A STUDY ON HRM PRACTICES AND ITS IMPACT ON JOB SATISFACTION AND ORGANIZATION PERFORMANCE IN BPO SECTOR, TIRUCHIRAPPALLI

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1 International Journal of Advanced Research in Management (IJARM) Volume 7, Issue 3, September December (2016), pp , Article ID: IJARM_07_03_001 Available online at Journal Impact Factor (2016): (Calculated by GISI) ISSN Print: and ISSN Online: IAEME Publication A STUDY ON HRM PRACTICES AND ITS IMPACT ON JOB SATISFACTION AND ORGANIZATION PERFORMANCE IN BPO SECTOR, TIRUCHIRAPPALLI F. Wahidha Begum Assistant Professor, Ph. D. Research Scholar, Jamal Institute of Management, Jamal Mohamed College, Tiruchirappalli. Dr. M. Shiek Mohamed Professor (Rtd), Jamal Institute of Management Jamal Mohamed College, Tiruchirappalli. ABSTRACT The purpose of this study was to examine the impact of HRM practices on job satisfaction and organizational performance in BPO (Business Process Outsourcing) organizations in Tiruchirappalli. Specifically, the study examined HRM practices that are under the control and responsibility of supervisors and managers. The sample size for the study is 244, by adopting purposive sampling technique. The research findings indicate that there is positive relationship between HRM practices, Job satisfaction and organization performance. Key words: HRM Practices, Job Satisfaction, Perceived Organization Support and BPO Cite this Article: F. Wahidha Begum and Dr. M. Shiek Mohamed. A Study on HRM Practices and its Impact on Job Satisfaction and Organization Performance in BPO Sector, Tiruchirappalli. International Journal of Advanced Research in Management, 7(3), 2016, pp BACKGROUND OF THE STUDY Today many organizations are under pressure to improve performance. Organizations are experiencing massive changes in the demands for products and services they provide. This has increased the need for organizations to not only improve the way they deliver services, but also to examine their practices, organizational mission and goals, performance objectives, and performance measures. Thus, there is a new emphasis on the human factors associated with organizational goals and performance (Becker & Gerhart, 1996; Carnevale, 2003; Denhardt & Denhardt, 2003). The effective management of people within the organization is important to the organization's efficiency and effectiveness. Boyne (2003) argued that public service improvement depends on better management, including a focus on leadership and human resource management (HRM) practices. He maintained the focus on regulations and organizational structure limits the progress of today's public 1 editor@iaeme.com

2 F. Wahidha Begum and Dr. M. Shiek Mohamed organizations. HRM consists of all the tasks involved in ensuring the effective and efficient use of the people inside the organization to meet an organization's goals and objectives. The process of effective management of people means cultivating effective work environments, fostering employee participation and contribution to the organization's success. An abundance of research has been conducted on HRM and its influence on organizational performance, organizational commitment, organizational culture, organizational climate, empowerment, leadership style, and turnover (Cho, 2004; Delaney & Huselid, 1996; Erbisch, 2004; Ferguson, 2006; Gelade & Ivery, 2003; Platonova, 2005; Ulrich, 1997). Most of the research conducted was in the private sector. Seldom has there been research conducted on the relationship between HRM practices, job satisfaction, and organization performance in a service sector. Furthermore, little or no research compares the perceptions employees working in BPO sector in the Service Industry. Therefore, the current study explored the HRM practices, perceived job satisfaction, and perceived organizational performance of employees working in BPO Sector in Tiruchirappalli. The study sought to provide direction for future research on the relationship between HRM practices, job satisfaction, and organizational performance in BPO sector. 2. REVIEW OF LITERATURE Ross (1981) defines human resource management as a comprehensive approach to managing people that goes beyond the traditional personnel functions. She argues that HRM has two objectives: the motivation and development of the employees and the performance and productivity of the organization. Unless supervisors and managers develop and implement effective HRM practices, the organization will not reach these objectives. The literature on HRM practices is extensive and includes practices such as recruiting, selection, compensation, and job design that are still structured and controlled by human resource departments. The recent trend, however, is toward the devolution of many HRM practices and responsibilities to line supervisors and managers. This review discusses those practices that have always been the responsibility of line supervisors and managers and will address practices that have been devoluted to line by human resource departments (HRD) Communication According to Drucker (1999), communication is an integral part of management. He argued that multidirectional communication is essential for clearly defining the managers' expectations. Organizational communication is the process that an organization uses to communicate to employees the organization's mission, vision, expectations, and outcomes. Consequently, effective communication results in higher job satisfaction, morale, commitment, and organizational performance (Lee, 2006; Penley & Hawkins, 1985; Sprague & del Brocco, 2002) Empowerment Empowerment is the process supervisors and managers use to encourage employees to utilize their skills, abilities, and creativity. According to Conger and Kanungo (1988), two categories of power define empowerment: relational perspective and motivational perspective. The relational perspective of empowerment involves management's delegation of or sharing of power. The creation of an environment that increases employee motivation and enhances personal development characterizes the motivational perspective. The researchers argued that the need to empower is critical in circumstances where employees feel powerless. Thus, managers must identify those circumstances within the organization that instill this sense of powerlessness. The manager is responsible for developing ways to remove the condition or change the circumstances so that the employee feels empowered to act once the circumstances are identified (Conger & Kanungo, 1988). 2 editor@iaeme.com

3 A Study on HRM Practices and its Impact on Job Satisfaction and Organization Performance in BPO Sector, Tiruchirappalli Motivation Motivation is the process of providing reasons or motives for exerting effort and causing employees to act in certain ways. According to Timm and Peterson (1993), the most important function of a supervisor or manager is to motivate and direct human behavior. Wright (2001) expanded this idea further by hypothesizing that motivation is linked to job satisfaction. He further noted that this linkage is related to the extent of which an employee is satisfied with meeting personal needs and whether one feels sufficiently rewarded at work. In addition to the fundamental concepts that influence and characterize behavior and management style, motivation theory embodies the concept of public service motivation (PSM) developed by Perry and Wise (1990). This construct helps explain why individuals choose public service employment. The researchers asserted that the approach to public service motivation is from three perspectives: rational, norm based, and affective Participative Management Participative management is a managerial philosophy in which employees participate in problem-solving and decision-making activities. Kim (2002) maintained that "participative management practices balance the involvement of managers and their subordinates in information-processing, decision-making, or problem solving endeavors" (p. 232). According to Lee (2006), participative management can enhance job satisfaction. Lee's study explored the relationship between participative management and job satisfaction in local government agencies. To enhance the study, the researcher used four control variables: teamwork experience, union membership, position, and years of employment. The implication of this study is that it demonstrated importance of the use of participative management as a HRM practice that will improve job satisfaction and organizational performance Performance Evaluation Performance evaluation is the process of evaluating how well employees perform their job when compared to a set of standards intended to measure the performance. They focus on identifying, measuring, evaluating, and improving employee performance. Cleveland, Murphy, and Williams (1989) found that organizations use performance evaluations for between-individuals and within-individuals purposes. The between-individuals evaluation is used to determine salary and promotion and to identify poor performance. Conflicting with between-individuals approach is within-individuals, which identifies individual training needs and individual strengths and weaknesses and provides performance feedback. A third usage suggested by the researchers is systems maintenance, which identifies individual training needs and evaluates goal attainment and goal identification. Finally, the researchers suggested that performance evaluations may be used to validate research, document personnel decisions, and meet legal requirements Reward and Recognition A process designed to motivate employees to increase morale, commitment, productivity, and teamwork, rewards and recognition are often given through both monetary and nonmonetary means. Literature supports the idea that reward and recognition are important factors that influence employee behavior, job satisfaction, and organizational performance (Keller & Szilagyi, 1976). Research conducted by Huselid (1995) indicated that HRM practices can affect employee motivation by encouraging employees to work harder. Often these practices are in the form of compensation but may also include rewards and recognition and employee participation programs. 3 editor@iaeme.com

4 F. Wahidha Begum and Dr. M. Shiek Mohamed 2.7. Supervisory Leadership Supervisory leadership is behavior that provides direction and encourages others to take action. This includes perceptions held by employees about the extent of supervisory support, work facilitation, and team building. This HRM factor displays commonly recognized leadership styles that are observable in the day-to-day work environment of line operations in many public organizations. Those styles are autocratic, consultative, participative, and laissez-fare. The autocratic leader is decisive and allows for little input or participation from his or her subordinates. These leaders (supervisor and managers) simply make decisions and impose those decisions on subordinates Training and Development Training and development is the process of developing expertise and is designed to promote or enhance job performance. Furthermore, training is an important function that influences the organization's ability to achieve its goals (Selden, 2005). According to Peter Drucker (1999), managers are responsible for the development of employees in an organization. He argued that as part of their role, managers should be able to turn their employees' strengths into effective job performance through consistent training and development. He further argued that employees' weaknesses are unimportant. Drucker also suggested that training and development are needed for both management and every employee in the organization Job Satisfaction Locke (1969) defined job satisfaction as a state of pleasure that an individual gains from applying one's values to a job. He maintained that different individuals measure this level of satisfaction differently. His research into job satisfaction focused on the individual values that define a person's job satisfaction. Arvey (1995) defined job satisfaction as the affective or emotional state resulting from the overall appraisal of one's job experienced by an individual. According to Barber (1986), although researchers have presented a plethora of research on job satisfaction, they have published relatively little literature about human services employees. In his study of a state social insurance agency, he found that workers were dissatisfied with their jobs. He further concluded that a change in management's philosophy toward motivating and evaluating employees is essential to the improvement of performance and consequently increased job satisfaction Organizational Performance Traditionally, organizational performance in the public sector focused on the delivery of service and was measured by organizational effectiveness and efficiency. Recently, because of many reform efforts, organizational performance organization has become the focus of intensive research. Generally, the literature discusses performance at four levels: (a) the individual employee (performance appraisal), (b) the team or small group (team performance), (c) the program (program performance), and (d) the organization (organizational performance). Key elements of organizational performance are effectiveness, efficiency, relevance, and financial viability. All organizations struggle to balance these elements. According to Daley et al. (2002), how well an organization accomplishes its mission and service delivery goals are the measure of all things. They posited that combining HRM practices with a focus on the achievement of organizational goals and objectives substantially impacts the ultimate success of the organization. 3. STATEMENT OF PROBLEM The managers and supervisors in BPO Sector concentrate their efforts toward ensuring that goals and objectives of the organization are met by delivering services effectively and efficiently. Consequently, HRM practices such as communication, empowerment, motivation, participative management, reward and 4 editor@iaeme.com

5 A Study on HRM Practices and its Impact on Job Satisfaction and Organization Performance in BPO Sector, Tiruchirappalli. recognition, supervisory leadership, and training and development may be absent from line operations. Therefore, attention to the needs of the organization's most valuable resource, its employees, may be limited. Research on the relationship between HRM practices, job satisfaction, and organizational performance is lacking in the literature. Furthermore, few studies have explored the relationship between HRM practices employed by supervisors and managers in a service sector. This study will be useful for administrators with information to make better decisions about the role of and inclusion of supervisors and managers in the HRM system. 4. OBJECTIVES OF THE STUDY To study the organization culture of selected BPO organizations in Tiruchirappalli. To measure the HRM practices in selected BPO organizations To predict the level of employee job satisfaction and perceived organization performance To identify the inter relationship between organization culture, HRM practices, Job satisfaction and perceived organization performance. 5. POPULATION AND SAMPLE The sample population for this study was based on purposive sampling. This sampling technique was appropriate because the researcher was interested in examining the perceptions of the target group with very specific experiences and skill sets. The survey instrument considered for the study is questionnaire. The questionnaire consists of personal information of the respondents as Part I. In the part II, the questionnaire consists of dimensions related to the study. The dimensions are Organization culture, HRM practices, Job satisfaction and finally perceived organization performance. In the HRM practices dimensions the dimensions included are Communication, Empowerment, Motivation, Participative decision making, Performance evaluation, reward and recognition, Supervisory leadership and Training and development. The Likert five scaling technique was considered for the study. A Likert-type scale represents ordinal level of measurement. This type of scale is often used to measure the opinions and attitudes of individuals. The employees working in BPO sector in Tiruchirappalli were considered as the population of the study. In Trichy there are three leading BPO organizations are there, in which employee working in the BPO organization and having overall working experience in BPO industry for more than 12 months are considered. The purpose of the study was explained to the potential identified employees, once the accepted to participate in the survey, questionnaire was distributed. The questionnaire was distributed to the employees who fulfilled the sampling frame criteria. In the result 248 questionnaire were returned, in which 244 was fully completed. The study is limited only measuring the role of supervisor and managers in implementing HRM practices, and its effect on job satisfaction and perceived organization support. 6. FINDINGS 6.1. Profiles The gender wise classification shows that 52% of the respondents were male and the remaining 48% of the respondents were female. The age group of the respondents shows that 39% of the respondents fall below 25 years. The monthly income shows that 40% of the respondent s income lies below Rs.20,000. The education qualification shows that majority 55% of the respondents were under graduate 5 editor@iaeme.com

6 F. Wahidha Begum and Dr. M. Shiek Mohamed 6.2. Statistical Findings The relationship between organization culture, HRM practices, Job Satisfaction and Perceived Organization Support. Organization Culture Organization Culture HRM practices Job Satisfaction Perceived Organization support Pearson Correlation **.554 **.397 ** Sig. (2-tailed) N Pearson Correlation.614 ** **.476 ** HRM practices Sig. (2-tailed) N Job Satisfaction Pearson Correlation.554 **.659 ** ** Sig. (2-tailed) N Perceived Organization support Pearson Correlation.397 **.476 **.566 ** 1 Sig. (2-tailed) N The above table shows that organization culture has high relationship (.614) with HRM practices of the organization and job satisfaction (.554) and its significant (.000). The dimension HRM practices are highly correlated with all the dimensions and significant. The dimension job satisfaction also highly correlated with all dimensions and was significant at (.000). The resultant dimension organizational performance shows that it is moderately correlated with organization culture (.397), and its significant at (0.000) level. The dimension perceived organizational performance is highly correlated with HRM practices and job satisfaction Multiple Regressions Cause and Effect between HRM Practices, Organization Culture, Job Satisfaction and perceived organization performance 6.4. Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate Predictors: (Constant), HRM Practices, Organization Culture, Job Satisfaction, 6 editor@iaeme.com

7 A Study on HRM Practices and its Impact on Job Satisfaction and Organization Performance in BPO Sector, Tiruchirappalli. The R value shows that the inter relationship between Organization Culture, Job satisfaction and HRM practices support was highly correlated. The R square value shows that the predictors predict HRM practices 83% Coefficients Model Unstandardized Coefficients Standardized Coefficients B Std. Error Beta t Sig. (Constant) Organization Culture Job Satisfaction HRM practices Dependent Variable: Perceived organization Support The coefficient table shows that HRM practices are the strongest predictor of perceived organization support and it is very highly significant at (0.001) level of significance. The job satisfaction of the employees is the second strongest predictors of perceived organization performance and it is highly significant at (0.001). Among the consider predictors organization culture has the lowest beta loading and it is significant at (0.001) level. 7. MANAGERIAL IMPLICATIONS The managers and supervisors must create a platform for their employees to exhibit their innovations and creativity periodically, which make the employees to think out of the ways and bring their own ideas for the better performance of the organization. The appraisal should be taken periodically, the performance should be measured in all aspects, once the supervisors or Manager identify the employee is lacking in particular skills, that particular employee should be sent to training programme, to equip themselves. The supervisors and managers should encourage employees on personal development and growth. Inside the organization there should be always open and honest communication between the employee and supervisors. The supervisors and managers should work closely with the employee in achieving the organization objectives and goals. 8. CONCLUSION The study identified the role of Supervisors and Managers in BPO organizations in administering those soft HRM practices. Along with it, the study also identified the role of HRM practices in influencing job satisfaction and organizational performance in BPO organizations. The study concluded that role of supervisors and Managers play a major role in implementing HRM practices inside the organization. 7 editor@iaeme.com

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