RESEARCH PROPOSAL Human Resource Management for the Local Government: Measuring its impact on Organizational Performance Introduction: Two types of government deliberate public services in Nepal: the central government and the local government. While the central government governs the sectoral ministries, departments and their regional and district offices, the local government supports the local governance. Nepal has a two-tier system of the local governance, with village and municipal bodies as the lower tier and district bodies as the higher.
The village bodies are called Village Development Committees (VDCs) while municipalities serving the same function in town areas.
The district bodies are the District Development Committees (DDCs). These are the front units of central government to deliver service to the people. There are 3913 VDCs, 58 Municipalities and 75 DDCs in Nepal. Each district has a district council, which serves the same role as Village Councils and Municipal Councils with an executive committee (Local Authority Fiscal Commission, 2000).
The local government bodies in Nepal have critical roles in development, as they are only institutions which are relatively closed to people and operate based on the decentralized development approach.
Human Resource Management (HRM) is sometimes referred to as a “soft” management skill in an organization. An effective practice within an organization requires a strategic focus to ensure that human resources can facilitate the achievement of organizational goals.
The effective human resource management also has an element of risk management for an organization which, as a minimum, ensures legislative compliance. Research in the area of HRM has much to contribute to the organizational strategy, practices and performance. For the last 20 years, empirical work has paid particular attention to the link between the practice of HRM and organizational performance manifested mainly in improved employee commitment, lower levels of absenteeism and turnover, higher levels of skills and therefore higher productivity, enhanced quality and efficiency.
The certain best practices in HRM will result in better organizational performance Pfeffer (1994) has argued that there are seven best practices for achieving competitive advantage through people and ‘building profits by putting people first’. These practices included: providing employment security, selective hiring, extensive training, sharing information, self-managed teams, and high pay based on company performance and the reduction of status differentials. Becker and Gerhart, (1996) have introduced the concept of b-fit, or the contingency approach to HRM.
They stated that HRM improves performance where there is a close vertical fit between the HRM practices and the company’s strategy. This link ensures a close coherence between the HR people processes and policies and the external market or organization strategy. There are various theories about the nature of this vertical integration. For example, a set of ‘life cycle’ models argue that HR policies and practices can be mapped onto the stage of an organization’s development or life cycle (Kochan and Barocci, 1985).
Competitive advantage models take Porter’s (1985) ideas about strategic choice and map of a range of HR practices onto the organization’s choice of competitive strategy. Finally ‘configuration models’ by Delery and Doty (1996) provide a more sophisticated approach which advocates a close examination of the organization’s strategy in order to determine the appropriate HR policies, practices and performance. However, this approach assumes that the strategy of the organization can be identified – many organizations exist in a state of flux and development. Significance of the study
This research is expected to make many important contributions. First of all, it will help to develop a new theoretical approach to measure organizational performance through Human Resource Management. This research will contribute to methodological developments by findings which would be acted as adequate instruments to correct estimation problems in conventional econometric models. Specifically, in analyzing the impact of HRM on organizational performance linkage models developed will complement the others by adding constructs, variables or relationships (Alcazar, Fernandez, & Gardey, 2005).
Moreover, it contributes to policy process. The findings of this research will be shared and disseminated at the policy level. Academicians, executive officers, Mayors and other political representatives of municipalities, Ministry of Local Development, and any others who are directly or indirectly involved in the local government will be informed about the research findings. Importantly, none of the studies has attempted to ascertain the measuring organizational performance through human resource management in the Local Government, Nepal.
Therefore, the present study tries to analyze and measure organizational strategy, HRM policy and HRM output in public organization and identifies the factors that influence organizational performance in the local government, Nepal. Research Goal, objective and Questions The goal of the research is to empirically examine and extend our knowledge about human resource Management for the Local Government and measuring its impact on organizational performance. Its objectives are to analyze Human Resource Management in the Local Government and measure its impact on organizational performance in Nepal.
To achieve these objectives, the study has the following sets of questions: • How do HRM strategies influence HRM policies to determine organization performance? • What is the relationship between HRM policies and HRM outcomes? • What is the relationship between HRM policies and organizational performance? • How do HRM outcomes measure the organizational performance? Operational model and hypotheses Figure 1 depicts an operational model linking HRM to organizational performance.
The model is adapted from Paauwe and Richardson (1997), which argues that HRM outcomes mediate the relationship between HRM activities and firm performance, and recognizes that HRM outcomes connect HRM policies to organization’s performance, and furthermore it assumes that HRM policies and organization’s strategies are independent. The proposed model is blending insights from the theories of contingency, resourced-based view and AMO into an overall theory of HRM and it hypothesizes that HRM policies are influenced by business strategies.
Figure 1 “The operational HRM-Performance linkage model” We propose that an organization’s set of HRM policies will be effective if it is consistent with other business strategies (Gomez-Mejia & Balkin, 1992), suggesting that business strategies are followed by HRM policies in determining business performance as contingency perspective. Porter’s (1985) generic business strategies of cost reduction, quality enhancement and innovation, for an organization to gain and retain competitive advantage, could be obvious candidates.
Specifically, a cost organization’s strategy ambiguously influences the relationship between HRM policies and organizational performance, a quality organization’s strategy positively influences the relationship between HRM policies and organizational performance, and an innovation organization’s strategy positively influences the relationship between HRM policies and organizational performance (Schuler & Jackson, 1987). Thus, we may hypothesize that: H1. HRM strategies influence HRM policies in determining organization’s performance.
HRM policies may play an important role in building the organization’s human capital pool by developing its rare, inimitable and non-substitutable internal resources. According to the resource-based view, HRM policies have a direct impact on employee attributes such as skills, attitudes and behavior, the so-called HRM outcomes, which are subsequently translated into improved organizational performance (Boxal and Steeneveld, 1999). However, according to the contingency theory, it may not be always like this, because of the influence of external factors. Nevertheless, theoretical and empirical work in the field of HRM (Lepak et al. 2006) suggests that according to the AMO perspective the HRM system of employees’ “ability to perform” (e. g. , selection, training, performance appraisal) influences their “skills” (competence, including cooperation), the HRM system of employees’ “motivation to perform” (e. g. , compensation, promotion, incentives) influences their “attitudes” (motivation, commitment, satisfaction), and the HRM system of employees’ “opportunity to perform” (work design, participation, involvement, communication) influences their “behavior” (retention, presence). Thus, we may hypothesize that:
H2. A relationship exists between HRM policies and HRM outcomes. The philosophy of the AMO perspective is that HRM policies encompasses mediating changes in employees’ abilities, motivations, and opportunities to participate that positively influence organizational performance, illuminating thus the “black box” in the HRM-performance relationship (Purcell and Hutchinson, 2007). However, it is argued that there must be enough employees with the required skills, experience and knowledge to do all the necessary work for the benefit of the organization (Appelbaum et al. 2000). Moreover, it is argued that in order to bring lasting and better results and to significantly contribute to the success of their organization, employees must be motivated, committed, and satisfied (Paul & Anantharaman, 2003). Additionally, it is accepted that unless the organization is able to retain its employees, it will not be able to capitalize on the human assets developed within the organization. Thus, employee retention and employee presence may have a positive impact on organizational effectiveness (Boselie, Paauwe, and Jansen, 2001).
Thus, we may hypothesize that: H3. Improvements in HRM outcomes mediate the relationship between HRM policies and organizational performance. Considering the discussion thus far the HRM policies or systems may influence organizational performance indirectly through HRM outcomes. However, a direct effect of HRM policies on organizational performance may also be present (Katou & Budhwar, 2007), implicitly accepting the arguments of Huselid and Becker (1996), who support that a causal relationship exists from HRM policies to organizational performance, and further assume that the elationship between HRM policies and organizational performance is linear, thus implying that there is no synergic interdependence of the different HRM policies, but the effect of the HRM policies on organizational performance is additive (Becker and Gerhart, 1996). Thus, we may hypothesize that: H4. A positive relationship exists between HRM policies and organizational performance. Several controls, such as ‘size’, ‘capital intensity’, ‘industry’ and ‘union intensity’, may influence the adoption of business strategies and HRM policies, and have an impact on HRM outputs and organizational performance (Paauwe & Richardson, 1997).
This means that organizations do not operate in a vacuum, but controls may influence the adoption of business strategies and HRM policies, and may have a positive or negative impact on HRM outputs and organizational performance (Huselid, 1995). In summary, the causal pathway indicated by the operational model in Figure 1, refers to an ‘indirect linkage’ through HRM outcomes, between HRM policies and organizational performance, and to a ‘direct linkage’, between HRM policies and organizational performance. However, it is not required these linkages to be simultaneously present.
It is very possible even in the absence of a direct linkage, some policies to significantly contribute to business performance through the intervening process. Furthermore, organization’s strategies influence HRM policies, and the whole process may be ‘moderated’ by organizational level controls (Paauwe and Richardson, 1997). Review of Literature A serious limitation that recent reviews of the literature points out is that the link between HRM and organizational performance is considered like a ‘black box’, i. e. lack of clarity regarding ‘what exactly leads to what’ (Gerhart, 2005). It is further argued that it is important to consider the intervening steps in the HRM-performance relationship, or to consider the variables mediating or moderating the endpoint variables (Becker & Gerhart, 1996). Furthermore, Boselie, Dietz and Boon (2005), by analyzing the literature over the some couple of years on the HRM-performance relationship, reported wide disparities in the treatment of the components emphasizing the “black box” stage between HRM and performance.
They indicated that the theoretical frameworks which dominated the field were the “contingent framework” (i. e. , HRM influences performance in relation to contingent factors such as business strategies), the resource-based view (i. e. , HRM influences performance according to the human and social capital held by the organization) (Barney, 1991) and the AMO theory (i. e. , HRM influences performance in relation to employees’ Ability, Motivation and Opportunity to participate) (Appelbaum, Bailey, Berg, and Kalleberg, 2000).
Moreover, considering that there was no agreement on the HRM practices, policies, and systems employed, and accordingly the constructs developed, Lepak, Liao, Chung and Harden (2006) argued that the results derived from these studies were not comparable. Specifically, although there were attempts to create ‘HRM checklists’, these lists were not generally accepted due to the different context and concept of HRM employed by the authors of the studies.
Additionally, the HRM-outcomes categorized as “employee skills” (employee competences, including cooperation), “employee attitudes” (motivation, commitment, satisfaction) and “employee behavior” (retention, presence), were the usually employed sets of mediating variables (Paauwe, 2004). However, the studies considering HRM outcomes as mediating variables also produced mixed results with respect to causation (Wright et al. , 2005).
In summary, it is argued that while there is a growing body of theory and empirical research demonstrating relationships between HRM policies, collective employee attributes, and firm outcomes, additional studies in this area are needed (Purcell & Kinnie, 2007). Furthermore, although it is accepted that HRM is positively related to organizational performance, there is a great need for additional evidence to support the HRM-performance relationship in different contexts (Gerhart, 2007).
Specifically, while a few investigations have been initiated in emerging markets and in transitional countries (Ahlstorn, Floey, Young, & Chan, 2005), the literature highlights that most of the studies examining the relationship between HRM and organization’s performance have been conducted in the United States and the United Kingdom (Guest, Michie, Conway, & Sheehan, 2003). To fill this gap and to further examine the process through which HRM policies impact organizational performance, it is important to conduct analysis in non-US/UK context.
Thus, the purpose of this paper is to investigate how HRM influences organizational performance and, for a better understanding of the relationship between these two variables, to take into account that organization’s strategies influence HRM in the Neplease Local Government context. The research is structured with the following methodology. Research Methodology Research methodology refers to various systematic steps to study the identified and defined problem or subject by a researcher stating certain related objectives.
This section deals with the methodology used in the study to collect primary and secondary data and analyze and measure the organizational performance of Human Resource Management in the Local Government in Nepal. First, research design has been set making overall plan of the study using appropriate sample size. Second, data are collected from different service organizations with related customers and analyzed the data using compatible statistical software.
The research methodology term contains research design, source of data, sample and population of survey, data collection procedure, tools and techniques, data presentation and analysis procedures, instruments, and tools or techniques. Research Design This study will be a large survey research under the descriptive research design that measures the organizational performance in the local government of Nepal. The present study involved both exploratory and confirmatory dimensions because no tested model is available so far in the Human Resource Management in Nepal.
This study purposes a conceptual scheme incorporating the universalistic perspective of Human Resource Management. Population and Sample Size This study is intended to measure the organization performance among local government’s employee and other concern stakeholders of the local government in Nepal. Appropriate sample size will be taken representing from different local governments of Nepal. Information will be accumulated from the front line staffs, supervisors, managers and senior officers of different service organization and other relevant personalities. .
Nature and Sources of Data For the purpose of obtaining the aforementioned objectives of the research, necessary data and information will be collected through primary sources i. e. questionnaire. Questionnaire items will contain about the organization’s strategy, HRM policy, HRM output and organization performance on human resource management and its impact on organization performance which will be based in the previous research. However, this research will less depend on secondary data which also will be collected through the published or unpublished reports and journal articles.
Statistical Tools In this research, advanced econometric model and different statistic tools will be used measuring the organizational performance on the basis of organization’s strategy, HRM policy, HRM output and organization performance of the local government in Nepal. Collected data will be analyzed using Mean, Standard deviation, Correlation, Regression, Reliability test, Factor analysis, path analysis and structural analysis. The appropriate computer software will be extensively used to measure the relationship between the variables under this study. References
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Human Resource Management for the Local Government: Measuring Its Impact on Organizational Performance. (2016, Nov 13). Retrieved from https://graduateway.com/human-resource-management-for-the-local-government-measuring-its-impact-on-organizational-performance/