IJMSS Vol.04 Issue-03 (March, 2016) ISSN: International Journal in Management and Social Science (Impact Factor )

Transcription

1 (Impact Factor ) A Study on HRM Practices in Life Insurance Corporation of India B. Raghavendra*, M.B.A. Kristaiah Gopanapalli*, M.Com., Research Scholars,S.K. Institute of Management, Sri Krishnadevaraya University, Anantapuramu, A.P. Abstract: This study based on 150 valid questionnaires and secondary data, an exploration was conducted through descriptive statistics to examine human resource practices being practiced in only public sector undertaking in India. To overcome the competition and to have edge, a company uses human resource practices for performance. Over the last 15 years, the life insurance sector has undergone phenomenal change in terms of insurance operations and insurance coverage with 24 life insurers, including LIC, has achieved a lot and there are many more to achieve. This study focuses on Life Insurance Corporation HR practices that affected organizational performance and withstood the leadership position in severe competition. Factorial analysis resulted training and development given more emphasis by the organization. Managerial implications are discussed. KEY WORDS: Compensation & benefits, HR practices, Job design, Performance appraisal, Staffing, Training & development. 1. Introduction HRM practices are very important factor for productivity in the service sector. Both the customer and employee are involved in co-production of the product. The direct contact factor emphasizes the importance of HRM in the services. Studies have recognized the employees make an important source of competitive advantage for an organization (Barney, 1991). Thus, every firm implements HRM practices to realize best of its employees. Past research, established the positive relationship between HR practices and organizational performance (Huselid, 1995; Becker et al. 1997; Guest 1997; Boselie et al., 2001). Today service organizations give emphasis on human resources due to the globalization and liberalization of the markets. Life Insurance Corporation of today is altogether different one as compared to the pre-liberalisation of the sector. Most of the business processes being on-line, provides easy access through new satellite sampark offices, with small, lean in size and close to the customers. Launched innovative practices for its people and the results helped to be largest player in this sector. The organization continues to enjoy enormous faith of its customers and made inroads into length and breadth of the country. After the liberalization of the industry, the firm has undertaken many changes in its business operations. Employee unions have given full support to professionalize the organisation. It has established extensive training facilities at all levels and being worked in partnership with premier management institutes for training. The Human Resource practices playing active role to improve the employee s performance and to sustain edge over the others. The external environment has profound impact on the employees. The challenge before the firm, in the initial years of private life insurance companies the company lost large number of employees at every level. As the years passed on, the company withstood the competitive and able to contain the employee turnover, and at present, the employee turnover is very less id- irjmss@gmail.com Page 118

2 (Impact Factor ) compared to private insurers. In the whole process, the HR practices play important role in LIC, that have to organize people to realize the origination goals in terms of meeting customer needs, aspirations, and interests of various stakeholders. HRM practices in an organisation are centered aroung talent acquisition, developing employee capabilities, performance management systems to improve employee performance, and talent retention for enhancing organizational performance. Literature Review Staffing involves managing the course of employee s into and within the organisation and retaining them. The focus of staffing process includes recruitment, selection and employment (Harel and Tzafrir, 1999). Staffing process plays key role in human resource planning. Huselid (1995) found effective staffing process is positively associated with organizational performance. The organizational performance depends of quality of employees, competencies and motivation to exert intended behaviors. Right selection methods are important to place right persons at right places. Levesque (2005) stated the effective staffing process, includes fit between person and organisation in terms of personality, goals, values, skills and behavior. Training and development includes training, education and development, to produce highly competent staff, skilled and motivated to play their roles in the organisation (Mahesh, 1988). To have edge over others, employees should have knowledge, skills, and abilities and that should be unique. Training and development results in better products and services, and helps in optimization of the employees competencies. Studies observed the link between training and development and various measures of performance (Bartel 1994; Delery and Doty, 1996; Delaney & Huselid1996; Arago n-sa nchez et al. 2003). The process of examining and evaluating employee s performance and providing feedback to the employee, the results used for learning (Basu, 1978). Performance appraisal process enhances understanding between the employee and superiors. Employee expectations, job responsibilities and communications are evaluated here. Feedback affects on team work and results in enhanced performance. Studies found positive relationship between performance appraisal and quality, increase in organizational productivity and suggest that this process affects organizational performance (Brown and Hewood, 2005). Compensation and benefits are financial payment and non-financial benefits received by an employee and forms key dimension of HR practices. The organisation has to review its payments and benefits to match the performance of its employees, business needs and the growing scale of opportunities (Ulrich, 1997). Contingent compensation works as a motivational tool, as employees are aware of their part in the results and affects the performance (Pfeffer, 1998). Delaney & Huselid (1996) observed compensation and benefits yields increase in productivity and organizational performance. A right element of compensation and benefits helps to retain right persons for the organisation (Mathis and Jackson, 2004). Work design is the process of explaining the way job is done and tasks required in a given job. Spreitzer et al. (1999) stated both work design and social technical theory lead to task design that result in selfmanaging team effectiveness in service firms that include insurance business operations and the The core job characteristics, skill variety, task identity, task significance, autonomy and feedback. Skill variety reveals the extent to which different skills are needed for job performance and affects satisfaction and team-based reward influence positively on the quality of the work. Task identity explains the way an individual starts and completes a piece of work. Task significance refers to the extent, the job influence id- irjmss@gmail.com Page 119

3 (Impact Factor ) the lives of others, both inside and outside the organisation. Autonomy refers to the extent the employee has freedom and control to perform the job and associated with higher performance among team members. Feedback reflects to the degree to which a job reports about an individual s performance. Work design has great importance to organizations as they aim to achieve efficiency and employee satisfaction (Armstrong, 2006; Morgeson and Campion 2008). Studies reported the best practices that positively affect various Organizational outcomes (Delaney and Huselid, 1996; Koch and McGrath, 1996) and combination of HR practices as bundles, which believed that HRM practices function by alignment and several practices together may strengthen each other for organizational performance (Huselid, 1995; Delery and Doty, 1996). Objective of the study: The main objective of the study is to explore HR practices those are used in LIC, and then relative importance of the HR practices from employee s perspective, so as to ensure optimal usage of hr practices for the best value of the organisation. The review of literature guides us to hypothesize: H 1 : there is significant difference among the respondents of Managers and Development officers on HRM practices of LIC. H 2 : Employees expressed positively with the HRM practices of the LIC. Research design: The study first used the available secondary data on HR policies, practices using the Internet. Website of the LIC, news reports, and dissertations that discuss about the firm are included. The secondary data results helped in framing statements to collect the primary data from the interested and volunteered employees (Kundu and Malhan, 2009; Dubey and Pandey, 2013). In second stage, a survey was conducted in the branches of LIC with the structured questionnaire on HRM practices. Questionnaire and Reliability: A pilot study was performed with a small sample size of 30, to get clarity over structure of questionnaire. The employees provided comments on clarity of some questions and established validity of the question in the questionnaire. The respondents are chosen by convenience sampling method. The reliability of the data was assessed with the values of coefficient alpha (Cronbach s alpha), the alpha value was The employee respondents belong to Life Insurance Corporation of India branch offices located in Hyderabad and Secunderabad, twin cities. Convenience sampling method was used to collect data. The respondents include female (39, 18.75%) and male (169, 81.25%) belong to age groups, under 30 (12, 5.7%), 31-40(79, 38%), 41-50(96, 46.2%), 51 and above (21, 10.1%). Employee s education criterions were Graduate (56, 27%), Post Graduate (140, 67.3%), Professionals (12, 5.7%). The overall experience 6.1 to 10 years (17, 8.2%), 10 to 20 years (145, 69.7%), more than 20 years (46, 22.1%). Respondents include 163 Development officers and 45 Managers. Operational definitions: Staffing refers to the process, which determines and manages the flow of employees interested in the organization, within the organization and out of the organization. This system of flow of employees involves recruitment, selection, decision-making, job offer and retention systems. id- irjmss@gmail.com Page 120

4 (Impact Factor ) Training refers to systematic acquisition and development of knowledge, skills, and attitudes that are necessary for employees to perform a task. Performance appraisal refers to structured formal interface between a employee and supervisor, usually takes place periodically, where performance of the employee is analyzed and discussed, with a scope to identify strengths and areas to improve by learning. Compensation and benefits refers to evaluation of the way an organization sharing of financial gains resulted from employee s contributions generously and fairly with them. Work design defined as deciding factor on the relationships, that exist between the duties and responsibilities and the relationship exists between the job holder and his/her colleagues. Results, Analysis and Discussion Data analysis: Data analyzed using SPSS 19.0 software package. Chi square test was used to make comparison between two ranks of respondents, that is Managers and Development Officers. Mean score was used to analyze the respondents data for representative value. The study interpreted mean score 1.0 to 2.0 as highly negative; mean score of 2.01 to 3.0 as negative; mean score 3.01 to 4.0 as positive and mean score 4 to 5 as highly positive. Table 1: Chi square values of the employee responses on HRM practices S.no. Practice(s) X 2 Value df P value 1 Staffing Training and development Performance appraisal * 4 Compensation and Benefits Work design For various statement on HRM practices resulted, except for the performance appraisal, there is no significant difference among the respondents of Managers and Development officers of LIC. Mean scores of HR practices are, Staffing practice (3.30); Training & Development (3.27); Performance appraisal (3.31); Compensation and Benefits (3.20); and Work design (3.36). Mean scores of each of the HRM practices indicates that employees have responded positively. Further, Factor analysis was used to know the fewer dimensions to represent the original data constructs of HRM practices and ensure the construct validity. This process preserves the majority of information provided by it. The study followed the guidelines for factor extraction as recommended by Hair et al. (1998) to extract the factors with the eigen value bigger than 1. Coefficient alpha of the scale was 0.792, good score and satisfactory, compared to standard score of 0.70 (Sekaran, 2000). KMO and Bartlett s tests performed for reliability test. The result indicated in table 2 shows that the Bartlett s test of Sphericity was significant (Chi-Square , p<0.000). The KMO measure of sampling adequacy was higher at and the value of is excellent since it exceeded the recommended value of 0.60 (Kaiser, 1974). The two results of (KMO and Bartlett s) suggested that the data is appropriate to proceed with the factor analysis. Principal Component Analysis reflected elevan factors with Eigen value exceeding 1.0, explaining the variance up to per cent. Each item variance was %, second factor 6.199%, third factor 4.638%, fourth factor 4.163%, and fifth factor 3.914,; sixth 3.721; seventh 3.517; eighth 3.228; ninth 2.739; tenth 2.488; eleventh 2.426% of variance respectively. id- irjmss@gmail.com Page 121

5 (Impact Factor ) Table 2: Factor analysis of the Employee responses on the HRM practices statement Extraction statement Extraction statement Extraction Sh TDh CBh Sh TDh CBh Sh * TDh17.895* JDh Sh TDh JDh Sh PAh JDh TDh6.605 PAh JDh TDh7.638 PAh21.861* JDh TDh8.865* PAh JDh TDh9.832* PAh23.760* JDh TDh CBh JDh TDh CBh JDh39.936* TDh12.781* CBh JDh TDh13.814* CBh JDh41.802* TDh CBh28.805* JDh From the Factor analysis, it is clear that the employees responded such that there is variation in the importance given to the factors that are crucial or influences the HRM practices variable. Factors that account for variation with the eigen values as responded by employees are given below. Scree plot with factors on X-axis and eigen values on y axis is shown in the graph. 1. Employees have autonomy in handling customers requests 2. Opportunities for learning and professional growth are existed here 3. Training is an opportunity to learn completely about the organisation 4. Performance appraisals provides employees feedback about their areas of improvement 5. Training programs helps to overcome fear in introduction of products & Service 6. Training is comprehensive that includes future needs of the organisation 7. My company provides a variety of benefits 8. Employees are involved in work related decisions 9. Training programs focused on team building activities 10. Formal tests are used for short-list of candidates 11. Performance review based on multiple sources (Supervisors, coworkers, self etc ) id- irjmss@gmail.com Page 122

6 (Impact Factor ) Discussion and Managerial implications: From the results, it can be stated the except for performance appraisal statements, there is no significant difference between sample respondents of Managers and Development officers of LIC. Hence, hypothesis (H 1 ) is rejected. From the table, it can be stated that employees are positive at every HRM practice of the organisation, hence hypotheses H 2 Employees expressed positively with the HRM practices of the LIC is accepted. The results indicate there is no significant difference in opinion of the employees, as every employee is involved in selling positive image of the organisation to its customers. These aspects act as a challenge to the organisation, for effective implementation of HR practices in future and to have edge in competition. The eleven factors with eigen values, five statements are from training and development practices, two each from Performance appraisal, job design, one each from staffing and compensation and benefits. Training and development of employees is emphasized, as training able to bring forth the employee s potential, in the areas of inherent talent, knowledge and skills, urge to apply one s talent, and intense commitment towards preferred tasks, activities (Subbarao, 2009). The higher the training given, the better was the service quality offered to customer (Batt, 1999). Employee with knowledge of organizational processes can educate customers about the firm s policies and practices and processes (Rafaeli et al. 2008). Performance evaluated from various sources and the feedback given to employees acts as learning and enhances the relationship, that are crucial for performance. From Job design perspective, freedom to handle the customer requests boasts the morale of the employee s and perform responsibly with the customer. This autonomy facilitate employees to effectively deal with task and various demands by making decisions in the process of doing the work (Spreitzer et al. 1999). Giving weight to the employee opinion improves the relationship between employees and management that affects performance positively. Formal tests as part of selection process, gives superior knowledge of the candidates that helps to forecast the success ratio in a given job (Armstrong, 2006). When organisation provides lot of benefits, the employees exerts the more favorable attitudes towards the business that enhance employee commitment finally effects the organizational performance. 4. Conclusion of the study: In line with expectations, the study found there is no significant difference between sample employee respondents, except for performance appraisal. Employees responded positive at every HRM practice of the organisation. The findings emphasize the continuing importance given to the training and development in the service organization. In spite of competition, the organisation continuous to invest in training and Training is a continuous process of improvement necessary for today and is an investment for future competition (Schuler & Jackson, 2000). Performance review based on multiple sources and feedback given for areas of improvement is a good sign in the competitive scenario (Ulrich, 1997). The autonomy and employee opinion on work related issues, affects both the opportunity and motivation to perform (Konrad, 2006). Company provides variety of benefits this feature is unique to the public sector entity, compared to the private sector. This factor motivates the employees to exert more efforts that finally affect the performance of the organisation (Pfeffer, 1998). Thus, the HRM practices of the organisation suggest they are intended to improves skills, knowledge, benefits and autonomy to the employee. Prior studies recommend these practices were largely associated to increase in productivity and long-term organizational performance (Huselid, 1995). id- irjmss@gmail.com Page 123

7 (Impact Factor ) Limitations and further scope of the study: The study is aimed at convey the qualitative aspects into greater focus. This study is confined to the LIC branches of Hyderabad and Secunderabad, twin cities. The opinions of the respondents were taken by questionnaires. The findings of the research may not be generalized, to the whole industry as a whole, as the organisation is rather unique. As only few branches are part of the study, the facts found can only be indicative of a possible trend rather than a definite reality. Further research can be done for exploring human resource practices in private sector companies, and how a human resource practices affect the organisation performance. References: Arago n-sa nchez, A., Barba-Arago n, I, & Sanz-Valle, R. (2003), Effects of training on business results, International Journal of Human Resource Management, 14, pp Armstrong Micheal (2006), A Handbook of Human Resource Management Practice, 10 th edition, Kogan Page, p.468. Barney, Jay.B. (1991). Firm resources and sustainable competitive advantage. Journal of Management, 17: doi: / Bartel, A.P. (1994), Productivity gains from the implementation of Employee training Programs, Industraial Relations, 33, pp Basu, Mihir K. (1978), Performance Appraisal in India, New Delhi, Vision books. Batt, R. (1999) Work organization, technology, and performance in customer service and sales. Industrial and Labor Relations Review, 52, Becker, B.B., Huselid, M.A., Pinkhaus, P.S., & Spratt, M.F. (1997), HR as a source of shareholder value: Research and Recommendations, Human Resource Management, 36, p Boselie, J.P., Paauwe, J., & Jansen, P.J. (2001), Human Resource Management and Performance: Lessons from the Netherlands, International Journal of Human Resource Management, 12, pp Brown, M. & Hewood, (2005), Performance appraisal systems: determinants and change, British Journal of Industrial Relations, 43(4), pp Delaney, J.T.& Huselid, M.A. (1996), The impact of Human Resource Management practices on perceptions of organistional performance in for-profit and non-profit organisations, Academy of Management Journal, 39, pp Delery, J.E., & Doty, D.H. (1996). Modes of theorizing in strategic HRM: tests of universalistic, contingency, and configurational performance predictions, Academy of Management Journal, 39, pp Dubey.K and Pandey J.K. (2013), Managing HR challenges in Insurance industry: A study on life insurance, accessed through Internet. id- irjmss@gmail.com Page 124

8 (Impact Factor ) Guest, D.E. (1997) Human resource management and performance: a review and research agenda, International Journal of HRM, 8(3), pp Hair, J.F., Anderson, R.E., Tathan, R.L., & Black, W.C. (1998). Multivariate data analysis (5 th edition: Prentice Hall. Harel, G.H., & Tzafrir, S.S. (1999), The effect of HRM practices on the perceptions of organizational and market performance of the firm, Human Resource Management, 38, Huselid, M. (1995), The impact of HRM practices on turnover, productivity, and corporate financial performance, Academy of Management Journal, 3, pp Koch, M.J. & McGrath, R.G. (1996), Improving labor productivity: Human Resource Management policies do matter, Strategic Management Journal, 17, pp Konrad, A.M.(2006) Engaging employees through high-involvement work practices, Ivey Business Journal, March/April, pp.1-6. Kundu C. Subhash and Malhan Divya (2009) HRM practices in Insurance Companies: A study of Indian and Multinational Companies, Managing Global Transitions, 7(2), pp Levesque, L.L. (2005). Opportunistic hiring and employee fit, Human Resource Management, 44(3), pp Mahesh V S (1988), Effective Human resources management: Key to excellence in service organisations,vikalpa,13(4), Oct-Dec, pp Morgeson, F.P., & Campion, M.A., (2008). Work design. In Morgeson F.P., & Humphrey S.E., (2008) Job and Team design: Toward a more integrative conceptualization of work design, Research in Personnel and Human Resources Management, 27, pp Pfeffer, J. (1998) Seven practices of successful organisations. California Management Review, 40(2), pp Rafaeli Anat, Lital Ziklik, and Lorna Doucet, (2008), The impact of call center employees customer orientation behaviours on service quality, Journal of Service Research, 10(3), sage publications, pp Schuler, R.S., Jackson, S.E. (2000), Strategic Human Resource Management, Blackwell, Oxford Publishing Sekaran, U. Research Methods for Business: A Skill-building approach, 3 rd edition, 2000, New York: John Wiley & Sons, Inc. Spreitzer G.M. Cohen.G.S., Ledford Jr. E.S. (1999), Developing effective self-managing work teams in service organisations, Group & Organisation Management, 23(3), September, Sage publications, pp id- irjmss@gmail.com Page 125

9 (Impact Factor ) Subba rao.p (2009), Personnel and human resource management, Himalaya Publishing House, Mumbai, pp Ulrich, D. (1997) Measuring human resources: An overview of practice and a prescription for results, Human Resource Management, 36, Fall, HR practices considered to take opinion of the employees: Shr1 Internal candidates are given priority in filling vacancies Shr2 The Organisation attracts service-oriented candidates Shr3 Formal tests are used for short-list of candidates Shr4 Service approach and skills are basis for selection of candidate Shr5 Structured interview are used for selection process TDhr6 Induction is arranged to the new to familiarize the organisation and its culture TDhr7 New training methods and techniques are used to learn TDhr8 Training is an opportunity to learn completely about the organisation TDhr9 Training programs helps to overcome fear in introduction of products&service TDhr10 Employees participate in determining their training needs, w.r.t. their jobs TDhr11 Training facility is fully equipped with all facilities TDhr12 Training programmes focused on team building activities TDhr13 Training is comprehensive that includes future needs of the organisation TDhr14 I receive training to deliver better quality and customer service TDhr15 Trained employees are deployed in the relevant fields TDhr16 Training programmes are emphasized and rewarded TDhr17 Opportunities for learning and professional growth are existed here TDhr18 This organisation provides employees with challenging work opportunities PAhr19 Performance is evaluated periodically on objective basis PAhr20 Performance is evaluated impartially and related to job description PAhr21 Performance appraisals provides employees feedback for areas of improvement PAhr22 Meeting the customer s needs emphasized in performance appraisal PAhr23 Performance review based on multiple sources (Supervisors, coworkers, self etc CBhr24 My organisation pays better than others in the industry CBhr25 Employee salaries and rewards are determined by the performance CBhr26 Non monetary rewards plays major role in improving performance CBhr27 My company gives compensations/rewards fairly CBhr28 My company provides a variety of benefits CBhr29 Monetary/ nonmonetary rewards for great effort good performance of employee CBhr30 Special rewards are given to employees who are excellent in customer service JDhr31 Everyone understands & takes responsibility for customer s sales and service JDhr32 Work are organized in teams and that helps in realizing the goals JDhr33 There is a chance to use a variety of skills JDhr34 Equipment, work processes are structured & technology used to analyze the Performance JDhr35 My performance evaluation is strongly influenced by team performance JDhr36 Rewards of my job are result of contributions of my team members JDhr37 My team makes an important contribution to serving the company s customers JDhr38 Information is shared with employees JDhr39 Employees have autonomy in handling customers requests JDhr40 job rotation used to develop skills JDhr41 Employees are involved in work related decisions JDhr42 My job gives me increased job security id- irjmss@gmail.com Page 126