Impact of HR practices on employee performance with the mediating role of employee

morality

Chapter 1

1.1 Abstract
This research was conducted to determine the impact of employee training and development,
compensation and benefit and performance appraisal on employee’s performance in the educational
sector of Pakistan. Convenience sampling technique was used to collect data for this study. A
questionnaire of 30 items was distributed among 50 employees of private institute for data collection.
Correlation and regression analysis was applied to check the association between training and
development, compensation and benefits, performance appraisal, employee’s morality and employee’s
performance. The results indicate that compensation and benefits, training and development and
performance appraisal has positive impact and employee’s morality and employee’s performance,
further employee’s morality mediates between compensation and benefits, training and development and
performance appraisal and employee’s performance. Hence it is proved that independent variables
positively contribute towards change in dependent variable through the mediating variable.
1. Key words: training and development, compensation and benefits, performance appraisal, employee
morality, employee performance
INTRODUCTION

1.2. Background of the study

Human resource management is the only source or factor which is helpful to attain the sustainable
competitive advantage in this modern era. The competitor can copy any resource of organization
like technology or capital but not HRM which is unique. So in order to develop the good HRM
culture in organization, the organization will have the need of human resource practices. Hr
Practices are the tools and ways through which the manager of organization carries out the function
of organization to achieve the organizational goal through effective utilization of people (Schuler &
Jackson, 1987; Schuler & MacMillan, 1984; Wright & Snell, 1991). HR Practices can be different
from one organization to another in sense of different nature of business. HR Practices directly or
indirectly affects the other variables of the organization. According to the resource based view of
the firm (Penrose, 1995 & Barney 1991), competitive advantage can be developed and sustained by
creating value in a way that is rare and difficult for competitors to imitate and the quality the human
resource within is difficult to imitate. The Hr Practices also puts positive impact on the employee-

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Impact of HR practices on employee performance with the mediating role of employee
morality

employer relation. Tzafrir et al. (2004) conducted a survey to find out the consequences of effective
human resource management practices on employees trust. The result indicated a positive and
significant influence of empowerment, organizational communication and procedural justice as
determinants of employees trust in their managers
There are different types or practices have been studied in the literature, we have discussed 3
practices in this research in the context of Pakistan.
Training and Development
Compensation and benefits
Performance Appraisal
Theoretical evidence shows the strong positive relationship of HR Practices with organizational
effectiveness which indicates that HR practices influence employee attitudes, behaviors,
perceptions, organizational climate and other HR performance measures which lead to
organizational effectiveness. It is clear that, HR practices and innovations therein, impact both
organizational outcomes as well as the employee outcomes. According to Harel and Tzafrir (1999),
training can influence performance by improving skills and abilities relevant to employees' tasks
and development. The findings of McEvoy (1997) reveal that training influences organizational
commitment, participant knowledge and organization-based self-esteem. Research also showed that
employees feel more passive when they receive the positive feedback for their outcomes. Also
intrinsic paybacks, in terms of rewards and compensation, do enhance the employees' in-role
performance to some degree. Altarawmneh and Al-Kilani (2010) states that employees are
motivated when there are financial rewards directly tied to their performance. Fulmer (2003)
investigate the association between compensation and work performance and found positive
association between them. Compensation has a significant correlation with worker performance
outcomes.
The education has an important role in our society wellbeing. A good indication of this is where
developed nations of the world have high literacy rate and productive human resource. So for this
purpose many developed countries have introduced effective selective training and education
programs in order to meet the rising technical and business demands. Employees equipped with
high education impart powerful knowledge and skills in order to be effective in a competitive
environment. Higher education is identification to a better life in improving the standard of living,

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Impact of HR practices on employee performance with the mediating role of employee
morality

to meet the demand for higher pay from an organization and to adapt fast technology changing in
global. Pakistan is the country which is facing a lot of problems in this sector in terms of
unqualified faculty, improper management, poor selection and training etc. so human resource
practices have high need to identity in this sector for improvement and enhancement of employee
performance.

1.3. Problem Statement

The concept of Hr Practices and employee performance has been discussed by many researchers.
While studying the literature it clearly states that Hr Practices has played a crucial role in employee
performance in developed countries like UK, USA. Research on these lines is lacking in Pakistan,
thus providing ample opportunity to do research work.

1.4. Gap Analysis

Hr Practices have a great role for achieving the organization objectives. Research showed that the
organization performance as well as employee performance will be higher if organization has a
good Hr practices in their culture. Such studies have been conducted by (Guest 2011; Hassan 2016),
but to my knowledge no studies on these lines have come forward from Pakistan especially in
Education sector and with the mediating role of Employee morale, thus providing favorable
grounds for research work.

1.4. Significance of the study

This study is concerned with the application of good HR Practice in educational sector of Pakistan
and its effects on employee performance, thus the study is very significant to academic perspectives
and policy maker concerned with providing high quality education.

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Impact of HR practices on employee performance with the mediating role of employee
morality

1.5. Research Questions:

Q NO-1 Does the Training and Development have positive relationship with the Employee
performance?
Q NO-2 Does compensation and benefits has significance positive relation with the employee
performance?
Q No-3 Does performance appraisal has positive relationship with the employee performance?
Q No-4 Does the training and development has significance positive relationship with the employee
morality?
Q No-5 Does compensation and benefits has significance positive relationship with the employee
morality?
Q No-6 Does performance appraisal has significance positive relationship with the employee
morality?
Q No-7 Does the employee morality has positive relationship with the employee performance?
Q No-8 Does employee morality mediate between training and development, compensation and
benefits, performance appraisal and employee performance?

1.6. Research Objectives:

 To find out the association between training and development, compensation and benefits,
performance appraisal and Employee performance in Educational sector of Pakistan.
 To find out the association between training and development, compensation and benefits,
performance appraisal and employee morality
 To find out the mediating role of Employee morality between training and development,
compensation and benefits, performance appraisal and Employee performance in
Educational sector of Islamabad.

1.7. Delimitations:

This study has been conducted on the HR Practices (training and development, compensation and
benefits, performance appraisal) and Employee performance with the mediating role of employee

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Impact of HR practices on employee performance with the mediating role of employee
morality

morality in the Educational sector of federal capital Islamabad-Pakistan private institutions with
having limited time in hand to complete.

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Impact of HR practices on employee performance with the mediating role of employee
morality

Chapter 2

Literature Review

2.1 Training and development:

Dessle (2008) explains that Training and development is one the key factors to contribute positively
towards organizational success. Training is a systematic approach that enables employees to attain
knowledge and skills in order to accomplish their tasks effectively with the resultant improvement
in the behavior (Armstrong, 2006). Training refers to the methods used to develop skills in the
employees required to perform the job .Training is the source to help employees with necessary
skill and ease employees to get knowledge of their job in better way. (Deming, 1982). According to
Partlow et al, (2002) the organizations which are always engaged to develop an appropriate training
design for the needs of the employees are the organizations always with good performance or
outcomes. Training and development are the means to improve the overall productivity of an
organization (Shepard, Jon et al, 2003). Besides training being very much costly to the employees
in short run but it will always give back what it took in long run (Flynn et al., 1995; Kaynak, 2003;
Heras, 2006). In order to be completive and sustain competitive advantage every organization must
develop its employees according to the requirement of that time (Carlos & Primo Braga 1995).
According to Jackson and Schuler (2000) Successful organizations always considered training and
development as an important factor of the human resource activity. Training can be used as a tool to
increase employee’s performance by developing knowledge and skills. Training can be described as
a constant approach to develop additional competencies needed today or in future in order to
increase the level of employee’s performance. Training can be used as a source to increase
efficiency and effectiveness of employees in order to increase the overall organizational
performance (Cook & Hunsaker, 2001). Guest (2002) illustrated that the influence of HRM on
employees’ and organizational performances depend upon responses of workers towards HRM
practices training as an HR practices has significant positive link with the performance of
employees (Qureshi et al., 2007) . Positive employee outcomes largely depend on employees’
perceptions of how much the organization cares about their well-being and values their
contributions (Vermeeren, 2014).
H1: Training and Development has significant positive relation with Employee Performance.

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Impact of HR practices on employee performance with the mediating role of employee
morality

2.2 Compensation and benefits:

Saira Hassan (2016) explains compensation is a process of providing monetary value to employees
for the work they performed. Compensation can be used to hire skilled employees, reward the
performance, encourage company loyalty by reduce turnover. Compensation may include Basic
Pay, Overtime, Bonuses, Travel/Accommodation Allowance, Stock Options, Medical Allowance,
Commissions, and Profit Sharing. A recent study conducted by Hay points out that 20% employees
plan to switch their current positions in at least five years. Employee retention turnover has become
a more prominent aspect of organizational life. The implementation of retention compensation
strategies has seen significant growth over the last several years. Those performances which are
related pay have direct influence on the workers performance as organizations create the output
through pay and workers has more able to give pay structure according to the performance
(Lazear,1986). Akerale (1991) states that reward is one of the key sources to generate as important
role for employee performance as others. Half of cash flow of companies is usually equal to
compensation, although it is more than half in sector like service. The individuals with good skills,
competencies and education are mostly unsatisfied with their job and salary packages and it results
in their turnover so organizations start planning a better compensation system for them to stop the
turnover and to motivate them which in return results in better performance (Aslam et al., 2015).
Nazir and Saif-Ur-Rehman Khan (2013 concluded The extent of organizational engagement and
job comfort in the UK Higher Education sectors and universities and finalized that UK Higher
Education system give rewards (cash and non-cash) to members of organization and makes them
competent and motivated because it recognized that the members of organization are social agent.
Adewale (2014) examined the impact of compensation system on the job performance of
employees and work on only preferred private institutes in Ogun State, South-West Nigeria by
distributing questionnaire. He concluded that institutes which have more appropriate compensation
packages are having more influence on employees’ performance therefore the turnover of
employees’ decreases and they become more attached with their organization. Maslow (1943,1954)
stated that the measurement of how employees performance are positive and productive may
depend on how much the organization are contributing to fulfill their need for status, security and
their survival need as postulated in the organization hierarchy of needs.
H2: Compensation and Benefits has significant positive relation with Employee Performance.

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Impact of HR practices on employee performance with the mediating role of employee
morality

2.3 Performance appraisal:

Verma (2004) illustrate that performance appraisal is the systematic process which is used to
measure and evaluate an individual’s job related behaviors and performance to evaluate how and
why the employee is currently performing on the job and how well the employee can perform better
and more effective way in future which in turn all environment be benefited. Performance appraisal
one of the best practices aimed at enhancing the performance of the employee in the organization
(Vasset, Marnburg & Furunes, 2011). Selvarajan and Cloninger (2011) argued that there are a many
factors which cause issues associated with the performance appraisal process and these include poor
design, lack of attention to the organizational culture, and unwillingness to confront issues of poor
performance, as well as time pressure. For achieving high performance objectives, organization
performance appraisal plays an important role for achieving such high performance and it is a very
important component of human resource management The information gathered through
performance appraisal provide basis for recruitment and selection, training and development of
existing staff, and motivating and maintaining a quality human resource through correct and proper
rewarding of their performance (Lillian, Mathooko, & Sitati, 2011).
H3: Performance Appraisal has significant positive relation with Employee Performance.

2.4 Impact of HR practices on employee morality:

Training and development brings staff to an acceptable level of performance and keeping them
engaged actually has a significant link and relation to job satisfaction, and their morality (Choi Sang
Long 2012). Monetary rewards exhibit a greater influence on morale than expected non-monetary
rewards. Their results indicate that there is a strong positive correlation between performance
assessment and morale, as well as between positive work attitudes and morale.
Murphy and Clеvеland (2000) believe that performance appraisals can help organization in four
ways. First, they can enhance the quality of оrganizatiоnal decisions, ranging from prоmоtiоns,
layоffs, cоmpеnsatiоn and transfers. Second, they can enhance the quality of individual decisions,
ranging from carееr choices to decisions about where to direct оnе's time and еffоrt. Third, they
provide a set of tооls for оrganizatiоnal diagnosis and dеvеlоpmеnt. Finally, pеrfоrmancе appraisals
can affect employees’' views of attachment to their оrganizatiоn. Pеrfоrmancе appraisal is a tооl of
management that can lead to better communication, motivation and fееdback (Stivеrs and Jоycе,

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 Impact of HR practices on employee performance with the mediating role of employee
morality

2000). . According to Finger (2005), morale is more influenced from the down (that is by
leadership) than from the bottom up.
H4: Training and Development has significant positives relation with employee morality.
H5: Compensation has significant positive relation with employee morality.
H6: Performance Appraisal has significant positive relation with employee morality.

2.5 Mediating role of employee morality

Senthilnatha and Rukshani (2013) stated that performance and efficiency of work of an employee
depends on the employee’s morale. Fard et al. (2010) concluded that HR practices leads to
improvement of employee’s morale and analyzed the positive relationship between HR practices,
morality and organizational performance.
H7: There is a significance positive relation of Employee morality with Employee Performance.
H8: Employee morality mediates between HR practices and employee’s performance

2.4. Theoretical Framework

H1
Training
Development
H4

H2

Employee
Compensation H5
Morality H7
Employee
& Benefit
Performance
H6

Performance H3
Appraisal

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Impact of HR practices on employee performance with the mediating role of employee
morality

Chapter 3

METHODOLOGY

3.1 Data collection:

For the purpose of this research the data were collected by distributing questionnaires to various
teachers engaged in private institutes across Islamabad. The questions proposed inquired the
employees about the HR practices currently being practiced in their institute and how well the
perceived those practices. The questions further inquired the impact of those practicing on their
performance whether those HR are practices are pushing them forward to be performance oriented
or not and to what extent they feel satisfied with their jobs .
.

3.2. Target population:

We have targeted educational sector for our study. The employees were inquired through
questionnaire that how much HR practices have impact on their performance.
.

3.3. Sample

We decided and distributed 50 questionnaires to teachers who were engaged in educational sector.

3.4 Sampling Technique:

We used convenience sampling method. Because it was hard for us to visit more regions due to lack
of resources so we focused on the region which was near and the institutes which could be easily
approached then we distributed 50 questionnaires to several teachers within Islamabad.

3.5 Types of study:

The study utilized a descriptive research design to approach the impact of HR practices (training
and development, compensation and benefits and performance appraisal) on employee’s
performance with the mediating role of employee’s morality.

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Impact of HR practices on employee performance with the mediating role of employee
morality

3.6. Time Horizon

The data was gathered using cross-sectional method. We distributed and collected the
questionnaire from the respondents once at a time.

3.7. Instrumentation:
IV: employee training and development: Q1-6
Compensation and benefits: Q7-12
Performance appraisal: Q13-18
18 items were adapted from Susmitha Chowdary(2013)
M.V: Employee’s Morality: Q19-24
6 items were adapted from (Ruth Mayhew)
D.V: Employee’sperformance:Q25-30
6 items were adapted by Yasith Weerasinghe

3.8. Data Analysis

The data were analyzed through completed questionnaire using SPSS software. The questionnaires
were filled by the teachers from different department with different designations.

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Impact of HR practices on employee performance with the mediating role of employee
morality

3.9. Pilot Test

3.10. Reliability Analysis

Total Reliability:

Cronbach's Alpha N of Items

.923 30

With all Variables put into the Reliability analysis of SPSS , we get a Cronbach Alpha of 0.923 i.e
92% Reliability.

Reliability of Training development:

Cronbach's Alpha N of Items

.773 6

With all the Elements of Training development put through Reliability analysis we get a Cronbach
Alpha of 0.773 i.e 77% Reliability.

Reliability of Compensation and benefits:

Cronbach's Alpha N of Items

.844 6

With all the Elements of Compensation and benefits put through Reliability analysis we get a
Cronbach Alpha of 0.844 i.e 84% Reliability.

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Impact of HR practices on employee performance with the mediating role of employee
morality

Reliability of Performance and appraisal:

Cronbach's Alpha N of Items

.824 6

With all the Elements of Performance and appraisal put through Reliability analysis we get a
Cronbach Alpha of 0.824 i.e 82% Reliability.

Reliability of Employee morality:

Cronbach's Alpha N of Items

.672 6

With all the Elements Employee morality put through Reliability analysis we get a Cronbach Alpha
of 0.672 i.e 67% Reliability.

Reliability of Employee performance:

Cronbach's Alpha N of Items

1 6

With all the Elements of Employee performance put through Reliability analysis we get a Cronbach
Alpha of 1 i.e 100% Reliability.

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Impact of HR practices on employee performance with the mediating role of employee
morality

Chapter 4

RESULTS

4.1. Demographic Analysis

Age, gender and qualification of the participants are measured in demographic analysis.
Purpose of demographic analysis is to explain characteristics of the sample.

Table 4

Demographic Profile Sample

Questions Options Frequencies Percent%

Gender Male 38 76%

Female 12 24%

Age 20-30 13 26%

31-40 31 62%

41-50 65 12%

50 and Above - -

Qualification Bachelors 6 12%

Masters 13 26.%

M.Phil/MS 25 50%

Ph.D 6 12%

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 Impact of HR practices on employee performance with the mediating role of employee
morality

For this study, demographic variables with respect to respondents were studied. The respondents
were asked to provide the information for age, gender and qualification. For age variable, we had a
response of 26% 20-30 years old, 62% 31-40 and 12% 41-50. For the Graduation level variable, we
had a response of 12% bachelors, 26% those with Masters, 50% MS/M.Phil and PHD 12%. For the
gender we had response of 76% male and 24% female.

4.2. Pearson’s Correlation Analysis

Table

variables Correlations
TDM CBM PAM EMM EPM
1
TDM
50
**
.855 1
CBM .000
50 50
** **
.674 .856 1
PAM .000 .000
50 50 50
** ** **
.851 .831 .797 1
EMM .000 .000 .000
50 50 50 50
** ** ** **
.773 .844 .824 .672 1
EPM .000 .000 .000 .000
50 50 50 50 50
**p˂0.05 *p˂0.1

Pearson’s Correlation Analysis

Source: Developed by Researcher (2017)

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Impact of HR practices on employee performance with the mediating role of employee
morality

Table 5 shows the value of correlation for the given variables. The results of correlation are
interpreted in following way:

Regression Analysis

Regression analysis is conducted to test hypothesis. On the basis of results of this test
hypothesis are rejected or accepted. Therefore to test our hypothesis we run data through regression
analysis.

Table 6

Mediation Table

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Impact of HR practices on employee performance with the mediating role of employee
morality

Mediation Table

Mediation Table

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Impact of HR practices on employee performance with the mediating role of employee
morality

Chapter 5

5.1 Conclusion and discussion:

The study resulted a significant relationship between HR practices(Training and development,
compensation and benefits and performance appraisal) on employee’s performance with the
mediating role of employee’s morality. The study revealed that employee’s performance increases
by utilizing the HR practices (Training and development, compensation and benefits and
performance appraisal) through employee’s morality. The research conducted by Singh (2004)
indicates a positive relationship between HRM practices and employee’s performance. it is
concluded that HR practices can enhance the employee’s performance by the help of employee’s
morality(Khalid et al.,2014).
5.2 Recommendation:
It is obvious from the study that HR practices (Training and development, compensation and
benefits and performance appraisal) has significant positive role in boosting employee’s
performance through employee’s morality, so the organizations should implement these practices to
achieve the desired outcomes. Organization must adopt training and development programs,
compensation and benefits and best appraisal system for its employees relevant to the changing
needs of employees and organization. HR practices should be considered one of the key factors to
determine the employees’ morality and employee’s performance.
5.3 Limitations and future directions
The research context only focused on educational sector of Islamabad while the future research can
be extended to difference sectors of different cities to get more positive outcomes. The total
number of respondents (50) was chosen for this study which is a small number of respondents. So,
similar research should be conducted by increasing the sample size. The study examined limited
HR practices (Training and development, compensation and benefits and performance
appraisal)while other human resource practices can also be analyzed for further study to get a clear
theory of the important employees’ performance determinants.

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Impact of HR practices on employee performance with the mediating role of employee
morality

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