Data collected from fifty manufacturing firms in Bangladesh shows that HR practices have significant association with organizational performance. Out of HR practices, only performance appraisal is found to have significant impact on organizational performance. Keywords: HR Practices, Organizational Performance, Manufacturing Firms JEC Classification: M12, D24 Balasundaram Nimalathasan2 Munshi Muhammad Abdul Kader Jilani3 1. IntroductIon Impact of human resource management practices on organizational performance has been a widely researched area for years.
Results of studies, from developed countries to developing countries, have been time and again showing that HR practices have significant impact on organizational performance (Delaney & Huselid, 1996; Katou & Budhwar, 2007; Sing, 2004; Tzafrir, 2006). But unfortunately, very insufficient number of studies have been conducted in this area context of Bangladesh and other developing countries. To augment the contemporary knowledge base of HR practices of developing countries, this study has been undertaken. 2. esearch QuestIons Specifically, this study was undertaken to explore the answer to the following research questions (RQ): RQ1:
Is there any association between HR practices and Organizational Performance? RQ2: Do HR practices have any impact on Organizational Performance? resource(HR)’ aspects of a management position including human resource planning, job analysis, recruitment, selection, orientation, compensation, performance appraisal, training and development, and labour relations (Dessler, 2007, p. ). HRM is composed of the policies, practices, and systems that influence employees’ behaviour, attitude, and performance (Noe, Hollenbeck, Gerhart, & Wright, 2007, p. 5). There are four top models of HRM such as the Fombrun, Tichy, and Devana Model of HRM, the Harvard Model of HRM, the Guest Model of HRM, and the Warwick Model of HRM (Bratton & Gold, 1999, pp. 17-24). Out of these models, the Fombrun, Tichy, and Devana Model of HRM are considered to be the first one (Aswathappa, 2008, p. 18).
The present study selected the HR practices such as recruitment and selection, training and development, performance appraisal, and compensation which were incorporated by the Fombrun, Tichy, and Devana Model of HRM. The model assumed that these four key HR practices have significant impact on organizational performance. 4. 2 Organizational Performance 3. objectIves The main purpose of the study was to identity the impact of HR practices on organizational performance. In order to materialize this objective, the following specific objectives were considered. • To address the linkage between HR practices and organizational performance. To indentify the impact of HR practices on organizational performance. • To offer some measures in order to enhance the organizational performance of the selected manufacturing firms in Bangladesh and other similar countries. 4. hr PractIces and organIzatIonal Performance: concePtual and emPIrIcal overvIew 4. 1 hr Practices Human resource management (HRM) refers to the policies and practices involved in carrying out the ‘human 1 2 The ultimate goal of a business organization is higher financial performance or maximisation of wealth for stake holders (Becker & Huselid, 1998; Horngren, Foster, & Datar, 2000).
Nonetheless, attaining the organization’s goals depends upon the extent to which its organizational performance is reached (Katou & Budhwar, 2007). Organizational performance is generally indicated by effectiveness (whether an organization can achieve its objectives), efficiency (whether an organization uses resources properly), satisfaction of employees and customers, innovation, quality of products or services, and ability to maintain a unique human pool (Delaney & Huselid, 1996; Dyer & Reeves, 1995; Guest, 2001; Katou & Budhwar, 2007).
The organizational performance variables of the present study included features such as product quality, customer satisfaction, new product development, ability to attract employees, ability to retain employees, and relationship between management and employees. According to the earlier studies (Delaney & Huselid, 1996; Harel & Tzafrir, 1999; Singh, 2004), the respondents were asked to assess their organizations’ performance in comparison to the performance of their competitors.