Important of the study according to researcher is this study is essential because it strengthen the knowledge and experience as well as learning how to conduct research for future undertaking. Furthermore, this study will help the researcher to obtain better understanding on the employee’s job performance in the organization. It also can be a source to other researcher and may guide the researcher to conduct a research in related to the topics.
1.4 Limitation of study
1.4.1 Data Collecting
Data collecting was a harder step compare to other since most of the respondent lack of cooperation by giving a reason that they do not have enough time to answer the questionnaires even it just take 10 minutes to complete the questionnaire. Other than that, employees in IRDA and YPJH are always busy with their work and it make it harder for the researcher to collect the data because they do not want to be disturb even during their leisure time.
1.4.2 Respondent Responses
Not all respondent give accurate responses and fully cooperated. This will lead to the inaccuracy of the information given by them. This will also affect the validity of the information. Some of employees in IRDA and YPJH do not even read the questionnaire carefully and they just simply ticked the answer that they want.
1.4.3 Time Frame
Time frame also had taken into account by the researcher. Researcher is busy with workloads during interns and at the same time the researcher need to conduct a survey because it is a rule for a final year student to complete the survey while they are working as internship at any company approved by the university. As a result, the researcher needs to manage their time efficiently between works and conduct a survey within a time frame. Additional time will be needed in order to produce an accurate findings and extensive study will done in order to gain more facts to strengthen the survey.
1.5 Definition of Term
1.5.1 Human Resource Practices
HR practices may lead to higher firm performance and be sources of sustained competitive advantage because these systems of practices are often unique, causally ambiguous, and hard to imitate (Lado& Wilson, 1994).
1.5.2 Training and Development
Employee’s value-added knowledge and skill are the result from and effective training either through in-house training or external training (Tan &Batra, 1995; Aw & Tan,1995).
1.5.3 Compensation Package
Money received for work, such as wages, salaries and tips (Doornhein and Bos, 2014).
1.5.4 Performance Appraisal
Emphasizes the assessment of an employee’s strengths and weakness and does not include strategic business consideration (Aguinis, 2014).
1.5.5 Job Satisfaction
A feelings or state-of-mind of the individual regarding their nature of the work and can be influenced by pay practices, relationship with supervisor and colleagues, environment and features of the organization (Mudor & Tooksoon, 2011).
1.5.6 Employee Performance
Employee productivity is the logarithm of net sales per employees was consistent with prior empirical work (Huselid, 1995).
CHAPTER 2: LITERATURE REVIEW
2.0 INTRODUCTION
According to Kaveri and Prabakaran, (2013) the study investigates on Impact of High Performance Human Resource Practices on Employees’ Job Performance in Manufacturing Company. This study examined the relationship of job design, training and development, motivation, supervisory support, working environment and compensation with employees’ job performance in Leather goods manufacturing companies at Vellore district.
The target population of this study consists of those employees working in selected 10 Leather goods manufacturing companies at Vellore district and the sample size selected was 200 employees in the company. The data was collected using questionnaires and conducted by using descriptive statistics, correlation and regression analysis, chi-square and Friedman test. Based on the findings, it shows that job design, supervisory support and work environment are having a positive and significant relationship with employees’ job performance and training and development, while motivation and compensation are not having a significant relationship with employees’ job performance.
Next, WerkuIjigu (2015), found that the main objective of the study is to examine the effect of selected human resource management practices on employees’ job satisfaction in Ethiopian public banks. The variables of the study are recruitment and selection, training and development, performance appraisal and compensation package and employees’ job satisfaction.
Based on the study, a sample of 333 is selected from both employees and managers from 3 respective public banks. The study used both primary and secondary sources of data which primary data is questionnaire and secondary data is gathered from published and unpublished theoretical literatures and empirical studies, books, journal articles, internet and other publications. From the study, it can be concluded that recruitment and selection is significantly and positively related to employee job satisfaction. Next, training and development is significantly and positively related to employee job satisfaction. Performance Appraisal and compensation package also are significantly and positively related to employee job satisfaction.
2.1 Employee performance
There is an increasing interest in clarifying the performance concept and developing the performance concept since the past 10 years. Job performance is defined as the degree to which employees execute tasks, responsibilities, and assignments (Knight, Kim, and Crutsinger, 2007). Other than that, performance is not only defined by action, but also judgmental and evaluative process (Motowidlo, Borman, and Schmit, 1997). It refers to what the organization hires individual to do well (Campbell, McCloy, Oppler, and Sager, 1993). In other words, the employees must acquire the skills required to achieve task quality and to excel at organizational performance and interpersonal relationship in the work situation.
Furthermore, there are two types of employee behavior that are crucial for organizational effectiveness. First, task performance refers to an individual’s proficiency with which he or she performs activities that provide indirect support for organization’s core technical process. It can be both direct, such as contribution of production workers and indirect, such as contribution of managers. This behavior has direct relationship with formal organizational reward system. Second, contextual performance refers to individual efforts that are not directly related to their main task functions, but support the organizational, social and psychological environment in pursuing the organizational goals. This includes not only behaviors such as helping coworkers in the organization, but also making suggestions on improvement in work procedures (Sonnentag and Frese, 2001).
In addition, there are three basic assumptions associated with the differentiation between task performance and contextual performance. First, the activities that are significant for task performance vary between jobs. However, activities for contextual performance are relatively similar across jobs. Second, task performance is more related to the ability, but differs with contextual performance which is more related to personality and motivation. Third, task performance is more prescribed and institutes in role behavior, whereas contextual performance is more flexible and extra-role (Borman and Motowidlo, 1997).
The conceptualizing of employee performance is based on two aspects, which are action aspect, such as behavioral and outcome aspect (Campbell et al., 1993). First, action aspect refers to what an employee does in the workplace. This includes behaviors such as selling personal computer, performing heart surgery, and also teaching basic writing skills to elementary school children. Second, outcome aspect is defined as the result or consequence of the employee’s behavior. For instance, performing heart surgery may result in increasing number of successful heart operations. Outcome aspects of performance depend on both employee’s behavior and factors. For example, assume that a teacher who delivers a perfect writing lesson (behavioral aspect of performance), but some pupils still do not improve their writing skills due to their intellectual discrepancies (outcome aspect of performance). Both behavioral and outcome aspects are related empirically in many situations. However, they do not intersect completely (Sonnentag&Frese, 2001).
Last but not least, it might be difficult for the organization to describe the action aspect of performance without any reference to the outcome aspect in real practice. This is because only the behaviors that are relevant for the organizational goals are included under the performance concept (Sonnentag&Frese, 2001). In other words, it is necessary to has criteria for evaluating the degree to which an employee’s performance meets the organizational goals. Therefore, conceptualization of such criteria without concurrently considering the outcome aspect of performance at the same time does not really solve all the problems.
Employee performance is basically outcomes achieved and accomplishments made at work. Performance refers to keeping up plans while aiming for the results. Although performance evaluation is the heart of performance management (Cardy,2004), the performance of an individual or an organisation depends heavily on all organisational policies, practices, and design features of an organisation.
2.2 HR Practices
Taseem and Soeters (2006) stated that there are about eight HR practices and their relationship with job satisfaction. These include recruitment and selection practices, placement practices, training practices, compensation practices, employee performance evaluation process, promotion practices, empowerment and social security or pension. Huselid (1995) indicated that there are eleven practices which are incentive compensation, job design, personnel selection, empower of decision, information sharing, performance appraisal, attitude assessment, labor management participation, recruitment efforts, employee training and promotion criteria. However, according to Yeganeh and Su (2008), the most common HR practices are recruitment, selection, training and development, compensation, rewards and recognition.
2.2.1 Training and Development
Training implies offering employees the opportunity to develop general and specific skills to increase their employability (Benson, 2006). Training opportunities allow for autonomy satisfaction by increasing feelings of internal control (Gellatly et al., 2009). Next, training may satisfy the need for relatedness because it signals employees that they are valued and the company is willing to invest in a long-term relationship with them (Suazo et al., 2009). It also allows for collaboration with other people such as colleagues and tutors, which can stimulate relatedness satisfaction (Stone et al., 2009). Finally, the need for competence can be nurtured by acquiring new skills and knowledge (Stone et al.,2009).
Career development is a system which is organized, formalized and it’s a planned effort of achieving a balance between the individual career needs and the organization’s workforce requirements (Leiboiwitz et al, 1986). A company that wants to strengthen its bond with its employees must invest in the development of their employees (Hall & Moss, 1998; Hsu, Jiang, Klein & Tang, 2003; Steel et al., 2002; Woodruffe, 1999). Growth opportunities which were offered by the employers are reduced due to turnover intentions of employees because the lack of training and promotional opportunities was the main cause for high-performers to leave the company (Allen, Shore &Griffeth, 2003).
Career development is having recruited outstanding talent, employers need to ensure that these people remain at the forefront of their field in terms of professional expertise and product knowledge gained through training which facilitates learning so that people can become more effective in carrying out aspects of their work (Bramley, 2003).
2.2.2 Compensation
Compensation can be referred as payments or all commodities which used instead of monetary compensation to rewards the workforce. According to Huselid (1995), compensation system is recognized as workers merit and it is widely linked with objectives of the organization. Compensation gives much important for employees because it is one of the main causes for which people work. It includes monetary such as salary or allowance, while non-monetary includes housing. This will help to motivate employee for better performance and reduce employee turnover besides maintain justice of employee salaries. Moreover, Aswathappa (2008), cited that employees’ living status in the society, satisfaction, loyalty, and productivity are also influenced by the compensation.
The general purposes of the compensation policy include covering respecting employees’ performance, maintaining a competitive labor market conditions, maintaining justice employee salaries, motivating employee performance and reducing employee turnover (Zinghein, 2000). Compensation performance is the result work of employee because it is the strongest link for the planned goal and economy (Devins and Johnson, 2006). Thus, it can contribute soothing effect to both organization and employee’s performance by providing respectful compensation to the employees
Compensation process can be divided into direct financial compensation and indirect compensation whether it financial or nonfinancial (Mondy, 2011). Besides, (Mondy, 2011) also stated that compensation is a strategic policy in the organization, which it can effect on the employer’s possibility to attract new applicants, gain employee’s loyalty and ensure the maximum level of performance to meet the organization goal and objective from the employee. Next, according to expectancy theory (Vroom, 1964), once pay is linked with performance of group or individual, employees are more likely to increase their efforts in working hard to increase the performance of individual and the organization which related to increase and improve the overall organization’s performance. Based on (Vroom,1964) it can be expected that, if the company provides compensations and rewards desired by the employee in question, the employee is more likely to perform so that the employee can be rewarded.
2.2.3 Performance Appraisal
Performance appraisal is carried out to evaluate the contribution of all the executives and workers toward the overall growth of the organization. Performance appraisal also give influence on other HR practices such as recruitment and selection, training and development, compensation and employee relations. With better performance appraisal, it will have an impact on employee job satisfaction. Levin (1986) in his studies identified some uses of performance appraisal such as, determining of employee salary, employee training needs, assessment of employee merit appraisal feedback and suggestion of employee’s past performance.
Performance appraisal represents, in part, a formalized process of worker monitoring and is intended to be a management tool to improve the performance and productivity of workers’ (Brown and Heywood, 2005). Employee commitment and productivity can be improved with performance appraisal systems (Brown and Benson, 2003). Appropriate explanation and supervision of performance lead to higher job satisfaction and professional commitment amongst teachers. This is also true when performance appraisal is low.
Commitment to teaching is a function of teacher’s attitude towards performance appraisal system (Rahman, Shahzad, Bashir and Ramay, 2006). Possibility of performance appraisal is enhanced by complementary human resource management practices like formal training and incentive pay and performance appraisal leads to greater influence of productivity (Brown and Heywood, 2005).
2.3 Job Satisfaction
According to Jernigan et al. (2002) work satisfaction is one’s sense of satisfaction not only with work but also with the larger organisational context within which work exists. Job satisfaction is more narrowly defined as a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experiences (Locke and Latham, 1990). Similarly, Fisher et al. (2004) claim that job satisfaction includes the positive feelings associated with the rewarding aspects of a job that can intuitively lead to improved work performance.
Currie (2001) suggests that satisfaction is related to the degree to which an individual is satisfied with the terms and conditions of employment and the factors that make up the physical work environment. For example, individuals may be satisfied with their salaries and how well they get on with their peers and work, or are satisfied with company policy. Therefore, job satisfaction and job involvement are attitudes which are determined by individual’s perceptions of their total job situations, including the physical work environment, the terms and conditions of their employment and the degree to which they are given autonomy, responsibility, authority and empowerment in their jobs (Kersley et al., 2006). This study frames the perceptions of job satisfaction and its effects on employees’ attitudes in terms of social exchanges between employees and employers.
Apart from that, job satisfaction can be defined as an individual’s general attitude regarding his or her job (Robbins, 1999). Mullins (1993) cited that motivation is closely related to job satisfaction. Few factors such as an employee’ s needs and desires, social relationships, style and quality of management, job design, compensation, working conditions, perceived long range opportunities, and perceived opportunities elsewhere can be considered to be the causes of job satisfaction (Byars and Rue, 1997; Moorhead and Griffin, 1999). Apart from that, job satisfaction also significantly influence on turnover, absenteeism, tardiness, employees’ organizational commitment accidents, and grievances (Byars and Rue, 1997; Moorhead and Griffin, 1999). According to Robbins (1999), a satisfied workforce can increase organizational productivity through less distraction which caused by absenteeism or turnover and medical costs.
2.4 The relationship between training and development and employee performance
Training and development involves three main activities which are training, education, and development. Organization that offers training and employee development are making a visible investment in employees. Among its positive outcomes, this investment increases employability for the individual employee (Waterman et al., 1994).According to David Devins, Steve Johnson, John Sutherland (2006), training is not only mentally develops the employee but also prepare them to make better their health in order to be with active mind and more productive thought for the organization. Improving employee’s self-efficacy at work will also assist in pushing their performance to an improved and effective level and increasing their momentum on their own behalf.
A substantial body of research has been developed that investigated the impact of training on firm performance. For instance, considerable evidence suggests that firm investments in training result in better organizational performance (Russel et al.,1985; Bartel,1994; Kalleberg and Moody, 1994). Generally, a positive relationship has been established between employee training and development and organizational performance (Delaney and Huselid, 1996; Koch and McGrath, 1996). Firms with superior training programmes are likely to experience lower staff turnover than companies that neglect staff development (Arthur, 1994; Fey et al., 1999).
A number of studies have looked at the effect of training on productivity, and they have found positive relationship between training and productivity of an organization (Bartel, 1994). Previous studies have found the relationship between various training & development practices and different measures of organizational performance (Delery and Doty, 1996; Becker and Huselid, 1998). Similarly, Bartel (1994) also found that investment training increases employee morale and their skills and abilities to performance. Overall, training allows employees to obtain greater competencies that are needed to perform their jobs efficiently and effectively (Harel, H.G. and S.S. Tzafrir, 1999).
H1: There has a relationship between training and development and employee performance
2.5 The relationship between compensation and employee performance
Gomez-Mejia and Wellbourne, (1988) Gerhart and Milkovich, (1992) examined the impact of compensation on firm performance and found that an advanced compensation system can be a potential source of achieving competitive advantage. Incentive compensation has a positive impact upon organizational performance, lowers employee turnover and increases sales growth (Arthur, 1994; Delaney and Huselid, 1996; Batt, 2002). Delaney and Huselid (1996) found that a compensation system based on excellence results in increased employee performance.
Most studies have included performance-based compensation as one of the high-performance HRM practices such as (Arthur, 1994; Huselid, 1995; MacDuffie, 1995; Delery and Doty, 1996), and Delery and Doty (1996) even identified performance-based compensation as the single strongest predictor of firm performance. High performance work practices (including compensation) have a statistically significant relationship with employee outcomes and corporate financial performance (Huselid, 1995). Empirical studies of the relationship between performance-related pay and company performance have generally found a positive relationship.
In studies related to compensation, Abassi and Hollman (2000) in their study have identified lack of recognition and lack of competitive compensation systems as reasons for employee turnover in the organization. Teseema and Soeters (2006) stated that there was a significant and positive correlation between compensation practices and perceived employee performance. Javed et al. (2010) studied relationship between compensation and performance. This study results show that compensation has significant effect on organization performance. Research by Siswanto (2001) examines effect of compensation on motivation and lecturer performance at Economics Faculty at some private colleges in Kediri. Study results show that financial and non-financial compensation significantly effect on work motivation of lecturers whereas financial and non-financial compensation and intrinsic motivation have a significant effect on lecturer performance.
H2: There has a relationship between compensation and employee performance
2.6 The relationship between performance appraisal and employee performance
Based on Shahzad, Bashir and Ramay, (2008), performance appraisal represents a formalized process of worker monitoring and is intended to be a management tool to improve the performance and productivity of workers. Performance appraisal is the process of observing and evaluating employees’ performance and providing feedback, which is an important method for developing an effective workforce. Performance appraisal is also used as mechanism for improving employee performance. It is widely recognized as the primary human resource management intervention for providing feedback to individuals on their work-related achievements (Waddell et al., 2000). It is also employed as a developmental guide for training needs assessment and employee feedback. Employee commitment and productivity can be improved with performance appraisal systems (Brown and Benson, 2003.
Performance appraisal also is a systematic evaluation of an employee’s performance in assigned tasks. Sels et al. (2003) stated that performance evaluation increase the employee’s productivity that in turn increases organizational performance. Performance appraisal enhances professional growth by pointing out the area of performance enhancement. Transparent performance evaluation motivates employees to work more in order to achieve the organizational objectives (Singh, 2004). Next, Wan et al. (2002) reported that merit based performance appraisal increase employee’s motivation and commitment that has a significant effect on organizational performance.
According to Wilson and Western (2001), it is natural for employees to be affected by how well they score on a performance appraisal depending on the outcomes. Thus, the application of a performance appraisal policy can be either positive or negative. Employees who receive good scores on their performance appraisals are generally motivated them to perform well and maintain their performance in the organization. On the other hand, if a supervisor gives an employee a poor score on his or her appraisal, the employee may feel a loss of motivation in the workplace and this will lessen their performance. Thus, this can impact on the employee’s performance (Kuvaas, 2006). According to Rudman (2003), performance appraisal policy is a critical factor in an organization in enhancing the performance of the employee. Further, there is a strong connection between how firms manage their employees and the organizational results they achieve which this will give impact to their performance.
Erdogan (2002) states that human behaviour in organization have also give contribution to organizations which is harmful thing is when managers are unable to relate to their employees. Cook and Crossman (2004) highlight that an employee whose performance is under review often become defensive. When the manager rated the employee performance less than the best or less than the level at which employee personally perceives his or her contribution, the manager is viewed as being biased. Nurse (2005) states that negative feedback from performance appraisal policy not only fails to motivate the typical employee, but can also cause employees to perform worse. Only those employees who have a high degree of self-esteem appear to be stimulated by criticism to improve their performance (Anderson, 2002).
Boswell and Benson (2000) states that it is important that the appraiser be well informed and credible, as employees are more likely to view the performance appraisal policy as accurate and fair. Employees are likely to feel more satisfied with their performance appraisal results if they have the opportunity to talk freely and provide the ideas besides discuss their performance. It is also more likely that such employees will be better able to meet future performance goals (Scott and Einstein, 2001).
In addition, according to Armstrong and Baron (2005), when employees work together effectively and communicate properly, the result is continuous and sustainable improvement. Rudman (2003) states that in order to achieve overall organizational excellence, individual employees need to work together to find areas where challenges exist, or where performance can be improved. Bond and Fox (2007) highlight that managers and employees can work together to identify related development opportunities. Last but not least, Tyson and York (2000) states that when employees understand how their individual roles function within the framework of a team, they can more effectively and efficiently contribute to the entire organization.
H3: There has a relationship between performance appraisal and employee performance
2.7 The relationship between training and development and job satisfaction
Stephen and Bowley (2007) studied the training impact on the employee job satisfaction. In this study, they related training with the employee’s productivity which would lead towards employee as well customer satisfaction. Gazioglu and Tansel (2002) found a significant positive relationship of training and job satisfaction in Britain by using ordered Probit estimation. Next, Schmidt (2007) investigated the relationship between training satisfaction and overall job satisfaction when analyzing a sample of 552 customer and technical service employees from the United States and Canada. He found that there was a significant positive relationship in terms of a bivariate regression coefficient (Baldwin and Johnson 1995).
Asaju (2008) described that if employees are trained at low level it would increase their tendency towards leaving the organization, while high level training increases the employee satisfaction and they will be able to stay in the organization (Bakare, 2012). D´Addio et al. (2007) analyzed determinants of job satisfaction where they also include information about training participation. They use data from Denmark and estimate ordered Logit fixed effects model which was proposed by Ferrer-i-Carbonell and Frijters (2004) and Das and van Soest (1999). The coefficient of their training variable is significantly positive for men. For women it is the same when using the Das and van Soest (1999) estimation but leads to an insignificant coefficient with the Carbonell and Frijters (2004) estimator. Bakare, (2012) investigated the correlation between training needs and job satisfaction among hotel employees. In conclusion, he found there was a positive correlation between training and job satisfaction.
H4 :There has a relationship between training and development and employee satisfaction
2.8 The relationship between compensation and job satisfaction
Compensation refers to all types of pay or rewards going to employees and arising from their employment (Dessler, 2008). Compensation is very much important for employees because it is one of the main reasons for which people work. Employees’ living status in the society, satisfaction, loyalty, and productivity are also influenced by the compensation (Aswathappa, 2008). Ting (1997) in a study on the employees of US government found that compensation was one of the most important determinants of job satisfaction.
According to the survey report which is conducted by the Society for Human Resource Management (2012), they found that compensation and benefits would affect employees’ job satisfaction. In this report, compensation and benefits are regularly among the top three factors in affecting employee job satisfaction. From here, compensation and benefits have a positive relationship with the employees’ job satisfaction. Therefore, it would be best to offer them a competitive salary and benefits, or reduce the gap between employees’ salary expectations and employers’ offers (IME, 2009). There are several studies that can prove this statement. According to several researchers, compensation and job satisfaction are positively associated with each other. Souza (2000) observes that compensation is a predictor of job satisfaction while employees who were paid highly showed a greater job satisfaction (Joanne, 1980).
Vaney and Chen (2003) proposed that pay or income as one of the main variable that significantly influences employees’ job satisfaction. Besides, there are two elements of benefits which are allowances and work-life balance is more often offered to employees.
Moreover, Bonner (1997) identified that wellness programs including benefits, transport allowance and medical allowance has positive relationships with job satisfaction of employees. From the study, it shown that availability of allowances had a significant impact on job satisfaction. These results are consistent with Onu et al. (2005) study in Nigeria who observed that auspicious conditions of service are important aspects of job satisfaction. Work-life balance programs have been demonstrated to have an impact on employees in terms of recruitment, retention or turnover, commitment and job satisfaction, absenteeism, productivity and accident rates (Melissa, 2007). Moreover, job satisfaction is found to be negatively correlated with work to family interference. Burke and Glass (1999) found that the employees are more satisfied and committed to their job if organizations are supportive of work life balance.
H5: There has a relationship between compensation and employee job satisfaction
2.9 The relationship between performance appraisal and job satisfaction
According to Monappa (2004), industrial relations play an important role in establishing and maintaining industrial democracy. With better industrial relations, it can create the appropriate working environment for all employees that ultimately influences job satisfaction (Khan and Taher, 2008).
Ahmed and Hussain (2010) analyzed the Performance Appraisals Impact on Attitudinal Outcomes and Organizational Performance, Pakistan. They recommended that a better performance appraisal (PA) system integrated with better HR practices will improve performance appraisal satisfaction and also increase employee job satisfaction besides reduce turnover intentions to bring effectiveness and efficiency in the organizations.
Poon (2004) observed the effects of employees’ perceptions of political motives in performance appraisal on their job satisfaction. From the observation, they found that when employees perceived performance ratings to be manipulated because of rater’s personal bias and intent to punish subordinates, this will led to greater intentions to quit their jobs. They concluded that even there was a manipulation of ratings for motivational purposes, however, had no effect on job satisfaction and turnover intention.
H6: There has a relationship between performance appraisal and employee’s job satisfaction
2.10 The relationship between job satisfaction and employee’s job performance
Job satisfactions significantly give implications towards employee’s job performance. According to Currall et al., (2005) the output and productivity of an organization is measured in terms the performance of its workforce, so it can be concluded that if level of job satisfaction is high, thus the employees will perform better. On the other hand, if level of job satisfaction is low, there will be performance problems among the employees in the organization.
The relationship between job satisfaction and performance has been critically evaluated in a variety of organizational settings. From these studies, Cummings (1970) identified three major points of view concerning this relationship which are satisfaction causes performance, performance causes satisfaction and rewards cause both performance and satisfaction. All of these three views are supported by various researches. Mirvis and Lawer (1977) produced conclusive findings about the relationship between job satisfaction and performance.
In attempting to measure the performance of bank tellers in terms of cash shortages, their proposed arguments are satisfied tellers were less likely to show shortages and less likely to leave their jobs. Kornhanuser and Sharp (1976) have conducted more than thirty studies to identify the relationship between satisfaction and performance in industrial sector.
Many of the studies have found that a positive relationship existed between job satisfaction and performance. Katzell, Barret and Porker (1952) proved that job satisfaction was associated neither with turnover nor with quality of production. Smith and Cranny (1968) reviewed the literature and concluded that satisfaction is associated with performance as well as effort, commitment and intention. Porter and Lowler (1969) suggested that satisfaction will affect a worker’s effort, arguing that increased satisfaction from performance possibility helps to increase expectations of performance leading to rewards, Carroll, Keflas and Watson (1964) found that satisfaction and productivity are crucial relationship in which each affects the other. They suggest that performance leads to more effort because of high perceived expectancy. The effort leads to effective performance, which again leads to satisfaction in crucial relationship.
In the labor market there is demand of highly skilled, trained and qualified employees. The output and productivity of an organization is measured in terms the performance of its workforce (Currall et al., 2005). It was found that better performance of the workforce is the result of level of job satisfaction (Sousa-Poza and SousaPoza, 2000). Nanda and Brown (1977) have investigated the important employee performance indicators at the hiring stage. They concluded that level of job satisfaction and motivation affects the employee’s productivity. The high performer demand attractive packages from the employers and now it becomes predicament for the human resource experts to retain the performer (Sumita, 2004). The low level of job satisfaction adversely effects on the employee commitment and sequentially effect the achievement of organizational objectives and performance (Meyer, 1999)
H7: There has a relationship between job satisfaction and employee’s job satisfaction
Reference:
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