Role of Human Resource Practices in Employee Performance and Job Satisfaction With Mediating Effect of Employee Engagement

• Author: TEHMINA SATTAR, KHALIL AHMAD and SYEDA MAHNAZ HASSAN

Abstract

This study attempts to examine the impact of Human Resource (HR) practices on employees' satisfaction and performance through mediating role of employees' engagement. The study collects data from 181 employees of three leading banks of Multan city (Pakistan) namely: Habib Bank, Faysal Bank, and Allied Bank. The findings of the present study reveal that training and empowerment of the workers contributes more in employees' work performance and their job satisfaction than that of rewards/incentives. However, rewards/incentives are significantly (P less than 0.01) related with the employees engagement in organizational activities.

Overall, HR practices (training, rewards and empowerment) are significantly (P less than 0.01) related with employees engagement and confirm the assumptions of Baron and Kenny (1986) for mediation analysis. The results of the study are gleaned by using the direct path way and multiple regression to investigate the impact of HR practices on mediating variable (employees engagement) and mediating variable on both dependent variables (employees' satisfaction and employees' performance). The results of the study confirm that proposed hypotheses are statistically significant (P less than 0.01) and indicate that employees' engagement partially mediates the relationship between HR practices and both employees' satisfaction and employees' performance outcomes.

Keywords: Employee engagement, Employee performance, Human resource practices, Job satisfaction, Mediating effect

1. INTRODUCTION

   Human Resource (HR) practices are vital for development of organizations (Hallberg and Schaufeli, 2006; Paul and Anantharaman, 2003). Some of the important HR practices include recruitment of the staff, selection techniques, market oriented training, performance enhancement, adequate exchange system, social security appraisals and planned strategic needs (Tessema and Soeters, 2006; Macey and Schneider, 2008).

   Apart from various HR practices, external factors (such as equipment, technology and finance) play an important role in working capacity and manufacturing of organizations (Garavan et al., 2008; Verkinderen and Altman, 2002). Although HR practices and external factors enhance workers' engagement, in turn workers' job satisfaction and performance (Harter et al., 2002); retention of engaged worker is cardinal in quality performance and success of the business in organization (SlAtten and Mehmetoglu, 2011). Workers' engagement divulges mental absorption and displays their positive connection with organizational work (Baumruk, 2004; Chandler and McEvoy, 2000; Hudson et al., 2001). The elaboration of this process can be extended by considering virtuous relations which must involve the psychological containment (Fleming and Asplund, 2007; Zheng and Lamond, 2010).

   Hence, the job containment of employees can surely transmit their efforts towards prosperity and efficiency. Job satisfaction of the employees depends on various socio-demographic and cultural factors such as professional attitude towards job, tolerant outcomes, organizational commitment and emotional values attached with the professional behaviour (Saks, 2006).

   HR conventions (such as quality education, market oriented training, career planning, workers' empowerment and performance evaluation) are interlinked with the organizational development (Pardo del Val and Fuentes, 2003; Richman, 2006) on the one hand. On the other hand, various HR practices (such as freedom of performance, team work, engagement and compensation) provide the placement of motivated and competent employees (Andrew and Sofian, 2012; Bakker and Demerouti, 2008). But training, empowerment and reward are three important HR practices which largely contribute towards quality performance and high levels of productivity in organizations (Combs et al., 2006). However, justice is the most appropriate procedure that ensures employees' sense of security in an organization (Robbins, 2003, Schaufeli et al., 2002; Tzafrir et al., 2004). Alternatively, affirmative HR practices can help achieve constructive resonance between employees and managers in organizations.

   Gravan et al. (2008) propose that HR strategy structure is a magnificent tool that can play a vital role in enhancing various HR practices. Inadequate salary structure, lack of opportunities, weak incentive schemes for excellent job performance, promotion code based on seniority rather than actual performance, delays in promotion, non-existent compensation modules, punitive treatment, and absence of motivational strategies are the salient determinants of employees performance and their engagement at workplace (Zheng and Lamond, 2010).

   Against this backdrop, the present study makes an attempt to ascertain information on the role of basic HR practices in employees' performance and their job satisfaction through the mediating effect of work engagement. The major objectives of the present study are:

   (a) To investigate the relative importance of basic HR practices (Training, Empowerment and Reward) for employee engagement;

   (b) To examine the role of HR practices in employee work performance and job satisfaction; and

   (c) To investigate the mediating effect of employee engagement on the relationship between HR practices and employee work performance and job satisfaction in customer care services.

2. METHODS AND MATERIALS

   The data for the present study were collected from three leading banks in Multan city (Pakistan) namely: Habib Bank, Faysal Bank, and Allied Bank. The study sample comprised all the employees engaged in customer care services from the selected banks because customers are usually believed to complain about the attitude of employees dealing with customer care services. Since employees engaged in customer care services are frontline employees who play an important role in delivery of quality services (Karatepe, 2013) their engagement, performance and satisfaction with the work is cardinal in determining organizational success and productivity. Alternatively, inadequate engagement of such employees could be attributed to ineffective HR practices, which in turn may influence their performance and job satisfaction. It is important to mention that the present study is based on Karatepe (2011) 'HR Practices and Employee Engagement' model.

   Prior consent of the respective bank management was attained before data collection. Self-administered questionnaire was used as a tool for data collection. Along with questionnaire there was an attached cover letter in which the name of topic, purpose of the study and ethical issues were described in precise manner. The questionnaire consisted of 7 parts. First part provided demographic information; next three parts addressed three major HR practices. Fifth part was about employees'...