Impact of HR Practices on Job Satisfaction: An Empirical Evidence from corporate sector of Punjab- Pakistan

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1 Impact of HR Practices on Job Satisfaction: An Empirical Evidence from corporate sector of Punjab- Pakistan Hafiz Kashif Iqbal 15 Prof. Dr. Muhammad Ehsan Malik 16 Muhammad Mudasar Ghafoor 17 Abstract Purpose: Aim of this study is to empirically evaluate the impact of supervisor role, participation in decision making & compensation policy on job satisfaction in manufacturing as well as service sector in the province of Punjab from Pakistan. Design/Methodology/Approach: Data from 128 organizations was collected through survey questionnaires at the response rate 85%. Pearson s Correlation was used to determine the impact of explanatory variables on explained variable. In addition regression analysis applied which shows the β values of study variables which explain the individual influence of independents on dependent variable. Findings: The empirical results of study reveal that supervisor role has strong positive effect on job satisfaction in context of Pakistani firms as supervisor role has highest β value which showed 49.2% variation in job satisfaction due to the supervisor role which is significant at.000. Results didn t support variation in Job satisfaction due to the Compensation Policy and Participation in decision making. Key Words: Supervisor s role, Participation in decision making, Compensation policy, Job satisfaction. 1. Introduction: This research article critically evaluates the relationship between HR practices and employee s job satisfaction; further classify the factors of the HR practices. Explanatory Variables of HR practices are Supervisor role, Participation in decision making, and Compensation policy. These variables are used to measure the relationship between HR practices, and Job satisfaction. In energetic business atmosphere, need an approach to achieve 15 Lecturer, University of the Punjab Gujranwala Campus, PhD (Scholar), School of Business and Economics, University of Management and Technology, Lahore. 16 Director, Institute of Business Administration (IBA), University of the Punjab, Lahore. Dean Economics and Management Sciences, University of the Punjab, Lahore, Pakistan. Director General, University of the Punjab Gujranwala Campus, Gujranwala, Pakistan. 17 Assistant Professor, University of the Punjab Gujranwala Campus, PhD (Scholar), School of Business, University of Dundee, Scotland, United Kingdom. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 442

2 better performance, to originate and implement HRM practices. In considerable and insubstantial extent the organizations need to invest in such practices and proactively chase a strategic approach to HRM practices to get an competitive advantage (Khan, 2010). In modern era organizations compete through adopting the unique HR practices and due to the globalization the HR practices transform and company adopt the most up-to-date practices to achieve the organizational goals (Mohrman et al., 1995). If company adopt that HR practices then it is not advantageous only for employees but also that is beneficial for the employer, so in short superior HR practices are beneficial for both employee and employer (Harmon et al., 2003). For implementing the high-quality HR practices the culture of the country is also effected like the low power distance and high power distance so that are the effected for the implementing the HR practices (Gürbüz, 2009). Explained variable is job satisfaction of the employees and explanatory variables are the supervisor role, compensation policy and participation in decision making. Relationship between the variables of the HR practices and this research also explain that by using the high performance HR practices satisfaction level of employees boost up. (Gürbüz, 2009) also suggested that job satisfaction is very important issue and the organization can meet it through the leadership style and through good working environment, even managers of company are also responsible for the satisfaction of employees HR Practices: HR practices means that it is a set of policies and practices which boost up the firms human capital to contribute in the achieving of business objective (Gürbüz, 2009) Supervisor s Role: Supervisor plays a very imperative role in the job satisfaction. Supervisor means overseeing the employees at the first level management. Supervisor can strongly affect employees with his attitude. Supervisor role segregated into two main sub groups that are supervisor support and supervisor communication, which may used to measure the impact of supervisor role on job satisfaction (Azman et al., 2009) Participation in Decision Making: Employees suggest something at the time of decision and in that way employees trust creates in front of others (Locke et al., 1986). Participation of workers in decision making may be COPY RIGHT 2013 Institute of Interdisciplinary Business Research 443

3 helpful in producing loyal workers which ultimately enhance the firm productivity level (Lawler and Mohrman, 1993). Gürbüz (2009) suggested that participation of employee is a dominant variable through which we increase the satisfaction level of the employees Compensation policy: In exchange for employee s services compensation as the bucket of financial rewardssalaries, commissions, wages, bonuses, insurance and other sorts of circumlocutory monetary benefits-provided to employees (Caruth and Handlogten, 2001) Job Satisfaction: An employee job satisfaction means that the level of satisfaction of employee according to job. The satisfaction level of employees also associated with increase output of the company, low absenteeism of the employees and low turnover (Hackman and Oldham, 1975). 2. Literature Review: HR Practices and job satisfaction both fields are very broad and many researchers have researched on these topics differently and found both fields are closely connected with each other and ultimately the job satisfaction of the employees influence the organizational performance, therefore, the HR practices are crucial for the organization (Berg et al., 2003). Human recourse management is a combination of multiple factors and these factors are practices, policies, and system which influence the behavior, attitude, and performance of the employee towards an organization in a positive way (Gerhart, 2007). Byars and Rue (1997) suggested that environment of the job, compensation policies, societal relationships, employees needs and structure of the job are basic factors which affect the job satisfaction of the employees through which the turnover, absenteeism, and commitment of the employees are also affected. Compensation is one of the core practices of HRM for which employees contribute in organization growth. Compensation creates workers loyalty, job satisfaction, and increase in social living standards (Inyang, 2010). According to Robbins and Langton (1998) satisfied workforce in result of that can increase productivity of an organization through efficiency and effectiveness and it ultimately become a cause of lower employees absenteeism rate, low turnover, and lower cost of medical. Yu COPY RIGHT 2013 Institute of Interdisciplinary Business Research 444

4 and Egri (2005) suggested that in Chinese firms HR practices play a significant or appreciation role in the employee s affective commitment. HR practice should be a source for high performance and there are two main characteristics of the high performance HR practices, first the HR practices boost up the performance of the organization, and secondly the HR practices adjusted in a dynamic environment of the organization (Becker and Gerhart, 1996). Organizations mostly adopt that HR practices through which the manager of the company believes that by using those practices the performance of the organization will be increased and due to the globalization the best practices of HR changed time to time, so organization adopt that practices which ensure the high performance and by using the high performance HR practices the employees job satisfaction would be ensured and moreover, the performance of company will be increased (Colbert, 2004). To investigate empirical impact of HR practices on job satisfaction Gürbüz (2009) gathered data from 480 blue collar employees of the 35 large firms of Istanbul, Turkey. Different variables were used which are empowerment, team work, Job rotation, participation and contingent compensation. Empirical data showed that dominant variable for the job satisfaction of employees is participation of the employees in decision making. Empirical evidence suggested that if the employees participation in decision making increases then job satisfaction of the employees will be increased. Supervisor plays a vital role in job satisfaction. Excellent role of supervisor create the valuable working environment. Effective feedback of employees can be gathered if provided them true information, so the supervisor behavior also affects the reactions of the team members (Durham et al., 1997). To measure role of supervisor and job satisfaction data collected from 4708 employees of the 48 manufacturing firms empirical evidence provided information that job design matter in organization while implementing supervision. If the efficient team working exists in the company then the relationship between the supervisor role and job satisfaction are weak due to the job design there are no strong relationship between them but if the team work doesn t exist in the company and the employees work individually then role of supervisor can influence the job satisfaction (Griffin et al., 2001). The high performance HR practices are catching the attention of the researchers in recent years, most of the researches revealed that HR practices influence the company performance COPY RIGHT 2013 Institute of Interdisciplinary Business Research 445

5 in a positive way (Delaney and Godard, 2001). The high performance HR practices that basically focus on the contingent pay system like payment to the master who uses our skills, profit sharing, performance related bonuses but doesn t focus upon the traditional system like payment on the basis the seniority, and job title (Handel and Gittleman, 2004). One of the researches has been conducted in Bangladesh to investigate the relationship between HR practices and job satisfaction. 20 manufacturing firms were selected and got response of 60 employees, 3 from each firm. From Human resource practices eight variables selected according to the Guest Model (HR planning, recruitment and selection, training & development, performance appraisal, compensation, and industrial relations) empirical results appreciated the validity about Human resource planning, performance appraisal and compensation which positively affect employees job satisfaction. Data regarding size of the firms, the volume of the production, and the turnovers neglected in this empirical effort (Absar et al.). 3. Hypothesis: After reviewing the literature following hypothesis are proposed, H1: Role of supervisor has positive and significant influence on the job satisfaction. H2: Participation of the employees in decision making has positive and significant influence on the job satisfaction. H3: Compensation policies are positively and significantly related to the job satisfaction. 4. Research Model: I.V s Supervisor s role D.V Participation in D.M Job satisfaction Compensation policy COPY RIGHT 2013 Institute of Interdisciplinary Business Research 446

6 5. Proposed Research Methods: 5.1. Procedure and Sample: The data was collected from both the manufacturing and services sectors in Gujranwala division in Punjab province. Medium of data collection is questionnaire in which 5 point liker scale technique has been used. 150 different organizations were selected for the collection of data, out of which 128 organizations participated in this research. The questionnaire was consisted upon two parts; first part was about demographic factors such as age, gender, current position. Second part of the questionnaire was about to investigate dependent and independent variables Measures: For conducting the research about this topic selected variables about the HR practices from the literature review variable comprises on supervisor s role, participation in decision making and compensation policy. Dimensions of the supervisor role find from the research of Azman et al (2009) and items to measure the compensation policy was adopted from the research of Alam and Mohammad (2010) and participation in decision making measure through Emamgholizadeh et al (2008). 18 items of overall job satisfaction are adopted from the research of Brayfield and Rothe (1951). 6. Analysis and Results: From 128 survey respondents male and female were 98 and 30 respectively, comprising of 77% male and 23% female. Mostly respondents were of age 20 to 30 years old representing 46.9% of the total sample. Following to this 43.8% were of age 31 to 40, 9.4% were the age group of 41 to 50. Among these respondents 47.7% were married and remaining 52.3% were single. In addition, respondents were 40%, 60% belonged to the managerial and non managerial positions respectively. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 447

7 Last question of the first section (Personnel Profile) was related to the work experience of the respondents in their respective institutions. From 128 respondents, 36 respondents have the work experience less than 1 year representing 28% of the sample. Next to this were the 60 respondents (46.9%) with work experience from 2 to 5 years, 28 respondents (21.9%) with work experience of 6 to 10 years, and only 4 respondents (3.1%) with work experience more than 10 years. To investigate the impact of HR practices on job satisfaction several statistical techniques were used. Regression analysis, Pearson correlation has been applied to investigate the relationship between the study variables and also check the means and standard deviation of the variables and to check the reliability of the overall data Cronbach s alpha is used. Table 6.1 Pearson s Correlation N=128 Variables Mean SD SR CP PDM JS SR CP ** 1 PDM ** -.021** 1 JS **.381**.127** 1 **.Correlation is significant at the 0.01 level (2 tailed) Cronbach s Alpha = Table 6.1 shows the mean, standard deviation and correlation of depended and independent variables. The mean value of supervisor role is 3.34, value of compensation policy is 3.37, value of participation in decision making is 3.62 and value of job satisfaction is All values are near to 3 which show that respondents were hesitant to show their response in support of the variables. Responses can deviate from the average responses of the respondents with the value.57 for the supervisor role,.522 for compensation policy,.53 for participation in decision making and.334 for job satisfaction. Moreover the.542 strong positive correlations exist between the supervisor role (SR) and job satisfaction (JS),.381 positive correlations exist between compensation policy (CP) and JS, respectively.127 positive correlations exists between participation in decision making (PDM) & JS at 1% level of significant. To check the reliability of data cronbach s alpha is being used, value of cronbach s alpha is.888 that exceeds the 0.7 so this is obvious that data is highly reliable. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 448

8 Table 6.2 Model Summary Model R R Square Adjusted R Square Std. Error of Durbinthe Estimate Watson a a. Predictors: (Constant), DesMak, sup role, comp policy b. Dependent Variable: job sat Table 6.2 shows that the total variation in the job satisfaction due to the influence of 3 explanatory variables nominated as SR, PDM, and CP. Value of R square which is.311 shows impact of all explanatory variables to JS. All independent variables have 31.1% influence on the dependent variable which is job satisfaction. Durbin Watson test shows the correlation among the study variables either it is positive, negative or zero. Its value is which shows that there is a positive autocorrelation among the study variables. Table 6.3 ANOVA Model Sum of Squares Df Mean Square F Sig. 1 Regression a Residual Total a. Predictors: (Constant), DesMak, sup role, comp policy b. Dependent Variable: job sat COPY RIGHT 2013 Institute of Interdisciplinary Business Research 449

9 Table 6.3 shows that level of significant is.000 which is less than.05 hence it is acceptable and there is strong impact of the SR, PDM and CP on job satisfaction of the employees. Table 6.4 Coefficients Unstandardized Coefficients Standardized Coefficients Model β Std. Error Beta T Sig. 1 (Constant) sup role comp policy DesMak a. Dependent Variable: job sat A table 6.4 showed the β values of research variables which elucidate the individual influence of independent variables on dependent variable. Results showed that standardized Beta coefficient of supervisor role is.492 which is highest beta coefficient. It can be explained that 49.2% variation in job satisfaction due to the supervisor role which is significant at.000. Thus, H1 is supported strongly. Results also showed that 7.6% variation in JS due to the CP and 11.9% variation in JS is due the PDM, so on the basis of the overall analysis hypothesis H1 is accepted. 7. Conclusion: The study aims to examine the impact of selected human resource practices on job satisfaction in manufacturing as well as services sector of Pakistan from Punjab province. Survey questionnaire was used to gather cross sectional data to summarize Whole Ocean in one drop. Empirical results from data gathering reveal latest indications formulated hypothesis approved and has been accepted. Regression analysis showed that supervisor role has strong positive COPY RIGHT 2013 Institute of Interdisciplinary Business Research 450

10 effect on job satisfaction (49.2% variation in job satisfaction due to the supervisor role which is significant at.000), participation in decision making the factor which is the optimistic about company success has lesser positive effect on job satisfaction (11.9% variation in JS is due the PDM) and similarly in compensation portion performance related bonuses is effective (7.6% variation in JS due to the CP). It is concluded that mentioned HR practices having an effect on job satisfaction of an organization employees in Pakistan. Strength of the effectiveness is different and environment of the organization also effective between the relationships of HR practices and Job satisfaction. Supervisor s role is most effective for the Job satisfaction according to this study. 8. Limitations and further direction: Data is collected from the cities Gujranwala, Sialkot, and Lahore that does not represent the whole Pakistan s firm. Sample size is small perhaps results may be different if sample size is increased. Other HR practices mentioned in the literature didn t investigate in this study. The model can further be tested in different countries with increased sample size and model can be extended by adding more variables which may show different results. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 451

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