The Effect of HRM Practices on Employee Performance in Business Organization

The Effect of HRM Practices

on Employee Performance
in Business Organization
BUS 601.3

Prepared for:
Dr. Mohammad Rabiul Basher Rubel
Course Instructor
North South University

Prepared by:
 Syed Mahmudul Muddassir 171 5077 060
 Syeda Fatama Tuz Zhora 172 5163 660
 Hazara Rahman Mitu 171 5293 660
 Mymuna Azam Drishti 173 5271 660
 Samia Hossain 172 5188 660

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 The Effect of HRM Practices on Employee Performance in Business Organization

Table of Contents

CHAPTER – 01 ............................................................................................................................................... 4
INTRODUCTION ............................................................................................................................................ 4
INTRODUCTION…………………………………………………………………………………………………..…………4
BACKGROUND OF THE STUDY………………………………………………………………..………………………4
PROBLEM STATEMENT………………………………………………………………………………………..…………4
SIGNIFICANCE OF THE STUDY.……………………………………………………..……..…………………………5
KEY TERMS………………………………………………………………………………………………………………….…5
SUMMARY………………………………………………………………………………………………………………….….5

CHAPTER – 02 ............................................................................................................................................... 6
LITERATURE REVIEW .................................................................................................................................... 6
CONCEPT OF THE DEPENDENT VARIABLE.…..…………………………………………………………………6
FACTORS INFLUENCING DEPENDING VARIABLE………………………………..…..………………………7
DIMENSIONS OF HRM……………………………………………………………………………………………….…12
RESEARCH FRAMEWORK………………………………………………………………………………………….….14
HYPOTHESIS……………………………………………………………………………………………………….…….…15

CHAPTER – 03 ............................................................................................................................................. 18
METHODOLOGY.......................................................................................................................................... 18
RESEARCH DESIGN ………………………….…………………………………………………………………………..18
POPULATION & SAMPLE OF THE STUDY ……………………………………………………………..………19
DATA COLLECTION PROCEDURE ………………………………………………..………………………….……20
DATA ANALYSIS TECHNIQUES………………………………………………………………………….………….21

CHAPTER – 04 ............................................................................................................................................. 22
ANALYSIS & FINDINGS................................................................................................................................ 22

CHAPTER – 05 ............................................................................................................................................. 24
RECOMMENDATION & CONCLUSION ........................................................................................................ 24

REFERENCES ................................................................................................................................................ 26

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Acknowledgement

In performing our assignment, we had to take the assistance and guideline of some respected
persons, who deserve our greatest gratitude. The completion of this assignment gives us
much Pleasure. We would like to show our gratitude Dr. Mohammad Rabiul Basher Rubel,
Course Instructor, North South University for giving us a good guideline for assignment
throughout numerous consultations. We would also like to expand our deepest gratitude to all
those who have directly and indirectly guided us in writing this assignment.

Many people, especially the HR heads of Top organizations, our classmates and team
members itself, have made valuable comment suggestions on this proposal which gave us an
inspiration to improve our assignment. We thank all the people for their help directly and
indirectly to complete our assignment.

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 The Effect of HRM Practices on Employee Performance in Business Organization

CHAPTER – 01
INTRODUCTION

1.1- Introduction
Economic environment is changing quickly nowadays and this change is described by such
phenomena as the organizations go around the globe. These days, many organizations have
been insisted changing customer and investor expectations and increasing market
competition. To compete in the changing environment, organizations should improve their
performance. Human Resource is the most significant resource of the organization which is
becoming more important for organizations to become successful.
Employees are considered the essential strategic asset. Therefore, employees could be a
competitive advantage if their organization provides more attention and invest in developing
employees’ skills at the workplace.

1.2- Background of the study

Relationship between Human resource management practices and employee performance has
been the concentrated research area in recent years. A lot of research work is done regarding
to HRM practices in developed countries but very little work is done in developing countries
like Bangladesh. In last decade a significant research work has been done in Bangladesh but
still there is a lot of research work needed to be done on HRM practices and their effects in
employee performance.

1.3- Problem Statement

To determine the effect of Human Resource Management (HRM) practices on employee

performance in Business organization of Bangladesh.

1.4- Significance of the study

The significance of this research study is threefold which can contribute to knowledge and
literature. Firstly, to investigate the relationship between HRM practices and employees’
performance. Secondly, this research study provides meaningful insight about HRM practices
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and employee performance for academics and professionals for a better understanding of
HRM practices problems and challenges. Third, from applicable viewpoint, this study
provides more attention to the fact that there is a need to develop HRM that can improve the
efficiency of employees.

1.5- Key Words

HRM practices, Employee involvement, Compensation packages, Employee motivation,

Recruitment and Selection, working environment, Training Programs, Employee
performance

1.6- Summary

The qualitative study evaluates the effects of human resource management practices namely;
Recruitment and Selection, Training & development, Compensation and performance
appraisal in business organization of Bangladesh. A selective selection of Head of HR of
business organizations responded to the self-administered questionnaire which measured the
four HRM practices and employee performance. Qualitative analysis indicates a significant
and positive association of these four practices with employee performance. The study
provides insight to the management of the organizations to use these practices for superior
and improved performance and contributes to the limited empirical knowledge in the context
of Bangladesh.

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CHAPTER – 02
LITERATURE REVIEW

2.1- Concept of the Dependent Variable

We will be analyzing HRM practices on Employee Performance. Here we have our
dependent variable is Employee Performance. The main objective of business owner is
profitability. The success of organization depends on employee performance. Poor
performance can’t lead the company to the success.

The effective performance of an organization depends not only on the available technical
resources, but also on the quality and competence of its employees as required by the
organization from time to time. The difference in the level of performance of two
organizations depends on utilization value of employees (Khaled M. and Sharmin I., 2011).
The success of any organization depend on its employees’ behavior and their decision,
although there are many other factors contribute in that success, such as the organization size,
the environment in what it operate and its activities. Often, human resource management
practices are employed to evaluate the performance of the employee in the organization, and
in modern era and highly competitive climate between the organizations, the tendency to
improve employee performance is by improving the HRM practices (Caliskan, N. E., 2010);
(Bowra, Z., Sharif B., Saeed A., &Niazi, M., 2012).Employee performance may be taken in
the perspective of three factors which makes possible to perform better than others,
determinants of performance may be such as “declarative knowledge”, “procedural
knowledge” and “motivation” (McCloy, Campel&Cudeck, 1994).The importance of the
employees performance can be in form of several points such as 1) help to considering the
cost of the resources used (Mathis, H. & Jackson, L., 2004), 2) a measure of the quantity and
quality of work done (Mathis, H. & Jackson, L., 2004), 3) help to survive and excel between
the firms (Lee, K., & Carter, S., 2011), 4) help to assess and attain of established performance
goals (Boysen, C., Demery, A., & Shake, S., 1999), and finally, 5) increase the efficiency of
the employee performance helps to make the right decisions (Boysen, C., Demery, A., &
Shake, S. (1999).

Creating a well-versed approach to managing and guiding the employees requires expertise of
a human resources leader and a very decent work environment.

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2.2- Factors influencing Depending Variable

The Factors influencing Employee Performance are given below-

Organization
Culture

Working Promotion
Environment Practices

Employee
Performance
Career
Motivation Planning

Incentive Employee
Policy Involvement

2.2.1 Organization Culture

Organizational culture consists of the core values, beliefs and assumption that are widely
shared by members of an organization. It serves a variety of purposes including
communicating what the organization “believe in” and “stand for”, providing employees with
a sense of direction and expected behavior, shaping employee’s attitudes about themselves,
the organization and their role. Due to the subjective nature of culture, it could be challenging
to precisely define the specifications of organizational culture. Despite no single theory is
uniformly accepted, there is a general consent about organizational culture on being
traditionally determined and socially structured that involves beliefs, behaviors, values and
morals associated with different levels of the organization and incorporates to all aspects of

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organizational life (Pettigrew, 1990 and Hofstede, Neuijen, Ohauv and Sanders, 1990).
Hosftede (1980: 25) summarizes organization culture as collective process of the shared
values and beliefs that differentiates the members of one group from the other one. Thus the
above concept emphasizes that organizational culture could be the influencing tool to keep
employees in line so that they can give efforts towards the organization objective.

Creativity and innovation also trigger the performance of employees and facilitated by
organizational culture. Tushman and O’Reilly (1997) in this context stated that organizational
culture lies at the heart of organizational norms that reflects the influence of organizational
culture on creativity and innovation. Organizations Culture can play an important role in
creating such an environment that enables learning and innovative response to challenges,
competitive threats, or new opportunities. Thus, creating and influencing an adaptive culture
is one of a manager’s most important jobs (Daft, 2010).

In order to meet the organizational objectives and achieve competitive advantages, all
organizations are thriving to recruit highly performing individuals. On the other hand,
individuals need supportive organizational culture to help them reach individual objectives.
Therefore, an organization is a consciously coordinated system where characteristics of
individuals, groups and organization interact with each other and effective interaction among
them highly depends on organizational culture that shapes the individual performance
(Kozlowski & Klein, 2000) and in most of cases high performers are more appreciated and
promoted than low performers.

2.2.2 Working environment

The influence degree of working environment is the counterpart requirement of a creative
job. Higher job satisfaction and lower intentions to leave were found for those individuals
whose work environment accompanied the creative requirements of jobs. Enhancing the
creative performance of employees has been recommended as dire for remaining competitive
in a dynamic environment and for enhancing the overall innovations of an organization
(Janssen, O. and NW. Van Yperen, 2004).

Working environment can be divided into two components namely physical and behavioral
components. The physical environment consists of elements that relate to the office

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occupiers’ ability to physically connect with their office environment. The behavioral
environment consists of components that relate to how well the office occupiers connect with
each other, and the impact the office environment can have on the behavior of the individual.
According to Haynes (2008), the physical environment with the productivity of its occupants
falls into two main categories office layout (open-plan verses cellular offices) and office
comfort (matching the office environment to the work processes), and the behavioral
environment represents the two main components namely interaction and distraction.

2.2.3 Motivation
Motivation is a key determinant of job performance and a poorly motivated force will be
costly in terms of excessive staff turnover, higher expenses, negative morale and increased
use of managements’ time (Jobber, 1994). Therefore, management must know what exactly
stimulates their staff so resources are not misallocated and dissatisfaction develops among
employees (Jobber, 1994). As Green (2000) has described motivation to be proactive in the
sense of; in dealing with employees who are high performers, motivation is essential,
otherwise their performance will decline or they will simply leave the job. While dealing with
low performers, motivation is a prerequisite; otherwise these employees will drag results
down, lower productivity and certainly would not leave the organization, as they will have
nowhere else to go.

A motivated workforce is essential because the complete participation of employees will

certainly drive the profitability of the organization (Carlsen, 2003), Darmon (1974) believe
motivation is the educating of employees to channel their efforts towards organizational
activities and thus increasing the performance of the said boundary spanning roles. According
to Denton (1991), a motivated workforce will lead to greater understanding, acceptance,
commitment to implementation, understanding of objectives and decision making between
management and employees. There are 6 most important elements of motivation: rewards,
pay, profit sharing, promotion, recognition, job enrichment.

2.2.4 Incentive Policy

The role of incentives has expanded significantly. Researchers have investigated that there is
a strong impact of incentive management on risk- taking which enhance the organizational
performance. The impact of incentives on behavior has in different studies. Incentives may be
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in monetary rewards forms or other types of incentive-based compensation which are stock
option, share ownership (partnership) and additional benefit like bonuses and rewards.
Employees’ performance can be improved through different incentive plans which are
demonstrate by innovative work flows (Ichniowski, C., K. Shaw and G. Prennushi, 1997).
Researcher argued that study based on theoretical model with agency theory in order to
understand either incentive work as a moderator in affecting the organizational performance
or not. On the other hand, some researcher argued that incentives are associated with the
accomplishment of previously set goals and mission. Incentives are basically used to
motivate employees to become more productive in order to enhance the organizational
performance (Mohamad, A.A., M. Chiunlo and M. Kingla, 2009)

Motivation is another important factor highlighting HRM and firm's performance. Researcher
said that human attitude can be examined by two components:
 Economic gains
 Social acceptance

These two components are basically an incentive for workers of organizations. Incentives are
basically complex arrangement between worker and managers to maintain and express
working relationships between them. Research shows that incentives encourage employee to
increase their output and organizational performance (Ana-Maria, 2012).

2.2.5 Employee involvement

In Chen and Tjosvold research (2006), they revealed that participation management is about
involving employees in the decision making process where the employees feel that they have
the opportunity to discuss problems and can influence organizational decisions. The overall
impact of participation is increased employee job performance and low turn-over. In addition,
organizations can act to increase or decrease the levels of these mediator variables within
their personals and potentially strengthen the positive performance effects of employee
participation (Lam et al, 2002).

Employee will be motivated because management considers them as partners in contributing

to organizational success instead of being seen as mere subordinates and therefore will avoid
engaging into counterproductive behaviors hence improved performance through timely

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achievement of organizational goals and objectives (Carrel, Kuzmits & Elbert,

1989).Employee involvement increase job satisfaction, motivation and employees
commitment as employees feel themselves more involved in the success of the organizational
goals (Mullins and Peacock, 1991). Empowering the employees by involving them in
decision making contribute to the success of organization as it increases the productivity,
saves time for decision making, lowers the gap between supervisor and subordinates,
encourages a strong sense of teamwork among workers.

2.2.6. Promotion Policy

Promotion always go with a salary increase, either it is done within a grade or to the higher
grade. A Continuous process which is based on the length of service and professional
“competency” is adopted at the time of promotion to higher step in the job within a grade
promotion. It is or may be “continuous” in which test, review or competition is given which
entitle for simple decision or selection (Hdiggui, 2006).

2.2.7. Career planning

Career planning is a tool used to motivate employees to work for the development of the
organization (Wright and Snell, 1998). The career planning focused on motivating the
employees to achieve a desired match between personal goals and organizational goals. A
process of developing human resources to increase organizational performance is referred as
career planning (Leibowitz et al., 1986). Career development process is useful in identifying
employee’s skills and experience and assigning them tasks accordingly. Individuals prefer to
join those organizations where they get enough opportunities to pursue their career goals and
exploit their potential fully (Gardener et al., 2011). Career planning serves as a tool to
motivate employees to work effectively and efficiently in order to achieve the goals of the
organization. Career planning is a deliberate process of providing opportunities for successful
development (Snell, 1992).

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2.3- Dimensions of HRM

2.3.1. Recruitment and selection

Recruitment is the systematic process of the organization where they select the candidates by
assessing their skills and proficiencies which meets their requirement. It is a process of
finding “Right People” for the “Right Job”. Adopting good practices in Recruitment and
Selection allows good quality of skills in the organization. Carroll et al. (1999) have been
divided recruitment process into four stages. (a) A review of the need to hire a new staff for
an unoccupied post, (b) job analysis, (c) job description, (d) candidate’s specifications and
qualifications. This selection process affects the employees and organizational performance.
What is more, important than getting the exact persons in the correct place at the accurate
time, it is necessary to guarantee that the employees will participate in the accomplishing of
organizational goals (Bloisi, 2007). The purpose of the employer or organization is to
develop a large pool of candidates during recruitment process in order to select the best
applicant for the available job position competitive process (Beardwell and Claydon, 2004;
Rogelberg, 2006).

After reviewing the previous studies, recruitment and selection are the basic HRM practices
and would be used as an independent variable in this study. Accordingly, ensuring good and
effective recruitment and selection process by the organization leads to improved employee
performance.

2.3.2. Training & Development

Training is one of the key factor for the candidates because it will provide the information
about his or her responsibilities and stress target and the usage of the skills in proficient
manner. The training period should be conducted as learning session not that the employees
are ignorant but because what the organization want from them. According to Grossman and
Salas (2011), training is an organized task of information, skills, and attitudes lead to
enhancing performance in a particular situation. However, careful selection of employees
does not guarantee that the new staff will perform the tasks effectively, thus, firms should
design and implement proper training programs for those employees in order to achieve the
tasks assigned to them (Dessler, 2009).

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Training and development activities allow organizations to adjust, be a competitor, advanced

skills, innovate, develop, enhance employees safety, expand service, and reach firm’s goals
(Salas et al., 2012). Consequently, any organization strives to compete in the global economy,
differentiation on the basis of the skills, knowledge, and motivation of their workforce must
realize the importance of training and development and its impact on employees and
organizational performance (Aguinis and Kraiger, 2009).

Della-Torre and Solari (2013) have revealed that the perceived employee and organizational
performance were positively related to effective training practices. Hence, organizations must
realize the importance of training and development and adopt a continuous learning
perspective; the organization should constantly update its employees’ knowledge and skills to
stay on cutting edge in order to maintain a competitive edge.

2.3.3. Compensation and Incentive

Compensation is the consideration paid to the employees for their contribution in the
organization. It is divided into two categories a) Financial benefits and b) Non-financial
benefits. Organization’s strategy and business requirements are the main determined of
compensation practices (Boyd and Salamin, 2001). Similarly, there are different factors may
effect on the individuals’ incentives based on their necessity, education, social position, or
environments (Gerhart and Rynes, 2003). Workers should be offered rewards, incentives, and
social benefits in order to motivate them to better performance. Pfeffer (1994), has supported
this view by emphasizing the influence of incentive pay on the firm’s performance. Another
study conducted by Carlson et al., (2006), they investigated the financial, non-financial
rewards in family business SMEs. They found at each level in the firm, accomplishment of
sales-growth used more financial rewards.

Several scholars have discussed the influence of financial, non-financial rewards on the
employees and firms’ performance. For example, James (2005) suggests that simple or non-
financial incentives such as gratitude and acknowledgment which are expected to enhance
communication in the workplace (Frey and Jegen, 2001). Furthermore, compensation and
reward system can also reinforce firm’s empowerment through good decision making,
improve corrective and preventive measures, and can motivate employees to improve their

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performance. In any organization, employees consider the way their firm rewarding them are
more important than how the organization expresses or announce.

2.3.4. Performance Appraisal

Performance appraisal is a way to assess and measure the performance of the employees
respective to their job nature. The objective is to improve the efficiency of an organization by
utilizing the employee’s skills and efforts to achieve the goals. The primary objective of a
performance appraisal is to ensure the maximum utilization of every employee’s skills,
knowledge, and interests (Arthur, 2008).

Measuring and fostering employees’ performance is a key determinant of organizational

success and competitive advantage (Ployhart et al., 2006). Thus, performance appraisal has
been broadly known as an essential process for the management and development of
employees working in an organization (Lee, 1985; Eberhardt and Pooyan, 1988). In addition,
selection and training practices might be changed based on the appraisal information with the
desired behaviors and attitudes. Nevertheless, professional employees without being
motivated to achieve their tasks, their efficiency will be imperfect (Sani, 2012).

However, numerous firms still do not consider that performance appraisal can achieve several
tasks such as provide feedback, training and skill development, and right to use to
information and knowledge (Kor and Sundaramurthy, 2009). Another study conducted by
Soomro et al. (2011) revealed that HRMPs were correlated positively with the employee
performance.

2.4- Research Framework

This study suggests a theoretical research framework which is developed on the basis of
extensive literature review. This study empirically tests the model. The Figure 1 shows the
theoretical framework of this research study, has several variables includes organization
culture, working environment, promotion and incentive policy, employee involvement,
motivation, career planning one dependent variable i.e. Employees’ performance.

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2.5- Hypothesis
The hypothesis assumes that employee performance is affected by and dependent on multiple
factors including organizational culture, working environment, motivation and so on. This
study purposes to figure out the effect of above-mentioned factors on the performance of
employee in addition to evaluate the degree of influence.

2.5.1. The effect of Organizational Culture on Employee’s Performance

Hypothesis 1: There is a positive relationship between the organizational culture and

employees’ performance.

According to this study, the organizational culture has influences on upgrading the
employees’ performance. If the environment is pleasant and comfortable to work, the
employees are encouraged and motivated to work effectively and efficiently. The good and
competitive organization culture enhances the performance of the work force. The global
context of Bangladesh is now allowing people to work with multi-cultural background
individuals, so the concept of organization culture is important as it’s one of the factor that
encourages employees to work effectively. Organizational culture that the employees can feel
“like home” will support them to work dedicatedly. Organizational culture is a reflection of
employees’ performance. It is directly proportional to the employees’ performance.

2.5.2. Relationships between Working Environment and Employee’s Performance

Hypothesis 2: There is a positive relationship between the working environment and

employees’ performance.

The working environment is a set of characteristics that distinguish the organization from
others and the characteristics of the organization’s internal environment results from the
outcome of goals, regulations, rules, procedures and policies that are applied in the
organization and well known by the employees in the organization, moreover directly and
indirectly affects the individual’s behavior and performance at work eventually leads to
achieve the goals of the organization.

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2.5.3. The effect of Motivation on Employee’s Performance

Hypothesis 3: There is a positive relationship between motivation and employees’

performance.

It is very important to motivate employees for increasing their performance. In an

organization where employees are valued for their knowledge, qualification and skills, the
best employee motivation efforts focus on what employees deem to be important. Employee
motivation become a crucial factor to increase employees’ longevity, productivity, better
moral, better performance and create better organization performance. Pay, rewards, profit
sharing, promotion, recognition, job enrichment, employee participation, authority, health
insurance etc. All these factors can motivate employees’ and increase their performance.

2.5.4. The effect of Promotion and Incentive on Employee’s Performance

Hypothesis 4: There is a positive relationship between Promotion and incentive and

employees’ performance.

Employees should be assessed according to their performance and the appraisal should be
fair. Often it’s been found in the research that employees leave the organization because he or
she thinks that they aren’t valued properly. Promotion comes with increment in monetary
value and also recognition in societal value.

Linking employees’ performance with Incentive system leads to an overall firm’s

performance. Therefore, workers should be offered rewards, incentives, and social benefits in
order to motivate them to better performance.

2.5.5. Relationships between Employee involvement and Employee’s Performance.

Hypothesis 5: There is a positive relationship between Employee involvement and

employees’ performance.

If the leaders coach, empower or enhance the employees’ participation to the job, the
employees are willing to work energetically. The performance of the employees is raised
positively if they feel they are working in some valuable projects that has a direct interest on
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organizations goal. They feel recognized and always embrace a positive attitude towards the
work and thus they feel proud leading to higher performance. If the manager is unbiased
towards employees, these organizations progress more than others. It is necessary that
manager is unbiased and treats every employee without discrimination.

2.5.6. Relationships between Overtime Policy and Employee’s Performance.

Hypothesis 6: There is a positive effect of decent overtime policy on employees’

performance.

The working hours is usually set in a way that employees can work within their productivity
level. Well few organization wants their employees to work more than the required working
hours and even on the holidays specially manufacturing companies when they have the
delivery schedule. That’s why a decent overtime policy should be developed and practiced.
Nobody wants to work more than 8 hours; the motivation here is to overtime remuneration.
Another fact is that long working hours is not appreciated no matter how well you pay, it has
a negative impact on performance.

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CHAPTER – 03
METHODOLOGY

3.1- Research Design

The research is based on literature review secondary data found through internet research. As
such, the typology of the research in qualitative in nature. Qualitative Research refers to
primarily exploratory research. It is used to gain an understanding of underlying reasons,
opinions, and motivations. It provides insights into the problem or helps to develop ideas or
hypotheses for potential quantitative research. The goal of the qualitative research is to gain
insight; explore the depth, richness, and complexity inherent in the phenomenon.

In our research, we have used soft sciences, which resemble the qualitative approach to
research. Characteristics of qualitative research are as follows, which are very relevant for
our research:

 Soft science
 Focus: complex & broad
 Holistic
 Subjective
 Dialectic, inductive reasoning
 Develops theory
 Shared interpretation
 Communication & observation
 Basic element of analysis: words

There are five distinctive qualitative approaches, one of which is the Grounded Theory
approach. In a grounded theory study, interpretations are continually derived from raw data.
A keyword to remember is emergent. The story emerges from the data. Often, researchers
will begin with a broad topic, then use qualitative methods to gather information that defines
(or further refines) a research question. For example, a teacher might want to know what
effects the implementation of a dress code might have on discipline. Instead of formulating
specific questions, a grounded theorist would begin by interviewing students, parents, and/or
teachers, and perhaps asking students to write an essay about their thoughts on a dress code.

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The researcher would then follow the process of developing themes from reading the text by
coding specific examples (using a highlighter, maybe) of where respondents mentioned
common things. Resistance might be a common pattern emerging from the text, which may
then become a topic for further analysis.

There are five distinctive qualitative approaches, one of which is the Grounded Theory
approach. In a grounded theory study, interpretations are continually derived from raw data.
A keyword to remember is emergent. The story emerges from the data. Often, researchers
will begin with a broad topic, then use qualitative methods to gather information that defines
(or further refines) a research question. For example, a teacher might want to know what
effects the implementation of a dress code might have on discipline. Instead of formulating
specific questions, a grounded theorist would begin by interviewing students, parents, and/or
teachers, and perhaps asking students to write an essay about their thoughts on a dress code.
The researcher would then follow the process of developing themes from reading the text by
coding specific examples (using a highlighter, maybe) of where respondents mentioned
common things. Resistance might be a common pattern emerging from the text, which may
then become a topic for further analysis.

A grounded theory study is dynamic, in that it can be continually revised throughout nearly
all phases of the study. You can imagine that this would frustrate a quantitative researcher.
However, remember that perspective is centrally important to the qualitative researcher.
While the end result of a grounded theory study is to generate some broad themes, the
researcher is not making an attempt to generalize the study in the same, objective way
characteristic of quantitative research.

3.1- Population & Sample of the Study

While the population for our study would be the people employed at the business
organizations operating in Bangladesh, the sample of our study were HR experts and
professionals employed in different business organizations operating in Bangladesh.

In case of qualitative research, the sample of the study can be as small as one. The size of the
sample interviewed in our research are only six (6) since we have employed Selective

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Sampling for our research. While our adopted approach of grounded theory requires a sample
size of at least 20 for a credible research, we could interview only six (6) HR professionals
due to time constraints and lack of access.

The sample of the study are as follows:

 Md. Tahmid Hossein, GM (Head of HR & Admin), Bashundhara group

 Md. Faisal Imtiaz Khan, Head of Human Resources, Robi Axiata Limited
 Selima Ahmed, Vice Chairperson & Head of HR, Nitol-Niloy Group
 Sharmin Alam, HR Business Partner, BRAC Health, Nutrition & Population Programme
 Nazika Imam, Head of HR & Employee Relations, HSBC Bangladesh
 Rumana Rahman, Head of HR, British American Tobacco Bangladesh

3.2- Data Collection Procedure

The data collection procedures employed in our research are as follows:

3.3.1. Interview (Individual)

The difference between an interview and a survey is that open-ended questions differentiate
the two. Qualitative researchers are concerned with making inference based on perspective,
so it is extremely important to get as much data as possible for later analysis. Researchers
spend a considerable amount of time designing interview questions. Interviews are designed
to generate participant perspectives about ideas, opinions, and experiences. In our research,
we have interviewed experienced professional in HR field of business organizations, whose
vast experience and knowledge enable them to provide us with valuable and reliable
information.

3.3.2 Document Analysis (Content analysis of written data)

The types of documents read and analyzed in qualitative research are virtually anything that
supports the question asked. Print media has long been a staple data source for qualitative
researchers, but electronic media (email, blogs, user Web pages, and even social network
profiles) have extended the data qualitative researchers can collect and analyze. The greatest
challenge offered by document analysis can be sifting through all of the data to make general

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observations. In our research, the documents analyzed mostly consists of published research
papers, articles and journals, which we have featured in the Literature Review section with
proper citations.

3.3- Data Analysis Techniques

Our qualitative research is based on the grounded theory approach, for which the data
analysis techniques employed are as follows:

 Concept formation
 Concept development - reduction; selective sampling of literature; selective sampling of
subjects; emergence of core concepts
 Concept modification & integration

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CHAPTER – 04
ANALYSIS & FINDINGS

4.1- Analysis
Performance is measured and managed in different organizations varies as per the culture of
the organization and its members and the nature of the industry. What is good for one
organization may not be equally effective for another. Thus, most of the participating
organizations maintained a process to measure the performance of its employees. Similarly
identifies that, many organizations had been able to successfully link a part of employee
compensation with the employee’s performance. The idea was to ensure that the superior
performers get recognized and rewarded. Also it helped to link salary payouts with
organization’s performance. However, Ms. Rumana Rahman, Head of HR, BATB, said “in a
country like Bangladesh where executive remuneration is not very high vice versa the cost of
living, a high variable pay component might not work (apart from the top management
level)”. Due to absence of appropriate social security, too much uncertainty in compensation
might bounce back. In addition, the PM data has implication for many short term and long
term processes.

While moving to more maturity in performance management, it would also be very critical
for the organizations to use electronic database to manage historical data and to make the
policies easily available. Also evident from the analysis of the responses that there are scopes
for adding more maturity in the sub-processes of PM, especially in the traditional sectors
such as RMG, manufacturing, and in cases of business conglomerates, Mr. Tahmid Hossain,
GM-HR & Admin, Bashundhara Group agreed from his experience.

The study also shows that rapid integration with global market place has significantly
changed management styles in organizations of Bangladesh in recent decade. According to
Ms. Nazika Imam, Head of HR and Employee Relation, HSBC Bangladesh, The MNCs, with
their exposure to “best-in-class‟ systems and processes have brought in changes in the PM
practices like giving Medical Leave as long as the employees want, of course with a proper
data. Similarly, local business conglomerates that had grown rapidly through the last few
decades are feeling the need for standardized systems and processes to measure and reward
performance.

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4.2- Findings
The study contributes in understanding the influence of HRM practices on the performance of
employees. The results provide the sufficient empirical evidence to say that, HRM practices
has a positive significant relationship with the employee performance. The present study of
private organizations of Bangladesh supports our hypothesized positive effects of HRM
practices on employee performance

With the test results above, there are 5 Hypothesis which are supported in accordance with
the theory presented Literature Review and the discussion with the HR heads of Top business
organizations. After a comprehensive review of the literature, four essential and important
HRM practices were identified namely; recruitment and selection process, compensation
practices, performance evaluation practices and training practices, to check their relationship
with the employee performance in present study.

 A comprehensive compensation system can contribute a lot to attract and retain the
competitive human resources and can also shape the behaviors and performance of
employees. Researchers argued that a balanced, fair and competitive compensation
system effect the retention of talented employees.

 Employees should clearly know that what is expected of them and how their performance
will be measured. An ideal and formalized appraisal scheme should measure properly, the
individual’s performance, highlight the potential of employees and determine the future
needs for training in development.

 Great Training programs will be helpful to retain top performers. Consider creating
individualized development plans, keep work challenging, offer advancement
opportunities and build a know-how framework.

 An unbiased recruitment and selection process is desired thus the employers can assess
the bunch of talents. Communication must be clear among the candidates and actual
information should be provided. Sometime unfair selection process may harm the existing
candidates indirectly, and this type of practices can question their goodwill and in future
they may face difficulties in finding the “Right People”.

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 The Effect of HRM Practices on Employee Performance in Business Organization

CHAPTER – 05
CONCLUSION & RECOMMENDATION

5.1- Recommendation
It is clear from the findings that Human Resource Management (HRM) practices such as
Compensation, Career Planning, Performance Appraisal, Training has a positive role in
growing the employee’s performance, so the organizations should implement these practices
to attain the desired goals.

Improving employees’ performance through improving factors affecting their performance

should be considered and the management should consider the following recommendations:

 First, maintaining a qualified and high-educated workforce is supposed to be the

competitive advantage, therefore, the organization should encourage them to perform
better for better organization performance by leadership style. Mr. Faisal Imtiaz khan,
Head of HR, Robi Axiata Ltd, added that “the managers in our organizations build a
confident and motivated team where they give their subordinates authority to complete
their project as effective as possible”. Creating empowerment environment within the
company through:
o Get employees involved in selecting their work assignments and the method for
accomplishing tasks.
o Create the environment of cooperation, information sharing, discussion, and shared
ownership of goals.
o Encourage employees to take initiative, make decision, and use their knowledge.
o When problem arise, find out what employees think and let them help to design the
solutions.

 Second, motivation is one of the most important factors affecting employee performance.
Most of aspects of motivation including rewards, recognition, promotion, job enrichment,
pay, profit sharing has a good impact on employee performance. The recommendation for
the business organizations in Bangladesh would be-
o Organizations should survey periodically in employee satisfaction to know what kinds
of motivation should be used and make sure that solutions satisfy individual needs.

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 The Effect of HRM Practices on Employee Performance in Business Organization

o Motivate the employee through job design, including job enlargement by putting more
variety into a job, job rotation by moving employees among specialized jobs, fit
people to jobs and jobs to people.
o Pay or profit sharing is supposed to be financial factors of motivation. Ms, Selima
Ahmed, Vice Chairperson, Nitol-Niloy Group, stated that “Part of the compensation
package, we have a policy of profit sharing that is maintained annually and the
percentage is pretty competitive 35-40%”.

 Third, Training is one of the vital factors to enhance the employees’ capability to
perform better. Followings are suggested to follow-
o Constitute the official procedures of training need analysis to figure out the training
demands of employees that comply with the company’s strategic goals and objectives.
o Training Contents and Method should be determined by professional experts,
technical advisors or department head of the company to maximize the effectiveness
of training.
o Diversify on job training method including web-based training, project simulation,
seminars, presentations, on-site training, job rotation, foreign expert training should
be practiced.

5.2- Conclusion
The purpose of this study is to explore the impact of HRM practices on employee
performance in business organization and to suggest recommendations for its improvement.
The findings of current research study illustrate that the HRM Practices (recruitment and
selection, training and development, compensation and incentives, performance appraisal) are
positively related to employees’ performance. Employees are one of the critical strategic
assets for any organization. Employees have an important and strategic role in enhancing
business organizations positioning in significant fields such as quality of leadership,
management reputation, great working environment.

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