Measuring the impact of human resource development (HRD) practices on

employee performance with mediation of employee competence in small

and medium scale enterprises

By
Muhammad Junaid Khan

Research student at kasbit

ABSTRACT

This study reveals important investigational outcomes that make a significant contribution to
clarifying the query of the impact of Human Resource Development practices on performance
of employee. The area that has been covered is this research is that how human resource
development practices impact on employee performance. This study will cover the research
gap of employee competence as a mediator. The mediating role of employee competencies
may include self-competency, team competency, change competency, communication
competency and ethical competency.The purpose of conducting this study is to analyze the
factors which affect the employee performance and analyze the factors of employee
competence as a mediator between HRD practices and employee performance. It will observe
the impact of human resource development practices on employee performance with
mediation of employee competence in small and medium scale enterprises. An incorporated
research model was developed by combining main factors from existing literature. The
results indicate that some human resource development practices impact employee
performance while having employee competence as a mediator. The research was conducted
in small and medium scale enterprises, and the analysis based on cross-sectional data which
cannot be generalized crossways a broader range of sectors. The findings of the study will
help stakeholders, policy makers and management of SME’s in espousing appropriate and
well-articulated HRD practices to improve employee competencies and enhance
organizational effectiveness. This study extends the literature by empirically adducing proof
that, HRD practices impact employee’s performance of small and medium scale enterprises.
Keywords Employee performance, HRD practices, Employee competence
Problem Statement:

This study discloses significant empirical results that make an important contribution to
clarifying the question of the impact of Human Resource Development practices on
performance of employee. The area that has been covered is this research is that how human
resource development practices impact on employee performance. The human resource
practices which has been discussed in this research previously are career development,
training and development, performance appraisal and compensations while the discussed
factors of employees performance are efficiency of work, plan of work, creativity and
innovation and making efforts.

There is a research gap in this study. There can be a mediating role of employee
competencies between Human Resource Development and Employee Performance. The
mediating role of employee competencies may include self-competency, team competency,
change competency, communication competency and ethical competency.

It is the need of this study to include employee competencies as a mediator since without
knowing the employee’s own competencies it’s not possible to derive the results of HRD’s
impact on employee performance.

(Norris, 1991) argue that as implicit understandings of the word competence have been
overtaken by the need to describe precisely and to operationalize concepts, the practical has
become shrouded in theoretical confusion and the apparently simple has become profoundly
complicated.

(Hellriegel & Slocum, 2011) recognized self-competency, team competency, change

competency, communication competency, ethical competency, diversity competency and
crosscountry competency as the seven key competencies that affects the behavior of
individual, teams and efficiency of an organization. Based on the literature, the following
competencies were examined: self-competency, team competency, change competency,
communication competency and ethical competency.

From the human resources management viewpoint, employee competency refers to the ability
to execute tasks well, and may require specific knowledge, skills, or abilities (Cardy &
Selvarajan, 2006).

Competency features are content knowledge, behavior skills, cognitive processing (IQ),
character traits, values, purposes and occasionally other perceptual or sensor motor
capabilities that accurately predict some level of performance (Potnuru, Sahoo, & Sharma,
2018). (Cardy & Selvarajan, 2006) has categorized competencies into two types: employee
(personal) and organization (corporate). Employee competencies are those traits that are
acquired by employees, such as knowledge, skills, ability and personality that differentiate
them from average performers (Cardy & Selvarajan, 2006).
Objective:

The purpose of conducting this study is to analyze the factors which affect the employee
performance and analyze the factors of employee competence as a mediator between HRD
practices and employee performance.

 To identify the effect of self-competence as mediating factor on employee

performance
 To determine the impact of team competence on the performance of an employee
 To find out whether change competence has an impact over employee performance
 To analyze the effect of communication competence of an employee
 To identify the impact of ethical competence as a mediating factor
Intorduction:

Organizations have tried to more clearly identify and focus on factors that impact their
success (Reich, 1991). Human resources are considered a specific resource in an organization
which influences a company’s success and its competitive position (Becker & Huselid, 1998).
Human resource development practices are programs designed and implemented to improve
employee capabilities, so that the employees perform effectively and meet performance
expectations (Indradevi, 2010). Human resource development has been studied in different
industries across the globe; nevertheless, relatively fewer studies exist on HRD in the SME
setting (Hill, 2004).

Human resource development (HRD) thrives as an important area of research practice. HRD
intent towards advancing a diversity of competence of workers and promoting a vigorous
work philosophy in the organization to harness the competencies of employees and
inordinately enhances organizational effectiveness (Rao, 1987). Such resources take on
special relevance when dealing with service industries, especially the banking industry,
where there is much more extensive direct contact between employees and customers at the
service interface (Delery & Doty, 1996). Creating competitive advantage through people
requires careful attention to the practices that best leverage these assets. HRD practices are
programs which are designed to be strategically oriented to organizational process for
managing the development of human resources to contribute to the overall success of the
organization (Werner & DeSimone, 2006). Competence is a characteristic trait of a person
that is related to superior performance and a demonstration of particular talents in practice
and application of knowledge required to perform a job (McClelland, 1973).

An employee competency refers to those traits, skills or attributes that employees need to
perform their jobs more effectively (Soderquist, Papalexandris, & Ioannou, 2010). To
develop and maintain employee competencies for future requirement and in the present
environment, an organization must emphasize on human resource development (HRD).

HRD practices continuously improve employee’s expertise and performance through the
existing practices of training, performance appraisal and organizational development
initiatives (Garavan, 2007). An organization should create a learning culture in the
organization, so that employee can share, acquire and create knowledge and skills, which can
modify the behavior of the employees. Organizational learning culture refers to a set of
norms and values about the functioning of an organization that supports systematic
organizational learning so that individual learning, teamwork, collaboration, creativity and
knowledge distribution have collective meaning and value (Torres-Coronas & Arias-Oliva,
2008).
Literature Review:

Human resource development practices

HRD is generally defined as a combination of structured and unstructured learning and

performance based activities which develop individual and organizational competency,
capability and capacity to cope with and successfully manage change (Simonds & Pederson,
2006). HRD programs are designed and implemented to improve employee capabilities so
that the employees perform effectively and meet performance expectations (Indradevi, 2010).
Organizations use HRD practices as an important strategic mechanism to stimulate positive
behavior in individuals and impact their knowledge, skills and attitudes which can increase
productivity and performance (Clardy, 2008). The training and development, performance
appraisal, rewards, organizational development, career development, feedback and
counseling, potential development and job rotation as HRD practices (Rao, 1987).

Employee competencies

(Norris, 1991) argue that as tacit understandings of the word competence have been
overtaken by the need to define precisely and to operationalize concepts, the practical has
become shrouded in theoretical confusion and the apparently simple has become profoundly
complicated. A competency is a reliably measurable, relatively enduring (stable)
characteristic of a person, team or organization that causes and statistically predicts a
measurable level of performance (Berger & Berger, 2010). Employee competencies are those
characteristics or traits that are acquired by employees, such as knowledge, skills, ability and
personality that differentiate them from average performers (Cardy & Selvarajan, 2006).

Employee performance

Employee performance is the performance associated with the quantity of output, quality of
outputs, timeliness of output, presence or attendance on the job, efficiency of the work
completed and effectiveness of work completed (Mathis & Jackson, 2009). Effectiveness of
an organization consists in the efficiency of each of its individual employees. Based on
literature, the following employee performance (Mastrangelo, Eddy, & Lorenzet, 2014)