Impact of HR Practices on Employee Job Satisfaction in Public

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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

COPY RIGHT © 2012 Institute of Interdisciplinary Business Research

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Impact of HR Practices on Employee Job Satisfaction in Public Sector

Organizations of Pakistan

Muhammad Javed

Faculty of Administrative Sciences Air University Islamabad, Pakistan

Muhammad Rafiq (Corresponding Author)


Islamabad, 44000, Federal, Pakistan.

Maqsood Ahmed


Mustajab Khan

MS Scholar Muhammad Ali Jinnah University Islamabad, Pakistan

Abstract

A lot of research has been done on the relationship of HR Practices and employee job

satisfaction but the main focus and theme behind those research studies has been the

developed countries. The purpose of this study is to observe the relationship between three

HR Practices i.e. (Training and Development, Rewards, Recognition) and the employee job

satisfaction in the public sector organizations of a developing country, Pakistan. Data has

been collected from the employees of various public sector organizations and then regression

and correlation have been applied to check the relationship between the dependent and

independent variables. Recognition and training and development are a key source of

employee job satisfaction in Public sector organizations of Pakistan but rewards do not have

any significant impact upon employee job satisfaction.

Key Words: Training and development; Rewards; Recognition; Job satisfaction; Pakistan

Introduction

A lot of researchers have found that HR Practices are positively linked with employee job

satisfaction (Wright et al., 2003; Spector, 1997; Huselid 1995); Petrescu & Simmons, 2008).

The aim and main focus of these studies have been developed countries. The eyes did not

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turn towards developing countries like Pakistan in a great deal. (Aycan et al. 2000)

found that so far very little research has been conducted in the field of HR Practices i.e.

Training and development, Rewards and Recognition in Pakistan which shows that this

particular field still has a lot of space for further research.

The main theme of this particular research is to observe the relationship between HR

Practices (Training and development, Rewards, Recognition) and Employee Job Satisfaction

in public sector organizations of Pakistan. These HR Practices are also known as key drivers

of employee performance. Training and development is one of the key elements of employee

job satisfaction because it reduces the discrepancies in job tasks and enhances the job skills

which in result motivates the employees and lead towards job satisfaction. Employees get

extremely motivated through rewards and recognition and these two factors lead towards

employee motivation and research shows that highly motivated employees are the most

satisfied employees and also the high performers.

This study is extremely significant as it is a big insight for the public sector organizations of

Pakistan. Normally managers don’t focus upon the relationship of rewards and job

satisfaction, recognition and job satisfaction or training and development and job satisfaction.

So this study will enable them to make a better strategy in terms of employee job satisfaction

and to focus upon those HR practices which actually are the source of job satisfaction for

employees. Every individual employee wants satisfaction at job but organization is wasting

its resources by focusing on wrong HR practices for employee job satisfaction. This study

could be an eye opener for many organizations and may well prove to be a very productive

one.

Pakistan is one of those countries where people working in the public sector organizations are

often not sure about the job satisfaction level. The unsatisfied employees of public sector

organizations, when switch to private sector i.e. MNE's, they have been observed to be much

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more satisfied, therefore it is very important for the managers to know which HR Practices

keep them satisfied and how much important role rewards, recognition and training and

development have regarding employee job satisfaction. This study can be very fruitful for HR

Managers of Public sector organizations in Pakistan as they would get a very clear idea about

the relationship of three important HR Practices and employee job satisfaction and as a result

can have much more productive employees and a decreased turn over rate in their

organizations.

Literature Review

HR Practices

HR Practices are linked with the management of human resources, activities necessary for

staffing the organization and sustaining high employee performance (Mahmood, 2004). The

most common HR Practices are recruitment, selection, training and development,

compensation, rewards and recognition (Yeganeh & Su, 2008). Six HR practices selective

hiring, compensation policy, rewards, recognition, training and development and information

sharing have been studied with relation to employee job satisfaction (Dessler, 2007). The

present study examines the relationship between three HR Practices i.e training and

development, rewards, recognition and employee job satisfaction.

Job Satisfaction

Job satisfaction means what are the feelings of different employees about the different

dimensions of their jobs (Robbins, 2003). The level of satisfaction and dissatisfaction is

another aspect which is related to employee job satisfaction (Spector, 1997). Job satisfaction

may be the general behavior emerged due to different happenings at the work place; it may

be supervisor’s behavior, relationship with peers or the work environment (Janet, 1987)

.Various factors such as an employee needs and desires, social relationships, job design,

compensation, developmental opportunities and aspects of work-life balance are

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considered to be some of the key factors of job satisfaction (Byars & Rue, 1997; Moorhead

& Griffin, 1999). According to (Robbins 1999), a satisfied workforce can increase

organizational productivity through less distraction caused by absenteeism or turnover, few

incidences of destructive behavior, and low medical costs.

Training and Development

Training is focusing on fixing a specific issue (Doyle, 1997).Training often answers the

question "what happens if" Development on the other hand takes a more global approach.

Training is related with current performance and progress of an employee while development

is related with the future performance and progress (Miller, 2006). Training is anything

offering learning experience (Paul & Anantharaman, 2003) Training helps employees is

more specific with their job and organization and as a result increases employee job

satisfaction and makes them work better.

H1: Training and development is significantly and positively related with employee job

satisfaction.

Recognition

Recognition is appreciation of employee’s performance in formal or an informal way.

Recognition is one of the driving force towards motivating employees, it also highlights how

much an employee’s performance is appreciated in an organization for the amount of work

he/she has put in (Miller & Lawson, 1999). Recognition maintains a strong bond between

motivation and performance and as a result the level of motivation of employee’s stays very

high almost all the time (Flynn, 1998). Recognition increases level of job satisfaction and

satisfied employees are a valuable asset for any organization (Entwistle, 1997). Recognition

is often considered to be of two major types, cash and non-cash awards. Different sectors

need different ways of recognition to be applied, some sectors or segments of population may

like cash and prizes to be a easy and better way of motivation while others may like non-cash

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awards because they feel that if cash is to be given as recognition than they already have

salaries and other bonuses which get consumed very quickly (Holmes, 1994) .

H2: Recognition is significantly and positively related with employee job satisfaction.

Rewards

Rewards are usually referred to as intangible returns including cash compensation and

benefits. Reward system is set of mechanisms for distributing both tangible and intangible

returns as part of an employment relationship (Rue & Byars, 1992). Rewards are also termed

as the need of an employee because when reward will be linked with the employee’s desire it

will motivate him/her to a very high level (Kalleberg, 1977). It certainly shows that what an

employee wants after performing a certain task. It has been revealed in the past researches

that rewards are very strongly correlated with job satisfaction. Rewards are positively linked

to employee job satisfaction (Gerald & Dorothee, 2004). Their research extracted one

important element that employees are more satisfied with those rewards that they actually

perceive. (Clifford, 1985) argues that employee Job satisfaction may be determined through

job rewards. There are a lot of differences between different authors related to the dimensions

of rewards and employee job satisfaction but one thing upon which almost all agree upon is

the element of rewards that are perceived by employees (Kalleberg, 1997).

H3: Rewards are significantly and positively related to employee job satisfaction.

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Theoretical Model of the Study

Methodology

The population for this study was public sector organizations of Pakistan, (ZTBL, NDC,

SME Bank ltd). 180 questionnaires were distributed to get response of employees while 140

useful responses were received back (77%). Convenient sampling had been used to gather

data.

The scale used for this research is highly reliable as it has been related to scales of many past

researches. This questionnaire checks the impact of HR Practices (Training and development,

rewards, recognition) on employee’s job satisfaction. Relationship of HR Practices and job

satisfaction has been tested on a 17 items scale. All the items of scale have been taken from

renowned past researche studies (Clifford, 1985) job satisfaction, (Rogg, Schmidt, Shull &

Schmitt, 2001) training and development (beer, 1987) recognition, (Spector, 1995) rewards.

Training and Development

Recognition

Rewards

Employee Job

Satisfaction

INDEPENDENT

VARIABLES

DEPENDANT VARIABLE

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Job satisfaction has been measured through a 3 item scale, training and development has been

measured through 6 items scale, and 4 items have measured recognition while another 4

items have measured rewards.

Questionnaires were filled under our personal supervision. The statistical tests were applied

upon the data through statistical software SPSS. Degree of association was measured by

using Pearson coefficient. Causal relationship between HR Practices and job satisfaction was

estimated by using Regression analysis.

According to the data collected the respondent’s average age for 25 or below segment is

31.4, for 26-35 is 26.4, for 36-45 is 30.0 and 46 or above segment is 12.1; 55.7% of the

respondents are male while 44.3% are female. The detail description of demographics is

given in table 1.

Table: 1 Demographic profile of respondents Sr # No Indicators Categories Frequency Percentage

1 Age 25 or below

26-35

36-45

46 or above

44

61

17

18

31.4

43.6

12.1

12.9

2 Gender Male

Female

78

62

55.7

44.3

3 Nature of Job Permanent

Temporary

Contract

68

63

09

48.6

45.0

6.40

4 Income level 25,000 or below

26,000-35,000

36,000-45,000

46,000 or above

44

37

42

17

31.4

26.4

30.0

12.1

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Data Analysis and Results

Reliability Analysis

Cronbach alpha is the tool used to check the reliability of any scale. According to the

statistical analysis the value of cronbach alpha ranges between 0.698-0.847. Normally 0.6 is

the minimum acceptable range for cronbach alpha. The overall reliability of scale items is

found to be 0.992. the detailed description of the value of cronbach alpha is given in table 2.

Table: 2 Cronbach Alpha of Scale Items

Construct/variable Number of items Cronbach alpha

Job satisfaction 3 0.698

Training and development 6 0.824

Recognition 4 0.760

Rewards 4 0.847

Correlation

Correlation analysis has been carried out to check the extent to which two quantitative

variables vary together, including the strength and direction of their relationship. The strength

of the relationship refers to the extent, to which one variable predicts the other; it can be

observed in table 3.

Table: 3 Correlations

Satisfaction Training Recognition Reward

Job Satisfaction Correlation 1

Training & dev Correlation .469(**) 1

Recognition Correlation .650(**) .550(**) 1

Reward Correlation .684(**) .615(**) .952(**) 1

As shown in the above table, training and development, recognition and rewards all are found

to be positively correlated with dependent variable job satisfaction. The value (r= .469)

suggests that training and development is positively correlated with job satisfaction, (r= .650)

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shows that recognition is also positively correlated with job satisfaction and (r= .684) shows

that rewards are also positively correlated with job satisfaction. Correlation analysis showed

that there is positive relationship between job satisfaction and independent variables.

Table: 4 Regression Analyses

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .710(a) .504 .493 .26238

Table: 5 Coefficients (a)

Variables

Unstandardized Coefficients

Standardized

Coefficients t

Sig.

B Std. Error Beta

(Constant) .925 .343 2.696 .008

Training .266 .085 .243 3.145 .002

Recognition .088 .205 .086 .430 .668

Reward .443 .206 .453 2.147 .034

As shown in the above table of coefficients (a), training and development is positively

affecting the dependent variable job satisfaction as the beta value is (.266). It is shown in the

table that recognition also has a positive effect on the job satisfaction, represented by beta

value (.088) and rewards also have positive effect on the job satisfaction, represented by beta

value (.443). Independent variables, training and development and rewards are having a

positive and significant relationship with the dependent variable but recognition is not having

a significant relationship. The value of R square is .504 which means that 50.4% variation in

dependent variable can be explained by independent variables.

On the basis of above analysis, hypotheses 1 and 3 are accepted but hypothesis 2 has been

rejected. Previous researches had shown the same results.

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Table: 6 Hypotheses Testing Hypotheses Result

H1: Training and development is significantly and positively related with employee job

satisfaction.

Accepted

H2: Recognition is significantly and positively related with employee job satisfaction. Rejected

H3: Rewards are significantly and positively related to employee job satisfaction Accepted

Conclusion and Future Recommendations

The findings of this research can be implemented in different ways in public sector

organizations of Pakistan. First of all training and development has a weak correlation with

employee job satisfaction which clearly indicates that training and development is not a

strong driver of job satisfaction in public sector organizations of Pakistan. Therefore serious

amount of consideration should be given to this aspect. Before allocating any sort of training

activities to employees training need analysis should be conducted so that managers should

exactly know that which kind of training should be given to employee. If employee will feel

training to be interesting and is according to the need of an employee than employees will

actively participate in trainings and that training will be much more productive and source of

satisfaction for employees. Employees will not only learn more but they will also exhibit the

learned skills at the workplace as well which will enhance the employee performance and that

will lead towards enhancement of organizational performance and then organizations will

have satisfied employees.

Rewards and recognition are both strongly correlated with employee job satisfaction which is

an indication that how important employees perceive rewards and recognition for them in the

public sector organizations of Pakistan. Rewards and recognition are both very useful and

recognized tool of employee job satisfaction but both these variables act other way around if

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there is no equity. So it is very important for managers in public sector organizations to

eliminate discrimination while giving rewards or recognition.

Pakistan is a developing country and employees of public sector organizations love to get

rewards as compared to recognition, monitory rewards are of great importance because past

researches show that monitory benefits for employees of public sector organizations of

developing countries have great significance towards job satisfaction and this study also

supports this particular argument. This is why the analysis of data shows that rewards are

extremely significant but recognition is not.

Future researchers need to study the relationship of job satisfaction and other HR practices in

relation with public sector organizations of Pakistan. When other HR practices will also be

investigated that will provide a very clear and broader picture to managers and it will be very

easy for them to decide that which factors lead towards job satisfaction and which do not in

public sector organizations of Pakistan. The in-depth analysis of compensation, promotion

and performance evaluation practices can be very fruitful for the managers of public sector

organizations and those studies will certainly increase the profitability and level of job

satisfaction of employees.

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Impact of HR Practices on Employee Job Satisfaction in Public