Influence Of Human Resource Management Practices On .

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International Journal of Accounting & Business ManagementVol. 3 (No.1), April, 2015ISSN: 2289-4519DOI: 10.24924/ijabm/2015.04/v3.iss1/50.80This work is licensed under aCreative Commons Attribution 4.0 International s/ijabmResearch PaperInfluence of Human Resource Management practices on EmployeeRetention in Maldives Retail IndustryMariyam ImnaSchool of Accounting and Business ManagementFTMS College, MalaysiaImnamariyam@gmail.comZubair HassanSchool of Accounting and Business ManagementFTMS College, MalaysiaZubai7@gmail.comAbstractThis study seeks to establish the influence of human resource management practices onemployee retention. A questionnaire was developed based on pas literature and a pilot testwas done to test the normality, reliability and validity of the scale. The independentvariables to measure human resource management practices include career anddevelopment, training and development, performance appraisal, reward andcompensation, and health & safety. The dependent variable used in this research isemployee retention. The study adopted descriptive and explanatory research design. Alsothis study used a cross sectional survey methods using a survey questionnaires containing30 items with Likert Scale (Disagree -1 and 5 for Agree). The sample of 254 employeesfrom 14 retail outlets in Male’ (capital city of Maldives) were selected using convenientsampling. The collected data was analysed using descriptive means and regression viaSPSS.20. This study found that three human resource practices such as careerdevelopment, reward and recognition, and health and safety have a positive andsignificant impact on employee retention. This research did not find any significantinfluence of training and development nor performance appraisal on employee retention.However when training and development is linked with career development, there is apositive and significant influence on employee retention. Also when performance appraisalis linked with reward and compensation there is a positive and significant influence onemployee retention. Though this study included only 14 retail organisations, future studiesmay include larger sample by conducting the research on more organisations includingtourist resorts, particular only tourism industry . The future studies may comparedifferences based on socio-demographic profile and might examine the similarities anddifference of HR practices in different sectors in Maldives.Key Terms: Human Resource Management Practices, Career and Development, Training anddevelopment, Performance Appraisal, Reward and compensation, Health and Safety, EmployeeRetention, Retail Sector, MaldivesISSN: 2289-4519Page 50

1.IntroductionThe influence of human resource management (HRM) practices and policies onemployee retention is an important study in the fields of human resource management.Organizations have witnessed the importance of human resource management practices onemployee retention (Singh, 2010). The purpose of this research paper is to analyze the factorsinfluencing employee retention due to the human resource management practices implementedby the organizations in Maldives retail industry1.1.Research BackgroundMany researches were done on this field in the past. Most of the recent studies werecarried out in developing countries (Tangthong, et al., 2014; Johari, et al., 2012; Shahzad, et al.,2013). Among them, a large number of studies were carried-out in Asia followed by a handful ofstudies in Europe and limited studies were done on other developing countries (Boxall, et al.,2003; Ghazali, et al., 2008; Rana, et al., 2009; Singh, et al., 2010; Akter, 2012; Bal, et al., 2014).Many research in the field HRM were done on Bangladesh, Pakistan, Malaysia, Thailand andIndia (Abdullah, et al., 2009; Thite & Russell, 2010; Mahmud & Idrish , 2011; Hassan, et al.,2013; Tangthong, 2014). But since this research is constructed on Maldives there are no officialpublications carried out on this context as of now, however there are handful of studiesconducted on other topics mainly concentrating on the Maldives tourism industry ( (Ministry ofTourism , Arts and Culture Republic, 2011; Shakeela, 2010).More specifically most of the past research that explored the influence of HRM practiceson employee retention were focus on Banking, Hospitality & Tourism, Retail, IT andtelecommunication sector (Mensah, 2010; Chalkiti & Sigala , 2010; Reddy & Chandra, 2011;Janjua & Gulzar , 2014; Janani, 2014). Likewise among these studies a broad range of researcheswere conducted on the retail sector in India and Malaysia (Tay, 2011; Puri, 2013; Bhatla &Pandey, 2014; Sultana, 2014). This could be due to the fast growth of Indian retail sector thathas expanded by 10.6 percent with in 2010 -2011 and it was expected to grow up to 750-850billion by 2015 (Sultana, 2014). Similarly the retail business in Malaysia has contributed 13percent of the countries gross domestic product with RM 334 billion in sales and the retailsector is accepted as one of the main pillars of economy (Tay, 2011). Though this industry hasattracted a lot of researchers in the past and produce a vast literature of this field. However,again it seems there is no formal research publication in Maldives retail sector in examining theinfluence of human resource management on employee retention.In past many aspects of human resources management were covered and discussed indetail. The most common cited practices of HR practices includes recruitment, reward andcompensation, performance appraisal, training and development, career development, healthand safety and supervisor support (Osemeke, 2012; Hong, et al., 2012; Okeudo & Cmilt, 2012;Omolo, et al., 2013; Fauzi, et al., 2013; Malik, et al., 2011; Rubel & Hung, 2013). Moreover, itwas revealed that the most effective human resource management practices in the retailindustry are performance appraisal, training and development, reward and compensation,career development, health and safety (Ming, et al., 2012; Tay, 2011; Puri, 2013). Past researchshows a strong correlation between human resource management practices on employeeretention. This is because by following appropriate human resource management practices theemployee are felt appreciated, satisfied, motivated, more engaged with training which willimprove the performance and encourage the employee to retain (Amin, 2013; Hoekstra, 2011).1.2.Research RationalISSN: 2289-4519Page 51

Human resource management practices is a topic that have been covered by a largenumber of researchers world wide for decades to analyze the relationship between HRpractices on employee retention (Qureshi, 1994; Fey, 2000; Jones, et al., 2010; Waiganjo, et al.,2012; Tangthong, 2014). A large number of empirical studies verify a positive relationshipbetween human resource management practices on organizational performance mainly inrelation to employee retention (Tangthong, 2014). Looking at the most recent findings amongthe studies conducted on this context training and development, health and safety, reward andcompensation, career development, supervisor support, recruitment, performance appraisal,work and family balance and wage are some of the key practices that influence employeeretention (Abeysekera, 2007; Malik, et al., 2011; Osemeke, 2012; Fauzi, et al., 2013).Furthermore training and development enhances job productivity, positive attitude of employeeallowing to acquire superior knowledge, skills and abilities (Tangthong, 2014), likewiseperformance appraisal, reward and compensation motivates employees to stay focused andengaged (Tay, 2011), while career development and supervisor support increase the employeesorganizational loyalty and reduce the negative thoughts towards the organization (Merchant,2013).On the other hand if human resource management practices are not implementedproperly in an organization there are several negative impacts. An organization with properhuman resource management practices enjoys the firm’s sustainable growth that will maximizethe economic opportunities in order to meet the organizational goals (Yi, Nataraajan & Gong,2011). Similarly more significantly related to this research will retain employees and improvetheir performance (Singh & Jain, 2014). Furthermore human resource management is anapproach to develop highly committed and capable workface additionally accountable forretaining skilled employees therefore with these approaches it is evident that one of theprimary sources of competitive advantage for an organization is employee (Saha & Gregar ,2012). Hence organizations without proper human resource management practices will investoften more on attracting and recruiting employees that fits for the organization, train them toalign with the overall culture and strategy of the organization which will incur higher costs(Moon & Li, 2012). Employee retention today has become a global issue. According to HayGroup, the global employee turnover rate will experience the severest escalation with in 2014and by 2018 more than 49 million employees will leave their present jobs compared to 2012making it a total number of 192 million employees worldwide (HayGroup, 2013). SpecificallyAsia Pacific will be experiencing an average turnover rate of 24% during 2013-2018 (Haygroup,2013).Similarly, employee retention and HR practices becomes very vital as Maldivian industriesrecently had experienced a number of incidents employees striking for their demands andneeds during operational hours in the Hotel premises (Haveeru Online, 2013). Mainly the causefor the strikes were low service charge, fail to provide pay raise, uneven benefits, promotions,accommodation, food, racism and discriminatory pay against local staff (Haveeru Online, 2013).In addition to that based on a report from Human Rights Commission of the Maldives the “Rapid Assessment of Employment in Maldives ’’ highlighted that government was unable totrain Maldivians to match the needs of growing industries along with the growth of economy inMaldives (Human Rights Commission of the Maldives, 2009). Nevertheless now the Ministry ofHuman Resources, Youth and Sports, Republic of Maldives is supporting the citizens byproviding scholarships through national and international programs (Cambridge Trust, 2014).Since this research is based on Maldives retail industry there are no official publicationsmade on this industry, however a handful number of studies are conducted on the Hospitalityand tourism industry of Maldives that generates the highest revenue for the country (Shakeela,2010; Shakeela, et al., 2011; Ministry of Tourism , Arts and Culture, 2011). Nevertheless retailindustry is studied among some of the developing countries such as India, Malaysia and withinfew European countries (Johari, et al., 2012; Fauzi, et al., 2013; Bhatla & Pandey, 2014; Singh &Jain, 2014). Therefore this study will be contributed to analyze the human resourcemanagement factors influencing employee retention in Maldives retail industry. This will allowISSN: 2289-4519Page 52

future researches to determine the importance of focusing on certain areas where very limiteddocumentation has been processed. Also the findings of this study can support organizations tocome up with appropriate strategies to improve retention and employee performance throughhuman resource management practices in Maldives Retail Industry.1.2 Research Aims and ObjectivesThe main research aim of this study is to evaluate the influence of human resourcemanagement practices on employee retention in Maldives Retail Industry. The objectivesderived are as listed below:To examine the effect of career development on employee retention.To examine the effect of practicing performance appraisal on employee retention.To examine the effect of training and development on employee retention.To examine the effect of reward and compensation on employee retention. To examine the effect of adopting health and safely in organizations on employeeretention. This paper is organised as follows: first part is discussed above. Second part is thetheoretical framework and research hypothesis development. Third part discusses the researchdesign and methodology, data collection procedures and process. Fourth part presents theresults and discussion. Final part is conclusion and recommendation, and implication for furtherresearch2.Literature ReviewDefinition of Human Resources (HR) PracticesBeginning with Beer (1985) a professor of business administration, Emeritus at theHarvard Business School defines human resource management as one of the main managementactivities involved in making decisions and all actions that affect the nature of the rapportbetween the employees and organization. Also human resource management is defined as astrong term used to define the policies, philosophy, practices and procedures interrelated inmanaging people with in an organization (Guest, 1997). Furthermore human resourcemanagement is defined as all the activities related in managing the workplace and employees inthe organizations (Boxall, 1996). According to Armstrong the term Human Resource and HumanResource Management has been fundamentally replaced with Personal Management, which isthe process of managing employees and their needs in organizations (Armstrong, 2006). Morerecently HR management is defined as planning; recruitment and selection; performance andreward management; employee well-being; training and development and employee relation toachieve the organizational objectives through their individual contribution (Armstrong &Taylor, 2014)Critical Review of Key HR TheoriesHard and Soft approaches of HRHard and Soft versions of human resource management are two of the most widely adoptedmodels. According to this framework in the soft version the employees are measured as anadditional value to the organization bearing in mind employees require training andISSN: 22

employee retention. A questionnaire was developed based on pas literature and a pilot test was done to test the normality, reliability and validity of the scale. The independent variables to measure human resource management practices include career and development, training and development, performance appraisal, reward and compensation, and health & safety. The dependent variable used in .