IMPACT OF HUMAN RESOURCE PRACTICES ON ORGANIZATIONAL COMMITMENT: A STUDY AMONG SERVICE SECTOR EMPLOYEES IN PAKISTAN

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1 IMPACT OF HUMAN RESOURCE PRACTICES ON ORGANIZATIONAL COMMITMENT: A STUDY AMONG SERVICE SECTOR EMPLOYEES IN PAKISTAN Asma Imran PhD scholar, Department of Management Sciences, Foundation University, Islamabad, Pakistan. Dr. Mehboob Ahmed HOD, Department of Management Sciences, Bahria University Islamabad, Pakistan. Abstract This paper examines the impact of human resource practices on the organizational commitment of the service sector employees of Pakistan. This study operationally defined human resource practices as perceived organization support, communication training and development, compensation, organizational climate, work life policies, career development opportunities, empowerment. The data were collected through the circulation of a uniform questionnaire amongst 600 employees through a convenience sampling. Data was analyzed using correlation and regression analysis. The results show the positive relationship of above mentioned HRM practices with organizational commitment. Conclusions as well as directions for future research are discussed. Keywords: Human resource practices, organizational commitment, perceived organization support, communication training and development, compensation, organizational climate, work life policies, career development opportunities, empowerment. 1. INTRODUCTION This paper analyzes the imperative aspects of the human resource practices that enhance the organizational commitment among the employees working in the service sector of Pakistan. Human resource practices deviates from organization to organization. Every business has its own set of rules, procedures and practices which makes employees to be reactive in a particular way in their employment environment. Whether they have positive and negative in their approach or committed or non -committed towards their organization in which they are serving? The endeavor of the paper is to uncover the impact of different aspects of human resource practices on the organizational commitment level of the employees. Its widely accepted fact that human resource practices has a strong influence on the performance of the employees which is pursued by the organizational commitment, our main aim is to delineate the impact of human practices of an organization with inclusion of new dimensions which could have a wider and an expended recognition. This will also assist the managers in considering the organization in which they are working not only for the formulation of the strategies and dealings but for evaluating the human conducts and keeping human assets in the paramount way. Moreover it also helps the academic researchers to expand the research area focusing the identification of the human resource practices to upraise the level of commitment the service sector employees, as there is gap of knowledge. The present study attempts to fill up the space in the body of knowledge. 2. Literature Review 2.1 Organizational Commitment Organizational commitment has been defined by the different researchers in different aspects. It is defined as the strength of an individual s identification and involvement with a particular organization (Steers, 1977) but then in advance it is affirmed by three aspects: a belief in and acceptance of goals and values, a willingness to exert effort, and a strong desire to maintain membership (Porter, Steers, Mowday and Boulian, 1974). Becker (1960) described commitment, in general as a disposition to engage in consistent lines of activity as a result of the accumulation of earnings that would be lost if the activity were discontinued. Allen and Meyer (1990) defined the commitment in three different perspectives: affective commitment as the extent of an employee s emotional attachment to, identification with, and involvement in the organization, continuance commitment as an judgment of costs related with leaving the organization and normative commitment as the degree to which an employee believes some sense of obligation to stay with the organization. In this research organizational commitment has been operationalized in terms of Meyer and Allen s categorization. Wasti (2003) discovered that fulfillment with work and special offers were the most effective predictors of business investment among individualists, whereas fulfillment with manager was an important forecaster of business investment among collectivists. Evaluating acquired outcomes with the research conclusions in the individual European societies would allow us to comprehend whether or not the workers of a collectivist lifestyle display the same design in their business investment. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 81

2 The notion of organizational commitment has been theme to several studies. The preceding researches have supported the positively significant association between organizational commitment and HR practices (Mathieu & Zajac, 1990; Mowday, & Boulian, 1974). 2.2 HR practices and organizational commitment Some of the Human resource management practices are linked with commitment (Meyer & Allen, 1997). Even though a lot of research studies empirically strived to illustrate the relationship (Paul & Anantharaman, 2004; Ulrich, 1997; Wimalasiri, 1995), the concept that how these practices influence commitment is yet to explore. It is asserted that the elucidation of the HRM practices by means of the employees would influence their level of commitment ( Guzzo and Noonan,1994). Studies have also shown that supervisors wanting to improve business efficiency and efficiency should ensure that personnel investment is maximum (Meyer and Allen, 1994; Ostroff, 1992). Markovits et al. (2007) analyzed the relationships between business commitment information and job satisfaction in Portugal by collecting reactions from both public and private sector employees. Another recent study by Fiorito et al. (2007) tried to develop and test practices concerning the impacts of HR practices and business features on business investment. They showed that complaint resolution systems and employee participation signs or symptoms are efficiently relevant to business investment, and compensation cuts are badly relevant to business investment while decentralization of selection increases business investment. Many studies have investigated a relationship between communication and organizational commitment for many years. Management communication process plays a vital and imperative role to develop and fortify the employee s commitment with the organization. It involves the way the organization sends and receives information among the organization employees to sustain the decision making process. This way gives assurance that employees are being acknowledged in decision making process and management are respecting and considering their view or judgment. Meyer and Allen, Trombetta and Rogers (1988), Thornhill, Lewis and Saunders (1996), and Guzley (2001) inveterate by uttering that open and transparent communication along with access to adequate information and participative decision making involvement build a positive affective commitment. Beside this, promoting downward and upward course of communication among diverse ranks of the organization would manipulate the level of employee commitment and ease in the workplace (Young & Worchel, 1998). The conception of Perceived organizational support (Eisenberger, Huntington, Hutchison & Sowa 1986) proposes that employees develop a common observation relating to the extent to which the organization signifies their contributions and concern about their welfare. Perceived organizational support offered from the organization is a way to do the job competently. Perceived organizational support is positively correlated with affective commitment. Normative commitment might be the reflection of organizational support in the manner psychological contract of employees (Rousseau 1995). On the other hand, Allen and Meyer (1990) assert that the Continuance commitment is negatively correlated with Perceived organizational support. Agarwal and Ferratt (1999) studied that victorious IT organizations are dedicating assets toward empowering IT professionals to take increasing responsibility for their work and for decision making. Training is a way to engage committed employees to the organization. (Rainbird, 1994; Heyes & Stuart, 1996). Past researches has also found the association of training variables with organizational commitment (Ahmad and Bakar, 2003; Al-Emadi & Marquardt, 2007) come up with the fact that both variables are positively related to each other. Researchers found that work life policies consist of flexible timing, job sharing, flexible scheduling, leave policies for taking care of family matters and working conditions (Burke & Cooper, 2002). Others considered work-life policies as a way to comparable to working conditions provided by organizations to take into description of the needs of the IT workforce and to minimize the outcome of divergence between the work and family matters (Honeycutt and Rosen 1997; Kopelman et al. 1983). The career development opportunities specified by the organization have positive influence on commitment (Baruch, 2004). In this technological advanced world, it is apparent that skilled and trained personnel play a very imperative element in the service sector. The committed employees are very crucial in upbringing the performance of the organizations. They help to increase the efficiency and effectiveness of the organizations. The employee s commitment with organizations is not an avoidable aspect in the service sector because they are providing services where skill, expertise and proficiency matters a lot in building relationships with customer and saving time, resources and cost associated with it. In this regard human resource practices are significantly playing its role in edifying commitment among the employees. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 82

3 3. Theoretical Framework: From the given literature, following research model and hypothesis has been formulated. Human Resource Practices Training and development Perceived organizational support Communication Compensation Organizational Climate Work life policies Career development opportunities Empowerment Organizational Commitment Affective commitment Normative commitment Continuance commitment The above model consists of human resource practices as an independent variable and organizational commitment as criterion variable. Previous studies show that human resource practices has its radical impact on organizational commitment among the employees. That s why the present study is conducted to examine the relationship in the service sector of Pakistan. That s why following propositions are envisaged: H1: Compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication is positively related to affective commitment H2: Compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication is positively related to continuance commitment. H3: Compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication is positively related to normative commitment. H4: Human resource practices are positively related to organizational commitment. H5: Compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication is positively related to organizational commitment. 4. Methodology A survey research design was utilized to carry out the research. A convenience sampling technique is adopted in this research due to resources, time and cost constraint. A total of 600 respondents from selected segment of service industry of Islamabad, Rawalpindi and Lahore are chosen. The response rate of this study was 85 %, which believe to be encouraging. The survey was personally administered. Pilot study was conducted to ensure the validity of the data to finish off the instrument. The majority of the participants is comprised of males (79%) and females characterized by 21%. In terms of age, 27 % of respondents were in the age group of 20-35, 72 % of respondents were in the age group of and 1 % of respondents were in the age group of over 50 year age respectively. The largest percentage of respondents belongs to age category. The lowest percentage of respondents belongs to over 50 year age category. With respect to education, 23.3 % of respondents have bachelor s degree, 66 % of respondents have Masters Degree and 11 % of respondents have doctorate degree respectively. The largest percentage of respondents has Masters Degree. The lowest percentage of respondents has doctorate degree. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 83

4 5. Measures of the Constructs The Organizational commitment involves 17 items used to unveil the following attributes: (1) normative commitment, (2) affective commitment and (3) continuance commitment. It was assessed by the scale developed by Meyer and Allen (1997). Human resource practices was measured by eight variables : Training and development was adopted by Meyer & Smith (2000) instrument, Perceived organizational support was assessed by the items developed by the resaercher, Communication was assessed through Johlke and Duhan s (2000) instrument, Compensation items selected on the basis of pay satisfaction questionnaire (Henemen & Schwab, 1985), Organizational Climate items were selected from the Chen(1992) Chan(1997) and Liao(1998) instrument,work life policies items based on a scale developed by Pare et.al s (2001), Career development opportunities from validated instrument of Lancler & Hammers (1986), Empowerment was measured by scale developed by Tremblay et al. (1997). The response is measured on the basis of Likert scale from 1= strongly disagree to 5 = strongly agree. The SPSS technique was used for data analysis and findings. 6. Results The table 1 illustrates that Alpha Reliability Coefficients of all the study variables listed. The values of Reliability Coefficients of all the scales are in tolerable and acceptable range.the table 2 illustrated the correlation matrix indicating that all the independent variables are strongly and significantly related to organizational commitment.the correlation coefficients varies between and 0.52.Simlarly the independent variables are strongly and significantly related to affective commitment. Hierarchical regression analysis was conducted to examine the impact of human resource factors in three dimensions of commitment and organizational commitment as an overall commitment. In table 3 the relation of specified independent variables and affective commitment is presented. The overall regression model is significant at the 0.05 level. The human resource dimensions explain 32 percent variance in affective commitment. The results indicates that compensation, perceived organizational support, work life policies, training and development and career opportunities were significantly and positively related to the affective commitment. The rest of the independent variables, specifically empowerment, organizational climate and communication had no significant relation with the affective-commitment. In table 4 the relation of specified independent variables and continuance commitment is presented. The overall regression model is non significant. The human resource dimensions explain 10 percent variance in continuance commitment. The results indicates that compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication had no significant relation with the continuance commitment. In table 5 the relation of specified independent variables and normative commitment is presented. The overall regression model is non significant. The human resource dimensions explain 10 percent variance in normative commitment. The results indicates that compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication had no significant but negative relation with the normative commitment. In table 6 the relation of specified independent variables and organizational commitment is presented. The overall regression model is significant The value of R of the model in which the impact of compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication analyzed on the organizational commitment is which shows the model of fitness is appropriate and significant. 7. Discussion In the present study all seven variables: compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication have been examined and hypothesized that all the dimensions of human resource practices will relate and significantly related and act as a predictor of the organizational commitment in the service sector of Pakistan. The fit of the models, as asserted by the adjusted R, showed that a low percentage of the variation had been explained. The imperative results were attained for affective commitment and organizational commitment whereas the inconsequential for the continuance and normative commitment. For affective commitment, all hypotheses were accepted. For continuance and normative commitment, all hypotheses were attained rejection. As asserted from the results, the components of commitment and organizational commitment relies on and predicts by the most significant factors were compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication. They have a significant impact on the affective commitment (compensation, perceived organizational support, work COPY RIGHT 2012 Institute of Interdisciplinary Business Research 84

5 life policies, training and development, career opportunities, empowerment, organizational climate and communication), normative commitment (compensation), organizational commitment (compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication) and where as all have non- significant impact on continuance commitment. From the study, it is obvious that training and development has a significant impact on affective and organizational commitment. Training and development prospects persuade by the organization helps to increase the organizational commitment among employees. The organizations spend a lot of money in employee development to strengthen their relationship with their workers (Hsu, Jiang, Klein & Tang, 2003; Steel et al., 2002) through training and development to achieve organizations goals and objectives (Antonacopoulou,2000) to gain competitive advantage (Graddick, 1988). The results show that work life policies is positively related with organizational commitment. Deery (2008) also concludes that there exists balance between work life policies and organizational commitment; the employees will like to stay in the organization. Perceived organizational support has a very significant impact and a source of intrinsic motivation for workers. Past studies link organizational commitment and empowerment practices positively and significantly (Samat, Ramayah & Saad, 2006) and determine as a factor that has significant impact in providing services to develop service eminence (Cacioppe, 1998). Similarly Communication and Organizational Climate has its significance with organizational commitment. The way information is shared and communicated is also a source for employees to be remaining committed to the organization. The working environment in which they are operationalizing their activities is also play a vital role in order to stay in the organization. 8. Conclusion The main purpose of the study was to investigate the impact of the human resource practice on the organizational commitment and by analyzing the impact of selected human resource determinants that are compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication on organizational commitment and its different facets in the service sector of Pakistan. The results evidently asserts that compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication have a direct and positive impact on organizational commitment. This utters the fact the enhancement and serious consideration of the above mentioned determinants of human resource practices basses the enhancement and enrichment of organizational commitment in the employees of the service sector. The value of R of the model in which the impact of compensation, perceived organizational support, work life policies, training and development, career opportunities, empowerment, organizational climate and communication analyzed on the organizational commitment is which shows the model of fitness is appropriate and significant. To be concluded, it is asserted that today s world where technology advancement and instant information makes the world to fact cutting edge competition employee s commitment with the organization is negligible to ignore. So organizations must adopt policies in the way they able to employees remain committed. 9. Future implications of the Research This research can be enhanced and encompassed to a maximum level to other sectors as well such as manufacturing, engineering, IT etc. Further comparative research can be accomplished to ascertain the Organizational commitment among the employees of Public sector and private sector organizations. It is prudent that the verdict of this research expanded by the inclusion of other determinants. The demographic and psychographic variable should be taken into deliberation because they may generate deviation in the level of organizational commitment. It provides to enhance the degree of knowledge and helps to expand the pool of literature in the area of organizational behavior. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 85

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8 Annexure 1 Table 1 : Alpha Reliability coefficients of all the study variables Table 2: Correlation matrix Training and Development - Perceived organizational support Communication Compensation Organizational Climate Work life policies Career opportunities Affective commitment Continuance commitment Normative commitment Organizational commitment COPY RIGHT 2012 Institute of Interdisciplinary Business Research 88

9 Table 3: Hierarchical regression analyses for human resource practices predicting affective commitment (N=510) Variables β T F Sig R Adjuste d R Training and Development Perceived organizational support Communication Compensation Organizational Climate Work life policies Career opportunities Empowerment Table 4: Hierarchical regression analyses for human resource practices predicting continuance commitment (N=510) Variables β T F Sig R Training and Development Perceived organizational support Communication Compensation Organizational Climate Work life policies Career opportunities Empowerment Adjuste d R COPY RIGHT 2012 Institute of Interdisciplinary Business Research 89

10 Table 5 : Hierarchical regression analyses for human resource practices predicting normative commitment (N=510) Variables β T F Sig R Training and Development Perceived organizational support Communication Compensation Organizational Climate Work life policies Career opportunities Empowerment Table 6: Hierarchical regression analyses for human resource practices predicting organizational commitment (N=510) Adjuste d R Variables β T F Sig R Adjusted R Training and Development Perceived organizational support Communication Compensation Organizational Climate Work life policies Career opportunities Empowerment COPY RIGHT 2012 Institute of Interdisciplinary Business Research 90