Chapter – 2 : Review of Related Literature

2.1 Literature Review

2.2 Theoretical Concept of HRM

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2.1 Literature Review

In the age of knowledge economy, the most significant resource of the organizations
is human resource. Human resource has become requisite for success of any
organization (Moyeen and Huq 2001; Schuler 1990; Werther and Davis 1996). There
is no doubt that an organization enriched with devoted, motivated, talented, and
competent human resource can achieve any kind of challenging goals.

HRM practitioner discussed about various functions of HRM. Katou (2008)

conducted a study to find out the impact of HRM practices on organizational
performance especially in the manufacturing sector of Greece. The summery of the
survey find out the relationship between HRM practices (resourcing and development,
compensation and incentives, involvement and job design) and organizational
performance is partially reconciled through HRM outcomes (skills, attitudes,
behavior), and it is influenced by business strategies (cost, quality, innovation).

The study came to an end with the conclusion that HRM practices are associated with
business strategies which will affect organizational performance through HRM
outcomes. Iqbal et al (2011) developed a study to contrast the HRM practices of
public and private universities of Pakistan among executives. The study found that
HRM activities differ in public and private universities. Public universities HRM
practices such as job definition, training and development, compensation, team work
and employees participation were better than that of private universities. AS per the
study performance appraisal practices were better in the private university than public
sector universities.

Khan (2010) identified that in energetic business environment, there is a need for an
approach which achieve better performance, to originate and implement HRM
practices. To get a competitive advantage organization need to invest in this aspect.
Zulfqar et al. (2012) conducted a study to scrutinize the relationship and nature of
relationship between the employee’s perceived performance and HRM practices
(compensation, performance evaluation, and promotion practices) in the banking
sector of Pakistan.

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The findings of the study found that, the employee perceived performance and HRM
practices has the positive and significantly related. Further results indicated that
performance evaluation and promotion practices are significant while the
compensation practices are insignificant. The current HRM practices (recruitment and
selection process, compensation , security of job, growth of career, training and
development, management style, job design and responsibilities, reward and
motivation and working atmosphere) and its impact on employee’s satisfaction in the
private banking sector in Bangladesh similar study was conducted by Majumder
(2012) .

As per the study most of the employees are dissatisfied with organizational
compensation package followed by reward and maintenance, career advancement,
training and development, management approach, and job design and assign
responsibilities. Training is a symbol of good management, and a task manager ignore
at their dark side. Having qualified employees does not guarantee they will succeed.
Instead, they need to know what the management want them to do and how to do it
(Afroj, 2012).

Hussain and Rehman (2013) analyze the relationship between work effectively for the
organization and the HRM practices implemented on employee’s intention to stay in
the organization. The study found that factors having intense contribution in
developing the employees’ desire to stay in organization are HRM practices viz-a-viz:
person-organization fit, employment security, communication and training and
development. HRM practices and employees’ retention are positively inter related and
such practices enhances employees’ retain ability of organizations. Firm performance
is continuously influenced by HR practices via employee skills, attitudes or
motivation (Park et al.2003).

The way HRM practices provide an edge to employee’s commitment towards an

organization goal in the global competitive market are revealed by Lamba and
Choudhary (2013). The study found that organizational commitment are significantly
affected by HRM practices such as training & development, compensation and
welfare activities and are associated with superior organizational performance, which

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help in retention of knowledgeable and skilled employees. It is vital for the high
performance movement & other work reforms effort that focus on employee
involvement to recognize the crucial role those job characteristics can play in shaping
the performance of employee and ultimately of organization (Cappelli and Regovsky,
1998).

2.2 Theoretical Concept of HRM

2.2.1 HRM:
Many authors explain HRM as management knowledge and function. Keegan &
Boselie (2006) argue that HRM is a social construction, and it works as a form of
social action in structuring employment relations. From that standpoint, people can
understand that HRM plays a social role in managing relationships between
employers and employees in their organization. Some people are confused about the
understanding of talent management, personnel management, and HRM. In
developing their HRM practices, some Chinese locally owned organizations face and
experience the transition from personnel management to HRM (Zhao, 2008)

2.2.2 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.

2.2.3 Employee
An employee is a term for workers and managers working for a company,
organisation or community. These people are the staff of the organization. Generally

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speaking, any person hired by an employer to do a particular job is an employee. In
most modern economies the word "employee" means a person who works for a
corporation. The relationship between employer and employee is different from that
between the firm and a customer or client. An employee usually has to provide a
resume and have an interview before being offered a job.

2.2.4 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 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.

2.2.5 History of job satisfaction

The term job satisfaction was brought to lime light by Hoppock (1935). He revived 35
studies on job satisfaction conducted prior to 1933 and observes that Job satisfaction
is combination of psychological, physiological and environmental circumstances.
That causes a person to say. “I m satisfied with my job”. Such a description indicate
the variety of variables that influence the satisfaction of the individual but tell us
nothing about the nature of Job satisfaction.

Job satisfaction has been most aptly defined by Pestonjee (1973) as a job,
management, personal adjustment & social requirement. Morse (1953) considers Job
satisfaction as dependent upon job content, identification with the co., financial & job
status & priding group cohesiveness

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One of the biggest preludes to the study of job satisfaction was the Hawthorne study.
These studies (1924-1933), primarily credited to Elton Mayo of the Harvard Business
School, sought to find the effects of various conditions (most notably illumination) on
workers’ productivity.

These studies ultimately showed that novel changes in work conditions temporarily
increase productivity (called the Hawthorne Effect). It was later found that this
increase resulted, not from the new conditions, but from the knowledge of being
observed.

2.2.6 Importance of job satisfaction

➢ Job satisfaction is an important indicator of how employees feel about their job
and a predictor of work behaviour such as organizational, citizenship, Absenteeism,
Turnover.
➢ Job satisfaction can partially mediate the relationship of personality variables
and deviant work behaviour.
➢ Common research finding is that job satisfaction is correlated with life
style.This correlation is reciprocal meaning the people who are satisfied with the life
tends to be satisfied with their jobs and the people who are satisfied their jobs tends to
satisfied with their life.

2.2.7 Importance to employee and organization

Job satisfaction and occupational success are major factors in personal satisfaction,
self-respect, self-esteem, and self-development. To the employer, job satisfaction
brings a pleasurable emotional state that can often leads to a positive work attitude. A
satisfied employer is more likely to be creative, flexible, innovative, and loyal.

For the organization, job satisfaction of its employee means a work force that is
motivated and committed to high quality performance. Increased productivity- the
quantity and quality of output per hour worked- seems to be a byproduct of improved
quality of working life. It is important to note that the literature on the relationship

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between job satisfaction and productivity is neither conclusive nor consistent.
However, studies dating back to Herzberg’s (1957) have shown at least low
correlation between high morale and high productivity and it does seem logical that
more satisfied employees will tend to add more value to an organization.

Unhappy employees, who are motivated by fear of loss of job, will not give 100
percent of their effort for very long. Though fear is a powerful motivator, it is also a
temporary one, and also as soon as the threat is lifted performance will decline.

Job satisfaction benefits the organization includes reduction in complaints and

grievances, absenteeism, turnover, and termination; as well as improved punctuality
and worker morale. Job satisfaction is also linked with a healthier work force and has
been found to be a good indicator of longevity.
Although only little correlation has been found between job satisfaction and
productivity, Brown (1996) notes that some employers have found that satisfying or
delighting employees is a prerequisite to satisfying or delighting customers, thus
protecting the “bottom line”.

2.2.8 Employees role in job satisfaction

If job satisfaction is a employers benefit, surely the employer must be able to
contribute to his or her own satisfaction and well being on the job. The following
suggestions can help a employer find personal job satisfaction: Seek opportunities to
demonstrate skills and talents. This often leads to more challenging work and greater
responsibilities, with attendant increases in pay and other recognition.

Develop excellent communication skills. Employer’s value and rewards excellent

reading, listening, and writing and speaking skills.
Know more. Acquire new job related knowledge that helps you to perform tasks more
efficiently and effectively. This will relive boredom and often gets one noticed.

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Demonstrate creativity and initiative. Qualities like these are valued by most
organizations and often results in recognition as well as in increased responsibilities
and rewards.
Develop teamwork and people skills. A large part of job success is the ability to work
well with others to get the job done.

Accept the diversity in people. Accept people with their differences and their
imperfections and learn how to give and receive criticism constructively.

See the value in your work. Appreciating the significance of what one does can lead to
satisfaction with the work itself. This help to give meaning to one’s existence, thus
playing a vital role in job satisfaction.

Learn to de-stress. Plan to avoid burn out by developing healthy stress management
techniques.

2.2.9 Factors of job satisfaction

Hop pock, the earliest investigator in this field, in 1935 suggested that there are six
major components of job satisfaction. These are as under:

 The way the individual reacts to unpleasant situations,

 The facility with which he adjusted himself with other person
 The relative status in the social and economic group with which he identifies
himself
 The nature of work in relation to abilities, interest and preparation of worker
 Security
 Loyalty

Herberg, mausaer, Peterson and capwell in 1957 reviewed more than 150 studies and
listed various job factors of job satisfaction. These are briefly defined one by one as
follows:

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 1. Intrinsic aspect of job
It includes all of the many aspects of the work, which would tend to be
constant for the work regardless of where the work was performed.

2. Supervision
This aspect of job satisfaction pertains to relationship of worker with his
immediate superiors. Supervision, as a factor, generally influences job
satisfaction.

3. Working conditions
This includes those physical aspects of environment which are not necessary a
part of the work. Hours are included this factor because it is primarily a
function of organization, affecting the individuals comfort and convenience in
much the same way as other physical working conditions.

4. Wage and salaries

This factor includes all aspect of job involving present monitory remuneration
for work done.

5. Opportunities for advancement

It includes all aspect of job which individual sees as potential sources of
betterment of economic position, organizational status or professional
experience.

6. Security
It is defined to include that feature of job situation, which leads to assurance for
continued employment, either within the same company or within same type of work
profession.

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 7. Company & management
It includes the aspect of worker’s immediate situation, which is a function of
organizational administration and policy. It also involves the relationship of employee
with all company superiors above level of immediate supervision.

8. Social aspect of job

It includes relationship of worker with the employees specially those employees at
same or nearly same level within the organization.
9. Communication
It includes job situation, which involves spreading the information in any direction
within the organization. Terms such as information of employee’s status, information
on new developments, information on company line of authority, suggestion system,
etc, are used in literature to represent this factor.

10. Benefits
It includes those special phases of company policy, which attempts to prepare the
worker for emergencies, illness, old age, also. Company allowances for holidays,
leaves and vacations are included within this factor.

2.2.10 Reasons of low job satisfaction

Reasons why employees may not be completely satisfied with their jobs:

1. Conflict between co-workers.

2. Conflict between supervisors.
3. Not being opportunity paid for what they do.
4. Have little or no say in decision making that affect employees.
5. Fear of loosing their job.
2.2.11 Effects of low job satisfaction
High Absenteeism
Absenteeism means it is a habitual pattern of absence from duty or obligation. If there
will be low job satisfaction among the employees the rate of absenteeism will
definitely increase and it also affects on productivity of organization.

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High Turnover
In human resource refers to characteristics of a given company or industry relative to
the rate at which an employer gains and losses the staff.
If the employer is said to be have a high turnover of employees of that company have
shorter tenure than those of other companies.
Training Cost Increases
As employees leaves organization due to lack of job satisfaction. Then Human
resource manager has to recruit new employees. So that the training expenditure will
increases.
Influences On Job Satisfaction
There are no. of factors that influence job satisfaction. For example, one recent study
even found that if college students majors coinsided with their job , this relationship
will predicted subsequent job satisfaction. However, the main influences can be
summerised along with the dimentions identified above.
The work itself
The concept of work itself is a major source of satisfaction. For example, research
related to the job characteristics approach to job design, shows that feedback from job
itself and autonomy are two of the major job related motivational factors. Some of the
most important ingredients of a satisfying job uncovered by survey include interesting
and challenging work, work that is not boring, and the job that provides status.

Pay
Wages and salaries are recognised to be a significant, but complex, multidimensional
factor in job satisfaction. Money not only helps people attain their basic needs bedevil
need satisfaction. Employees often see pay as a reflection of how management view
their contribution to the organization. Fringe benefits are also important.
If the employees are allowed some flexibility in choosing the type of benefits they
prefer within a total package, called a flexible benefit plan, there is a significant
increase in both benefit satisfaction and overall job satisfaction.

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Promotions
Promotional opportunities are seem to be have a varying effect on job satisfaction.
This is because of promotion take number of different forms.

What is the impact of job satisfaction?

Many managers subscribe to the belief that a satisfied worker is necessarily good
worker. In other words, if management could keep the entire worker’s happy”, good
performance would automatically fallow. There are two propositions concerning the
satisfaction performance relation ship. The first proposition, which is based on
traditional view, is that satisfaction is the effect rather than the cause of performance.
This proposition says that efforts in a job leads to rewards, which results in a certain
level of satisfaction .in another proposition, both satisfaction and performance are
considered to be functions of rewards.

Various research studies indicate that to a certain extent job satisfaction affects
employee turn over, and consequently organization can gain from lower turn over in
terms of lower hiring and training costs. Also research has shown an inverse relation
between job satisfaction and absenteeism. When job satisfaction is high there would
be low absenteeism, but when job satisfaction is low, it is more likely to lead a high
absenteeism.

What job satisfaction people need?

Each employee wants:
1. Recognition as an individual
2. Meaningful task
3. An opportunity to do something worthwhile.
4. Job security for himself and his family
5. Good wages
6. Adequate benefits
7. Opportunity to advance
8. No arbitrary action- a voice a matters affecting him

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 9. Satisfactory working conditions
10. Competence leadership- bosses whom he can admire and respect as persons and
as bosses.

SATISFACTION WITH COMPENSATION LEVELS

1. Overall I am satisfied with the company’s compensation package
2. I am satisfied with the medical benefits
3. I am satisfied with the conveyance allowance
4. I am satisfied with the retirement benefits
5. I am satisfied with the reimbursement of the expenses as per the eligibility
6. I am satisfied with the holiday (vacation) eligibilities
SATISFACTION WITH TASK CLARITY
1. Management decisions are Ad Hoc and lack professionalism (reverse scaled)
2. Rules and procedures are followed uncompromisingly
3. My job responsibilities are well defined and clear

SATISFACTION WITH CAREER DEVELOPMENT

1. I have adequate opportunities to learn and grow
2. I get opportunities to handle greater responsibilities
3. My skills and abilities are adequately used at work
From all above we can conclude level of job satisfaction of our employees.

RATING SCALE
It is one of the most common methods of measuring job satisfaction. The popular
rating scale used to measure Job satisfaction is to include:
Minnesota Satisfaction Questionnaires: It helps to obtain a clear picture of pertinent
satisfactions and dissatisfactions of employees.
Job Description Index: it measures Job satisfaction on the dimension identified by
Smith, Kendall, Hullin.
Porter Need Identification Questionnaires: It is used only for management personnel
and revolves around the problems and challenges faced by managers.

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 References:

Afroj, 2012, Social exchange theory: An interdisciplinary review. Journal of

Management, 31(6), 874–900.

Byars & Rue, 1997; Moorhead & Griffin, 1999, The nature and causes of job
satisfaction, In M. D. Dunnette (Ed.), Handbook Industrial and
Organizational Psychology, Rand McNally, Chicago, pp. 395-407.

Cappelli and Regovsky, 1998, 2003) Human Resource and Personnel Management:
New Delhi: Tata McGraw Hill Gibson, Charles H, (2002), Financial Statement
Analysis, Prentice Hall International Corporation7th. Ed.

Dessler, 2007, The Effect of Financial and Non-financial Incentives on Job

Satisfaction: An Examination of Food Chain Premises in Turkey.
International Business Research, 5(10), pp. 136-145.

Hoppock (1935), Job Satisfaction among the Bankers: An investigation on

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Hussain, S. A., Farooq, U., Zia, K., & Akhlaq, M. (2004). An extended topology for
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Iqbal & Saeed 2013. Effective management of pest termite. species requires the
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Katou (2008), Human Resource Management (7thedition). Southern Africa Oxford
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Khan (2010), an introduction to Human Resource Management
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Keegan & Boselie (2006), 3rd Edition, “Strategic Human Resource Planning”,
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Lamba and Choudhary (2013), Distinctiveness of globalization and it implications for

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 Mahmood, 2004, 3rd Edition, “Human Resource Planning”, New Delhi: Tata…
Sage Publisher.

Moyeen and Huq 2001; Schuler 1990; Werther and Davis 1996, “Human Resource
Management” Third Edition, Houghton Mifflin Company, Boston, Toronto.

Majumder (2012), Serving up a new level of customer service. Workforce, a

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Pestonjee (1973), Theory of Human Motivation. Psychological Review, 50(4), pp.

370-396.

Zulfiqar et al. 2012; Tsuda et al. (1997). The signal intensities on MRI and density
values on CT allow a limited diagnosis of the histology

Reports:
1. Annual Report of NBL-2015 & 2016
2. Terms paper of NBL training Institute.
3. ID Circular No-247, maturational Division, NBL.

Website:
Website of NBL: www.nblbd.co

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