Impact Of Hrm Practices On Employee Satisfaction In Public Sector Commercial Banks In Chennai

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1 International Journal of Management Academy (2013), 1 (2): Received: October 2013 Accepted: November 2013 Copyright 2013 by IJOMA Impact Of Hrm Practices On Employee Satisfaction In Public Sector Commercial Banks In Chennai Dr. T. Usha Priya Abstract Original Article Head, Post Graduate Department of Banking and Insurance Management Ethiraj College for women, Chennai Building on the notions of soft or high commitment HRM, the relationship between human resource practices and work outcomes is an increasingly researched topic in human resource management. Founded upon a theory Y approach of employees as active,selfcontrolled human beings who like work, seek responsibility, and serve objectives to which they are committed, soft HRM focuses on empowering, developing, trusting, and managing employees as humans with specific needs, and predicts that performance is created through positive attitudes..more specifically, HRM is hypothesized to fulfill employees needs which enhances favorable attitudes, and subsequently improves performance outcomes This is consistent with social exchange theory (SET) which argues that HRM practices contribute to positive exchange relationships between employee and employer-especially when the needs of individual workers are considered-to which employees reciprocate with favorable attitudes and behavior. Keywords: HPWS, Employee Compensation, Training and Development. Introduction Globalization and changing customer s demands for better quality have revolutionized the organizations and has created intense competition among them. In order to survive in this global competition, creation of satisfied and loyal work force is vital for all organizations including commercial banks. The worldwide current competition in banking industry has been increased by globalisation, high tech-change and privatization of public banks. To keep pace with this high competition, the banks need highly motivated, satisfied and loyal employees and hence, there is a need to adopt strategies like * Corresponding author: ushapriya69@gmail.com High Performance Work System. This study focus on HRM practices and their outcomes in public sector commercial banks in Chennai. The main objectives to achieve through this research: To identify the HRM practices that are followed in public sector commercial banks in chennai. To examine the relationship between HRM practices and HR outcomes of public sector commercial banks. Literature Review High Performance Work Systems High Performance Work Systems (HPWS) is a set of interrelated HR practices designed to enhance employees skills, commitment, and productivity in such a way that employees become a source of sustainable competitive

2 Usha Priya T / IJOMA (2013), 1 (2): Impact Of Hrm Practices On Employee Satisfaction In Public Sector advantage ( Datta et al., 2005). But as there is no single agreed definition of HPWS (Boxall and Purcell, 2003), different labels have been used to describe these sophisticated human resource practices, for instance, high involvement work practices (Lawler, 1986; Guthrie, 2001), high commitment management (Beer et al., 1985), high performance work organisation practices (Osterman, 2000),and innovative HR practices (MacDuffie, 1995). HRM practices and job satisfaction are studied widely in different parts of the world. It is assumed that HR practices are closely associated with job satisfaction (Ting, 1997). Steijn (2004) found that HRM practices had positive effect on job satisfaction of the employees of Dutch public sector whereas individual characteristics such as age, gender, and education had insignificant effect on job satisfaction. Gould-William (2003) showed that use of specific HR practices in local government organizations in the United Kingdom (UK) was associated with a greater degree of job satisfaction, workplace trust, commitment, effort, and perceived organizational performance. Thang and Buyens (2008) stated that training and development lead to superior knowledge, skills, abilities, attitudes, and behavior of employees that ultimately enhance excellent financial and non-financial performance of the organizations. Aswathappa, (2008)found that compensation is very much important for employees because it is one of the main reasons for which people work. Employees living status in the society, satisfaction, loyalty, and productivity are also influenced by the compensation. Most studies have included performancebased compensation as one of the highperformance HRM practices (e.g. Delery and Doty, 1996; Huselid, 1995; MacDuffie, 1995). Empirical studies on the relationship between performance-related pay and company performance have generally found a positive relationship. Delery and Doty (1996) identified performance-based compensation as the single strongest predictor of firm performance. Relatively, there is little published research on HRM practices and their outcomes in public sector commercial banks in Chennai. Therefore, the study attempts to find the same. Methodology Primary data related to HRM outcomes such as employee satisfaction and employee commitment were collected from employees who are working in different departments of commercial banks. Five Public sector banks in Chennai have been selected to study of how HRM practices impact on HRM outcomes of public sector banks. The sample of this study consisted of 100 respondents who are working in the different departments of branches of five public sector commercial banks. For the purpose of this study, a structured questionnaire consisting of 59 questions was made to collect data. It was organized into two sections and was used to collect primary data from employees. Section one consisted of 6 questions regarding the personal details of respondents such as age, experience, sex, designation, education and marital status. Section two was designed to test employees perceptions about HRM practices like Recruitment, Training, Performance appraisal and. A five point Likert scale has been used in this second section of the questionnaire to measure the impact of HR practices on HRM comes. The scaling is: 5 for strongly agree, 4 for agree, 3 for neutral, 2 for disagree and 1 for strongly disagree have been given in order to analyze data. Measurement of HR outcomes Using a five point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree), respondents (employees) were asked to indicate their perception on these HR outcomes. Eight questions were asked to test employee satisfaction, and two questions were used to test employee commitment respectively. Hypotheses Tested Hypothesis 1 Job advertisement in news papers leads to higher employee satisfaction and employee commitment. Hypothesis 2 Training and Development of employees is 92

3 Impact Of Hrm Practices On Employee Satisfaction In Public Sector positively related to higher employee satisfaction and employee commitment Hypothesis 3 Compensation is positively related to higher employee satisfaction and employee commitment Hypothesis 4 Performance evaluation of employees is positively related to higher employee satisfaction and employee commitment. HRM practices followed in Public Sector commercial Banks Human resource practices are the primary means by which firms can influence and shape the skills, attitudes, and behaviour of individuals to do their work and thus achieve organizational goals. The are various practices but the study includes only aspects like recruitment & selection, training & development, compensation and performance evaluation. Recruitment & Selection Recruitment is the process of locating potential individuals who might join an organization and encouraging them to apply for existing or anticipated job openings. Recruitment is the development of a pool of job candidates in accordance with a human resource plan. Further it can be explained as the process of locating, identifying and attracting capable applicants. During this process, efforts are made to inform the applicants fully about the qualifications required to perform the job and the carrier opportunities the organization can offer its employees. Selection is the process of choosing individuals who have relevant qualifications to fill existing or projected job openings. It is the process of assessing candidates and appointing a post holder to ensure that the most appropriate candidates are hired. Successful employee hiring decisions are the foundation of any organization s success. Most managers and senior executives would agree that the task of hiring can be one of the responsibilities with the most impact in their organization. Training & Development In the field of human resource management, training and development is the field concerned with organizational activity aimed at improving productivity and enhancing skills of individuals and groups in the organizational setting. Development refers to formal education, job experiences, relationships, and assessments of personalities and abilities that help employees prepare for the future. The term training is often used casually to describe almost any effort initiated by an organization to foster learning among members. Training tends to be more narrowly focused and oriented toward short- term performance concerns, and development, which tends to be oriented more toward broadening an individual s skills for future responsibilities (Snell S 2007). It can be expected that firm investments in technical and non- technical training will have a positive impact on the skills/knowledge of its employees. Training was included as a high-performance HRM practice (Huselid, 1995). Firms with superior training programmes may also experience lower staff turnover than firms that neglect employees training and development. Compensation & Benefits Employee compensation includes all forms of pay and rewards received by employees for the performance of their jobs (Snell S, 2007). Direct compensation encompasses employee wages and salaries, incentive-payments, bonuses, and commissions. Indirect compensation comprises the many benefits supplied by employers and non financial compensation includes fringe benefits like free insurance and subsidized lunch. Performance evaluation The performance appraisal can be defined as a process, typically delivered annually by a supervisor to a subordinate, designed to help employees understand their roles, objectives, expectations and performance success. Performance appraisal is a process of systematically evaluating performance and providing feedback upon which performance adjustments can be made. It should be based on job analysis, job description and job 93

4 Usha Priya T / IJOMA (2013), 1 (2): Table 1. Results of Regression Analysis for Employee Satisfaction Coefficients. Model Unstandardised Coefficients B Std. Error Standardised Coefficients Beta (Constant) Recruitment& Selection Training& Development Compensation & Benefits Performance Evaluation t Sig specifications and it is a systematic process to evaluate the performance of an employee after a certain period. Performance appraisal also influences other HR practices such as recruitment and selection, training and development, compensation, and employee relations. As performance appraisal leads to pay raise, promotion, and training, it is assumed that better performance appraisal can have an impact on employee job satisfaction. Relationship between HRM practices and HR outcomes of public sector commercial banks. Multiple regression analysis was conducted to test the hypotheses of this study. Multiple regression analysis is the most commonly used technique to assess the relationship between one dependent variable and several independent variables. Dependant variables are HRM outcomes i.e., employee satisfaction and employee commitment. The specified various dimensions of HRM practices are the independent variables for this study. The adjusted R square gives more accurate information about the fitness of the model, the share of variation in the dependant variable explained by the variation in the independent variables. In this study, the adjusted R square, F-value and t-value from the SPSS output have been used to interpret the results of regression analysis. Table 1: Results of Regression Analysis for Employee Satisfaction-Coefficients From the above Table, it is found that, compensation & social benefits (t = 4.956; p = 0.002), performance evaluation (t = 4.321; p = 0.004), training & development (t = 3.193; p = 0.003), and recruitment & selection practice (t = 2.641; p = 0.002) have emerged as the most significant variables in explaining the variance in employee satisfaction. These are the significant predictors of employee satisfaction in public sector banks in Chennai. Tthe results of regression analysis shows that the null hypothesis is rejected and support that a higher intensity HRM practices is positively related to better employee satisfaction. Table 2: Results of Regression Analysis for Employee Commitment-Coefficients According to the Table 2, compensation & social benefits (t = 4.122; p = 0.000), recruitment & selection (t = 4.158; p = 0.000), petrformance evaluation (t=3.121,p=0.003)and training & development practices (t = 3.100; p = 0.002) Table 2. Results of Regression Analysis for Employee Commitment Coefficients. Model Unstandardised Coefficients Standardised B Std. Error Coefficients Beta )Constant( Recruitment& Selection Training& Development Compensation & Benefits Performance Evaluation t Sig 94

5 Impact Of Hrm Practices On Employee Satisfaction In Public Sector emerged as the significant variables in explaining the variance in employee commitment. Results of regression analysis support the hypotheses that a higher intensity of using HRM practices is positively related to better employee commitment in public sector commercial banks in Chennai. Hence, the null hypothesis is rejected and its alternative hypothesis that pre-specified bundles of HRM practices is positively related to better employee commitment is accepted. Conclusion The present study was conducted in the public sector commercial banks in Chennai, with an aim to find the relationship between HRM practices and its impact on employee satisfaction and employee commitment. Results of the study show that recruitment and selection, training and development, employee compensation and performance evaluation is strongly correlated with employee satisfaction and employee commitment which indicates that HRM practices are the vital factor for generating satisfaction and commitment in employees of public sector commercial banks in Chennai. References Arthur, J. B Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37(3): Aswathappa, K. (2008), Human Resource Management: Text and Cases, Tata McGraw-Hill Publishing Company Limited, Delhi. Boxall, P., & Purcell, J. (2000). Strategic human resource management: where have we come from and where should we be going? International Journal of Management Reviews, 2(2), Datta, D. K., Guthrie, J. P., & Wright, P. M Human resource management and labor productivity: Does industry matter. Academy of Management Journal, 48(1): Delery, J. E., & Doty, D. H. (1996). Modes of theorizing in strategic human resource management: Tests of universalistic, contingency, and configurational performance predictions. Academy of Management Journal, 39(4), Gould-Williams, J. & Davies, F. (2005). Using social exchange theory to predict the effects of HRM practice on employee outcomes. Public Management Review, 7(1), Guthrie, J. P. (2001). high-involvement work practices, turnover, and productivity: evidence from new zealand. Academy of Management Journal, 44(1), Huselid, M. A The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3): MacDuffie, J. P. (1995). Human resource bundles and manufacturing performance: Organizational logic and flexible production systems in the world auto industry. Industrial & Labor Relations Review, 48(2), Osterman, P. (2000). Work reorganization in an era of restructuring: trends in diffusion and effects on employee welfare. Industrial and Labor Relations Review, 53(2), Stejins, B. : HRM. OECD-PUMA/HRM, Pariz, Thang, N. N., and Buyens, D. (2008), What We Know about Relationship between Training and Firm Performance: A Review of Literature. Paper Presented at The 7th International Conference on Ethics And Quality of Work-Life for Sustainable Development, Bangkok, Thailand. Thompson, M., & Heron, P. (2005). The difference a manager can make: organizational justice and knowledge worker commitment. The International Journal of Human Resource Management, 16(3),

IMPACT OF HRM PRACTICES ON EMPLOYEE SATISFACTION IN BANKING SECTOR IN CHITTOOR DISTRICT P.Suresh 1, Dr.T.Narayana Reddy 2

IMPACT OF HRM PRACTICES ON EMPLOYEE SATISFACTION IN BANKING SECTOR IN CHITTOOR DISTRICT P.Suresh 1, Dr.T.Narayana Reddy 2 1 Research scholar, Department of Management Studies, Jawaharlal Nehru Technological