The Influence of HRM Practices on Employee Performance: A Study of Retail Establishments in a Municipality in the Philippines

The Influence of HRM Practices on Employee Performance: A Study of Retail Establishments in a Municipality in the Philippines

Madonna P. Melchor

Mindoro State University- Bongabong, Philippines

DOI: https://dx.doi.org/10.47772/IJRISS.2024.8100252

Received: 16 October 2024; Accepted: 21 October 2024; Published: 21 November 2024

ABSTRACT

The study assessed the Human Resource Management practices and its relationship on the employees’ performance of the selected retail establishments in the province of Oriental Mindoro, Philippines. This aimed to propose Strategic Human Resource Management Program. The survey method used was the Descriptive-correlational, and survey questionnaire was employed to assess the HRM practices and its impacts on employees’ performance in terms of Recruitment and Selection, Training and Development and Performance-Based Compensation. Weighted mean was used to know the HRM practices and its effects on employees’ performance, while Pearson-R was used to test the significant relationship in the study. The recruitment and selection and training and development were moderately implemented, while performance-based compensation was highly implemented. Majority agreed that recruitment and selection, training and development, and strongly agreed that performance-based compensation have significant relationship on employees’ performance. Based on the result, the researcher had proposed a Strategic Human Resource Management Program.

Keywords- Human Resource Management, Recruitment, Selection, Training, Development

INTRODUCTION

Managing human resources in a business, is a strategic approach to one of the organization’s most valuable assets. The success of any firm can be attributed to effective human resource management, which involves managing these individuals. To accomplish an organization’s objectives, business managers must consider the efficient and effective administration of human resources and a skilled staff.

Human resources are thought to be an organization’s most valuable asset, but very few are able to fully utilize their potential, according to Satyendra, K.S. (2020). The rules, procedures, and systems that make up human resource management (HRM) have significant implications on the performance, attitude, and behavior of employees. Every firm must pay close attention to human resource management’s techniques, since this will enhance and sustain the performance of the organization.

Relatively, Bueno (2016), emphasized that the employees are essential to the operation of any firm, regardless of level. Employees are the only ones who can uphold and enhance corporate standards. The creation of policies for hiring and compensating employees is the focus of human resource management. Recruitment, staff development, promotions, transfers, staff evaluation, termination and general discipline, pay, and pensions are a few examples of areas where this type of participation occurs. Therefore, the actions of officials within the company or their agencies have an impact on the lives of employees. Assessing, determining the need for staff, and meeting that demand are the three main concerns that organizations have when it comes to staff or human resource management.

Different implementations of the human resource management practices were evident on the different business sectors. Each sector has their unique management of the workforce as the need arises based on the environmental business context. These previous studies cited the HRM practices and the perceived effect on employees’ performance. Relatively, businesses faced different implications on managing the human resources.

Asserted by Camillar-Serrano (2016), employers deal with a variety of human resource issues. One of the most important issues is finding the right person for the right position, and with a global economy and a highly mobile workforce, this process has gotten increasingly challenging. Employers are no longer able to make hiring decisions based only on candidate interviews.

Additionally, a recruitment plan is a written document that describes the objectives and requirements for hiring as well as how they will be met. Although individual recruitment methods range greatly throughout firms, they often involve a review of the personnel needs of the company as well as any existing problems or shortcomings. a description of recruitment objectives and the strategies to meet them, a budget for hiring, if any, and the location and methods for hiring new staff. Additionally, any seasonal variations in hiring needs and the approach to accommodate them, and finally, a means of assessing the effectiveness of the recruitment strategy.

Relatively, Dela Cruz and Cabaluna (2022), study examined how employee performance in some of the Philippine banks was affected by human resource practices. To assess how well human resource practices, such as recruiting and selection, training and development, employee relations, and pay and benefits, were being implemented in their respective organizations, employees were given survey questionnaires to fill out. The findings demonstrated that the application of HR procedures assisted bank workers in achieving the level of success that was anticipated of them in terms of scope, promptness, and quality.

Admin (2021), stated that retailers deal with a human resource environment that includes a lot of inexperienced employees, long hours, highly visible staff, a diverse workforce, a lot of part-time employees, and a wide range of client needs. These elements make hiring, staffing, and supervising employees more difficult. Retailers should generally consider effective hiring and selection practices, shortened training periods for temporary and inexperienced staff, equitable pay, and offering employees advancement chances. Additionally, the appearance and work habits of employees must be explained and reviewed; diverse workers must be taught to work well and amicably with one another; high turnover and a large number of part-time employees may lead to morale issues; and finally, conflicts between full-time and part-time employees may arise, particularly if some full-time employees are replaced.

Although human resource management has been researched, little is known about how HRM practices impact employees’ performance, particularly at retail establishments in the province of Oriental Mindoro. Different organizations, such as banks, retail supermarkets, academes and others must cultivate its people to achieve their objectives through employee performance. The changing cultures and work habits of the employees were inculcated through the emergence of the global pandemic. Further, the study is a leverage for the attainment of the United Nations’ seventeen (17) Sustainable Development Goals. This thrust focused on the Sustainable Development Goal 8 (SDG 8), where provision of decent work and economic growth is the top priority for the province. The results of the study will give opportunity for the retails establishments and the operators to prioritize programs and activities for the productivity of the employees.

Despite the fact that human resource management (HRM) has been extensively studied and its significance and application have been described, relatively little study has been done on HRM practices and their impact on employee performance, especially in Philippine retail supermarkets. Human resource management techniques have an impact on business success; nevertheless, the prior research on the subject has not provided sufficient clarification or answers to the concerns regarding the connection between HRM practices and employees performance.

Aim of the Study

This study determines the human resource management practices and its effect on employees’ performance in the selected retail supermarkets in the Province of Oriental Mindoro, Philippines.

Specific Objectives

– To assess the Human Resource Management practices in in terms of Recruitment and Selection, Training and Development and Performance-based Compensation.

– To know the effect of the Human Resource Management practices to employees’ performance.

– To determine whether there is a significant relationship between the assessment on the HRM practices and its effects on the employees’ performance.

– To propose strategic human resource management program

LITERATURE REVIEW

Human Resource Management

The goal of human resource management (HRM), a subfield of management, is to maximize an organization’s human resources by providing improved working conditions and activities for its employees. It aims to preserve useful and reputable working relationships both inside and between the different management levels. It is accurately described as the methodical, methodical process of managing personnel in businesses. It covers a variety of areas, including hiring or staffing, employee retention, setting salaries and benefits, performance management, change management, and handling employee departures to wrap up the activities (Mendoza, 2019).

Recruitment and Selection

One of the most important components of any successful enterprise is having the right personnel. On the other hand, failing to pay close attention during the recruiting and recruitment process may lead to several disappointments and failures later on. Numerous factors influence hiring decisions. According to Mendoza (2019), they include the state of the economy, site expansions, mergers, competitive activity, regulations, compensation packages, and much more.

Selecting a candidate for a position is a continuous process for the majority of firms. Selection is a lengthy and intricate process that involves a number of processes before a final employment decision is made. The stages involved may vary from one company to another, as may the type and scope of the position that has to be filled. As a result, each stage should be evaluated for its value to the company. In accordance with the legal requirements, a corporation should follow the ethical guidelines regardless of the approach it chooses. Note that not every applicant should complete each of these procedures satisfactorily. After the initial screening, some can be rejected, while others might fail the employment exam (Lauron, 2019).

Training and Development

Training is a learning process that includes gaining knowledge, honing skills, concepts, regulations, or altering attitudes and behaviors to improve performance, according to Corpuz (2013). the workers’ performance. The training’s goals and development include: 1) raising output and quality and output volume; 2) efficiency in the current task which entails boosting an individual’s drive to do their work well; 3) cultivating more positive attitudes like cooperation and loyalty; 4) assisting staff members in their personal growth and promotion by assisting them in obtaining additional qualifications for a better position; and 5) meeting human resource planning requirements.

Performance-Based Compensation

In exchange for incentives or benefits from their labor, people are willing to work. Both monetary and non-monetary rewards are included in the inducements. An employee who is driven to work for the company and is drawn to the task is the ideal result. It encompasses all monetary compensation, material services, and perks that workers obtain as a result of their employment relationship (Corpuz, 2013).

Relationship between Human Resource Management Practices and Employees Performance

An investigation of the impact of HRM methods on employee performance at Malaysian Skills Institute (MSI) was carried out by Al_Qudah, H.M.A. et al. (2014). It looked into the variables that affect hiring, selection, and pay in relation to employee performance at MSI. Forty respondents made up the study population, which was made up of MSI workers. The researcher created and disseminated a survey, and SPSS was used to gather and examine the results. The descriptive statistics and correlation analysis were used as the basis for an overall analysis. The findings showed a substantial correlation between employee performance in MSI and recruiting, selection, and remuneration. The report offered suggestions for enhancing MSI’s hiring, selection, and pay processes.

This relates to a study by Tabiu and Nura (2013) that found that human resource management techniques are crucial to improving employee performance in businesses. Following the implementation of an effective human resource management system in their organizations, pharmaceutical companies’ employees are performing better. The study examined the relationship between human resource procedures and employee performance and found a positive correlation between the two.

Theoretical Framework

The Organization Behavior Theory serves as the foundation for this investigation. The study of organizational behavior (OB) is used to HRM activities, and its associated subjects assist us understand what people think, feel, and do in organizational situations, according to Pfeffer (2007). For HR and, in practice, all employees, this knowledge aids in anticipating, identifying, and tracking organizational events. The study of organizational behavior encompasses academic fields devoted to enhancing leadership, promoting innovation, boosting employment stability, and improving performance at work. An emphasis on organizational behavior aids in the explanation of why specific actions affect employees’ productivity and free will, as well as how to evaluate and predict the consequences of various policies on human resource management.

The Motivation Theory was another theory that was used as a foundation for developing the research topic. Fulfilling specific individual needs is one technique to address motivation, which is a means of generating a great deal of passion in order to accomplish organizational goals. As Haque et al. (2014) asserted that managers in companies or organizations bear a major responsibility for making sure that employees carry out their duties or responsibilities correctly. These HR managers must ensure that they have a competent staff in order to hire the most qualified individuals for the position. Employees must be sufficiently motivated in order to maximize their production. Since motivation affects employee performance, it is crucial to combine effective management and leadership with the right motivational tools in order to accomplish this goal.

Ability, Motivation, and Opportunity are the three-separate work-system components that, in accordance with AMO theory, shape employee traits and ultimately contribute to corporate success. Because AMO theory lays the groundwork for line managers to utilize efficient strategies that lead to employee motivation through HR policies and practices, organizational interests are best served by these three elements (Bos-Nehles, Riemsdijk, & Looise, 2013).

METHODOLOGY

To evaluate the impact of HRM practices on employee performance, the study used a descriptive-correlational research approach. Descriptive research provides answers to the following questions in order to precisely and methodically describe a population, circumstance, or phenomenon: what, where, when, and how. It cannot, however, answer questions concerning why (McCombes, 2021). On the other hand, correlational research seeks to determine the relationship between variables and gauge its strength, claim Quinto and Albrando (2019).

The study was carried out in the selected retail establishments in the Province of Oriental Mindoro, located in the Philippines. The respondents were ninety-four (94) employees of the said businesses. Random Sampling is adopted as the sampling method. They were the chosen respondents, since they will be the beneficiaries of the proposed strategic human resource management, in order to help the retail establishments to strategize and enhance the performance of the employees.

The instrument used was a self-developed survey questionnaire. The first part consisted of the profile of the respondents, while part two was the questions about the assessment on the Human Resource Management practices. The last part comprised the effect of the HRM practices in the employees’ performance. This was validated by the deans and faculty members related to Business Management.

To ensure the reliability of the instrument, this was checked using test-retest method. The reliability test was done through the use of the pilot study. The pre-test was carried out using 20 copies of the questionnaire that will be administered to the employees of retail supermarkets in the province.

Weighted mean was utilized to describe the HRM practices and its effects on the employees’ performance. While, the researcher had used the Pearson-R to know the significant relationship between the assessment of the HRM practices and its effects on employees’ performance.

RESULTS AND DISCUSSIONS

Human Resource Management Practices

Recruitment and Selection

Research findings indicate that the respondents assessed that the Recruitment and Selection practices were moderately implemented with a weighted mean of 3.09. The findings highlighted that the organization has implemented best practices in recruiting and selection (3.28), that candidates were chosen impartially (with the highest mean score of 3.77), and that those with the required knowledge, abilities, and attitudes (3.45) were chosen next.

Also, respondents seemed to agree on most of the items which were rated with low weighted mean with verbal interpretation of slightly implemented such as spelling out clearly the job description to the employees upon entry in the organization (2.40) and employee’s team behaviour is required for employee selection at this company (2.46) and the company has strong merit criteria for employee selection (2.88) respectively.

According to the respondents, this suggested that the retail supermarkets had imposed the selection of applicants with the knowledge, abilities, and attitudes that the company needed by choosing them impartially and objectively. Since they had a positive attitude on hiring and selecting the firm and accepting the correct and fit workers in the organization, this has an impact on the performance of the Human Resources department in particular.

These findings were related to Cania’s (2014) study, which found that organizations may create a successful environment by placing the appropriate people in the right places through the use of human resource management methods. According to Singh and Kassa (2016), recruitment and selection are the means by which a company can generate a pool of qualified applicants for employment, whereas determination is the process by which specific tools are used to screen a pool of candidates who are most suitable for the job while taking administrative goals and legal requirements into consideration.

Training and Development

When it comes to the training and development of the retail supermarkets, it was found to be moderately implemented, with a composite mean of 3.13. As further revealed in the study, there were high implementation of the formal training programs for the newly hired and old employees (3.84), and these increases their knowledge and skills that meet the future work requirement considerably (3.82).

Also, the T&D provides needed information about the new customer’s needs and demands with a weighted mean of 3.69 and lastly, trainings were realistic, useful and based on the business strategy (3.67).

Performance- based Compensation

Lastly, on the practices when it comes to the performance-based compensation, it was perceived as highly implemented with a composite mean of 3.54. As shown in the results, the respondents assessed that some indicators were highly implemented such as the company rewards the employees on their excellent services (3.88), the compensation focuses on the employees from all the levels in the company (3.83), addressed in good time (3.81) and the company provides substantial financial compensation to the employees (3.56).

In contrary, employees agreed that some of the performance-based compensation practices were moderately implemented such as the existence of indirect compensation such as flexible job design for the employees (3.24), and proper communication with the objectives of Performance appraisal system (P A S) to the employees (3.27).

The said results were vital for the HRM practices and strategies that will plan and implement by the management. Due to COVID-19 pandemic, the work arrangement can be adjusted based on the current health scenarios. It is with the great desire of the employees to provide indirect compensation such as flexible job design.

Effects of Human Resource Management Practices on Employee’s Performance

Recruitment and Selection

While on the effects of human resource management practices on the employees’ performance, majority of the respondents agreed that recruitment and selection have an effect on their performance. The research findings described that respondent strongly agreed that the recruitment of the applicant who meets the selection criteria is appointed and helped in the achievement of quality performance (3.65), the company selects employees without any biasness that boost the morale of the employees. (3.57) and objective selection procedure, by matching job description and person specification resulted to high skilled member of the organization (3.52).

However, respondents concurred that the number of employees and their distribution by department or unit are directly related to their performance level (2.69); the company has merit-based hiring practices that encourage employees to perform to the best of their abilities (2.71); and job descriptions are clearly communicated to employees, which enhances performance (2.73).

The findings also corroborate the research done by Soomro et al. (2011) that looked at how conventional HRM practices affected workers’ performance. Based on responses from 150 employees of different commercial banks in Upper Sindh, it was determined that all seven HRM practices—training, selection, career planning, employee participation, job definition, compensation, and performance appraisal—were positively connected with employee performance.

Training and Development

Moreover, with a composite mean of 3.11, the respondents agreed that training and development had an impact on workers’ performance. The results also showed that, with a weighted mean of 3.66, respondents strongly agreed that formal training programs teach both new and existing employees the abilities they need to operate at their best. Additionally, as indicated by the weighted mean of 3.68, they firmly agreed that the training needs mentioned are practical and helpful in keeping the staff informed about various company strategies.

Respondents agreed that training has reduced employee turnover in the organization by achieving employees’ motivation and hard work (2.81) and has increased productivity and financial returns for the organization (2.89). Training was shown to bring about changes in individual attitudes and behaviours to facilitate efficiency and effective learning that enable the employees to meet the organizational objectives of the organization (2.66).

Performance-Based Compensation

In the same manner, the respondents strongly agreed that the performance-based compensation has an effect on employees’ performance, substantiating this finding of the composite mean of 3.51.

Based on the results, the respondents strongly agreed on the following items: over-all, the company’s performance-based compensation affects the employees’ performance (3.87); compensations are addressed in good time that motivates the employees to perform at their best (3.82); present pay motivated employees to work harder and compensations play an important role in organizations that depend on human capital as an incentive in attracting and retaining skilled employees (3.74); and the compensation which is offered impacts the employee`s high performance (3.72).

Moreover, they agreed that the managers clearly communicate the objectives of performance appraisal system (P A S) to the employees that allow them to become participative in the organization’s goal got the lowest weighted mean of 2.83.

According to the aforementioned finding, the respondents strongly agreed that employee performance is impacted by salary. This supports Corpuz’s (2013) assertion that people are willing to work if they are offered incentives or benefits for doing so. Both monetary and non-monetary rewards are included in the inducements. An employee who is driven to work for the company and is drawn to the task is the ideal result. It covers all monetary compensation, material services, and perks that workers obtain as part of their employment relationship.

The result with regards to the impact of compensation to employees’ performance in the retail supermarkets in the Philippines is in line with the study that was undertaken in a Malaysian telecom major to identify the impact of HR practices such as training, compensation and employee participation on employee performance. Samples were collected using questionnaire from 102 employees in order to test the hypothesis. Regression analysis was done using SPSS to find out the impact of independent variables on employee performance. It was found that there was a significant relationship and impact of training and compensation plans on employee performance whereas employee participation had less impact on employee performance (Mahadevan, A. & Mohamed, F.A. 2014).

Relationship Between HRM practices and Employee’s Performance

The results also showed the significant relationship between the extent of implementation of the HRM practices in terms of recruitment and selection and its effect on employees’ performance with a computed R-value of 0.429, 0.224 and 0.667 which are greater than the tabular R-value of 0.205; the performance-based compensation with computed R-values of 0.667, 0.452, 0.401 respectively which are greater than the tabular R-value of 0.205.

This means that there was a direct link between the selection and recruitment and performance-based compensation practices on the employees’ performance. If the HRM practices are highly implemented, the employees strongly agreed on its effect on their performance and vice versa.

This affirmed that implementation of the different HRM practices in terms of recruitment and selection and performance-based compensation in the establishments have a certain effect on the performance of the employees as assessed by the employees as the respondents of the study. If the establishments have implemented HRM practices, employees were motivated to perform at their best, hence would also result to good outputs in the organization.

On the other hand, there is no significant relationship between the extent of implementation of the HRM practices in terms of training and development and its effect on employees’ performance with a computed R-value of 0.082 which is lower than the tabular R-value of 0.205.

CONCLUSION

Majority of the employees in the selected retail supermarkets in the province of Oriental were from first-line position and working for about 6 to 10 years. While, the Human Resource Management Practices that were highly implemented was the performance-based compensation. Based on the results, and it was found out that the Human Resource Management Practices particularly on recruitment and selection, training and development and performance-based compensation have significant effects on employees’ performance. The proposed strategic human resource management program provides HRM objectives and activities that will enhance the performance of the employees in the selected retail supermarkets in the province of Oriental Mindoro, Philippines.

After a thorough examination of the findings and conclusions of the study. The following recommendations were drawn;

1. It is recommended that the selected retail supermarkets should continuously update their profile of the employees.
2. Also, human resource managers should be encouraged to develop a Human Resource Management Information System that will monitor and evaluate the extent of implementation of the organization’s performance.
3. It is also recommended that the businesses may include training and development for the employees.
4. It is further recommended that the strategic human resource management program prepared by the researcher may be applied by the managers in order to enhance the performance of the employees.
5. Lastly, this study may be replicated by future researchers. Strategic HRM program may be enhanced considering the changes in the industries and business context as well.

ACKNOWLEDGEMENT

This research would not be possible without the guidance and support of the people who served as the inspiration for the realization of this study: to Melchor family, Palapus family and the Mindoro State University community who supported the researcher throughout her research journey.

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