Yeshihareg Addis

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The Effect of Human Resource Management

Practice on Perceived Employee Performance: The


Case of Ministry of Trade and Industry, Ethiopia

By: Yeshihareg Addis ID GSE/8511/09

Advisor: Solomon Markos (PhD.)

A thesis submitted to the School of graduate studies of Addis


Ababa University in Partial Fulfillment of the requirements for the
degree of MA in Human Resource Management

Jun 2019
Addis Ababa, Ethiopia

I
Addis Ababa University College of Business and
Economics School of Commerce Graduate Studies
The Effect of Human Resource Management practice
on perceived employee Performance: In the case of
Ministry of Trade and Industry

By: Yeshihareg Addis ID GSE/8511/09

Approved by Board of Examiners

____________ ___________________ __________________


Advisor Signature Date

________________ ________________ ______________

Internal Examiner Signature Date

________________ ________________ ______________


Internal Examiner Signature Date

II
Declaration

I, the undersigned, hereby declare that the work Contained in this thesis is

my own original work and that I have not previously in its entirety or in part

submitted at any university for a degree.

Yeshihareg Addis

Signature: ______________________ Date:_____________________

III
CERTIFICATE

This is to certify that the thesis titled “The Effect of Human Resource Management
Practice on employee performance: The Case of Ministry of trade and Industry”,
submitted to Addis Ababa University in partial fulfillment of the requirements for the
Degree of Master of Arts in Human Resource Management (MA) complies with the
regulations of the University and meets the accepted standards with respect to originality
and quality.

Confirmed by:
Solomon Markos (PhD) ___________________ Jun, 2019
Advisor Signature Date

IV
Table of Contents
Topics Page No.
Approval of the Research Board Examiners …………………………………….II
Declaration …………………………………………………………………………III
Certificate ……………………………………………………………………………IV
Acknowledgments ……………………………………………………………………VII
Acronyms………………………………………………………………………………VIII
List of tables ………………………………………………………………………….IX
Abstract ………………………………………………………………………………X
Introduction………………………………………………………………………………………………...1

1.1 Background of the study .......................................................................................................................1


1.2 Statements of the Problem ....................................................................................................................3
1.3 Objective of the study ...........................................................................................................................5
1.3.1 The General Objectives ............................................................................................................................... 5
1.3.2 The specific objectives: ............................................................................................................................... 5
1.4 Scope of the study .................................................................................................................................5
1.5 Significance of the Study ......................................................................................................................6
1.6 Limitation of the study ..........................................................................................................................6
1.7 Definition of Terms ............................................................................................................................. 6
1.8 Organization of the study .................................................................................................................................. 7
2.1 Theoretical Review ............................................................................................................................... 9
2.1.1 The Concept of Human Resource Management ............................................................................................. 9
2.1.2 Recruitment and Selection ............................................................................................................................ 10
2.1.3 Training and Development ........................................................................................................................... 11
2.1.4 Performance Appraisal ................................................................................................................................. 12
2.1.5 Reward Management .................................................................................................................................... 13
2.1.6 Employee performance ................................................................................................................................. 14
2.2 Empirical studies ................................................................................................................................. 16
2.2.1 Recruitment and Selection and perceived employee Performance; .............................................................. 17
2.2.2 Training and Development and perceived employee performance; .............................................................. 17
2.2.3 Performance appraisal and perceived employee performance; ..................................................................... 18
2.2.4 Reward management and perceived employee performance; ....................................................................... 19
2.3 Conceptual Framework ....................................................................................................................... 21
3.3.2 Interviews .................................................................................................................................................. 23
3.3.3 Population, sample and sampling techniques ............................................................................................ 23
3.4 Data collection procedures……………………………………………………………………………25

3.5 Data analysis/ Data Analysis Methods………………………………………………………………..25

3.6 Reliability Test………………………………………………………………………………………26

3.7 Ethical consideration…………………………………………………………………………………26

V
Chapter Four- Data analysis interpretation and discussion………………………………………………28

Introduction……………………………………………………………………………………………….28

4.1. Sample and Response rate .............................................................................................................................. 28


4.2 Demographic Characteristics ........................................................................................................................... 29
Section one: Descriptive Analysis .......................................................................................................... 31
4.2.1 Perception on Human resource management practices and employee performance ..................................... 32
4. 2.2 Interview response ....................................................................................................................................... 34
Section Two: the relationship between HRM practices and Employee Performance ............................... 36
Section Three: Effect of human Resource practice on employee performance......................................... 39
4.3.1 Assumption of regression analysis ............................................................................................................... 39
4.3.1.1 Multi-Colinearity Diagnostics: .................................................................................................................. 39
4.3.1.2 Homoscedacity test .................................................................................................................................... 40
4.3.1.3 Normality test ............................................................................................................................................ 41
4.3.3 Effect of human Resource practice on employee performance ..................................................................... 41
4.3.4 Hypothesis Testing ....................................................................................................................................... 44
CHAPTER FIVE Finding Summary, Conclusion and Recommendation……………………………….46

5.1 Introduction ..................................................................................................................................................... 46


5.2 Finding Summary of the Study ........................................................................................................................ 46
5.3 Conclusion of the study ................................................................................................................................... 48
5.4 Recommendation ............................................................................................................................................. 49
5.5 Limitation ........................................................................................................................................................ 50
References ............................................................................................................................................................. 51

VI
ACKNOWLEDGMENTS
I am grateful to God for His mercy that made this possible. He gave me wisdom and
Strength to always be courageous in accomplishing this thesis. Then, I would like to
express my special gratitude and respect goes towards my thesis advisor Dr. Solomon
Markos his patience in repeatedly reading the draft document of this study and for
making constructive comments and suggestions from which I have immeasurably
benefited in sharpening my understanding, predominantly, on the area I study. It is
palpable fact that without his closer follow-up and continuous encouragement with
valuable comments this thesis would not have been finalized in its present structure. I
would also like to extend my additional admiration for Dr. Konjit Hailu for her
genuine and sincere comment in the case of proposal as an internal examiner Also, I
would like to express my heartfelt appreciation to my friends Woinishet Haileysus,
Yehualashet ketema, and Emebet shewangizaw for their valuable support and advice
that gave me strength during my final project career.
Finally, I express my gratitude to the employee of the ministry of Trade and Industry
that spent their lovely time to provide me with all the necessary data required to carry
out the study.

VII
Acronyms
EP: Employee performance

HRM: Human resource Management

HRMP: Human resource management Practice

MOTI: Ministry of Trade and Industry

VIII
List of tables
Table 3.1 Target Population and Sample Size ............................................................................... 24

Table 3.2 reliability test result ...................................................................................................... 26

Table 4.1: Demographic Characteristics ....................................................................................... 29

Table 4.2 Assumptions likert scales mean values; ......................................................................... 31

Table 4.3: Perception on HRM practice and perceived employee performance ........................... 32

Table 4.4: The Correlation between HRM practices and employee performance ........................ 37

Table 4.5: Results of Multi collinearly .......................................................................................... 39

Table 4.6: Skewness and Kurtosis Test result................................................................................ 41

Table 4.7 : Model Summary ........................................................................................................ 42

Table 4.8: ANOVA ....................................................................................................................... 43

Table 4.9: Regression Coefficient................................................................................................. 43

IX
Abstract

The purpose of this research is to examine the effect of human resource Practices on
employee performance in the case of ministry of trade and industry. To achieve the study
objectives, the researcher developed, distributed questionnaires, collected and analyzed
the data with SPSS tool by using descriptive analysis and inferential statistics. Samples of
275 employees were selected from the population of 887 by using simple random
techniques; 270 questionnaires was collected back; the response rate was 98.8%. The
descriptive statistics result shows that the perceptions of employee of (recruitment and
selection, and Reward management, Performance appraisal and training and
development) were low. The Correlation results indicated that recruitment and selection,
Reward management, Performance appraisal and training and development were
significantly and positively correlated with the employee performance in MOTI. In
regression analysis recruitment (29.3%) and selection and reward management (23.7%)
have greater effect on employee performance in the ministry. In genegeral, the variation
of 45.9% of employee performance due to the predictors of Human resource practices
(recruitment and selection, and Reward management, Performance appraisal and
training and development).

KEY Words: employee performance, human resource practice, reward management,


performance appraisal, training and development, Ministry of Trade and Industry

X
CHAPTER ONE–INTRODUCTION

Introduction

This chapter explains the nature of the proposed research and the overall planned

approach to deal with the stated research problem. It consists of the background of the

study, statement of the problem, research questions, objectives of the study, Significance

of the study, Scope of the study, Definition of Terms (Operational Definitions of Terms)

and Organization of the study.

1.1 Background of the study

Human resource management (HRM) is defined as a strategic and coherent approach to

the management of an organization‟s most valued assets – the people working there, who

individually and collectively contribute to the achievement of its objectives. It is

concerned with all aspects of how people are employed, managed and developed in

organizations. They also stated that „Human resource management involves all

management decisions and action that affect the nature of the relationship between the

organization and its human resources (Armstrong, 2008, PP. 3).

As Raymond(2011) argued, there are several important HRM practices that should

support the organization‟s business strategy: analyzing work and designing jobs,

determining how many employees with specific knowledge and skills are needed (human

resource planning), attracting potential employees (recruiting), choosing employees

(selection), teaching employees how to perform their jobs and preparing them for the

future (training and development), evaluating their performance (performance

1
management), rewarding employees (compensation), and creating a positive work

environment.

Human resource practices are the process of procuring, maintaining and developing

competent workforce to achieve organization‟s goals in an effective and efficient manner.

Human Resource Management (HRM) is now a day‟s widely accepted as a management

disciple and plays an important role in helping an organization to achieve its mission,

vision, strategy, and goals. As mentioned by Byremo (2015), one of the reasons for

popularity is the assumption that HRM is a source for competitive advantage and will

influence the organizational results and performance in a positive direction.

As Guest et al. (2000) argued, “The distinctive feature of HRM is its assumption that

improved performance is achieved through the people in the organization.” If, therefore,

appropriate HR policies and processes are introduced, it can also be assumed that HRM

will make a substantial influence on firm performance.

As Hamzah et al. (2014) argued, Employee performance is one of the most important

factors that affect performance of the organization. The successful organization

understands the importance of HR as a critical factor that directly affects and contributes

on both organization and employee performance.

Decisions such as whom to hire, what to pay, what training to offer, and how to evaluate

employee performance directly affect employees‟ motivation and ability to provide goods

and services that customers value. Companies that attempt to increase their

competitiveness by investing in new technology and promoting quality throughout the

organization also invest in state-of-the-art staffing, training, and compensation practices

(Noel et al, 2011).

2
1.2 Statements of the Problem

How to manage people‟s knowledge, skills, attitudes, life, experiences, and motivation

affect the organizational performance. Employees are the most competitive advantages of

the success and sustainability of organization. It is one of the core competencies of an

organization, as examined by (Hoskisson, 2007). All managers in organizations are

regarded as HR managers. But their effectiveness and efficiency depend on how HR

system is being organized and managed in organizations (Osibanjo & Andeniji, 2012).

HRM is concerned with workforce planning, recruitment and selection, talent

management, employment issues such as employee retention and absenteeism, flexible

working, and the management of diversity and inclusion. Therefore, human resource

management practice is the most crucial element to create effective and efficient

employees.

There have been many studies from different part of the world under the Effect of HRM

practices on perceived employee performance in different sectors. However, the

researcher could only access few studies undertaken related to this topic in Ethiopia. The

researcher also found out that no study carried out on the effect of HRM practices on

employee performance in the ministry of Trade and Industry.

Additionally, the aforementioned studies were carried out in a different culture and time

which make it difficult to show and conclude the effect of HRM practices on Employee

Performance based on these studies. Hence, this research is essential to know the current

status of the HR practice in the ministry and its effects on employees‟ performance.

When referring specifically the case of the Ministry of Trade and Industry, the researcher

collected Five years employee‟s data from the Ministry of Industry for the years 2014-

3
2018 (see table 1.2 that attached in appendix). As seen in the data 66 employees resigned

from the organization in 2016 alone and the turnover rate is calculated at 36.04% which

is significant. The exit interview report published same year revealed that 51.06% of the

total resigned employees left the organization due to low salary and benefit packages.

The second major causes of their resignation were also Training & Development and

Career Development. As a result of this they sought to look for other better opportunities

that could satisfy their needs. This is obviously affects the organization performance by

not only losing competent employees but also lacks the capacity to attract new ones from

the market. It also creates dissatisfaction which hinders employees to use their maximum

effort and decrease their performance.

Based on the above mentioned facts, the researcher wants to study some selected HRM

practice among other such as Recruitment and Selection, training and development,

performance appraisal and reward management that the Ministry is exercising and

identify the relationship between HRM practices with employees‟ performance. This

study, therefore, aimed to contribute to the field of research by analyzing and creating

understanding of the link between HRM practices and Perceived employee performance.

The main targets of this study will be to answer the following basic questions:

 What is the status of Human Resource Management (HRM) practice in Ministry

of Trade and Industry?

 What is the relationship between human resource practices and Perceived

employee performance?

 To what extent do HRM practices influence perceived employee performance?

4
1.3 Objective of the study

1.3.1 The General Objectives

The general objective of this study is to find out the effect of HRM practices on perceived

employee‟s performance in the case of Ministry of Trade and Industry.

1.3.2 The specific objectives:

 To assess the practice of Human Resource Management (HRM) in Ministry of

Trade and Industry.

 To examine the relationship between HRM practices (Recruitment and Selection,

training and development, performance appraisal and reward management) and

perceived employees‟ performance.

 To evaluate the extent to which HRM practices (Recruitment and Selection,


training and development, performance appraisal and reward management)

influence perceived employee performance.

1.4 Scope of the study

The geographical scope of this study is delimited to the ministry of Trade and Industry

head Office only. The study focuses on the following human resource management

practices (Recruitment and Selection, training and development, performance appraisal

and reward management). Data gathering tools was structured questioners and interview.

5
1.5 Significance of the Study

First, the result of this study gives a chance for the ministry of trade and Industry to

change and manage their human resource policies and practices in appropriate style,

Secondly, the research is supposed to use for further reference to conduct a study in the

subject matter of the human resource management practices and employee performance.

1.6 Limitation of the study

The study is aimed at conducting an evaluation of the effect of human resource

management practice on employee performance might not be fully welcomed by all since

it may create unintended alarm among some management members( like human resource,

Strategic planning and change management directorates. Secondly, regarding the attitude

of the respondents towards answering the questionnaire and interviews was carelessly

responded. The other pitfall that the researcher was face is lack off enough money to

distribute questionnaires to the whole population of the study, so the researcher was draw

a sample. To add, due to lack off sponsorship the researcher was face financial challenge

to cover the expenses to be incurred.

1.7 Definition of Terms

HRM practice: is composed of the policies, practices, and systems that influence

employees‟ behavior, attitude, and performance. HRM practices have an effect on

employee performance and competitive advantage of an organization (Noel, 2007).

Recruitment and Selection (Selection and Staffing): This is the process of recruitment

and selection to staff. This involves matching people and their expectations with which

6
the job specifications and career path available within the organization (Mahapatro,

2010).

Training and development: Training is a planned effort to enable employees to learn

job related knowledge, skills, and behavior. Development involves acquiring

knowledge, skills, and behavior that improve employees‟ ability to meet the challenges of

a variety of new or existing jobs, including the client and customer demands of those jobs

(Noel, 2011).

Performance appraisal: which includes encouraging risk taking, demanding innovation,

generating or adopting new tasks, peer evaluation, frequent evaluations, and auditing

innovation processes? This strategy appraises individual and team performance so that

there is a link between individual innovativeness and company profitability. Which tasks

should be appraised and who should assess employees‟ performance are also taken into

account (Mahapatro, 2010).

Reward management: Incorporating the selection of reward strategies and the

administration of payment and benefits systems (Mahapatro, 2010)

1.8 Organization of the study


This study is organized in to five chapters. The first chapter consists of introduction. This

includes background of the study, statement of the problem, objective of the study,

significance of the study, scope of the study, Limitation of the study and definition of

terms. The second chapter presents the theoretical frame work, empirical review of

literatures and conceptual frame work. The third chapter consists of research

methodology and design that will be used in the study. It describes the type and design of

the research; the population and sampling techniques of the study; data collection

7
instruments and procedures used to collect data and the methods of data analysis. In the

fourth chapter will contain data analysis, presentation and interpretation. Finally, the fifth

chapter will contain summary of the findings, conclusion, and recommendation.

8
CHAPTER TWO - LITERATURE REVIEW

This chapter should be divided into two major categories Theoretical Literature Review;
the study clarifies concepts and theories of human resource management and employee
performance and Empirical Literature Review; the study presents the research findings of
several researchers in relation to human resource management. At last, this chapter will
end up with the presentation of conceptual framework that indicates Human Resource
management as independent variable and employee performance as dependent variable.

2.1 Theoretical Review

2.1.1 The Concept of Human Resource Management (HRM)


It refers to the policies and practices involved in carrying out the „human resource (HR)‟

aspects of a management position including human resource planning, job analysis,

recruitment, selection, orientation, compensation, performance appraisal, training and

development, and labor relations (Dessler, 2007). HRM is composed of the policies,

practices, and systems that influence employees‟ behavior, attitude, and performance

(Noel, Hollenbeck, Gerhart & Wright, 2007). HRM practices have an effect on employee

performance and competitive advantage of an organization (Guest, 2002; Balochi et al.,

2010). The employees of every organization are a basis of competitive advantage. The

employees of every organization are a basis of competitive advantage. There has been an

increase in the experimental studies that examines the influence of some practices of

(HRM) on performance of employees (Becker & Huselid, 2006; Bowen & Ostroff,

2004).

According to Armstrong (2016) the goals of HRM are supporting the organization in

achieving its objectives by developing and implementing human resource (HR) strategies

9
that are integrated with the business strategy (strategic HRM) to contributing the

development of a high performance culture ensuring the organization has the talented,

skilled and engaged people it needs, creating a positive employment relationship between

management and employees and a climate of mutual trust and encouraging the

application of an ethical approach to people management.

2.1.2 Recruitment and Selection


Recruitment and selection involves two interrelated processes, recruitment is the process

of generating a pool of capable people to apply for employment to an organization whiles

selection is the process by which specific instruments are employed to choose from a

pool of applicant‟s persons most suitable for the job taking into consideration

management goals and legal requirements (Bratton & Gold, 2003). It is the process of

finding and engaging the people the organization needs. Selection is that part of the

recruitment process concerned with deciding which applicants or candidates should be

appointed to jobs (Armstrong, 2008 & 2016). Mahapatro (2010, PP.64 ), the objectives of

recruitment to attract people with multi-dimensional skills and experiences that suit the

present and future organizational strategies, to induct outsiders with a new perspective to

lead the company, to infuse fresh blood at all levels of the organization, to develop an

organizational culture that attracts competent people to the company, to search or head

hunt people whose skills fit the company‟s values, to devise methodologies for assessing

psychological traits, to seek out non-conventional development grounds of talent, to

search for talent globally and not just within the company, to design entry salary that

competes on quality but not on quantum and to anticipate and find people for positions

that does not exist yet.

10
2.1.3 Training and Development

Training is a planned effort to enable employees to learn job related knowledge, skills,

and behavior. Development involves acquiring knowledge, skills, and behavior that

improve employees‟ ability to meet the challenges of a variety of new or existing jobs,

including the client and customer demands of those jobs. Development programs often

focus on preparing employees for management responsibility. Likewise, if a company

plans to set up teams to manufacture products, it might offer a development program to

help employees learn the ins and outs of effective teamwork (Noël, 2011). As studied by

Busungu (2015) in Kenya Insurance company research revealed that training and

development of employees help employees adapt to their new surroundings through

socialization, affect recruitment of employees, Create efficient and effective service

delivery, boosts employee motivation, and productivity. Employee training also lowers

employee turnover to a great extent.

Guest (1987) argues that policies are necessary to ensure that employee performance is

evaluated, which in turn ensures that the appropriate training and development take place.

With the help of the performance appraisal reports and findings, the organization can be

able to identify development needs. However, individuals themselves can help to indicate

the areas requiring improvement as a result of the issues raised in the performance

appraisal process and their career path needs. Training plays an important role in

motivating employees to take part in organized projects, to willingly support programs

that will improve the organization and to do their best in order to see that organizational

goals are achieved (Bolman & Deal, 2011).

11
2.1.4 Performance Appraisal

Evaluating employee performance is a key responsibility of managers. Performance


appraisals, a powerful tool, provide to documented feedback on an employee‟s level of
performance. It is help to determine continued employment, promotion, transfer, bonuses,
and pay raises, and allow for improved communications between managers and
employees. Different scholars have defined Performance Appraisal from different
perspectives. Encouraging risk taking, demanding innovation, generating or adopting new
tasks, peer evaluation, frequent evaluations, and auditing innovation processes This
strategy appraises individual and team performance so that there is a link between
individual innovativeness and company profitability. Which tasks should be appraised
and who should assess employees‟ performance are also taken into account (Mahapatro,
2010, PP.13 & 101). Performance appraisal is about how managers should appraise,
manage performance, identify and develop potential, and train and develop employees.
The survival and growth of business depends upon the quality of the human resources
within the organization. This puts pressure on the capacity of managers in appraisal,
career management and development activities.

According to Torrington, Laura & Taylor (2005), performance appraisal is a measure of


personality traits that were felt to be important to the job such as creativity, enthusiasm,
drive etc.
As per Grote (2002), Performance Appraisal is a formal management system that
provides for the evaluation of the quality of an individual‟s performance in an
organization. It is the process of evaluating how well employees perform their jobs
when compared to a set of standards, and then communicating that information to those
employees (Mathis and Jackson, 2000).

According to Landy and Farr (1983), performance appraisal data is organized into two
groups: judgmental or subjective measures and nonjudgmental or objective measures.
Although judgmental measures are more broadly used, objective performance

12
measurements (e.g. production rates, time to complete a task, and scrap rates) have
been helpful measures of performance for routine, manual jobs (Rothe, 1946).Even so,
whether it is measured subjectively or objectively, the outcome of the performance
appraisal gives an insight to the management to how and to what extent an employee is
performing a given tasks and exhibit behaviors. (Collins and Clark, Mohamed .et al.
2003). Performance appraisal was found to have both direct and indirect effect on
administrative performance of employee and the feedback obtained from performance
appraisal activities, usually conducted at least once annually can help to improve
administrative processes.

2.1.5 Reward Management

According to Armstrong (2010,PP, 33), there are benefits of reward management :

deeper and longer-lasting impact on the motivation and commitment of people,

enhancing employment relationship, flexibility to meet individual needs, help to deliver a

positive psychological contract and this can serve as a differentiator in the recruitment

market. According Beaumont (1993), reward systems is to enhance the motivation of

individual employees, and hence their current on-the-job performance. Incorporating the

selection of reward strategies and the administration of payment and benefits systems

(Mahapatro, 2010). As argued by ( Keller & Szilagyi, Begum W. et al. 1976, 2016) it is a

process designed to motivate employees to increase morale, commitment, productivity,

and teamwork, rewards and recognition are often given through both monetary and

nonmonetary means. Literature supports the idea that reward and recognition are

important factors that influence employee behavior, job satisfaction, and employee

performance.

According Armstrong (2007), rewarding people according to the value they create,

aligning reward practices with business goals and with employee values and needs,

13
rewarding the right things to convey the right message about what is important in terms

of behaviors and outcomes, helping to attract and retain the high-quality people the

organization needs, motivating people and obtain their engagement and commitment and

developing a high-performance culture are the aims of reward management.

According to Armstrong (2007) and Rose (2014), Reward management deals with the

strategies, policies and processes required to ensure that the contribution of people to the

organization is recognized by finanial, material reward and Psychological rewards.

Reward management deals with the strategies, policies and processes required to ensure

that the value of people and the contribution they make to achieving organizational,

departmental and team goals is recognized and rewarded. It is about the design,

implementation and maintenance of reward systems (reward processes, practices and

procedures), which aim to meet the needs of both the organization and its stakeholders.

The overall objective is to reward people fairly, equitably and consistently in accordance

with their value to the organization in order to further the achievement of the

organization‟s strategic goals.

2.1.6 Employee performance


Employee performance is a core interest for any organization as it reflects the

organizational productivity by reflecting the employee‟ ability to attain the goals as

planned. Pushpakumari (2008) stated that performance is very much depended on

perception, values and attitudes. Porter and Lawler (1974) defined performance as a

function of individual ability and skill and effort in a given situation. In other words,

employee's performance is the ability of the employees to work effectively and efficiently

in order to accomplish the organizational goals and objectives (Kovach, 1987). Perceived

employee performance represents the general belief of the employee about his behavior

14
and contributions in the success of organization. Employee performance may be taken in

the perspective of three factors which makes possible to perform better than others,

determinants of performance may be such as “declarative knowledge”, “procedural

knowledge” and “motivation” (McCloy, Campel & Cudeck, 1994). Buchner (2007), a

sited by Armstrong (2009), there are three theories underpinning performance

management:-

2.1.6.1 Goals theory

Goal theory as developed by Latham and Locke (1979) highlights four mechanisms that

connect goals to performance outcomes: 1) they direct attention to priorities; 2) they

stimuli-late effort; 3) they challenge people to bring their knowledge and skills to bear to

increase their chances of success; and 4) the more challenging the goal, the more people

will draw on their full repertoire of skills. This theory underpins the emphasis in

performance management on setting and agreeing objectives against which performance

can be measured and managed.

Goals inform individuals to achieve particular levels of performance, in order for

them to direct and evaluate their actions; while performance feedback allows the

individual to track how well he or she has been doing in relation to the goal so that, if

necessary, adjustments in effort, direction or possibly task strategies can be made.

Robertson, Smith and Cooper (1992). Goal theory supports the agreement of

objectives, feedback and review aspects of performance management.

2.1.6.2 Control theory

According Armstrong (2009), Control theory focuses attention on feedback as a

15
means of shaping behavior. As people receive feedback on their behavior they

appreciate the discrepancy between what they are doing and what they are expected

to do and take corrective action to overcome it. Feedback is recognized as a crucial

part of performance management processes.

2.1.6.3 Social cognitive theory

Social cognitive theory was developed by Bandura (1986). It is based on his central

concept of self-efficacy. This suggests that what people believe that they can or

cannot do powerfully impacts on their performance. Developing and strengthening

positive self-belief in employees is therefore an important performance management

objective.

The main purposes of performance evaluations are to provide input into such

important decisions as promotions, transfers, and terminations. Evaluations identify

training and development needs. They pinpoint employee skills and competencies

that are currently inadequate but for which programs can be developed to remedy

(Mahapatro, 2010, PP.114).

2.2 Empirical studies

There are many researchers conducted around the world that showed the relationship

between human resource practices and perceived employee performance. Under this topic

the researcher consider only few studies to show the gap and the relationship between

HRM practices and employee performance in the ministry of Trade and Industry.

16
2.2.1 Recruitment and Selection and perceived employee Performance;
Recruitment and selection is one of the human resource management practices. The

object of recruitment is to find suitable candidates to meet organizational needs, in as cost

effective a way as possible (Tyson, 2006). Tanveer (2011) ,study revealed that

recruitment and selection found significantly related and impact with performance of

employees. HRM practice has significant impact on organizational performance (Kassa,

2016). (Fatema.N, 2018, PP.11), the study revealed that Recruitment and selection

constructive relationships with employee performance. AS Jouda (2016), undertaken a

study in Gaza University, he found that an increase employee‟s performance, the

university management should implement the human resource management practice

includes (selection, training and development, compensation and rewards, performance

appraisal) in order to increase their efficiency on the university performance. staff

selection was positive and shows positive change in dependent variable, so it shows staff

selection and employee performance are positively related(Ahamd and Jemal,2016)

H1: There is a significant and positive relationship between Recruitment & Selection
and perceived employee performance.

2.2.2 Training and Development and perceived employee performance;


Tanveer (2011) revealed that training and development found significantly related and

impact with performance of employees. The study undertook at Debrebrhan University

showed that HRM practice has significant impact on organizational performance. The

study found that university performance can be attributed by training and development (

Kassa, 2016). The study conducted by Yaounde (2017), training practice and employee

performance were correlated. This indicated that an improvement in training practices; it

is most likely to cause a slight improvement in employee performance. Hassan (2016)

17
concluded that Training and employee involvement play a positive role in increasing

employee‟s performance. According to Sarker.S (2017) study found that Training and

development is the most influential factors of Hrm practice in order to strength of

association with the employee performance. Hypothesis was supported, i.e. employee

performance is significantly related to training and development. AS Jouda (2016),

undertaken a study in Gaza University, he found that an increase employee‟s

performance, the university management should implement the human resource

management practice includes training and development, in order to increase their

efficiency on the university performance Mohamd (2014), found that regression analysis

proved that there was a significant relationship between training on employee

performance.

H2: There is a significant and positive relationship between Training & Development
and perceived employee performance.

2.2.3 Performance appraisal and perceived employee performance;


Performance evaluation is found to be a major contributor to performance (Tessema and

Soeters, 2006); this may be because employee performance evaluation is crucial for most

HR practices in that, if it is done properly, it could serve several purposes: first, for taking

proper personnel actions such as salary increment, promotion and other incentives.

Farooqi (2016) argued that performance evaluation is a significant and positive relationship

with employee performance; the individual‟s performance, highlight the potential of

employees and determine the future needs for training in development; Strong and positive

correlation of performance evaluation practices with the employee performance. Tanveer T.

et al (2011) study revealed that performance appraisal found significantly related and

impact with performance of employees. The study undertook at Debrebrhan University

18
revealed that human resource practice has significant impact on organizational

performance. According to Jouda(2016) studied in Gaza University found that an

increase employee‟s performance, the university management should implement the

performance appraisal in order to increase their efficiency on the university performance.

The impact of human resource management in case of Telekom Malaysia, the study was

found that Performance appraisal has moderate influence on the performance and

employee participation in decision making has least influence on the performance

(Mohamd, 2014).

H3: There is a significant relationship between performance Appraisal & perceived

employee performance

2.2.4 Reward management and perceived employee performance;

Compensation issues affect most HR practices or functions either directly or indirectly.

For instance, compensation affects employee motivation and practices, salary was also

found to be significant, which in turn suggests that compensation-related issues

considerably affect HRM outcomes such as employee‟s motivation and retention

(Tessema and Soeters, 2006). Compensation is a significant and positive relationship with

employee performance; A comprehensive compensation system can contribute a lot to attract

and retain the competitive human resources and can also shape the behaviors and

performance of employees. Balanced, fair and competitive compensation system affects the

retention of talented employees; a strong and positive correlation of compensation practices

with the employee performance. (Farooqi, 2016). The study undertook at debrebrhan

university revealed that HRM practice has significant impact on organizational

performance. The study found that university performance can be attributed by HRM

19
practices; compensation (Kassa, 2016). Compensation management has significant

influence on the enhancement of employee performance (Fatema.N, 2018) found that

compensation and the pay structure directly impact the performance of the employees.

For achievement of the employee as well as organizational performance; it is financial or

non-financial; compensation in the form of pay, rewards or incentives are the most

important factor to the employee. AS Jouda (2016), undertaken a study in Gaza

University, he found that an increase employee‟s performance, the university

management should implement the human resource management practice includes

compensation and rewards, in order to increase their efficiency on the university

performance.

H4: There is a significant and positive relationship between Reward Management

and perceived employee performance. Hence the entire hypotheses are taken from the

work of others scholars.

20
2.3 Conceptual Framework

In this section, the Researcher developed the Conceptual framework based on the review
of literatures of the study that indicates the relationship between HRM practices, as
independent variable, and Employee Performance (as dependent variable).

Fig. 2.1 conceptual framework of the study

Independent Variables
Dependent Variable
Source: Own Survey (2019)
HRM Practices
 Recruitment and Selection
 Performance Appraisal
 Reward Management Employee Performance
 Training and Development

Source: own survey (2019)

21
Chapter Three- Research Methodology

This chapter focuses on the research design, the source of data, sampling and sampling

techniques, data collection methods and data analysis procedures that the researcher

applied to conduct this research.

3.1 Research Design and Approach

The purpose of the research is to asses and investigates the effects of HRM Practice on

perceived Employee Performance in Ministry of Trade and Industry. To conduct such

kind of research, the researcher adopted explanatory research design. This research

design is preferable to identify and explain the relationship among different variables.

For this reason the researcher followed this research design for the intended study to

explain the relationship between the human resource management practice and perceived

employee performance in the Ministry.

3.2 Source of data


The study used both primary and secondary data sources. The primary data was collected

through questionnaires from the employees who are working for the ministry and through

interviews from management staff. The secondary data was collected from different data

sources such as professional journals, books, and the organizational HR data bank.

3.3 Data Collection methods


3.3.1 Questionnaires
Questionnaires are suitable tool for gaining quantitative data but can also be used for

qualitative data. A questionnaire enables to organize the questions and receive replies

without actually having to talk to every respondent. It is a very flexible tool that has the

advantages of having a structured format, is easy and convenient for respondents, and is

22
cheap and quick to administer to a large number of cases covering large geographical

areas (Walliman, 2011).

The questionnaire was the main data collection instrument that helped to collect different

information from employees who are working in the Ministry of Trade and Industry. For

this study, the researcher prepared both closed ended and likert scale questionnaires to

answer basic research questions.

3.3.2 Interviews

Interviews are more suitable for questions that require probing to obtain adequate

information. They are particularly useful when qualitative data are required.

To strengthen the data collected through questionnaires the researcher used interviews to

collect data from human resource manager, Strategic management manager and change

management manager of the ministry. Because those managers have close contact with

the employees and know the performance of each individual as well as have the exposure

to know the challenges that hinder the employees to utilize their potential effectively. The

researcher conducted a face-to face interview and by telephone with those managers in

the ministry.

3.3.3 Population, sample and sampling techniques

„Population‟s collective term used to describe the total quantity of cases of the type which

are the subject of the study. It can consist of objects, people and even events (Walliman,

2011).

There are 887 employees working for the Ministry. Sample size is number of items to be

selected from the population to constitute a sample. It refers to the appropriate number of

23
respondents for the study, and that was taken from the total population who are working

in the ministry of Trade and Industry.

Thus, the sample sizes were chosen so as to represent the whole population. The study
determined sample size by considering Yamane (1967:886) Statistical Formula:
n= N\(1+N (e2))
Where n = sample size N = population of the study, Where the study considered 5% as
tolerable Error and 95% as confidential level. The calculated sample size of the
population was approximately 275 employees. The researcher used proportionate
stratified sampling techniques that could be assumed to represent fairly each sector.
Simple random sampling technique was also adopted for the respective sectors until the
required sample size is reached since simple random sampling technique is supposed to
be well representative to the intended research work.

Table 3.1 Target Population and Sample Size

Total # of Sample size % Sample


Strata employees 31% proportion
Regulatory trade sector 81 25 9%

Promotion trade sector 277 86 31%


trade sector sub total 358 111 40%
Industry sector 144 45 17%
Supportive staff both sectors 385 119 43%
887 275 100%
Source: own survey (2019)

24
3.4 Data collection procedures.
Data collection instrument which were used in the study was prepared on the basis of

review of literature and research questions. Relevant and suitable questionnaires was

prepared in English, and translated to Amharic for simple understanding for the

respondents. The questionnaire consists of likert scale and close-ended. The questionnaire

was divided into two parts. Part – 1 of the questionnaire consists of profile of the

respondents such as, gender, education, occupation and experience. Part – 2 contains the

main body of the questionnaires. The structured close ended questionnaires were

distributed to the respective respondents returned afterwards.

3.5 Data analysis/ Data Analysis Methods


The data obtained from the respondents was analyzed by using statistical packages for

social science (SPSS) version 20. The responses of the questionnaire were filled by the

employees and analyzed by using descriptive statistics, finally regression analysis. The

data was analyzed and presented quantitatively by using tools like percentile, tables,

charts, graphs and others to facilitate the interpretation of the results of the data. In

addition, the information gathered through interview was discussed qualitatively to

understand the interrelationship between different human resource practice and employee

performance.

25
3.6 Reliability Test
To establish how closely related the variables are in the study, a Cronbach‟s alpha test
was done. According to Andrew, Pedersen, and McEvoy (2011), Cronbach‟s values
range from 0 to 1. However, values at or above 0.7 are desirable. Based on this
assumption the data was considered acceptable with an overall reliability coefficient of
0.94. The findings are presented in the table below.

Table 3.2 reliability test result


Item‟s Cronbach‟s Alpha No of Items
Recruitment and selection 0.75 6
Performance Appraisal 0.88 9
Training and development 0.86 7
Reward Management 0.68 5
Employee Performance 0.87 9
Overall Cronbach‟s Alpha 0.94 36
Source: own survey (2019)
It can be observed from the reliability statistics test table 3.2 above that the Cronbach‟s

Alpha varies between the range 0.75 and 0.88. This shows high consistency among the

items of the constructed. Since all items are considered useful and reliable for computing

scales, no items were being deleted.

3.7 Ethical consideration

 The researcher informed the target group of study that was subjected in this

research project that they have the freedom to withdraw from the study at any

time without any unfavorable conditions, and they would not be harmed as a

result of their participation or non-participation in the project to ascertain their

participation in the study was voluntary

26
 Participants were informed of the purpose of the research and assured of

confidentiality; the questionnaires were completed namelessly by respondents and

treats confidentially.

27
Chapter Four- Data analysis interpretation and discussion

Introduction

This section includes the rate of response, demographics analysis , analysis of HRM

practices and employee performance from the data that collected, the relationship

between HRM practices and employee performance, to what extent HRM practices

affects employee performance, discussions of the finding,

4.1. Sample and Response rate


The study had a population of 887 and a sample size of 275 respondents working for the

ministry of Trade and industry. To increase the probability of a good response rate, 275

questionnaires were sent out; from which 270 respondents filled and returned the

questionnaires. Leaving a total of 5 questionnaires unreturned. According to Mugenda

(2003); Cooper and Schindler (2014), 50% response rate is adequate for analysis, while

60% is good and 70% excellent response rate for analysis. Therefore, the research‟s

response rate of 98.18% excellent enough to proceed with data analysis.

28
4.2 Demographic Characteristics
Table 4.1: Demographic Characteristics
Demographic Frequency Valid Cumulative
Variables Frequency
variables percentage percentage Percentage
Gender of the Female 88 32.6 32.6 32.6
respondents Male 182 67.4 67.4 100
270 270 100 100
Age of the 18-30 166 61.5 61.5 61.5
respondents 31-40 80 29.6 29.6 91.1
41-50 8 3 3 94.1
51-60 16 5.9 5.9 100
Total 270 100 100
Level of Primary 8 3.0 3.0 3.0
education Secondary 11 4.1 4.1 7.0
Diploma 4 1.5 1.5 8.5
Degree 232 85.9 85.9 94.4
Above degree 15 5.6 5.6 100
Total 270 100 100
Experience 0-5 146 54.1 54.1 54.1
6-10 87 32.2 32.2 86.3
11-15 12 4.4 4.4 60.7
16-20 19 7.0 7.0 97.8
Above 21 6 2.2 2.2 100.00
Total 270 100 100
Source: Own Survey (2019)

4.1.1 Gender Distribution


In order to determine the gender distribution in the organization, respondents were asked
to indicate their gender by checking either male or female in the questionnaire. The
findings showed that male respondents were more than with female a representation of
67.4% (182 in number out of the 270), the remaining represent by female they were
32.6% (88 in numbers out of 270).

29
4.1.2 Age of the Respondent
The study also looked to establish the age bracket of the respondents by asking them to
check the boxes with their age. The findings showed the highest percentage of 61.5% of
the respondent were between the of 18 and 30 years old (in number 166 out of the total
respondent 270,) i.e. most of the respondent were at young age in the ministry, 29.6% of
the respondents were between the age of 31 and 40 years old (in number 80 out of the
total collected which is 270 respondents), which is the second most dominant age in the
ministry, 3.0% of the respondent were between the age of 41 and 50, 2.6% of the
respondent i.e. few in number (in number 8 out of the total respondents) . Between the
age of 51 and 60 years old 5.9%. They were also few in numbers out of the total
population about 16 in number.

4.1.3 Level of Education in the organization

It was also necessary for the study to determine the educational levels of the respondents

as that could help to determine the level of understanding of the respondents about the

different HRM practices to evaluate their respective effect on perceived performance

employee. The table in the above showed that the respondents hold a wide range of

educational qualifications from masters and above level. Majority of the sample group

were holding first degree which account for 85%, followed by above degree which is

5.5%, diploma 1.5%, higher school 4.1%. This implies that people of different

educational qualifications are assumed to work in the Ministry and the large proportion of

them degree and master„s and above graduates who do have at least the basic knowledge

about the management concept of human resource practice and also its association with

employees performance or in organizational performance.

30
4.1.4 Level of experience in the Organization
The study finds out how long the respondents have worked in the ministry of Trade and

Industry. The findings showed those that had 0-5 years‟ experience were 146. 6-10

years‟ experience was 87. Respondents with 11-15 years were 12, 16-20 were 19 and

lastly those with over 21 years of work experience were 6. The above findings confirmed

that most of the respondents had served the ministry for a short period of time. This

indicates that most of the employees have few experiences in the Ministry so that they

may not know well about the human resource practice and how that HRM can affect their

performance in the ministry.

Section one: Descriptive Analysis

In the final section of the questionnaire respondents were asked the effect of HRM

practice on employee performance and asked to fill in their option by selecting answers

corresponding to their choice on the Likert scale options (5=Strongly agree, 4=Agree,

3=Neutral, 2=Disagree, 1=Strongly disagree).

Table 4.2 Assumptions likert scales mean values;


No. mean scored Respondents
1 1-1.5 Strongly disagree
2 1.6-2.5 Disagree
3 2.6-3.5 Neutral
4 3.6-4.5 Agree
5 Above 4.5 Strongly agree

Source: Burns (2008)

31
Depending on the above assumptions the mean and standard deviation of the HRM
practices and employee performance in the ministry of Trade and Industry as follows;

4.2.1 Perception on Human resource management practices and


employee performance

Table 4.3: Perception on HRM practice and perceived employee performance

Strongly Strongly Standard


Variables N Agree Agree Neutral Disagree disagree mean deviation
Recruitment
72 360 882 306 2.26 0.6
selection
Percentage
270 4.4 22.25 54.51 18.91
(%)
Performance
14 114 668 1487 130 2.3 0.7
Appraisal
Percentage
270 0.58 4.72 27.68 61.62 5.39
(%)
Reward
1 54 303 726 101 2.23 0.5
Management
Percentage
270 0.08 1.56 25.87 61.27 8.52
(%)
Training and
72 270 1368 180 2.1 0.6
Development
270 3.81 14.29 72.39 9.52
Percentage(%)
Employee
3 120 543 1542 222 2.2 0.7
performance
Percentage
270 0.12 4.93 22.35 63.46 9.14
(%)
Source: Own Survey (2019)

In the table above showed that recruitment and selection has the mean value scored of

2.26. If the mean value falls between 1.5 and 2.5 the respondent disagree with this

practice (burn, 2008). The finding also supported by the frequency distribution

percentage of 54.51% from the total respondents was disagree with this practice. This

implies that recruitment and selection practice in the ministry of trade and Industry is low

level.

32
The above table showed that performance appraisal practice aggregated mean scored of

2.3. If the mean value scored between 1.5 and 2.5 then according to likert scale

assumptions Burns (2008) the respondent‟s response rate falls with disagree.

Furthermore, this finding supplemented by the frequency distribution percentage rate of

61.62% from the total respondent also disagrees with the practice of performance

appraisal. This means performance appraisal practice in the ministry was low.

Reward Management practice aggregated mean scored of 2.2. If the mean value scored

falls between 1.5 and 2.5 then the respondents were disagree with reward practice. In

addition to the above fact, the findings also supported by the frequency distribution

percentage of 61.27% from the total responses rate were disagree with practice. Hence,

the researcher can concluded that reward practice in MOTI was low.

And also the table above showed that training and development practice average mean

has scored of 2.1. According the assumption given above the respondents were disagree

with this practice. Beside to the above mean result, the frequency distribution percentages

of this practice of 72.39% from the total respondents were disagree. This showed that

the ministry has low practice in training and development. Finally, the researcher asked

the perception of employees on their own performance level the mean scored result was

falls under disagreed level. Furthermore, the frequency distribution percentage of this

practice showed that 63.46% of the total respondents were disagree with their own

performance. Therefore, in this study the researcher can conclude that human resource

practice (recruitment and selection, reward management, performance appraisals and

training and Development) and employee performance in the ministry of trade and

industry the respondents were disagree and the level these practices were low.

33
4. 2.2 Interview response

Heads of from HR, Strategic Planning and Change Management sections were also

interviewed related to the subject to triangulate the responses from employees side

collected through questionnaires with that of the Management view of point.

Accordingly, for the interview question is there clear recruitment and selection criteria

for the open vacant position at the Ministry, the HR Directorate, the Strategic Planning

Directorate and Change management directorates all had similar answers and saying that

yes, the vacant posts consist of the educational, skill and knowledge requirement for the

position, experience required with duties and responsibilities of the position.

However, based on the descriptive analysis presented above, most of the employees were

not in agreement with the above statement and showed that they are dissatisfied with the

recruitment and selection criteria set by the Ministry.

With regard to the second variable i.e. Training and Development, the three directorates

were asked if there is any training and development practices at the Ministry and how the

program is run. The HR Director replied that there is a training and development practice

in their organization. They usually plan and make appropriate budgeting at the beginning

of the year. They also usually make training need assessment and tried to organize as

much as possible internal and external trainings based on the gap analysis. The other two

Directorates agreed that there exists training need assessment and different trainings

offered to employees. However, they question on the fairness and effectiveness of the

training provided to employees. They further elaborated that post assessment is not

conducted after the training whether the training brought the required behavior and

change of the status quo.

34
Similar to the strategic and change management directorates, the employees do not

believe that enough training opportunities were not offered to all. This implies that they

have also fairness issue. The response from the employees also indicated that the

trainings offered did not help to improve their decision making and problem solving

skills. In general, it can be concluded that they were not satisfied with the training and

development practice applied at the ministry.

Both the HR and Change Management Directorates believed that there is implementation

problem even if there is performance evaluation practice in the organization and

appropriate tool is designed and provided to managers. The HR Director also believes

that supervisors are biased in filling their direct supervisees according to their real

performance and the feedback provided by them is not reflecting the overall achievement

of the employees objectively. In contract with the two Directorates, the Strategic

Directorate believes that result based evaluation is done every six months and feedback is

provided on the comment section of the performance evaluation format followed by

signature of both the supervisor and the employees side.

The response of the majority of employees reflects that there is a performance appraisal

system for formality. They are not appraised objectively and they were not provided

appropriate feedback. They also believe that the result of the performance appraisal do

not serve the purpose.

For the fourth interview question asking the directorates if the reward system depends on

employees performance at the Ministry, all of the respondents agreed at one point that

there said to be reward management system at the ministry which is not practical and

35
they preferred to say there is no reward system at the ministry in general. This response

was similar with that of the employees‟ response in which their reflection was very

dissatisfying reward management system.

Finally, the directorates were asked to describe the contribution of human resource

management practices for the performance of employees. Hint was given to the

respondents that HRM practices included Recruitment and selection criteria, Training and

Development, Reward Management system and performance appraisal system. They

replied that all are interrelated and very important factors for enhancement of the

performance of the employees. Having clear recruitment selection criteria and deploying

the right employee for the position is the first move for achieving the objective of the job.

By identifying gaps through performance appraisal system and offering training and

development program to employees enhances the employees‟ performance. Likewise,

good reward management system motivates employees for better achievement.

Section Two: the relationship between HRM practices and

Employee Performance

Identifying the relationship between two or more variables is the most important in

research activity. Correlation is a statistical method used to determine whether a

relationship between variables exists. To determine whether two or more variables are

related and to determine the strength of the relationship between or among the variables

are used (Allan, 2009, pp 534). The correlation coefficients have ranges from 1 to -1. I.e.

if the correlation coefficient is between 0 and +1, it is said be positive relationship

between variables, the correlation coefficient is between –1 and 0, it said to be negative

36
the relationship between variables. If the correlation value exactly +1 and -1 called

perfect positive and perfect negative respectively. The correlation coefficient

symbolized by r. When we come to this study, the research would identify relationship

between human resource practice and perceived employee performance. Based on the

questionnaires that were filled by the employees of the ministry of trade and Industry on

HRM practice and employee performance, the result of the correlation analysis between

those variables is listed in the table below.

Table 4.4: The Correlation between HRM practices and employee performance
Correlations
RS PA TND RM EP
Pearson Correlation 1
RS Sig. (2-tailed)
N 270
Pearson Correlation .780** 1
PA Sig. (2-tailed) .000
N 270 270
Pearson Correlation .572** .784** 1
TND Sig. (2-tailed) .000 .000
N 270 270 270
Pearson Correlation .482** .559** .423** 1
RM Sig. (2-tailed) .000 .000 .000
N 270 270 270 270
Pearson Correlation .607** .623** .514** .523** 1
EP Sig. (2-tailed) .000 .000 .000 .000
N 270 270 270 270 270
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Own Survey (2019)

Where EP- Employee performance RM-Reward Management, TND-Training and

Development

RS-Recruitment & Selection, PA-Performance appraisal

Pearson correlation test was conducted as depicted in table 4.11 to know the degree of

relationship between the independent variables, which are perceived performance

appraisal, perceived reward Management, recruitment and selection, perceived training

and development and the dependent variable perceived employee performance. As shown

37
in the table the independent variables, which are recruitment and selection and,

performance appraisal, reward Management, training and development have a

significant & positive relationship with the dependent variable (perceived employee

performance) with correlation coefficient 0.607, 0.623, 0.514 and 0.523 respectively.

From the correlation table (F), all independent variables (performance recruitment and

selection, performance appraisal and training and development and reward management)

are correlated with employee have highest correlation coefficient of r= (0.61, 0.62 and

0.51 and 0.52 respectively which is P value less than 0.05,) As shown in the table all the

independent variables are also significant and have positive relationship with dependent

variable which is perceived employee performance.

According to (Wong and Hiew, 2005) the correlation coefficient value(r) range from;

 0.10––0.29, is considered to be weak,

 0.30-0.49, considered to be moderate,

 0.5-1.0. Considered to be as strong relationship between dependent and

independent variables.

Therefore in this study we can conclude that recruitment and selection, reward

management, performance appraisals and training and Development have strong positive

relationship with employee performance in the ministry of trade and industry.

38
Section Three: Effect of human Resource practice on employee

performance

4.3.1 Assumption of regression analysis


Meeting the assumptions of regression analysis is necessary to confirm that the obtained

data truly represented the sample and that researcher has obtained the best results (Hair et

al., 1998). Two assumptions for regression analysis used in this study discussed for the

individual variables: multi-collinearity and linearity (Hair et al., 1998). In the following

paragraphs, each assumption is explained.

4.3.1.1 Multi-Colinearity Diagnostics:


The results of multi collinearity confirm that there are no high correlations between the

independent variables using the Variance Inflation Factor (VIF), Tolerance test for

each variable to ensure the independence of errors. Taking into account the Variance

Inflation Factor not to exceed the allowable value (10), Tolerance value greater than

(0.2). Table 4.5 shows the results of these tests.

Table 4.5: Results of Multi collinearly


Tolerance (VIF)
Recruitment and Selection .385 2.596
Performance Appraisal .206 4.851
Reward Management .381 2.622
Training and Development .682 1.467
Source: Survey (2019)
The multi collinearity in this study was checked using the Tolerance and VIF value. As it
is showed in the Table 4.5 all independent variables (recruitment and selection,
performance appraisal, reward management and training and development) have a

39
Tolerance value greater than 0.2 and a VIF value less than 10. i.e. the data checked multi
collinearity passed for further regression analysis.

4.3.1.2 Homoscedacity test


The linearity of the relationship between the dependent and independent variable

represented the degree to which the change in the dependent variable is associated with

the independent variable (Hair et al., 1998). In a simple sense, linear models predict

values falling in a straight line by having a constant unit change (slope) of the dependent

variable for a constant unit change of the independent variable (Hair et al., 1998).

The scatter plot is a visual way to describe the nature of the relationship between the

independent and dependent variables (Bluman, 2009). In our case the graph shows most

likely linear relationship between human resource practices and perceived employee

performance.

Figure 4.1 Homoscedacity test

Source: own survey (2019)

40
4.3.1.3 Normality test

Table 4.6: Skewness and Kurtosis Test result


Statistics
RS PA TND Rw EP
Valid 270 270 270 270 270
N
Missing 0 0 0 0 0
Skewness 1.563 2.335 1.373 1.773 1.127
Std. Error of Skewness .148 .148 .148 .148 .148
Kurtosis 4.340 6.162 2.799 6.946 3.203
Std. Error of Kurtosis .295 .295 .295 .295 .295
Source: own survey (2019)

Hence, one of our assumption or normality test can be done using Kurtosis test by the
help of SPSS version 20. As we can see from the Table 4.6, even though the distribution
is positive skewed we can say that it is approximately normal. Since a normal curve has 0
skewness or symmetrical. As to the reference of kurtosis measure, out of all the indicated
values of variables, Training and development and employee performance have nearly
Kurtosis values =3 but the rest which are recruitment and Selection and performance
appraisal and reward management have values greater than the normal.

4.3.3 Effect of human Resource practice on employee


performance
A multiple regression correlation R can also be computed to determine if a significant
relationship exists between the independent variables and the dependent variable.
Multiple regression analysis is used when a statistician thinks there are several
independent variables contributing to the variation of the dependent variable. This
analysis then can be used to increase the accuracy of predictions for the dependent
variable over one independent variable (bluman, 2007). The general form of the multiple
regression equation with k independent variables is
Y=b0+b1x X1+ b2xX2 ••• bkxk+£
Where Y = the Predicted Dependent Variable
bo = Constant b1, b2 and bn unstandardized regression coefficients
X1, X2 and xn are the explanatory variables and the error term ɛ (the Greek letter
epsilon) is a random variable. In multiple regressions, the strength of the relationship

41
between the independent variables and the dependent variable is measured by a
correlation coefficient. This multiple correlation coefficient is symbolized by R.
Hence, EP= b0+b1RS+b2PA+b3RM+b4TND+£ Where b1, b2, b3 and b4 are the
Unstandardized regression coefficients.

Table 4.7 : Model Summary


Model Summaryb
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .684a .467 .459 .34356

a. Predictors: (Constant), TND, RM, RS, PA


b. Dependent Variable: EP
A. Predictors: (Constant), TND, RS, RM, PA

B. Dependent variable: employee performance

Where TND= training and development

RS= recruitment and selection

RM= Reward Management

PA= performance Appraisal

In the above table the model summary the multiple regression correlation efficient R

=0.684 represent the correlation between employee performance and independent

variables which are (training and development, recruitment and selection, Reward

Management, performance Appraisal). R square represents the proportion of variance in

the dependent variable which explained by independent variables (0.467). Adjusted

square(R=0.459) this means 45.9 % the variation of employee performance is due to the

predictors (recruitment and selection, performance appraisal, training and development

and reward management). The remaining 54.1% of variations on employee performance

42
are explained by other variables out of this model or variables which are not incorporated

in this study.

Table 4.8: ANOVA

ANOVAa
Model Sum of df Mean Square F Sig.
Squares
Regression 27.445 4 6.861 58.127 .000

1 Residual 31.280 265 .118


Total 58.724 269

Source: Survey data (2019)

A. Dependent Variable: EP

B. Predictors: (Constant), TND, RM, RS, PA

From the above ANOVA table F value is significant (significant value is less than 0.05) it

means dependent variable is significantly affected by the respective independent variable

Table 4.9: Regression Coefficient


Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) .226 .142 1.593 .112
RS .343 .085 .293 4.062 .000
1 PA .172 .095 .178 1.808 .072
TND .112 .077 .106 1.458 .146
RM .264 .061 .237 4.358 .000
Source: Survey data (2019)

In the above regression analysis model table points out that the relationship between

independent and dependent variable. The model coefficient table reported that the

recruitment and selection and reward management have positive and both practices have

a significant value of P=0.000 which is less than 0.05. Whereas, performance appraisal

43
training and development have positive coefficients value but have the p values = 0.072

and 0.146. Therefore, the two variables were Insignificant to the employee performance

in the ministry of Trade and Industry.

The beta coefficient result also shows that recruitment and selection has ß=0. 293, this

implies that a one unit of recruitment and selection increased will leads to an increase in

employee performance by 29.3%. Reward management has ß= 0.237, this means

that a one unit of reward management increased will leads to an increased in

employee performance by 23.3%. While looking at the result recruitment and

selection have the greater effects on employee performance in the ministry

among the two predictors.

4.3.4 Hypothesis Testing


In this section the major findings of the study are pointed out in the following table;

Table 4.10: Summary of hypothesis testing

Correlation Regression
r value P Degree of Status B P hypothesi
Hypothesis Predictors
value correlatio value value s Status
n
H1 RS 0.607 0.000 Strong Accept Accepted
and ed .293 .000
positive
H2 TND 0.523 0.000 Strong accepte Rejected
and d .178 0.146
positive
H3 PA 0.623 0.000 Strong accepte rejected
and d .106 0.072
positive
H4 RM 0.514 0.000 Strong accepte Accepted
and d .237 .000
positive

44
H1: There is a significant and positive relationship between Recruitment & Selection and
perceived employee performance in the ministry of trade and industry was supported.
As shown in regression coefficient table the p value of recruitment and selection practice

is equal to 0.000 which is much less than 0.05 if the p value less than 0.05 then we have

adequate statistical evidence to accept the alternative hypothesis or we regret to accept

the null hypothesis (Abdulazak, 2014)

H2: There is a significant and positive relationship between Training & development and

perceived employee performance in this ministry was not supported.

As inferred in regression coefficient table the p value of training and development

practice is equal to 0.146 i.e. p value is much greater than 0.05 if p> 0.05 then the

alternative hypothesis was rejected and Training and development doesn‟t has influence

employee performance;

H3: There is a significant and positive relationship between performance appraisal and
employee performance in this ministry was not supported;
As inferred in table 4.11 value training and development practice is equal to 0.072 i.e. p

value is much greater than 0.05 if p> 0.05 then the alternative hypothesis was rejected

and performance appraisal doesn‟t has influence employee performance;

H4: There is a significant and positive relationship between reward and employee
performance in this ministry was supported.
As shown in regression coefficient table the p value of reward management practice is
equal to 0.000 which is much less than 0.05 if the p value less than 0.05 then we have
adequate statistical evidence to accept the alternative hypothesis or we fail to accept the
null hypothesis.
As considered from regression coefficient the table above H1 and H4 alternative
hypothesis were accepted, have the p value 0 .000 respectively. Except H2 & H3 which
is has a p value of (p=0.146 and P= 0.072) respectively, then the null hypothesis were
fail to accept.

45
CHAPTER FIVE Finding Summary, Conclusion and
Recommendation
5.1 Introduction
In this chapter, the summary, conclusion, and the possible recommendation are presented

and described. At the end of this chapter, limitations and suggestions for future research

are discussed.

5.2 Finding Summary of the Study

The general objective of this study was to find out the effect of HRM practices on

perceived employee‟s performance in the case of Ministry of Trade and Industry. The

research was guided by the three specific objectives of this study. The major findings of

this study is summarized and presented as follows:

With regard to the first research object i.e. assessing the status of the practice of Human

Resource Management (HRM) at the Ministry, the result of this study revealed that:

 The Mean and standard deviation corresponding to the recruitment & Selection,

Reward Management, performance appraisal and training & development

practices were law. This implies that the practice of these key HRM functions are

least practiced by the organization.

 The assessment of employee perception on their performance also showed that

low rate of mean and standard deviation. This means that the performance level

of the employees is low.

46
The second objective of this study was to examine the relationship between HRM

practices (Recruitment and Selection, training and development, performance appraisal

and reward management) and perceived employees‟ performance.

The correlation analysis shows that human resource practices and perceived employee

performance have positive and significant relationship. The first highest correlation is

between performance appraisal and employee performance, the second highest

correlation is between recruitment and selection and employee performance. The third

highest correlation is between training and development and perceived employee

performance and the fourth highest correlation is between reward management and

perceived employee performance. From this the researcher can say that all HRM

practices and employee performance have positive and significant relationship.

The third objective of this study was to evaluate the extent to which HRM practices

influence perceived employee performance. The regression model summary result has

established 45.9% of the variation of employee performance is due to the predictors or

the independent variables (recruitment and selection, performance appraisal, reward

management, training and Development).

Based on the standardized coefficients, recruitment and selection accounts greater rate of

effect on employees‟ performance followed by reward management.

The correlation and regression analysis showed that both recruitment & selection and

reward management have positive and significant relationship with employees

performance at p-value = 0.000. Therefore, H1 and H4 are accepted. On the other hand,

47
performance appraisal and training & development practices have insignificant positive

relationship with that of employees. To this effect, H 2 and H3 is rejected.

5.3 Conclusion of the study

The practices of human resource management are very important in industry as well as in

trade sectors, the involvement of modernize HRM system and practices should improves

employees and organization effectiveness. In this research the researcher examined four

independent variables, (recruitment and selection, performance appraisal, reward

management & training and development) and their effect on the dependent variable

which is perceived employee performance.

With regard to the status of HRM practice, the aggregate mean rate of variables shows

that they fall between 2.1 and 2.3. The researcher can conclude that the ministry has low

HRM practice and employee performance. Concerning with HRM practices and

employee performance relationship, the correlation coefficient shows that there is a

positive and significant relationship between HRM practices and employee performance.

In relation to the effect of HRM practices and employee performance, the variation of

predictor variables (Human resource management practice) have effects on employee

performance by 45.9%. Based on the standardized coefficients, recruitment and selection

accounts greater rate of effect on employee‟s performance followed by reward

management. Results in connection with recruitment & selection and reward

management are consistent with other researcher findings Tanveer et.al (2011),

kassa(2016 Fatema(2018), Jouda(2016) Ahamd and Jemal (2016), Tessema &

Soetere(2006), while the results of Training and development & performance appraisal

are inconsistent with the previous research finds Sarker(2017), Hassan(2016)

48
Mohamd(2014), Farooqi(2016), Yaounde(2017), Tessema & Soetere(2006), Tanveer

et.al (2011), Jouda(2016) Ahamd and Jemal (2016), There for the researcher can

concludes that HRM practices (recruitment & selection and reward Management) in the

ministry highly affect employee performance.

5.4 Recommendation

Human resource is the most valuable assets and a competitive advantage of any

organization. The performance of the employees and overall performance of the

organization will be enhanced when human resource management practices well

managed. Based on the findings of the study, the following recommendations are given

by the researcher.

 The Human resources capacitate and engage the line managers as a hiring

manager during recruitment and selection. Additionally, set clear selection criteria

for internal and external candidates such as the qualification, knowledge and skill

required from the job holder. As the ministry is being challenged in getting

qualified professionals, the researcher also recommends that to create a network

with higher institutions and HR Networks. In case of hiring technical expertise,

outsource the recruitment and selection practice.

 Reward management is obviously one of the major factors to attract and engage

employees for a better performance; the researcher recommends the Ministry to

study and propose a competitive salary scale and introduce other allowable

benefit packages. By doing so the employees will be motivated and their

performance will increase.

49
 Even though the regression analysis result showed the performance appraisal

management and training & development have insignificant effect on employees‟

performance, based on the interview and descriptive analysis generally, It is

recommended to see it critically rather than for formality. And also it is

recommended that performance appraisal conducted 360 degree performance

appraisal method should be used to truck the achievement level of the employees

and fill the gap. The training and development program should be arranged based

on gap analysis to enhance the capacity of employees and make them ready for

better achievement. The ministry should also make the impact assessment to

measure the effectiveness and outcome of the training.

5.5 Limitation
Research context was limited to Trade and Industry Sector, while the future research can

be extended to different sectors to get more significant results. Small number of

respondents has been chosen for this study so a similar study should be conducted by

increasing a sample size. This study examined only four human resource practices

(recruitment and selection , Performance appraisal, Training & development and reward

management), while other human resource management practices can also be used for

further study to get a clear idea of the important employee‟s performance determinants.

50
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54
Appendix
ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE
Questionnaires on the Effect of HRM Practices on Perceived Employee
Performance: In case of Ministry of Trade and Industry.
This study collects relevant information from selected employees to help in “The Assessment of the Effect
of HRM Practices on Employee Performance”. The information required is only for academic purpose and
any information provided would be treated with the highest confidentiality and shall be used only for the
intended purpose. The researcher will much appreciated if you could spare some minutes to complete this
questionnaire.
General guide lines:
 No need of writing your name
 Put your level of agreement by putting (√) sign. Thank you!!
Email address: ya9314@gmail.com
Respondent Demographic Information
1. Gender
Male Female
2. Age
18 – 30 Years 41-50 Years
31 – 40 Years 51-60Years
3. Marital status
Single Married
Divorced
4. Educational Level
Primary Diploma
Secondory Degree
Above
5. Experience
1 – 5 years 6-10 years
11-15 years 16-20 years
21 and above

55
Please express how far these practices in your organization by indicating your level of
agreement/disagreement on a five point LIKERT scales.
(1)Strongly Disagree (2) Disagree (D) (3) Neutral (N) (4)Agree (A) (5) Strongly Agree (SA)
(SD)
Using the above scales (1-5) please tick (√) the levels of agreement in each of the items below with regards
to the HRM practices and perceived employee performance of your organization.

Code Items SA (5) A(4) N(3) D(2) DA(1)


RS Recruitment and Selection
RS1 Appointments in this organization is based on merit

RS2 Applicants are fully informed about the qualifications required to perform the
job before being hired

RS3 Measurable selection criteria's are developed and used while filling up jobs

RS4 In this organization, line managers and HR managers participate in the


selection process
RS5 The recruitment and selection process in MOTI is fair and transparent

RS6 Selection system selects those having the desired knowledge, skills and attitude

PA Performance Appraisal
PA1 There is a formal and written performance appraisal system
PA2 I am informed of how my performance evaluation is done
PA3 Performance of employees is measured on the basis of objective quantifiable
PA4 results
The objectives of the appraisal system are clear to employees
PA5 Appraisal system has a strong impact on individual and team performance

PA6 Appraisal system helps me to grow and develop my career


PA7 Employees are provided with performance based feedback and counseling

PA8 I feel performance appraisal is just a formality in this organization

PA9 Performance appraisal is fair in this organization


RM Reward management
RM1 Pay increments offered by our organization are satisfactory
RM2 Rewards in our organization are strictly linked to employee performance.

56
RM3 We are satisfied with the benefits we receive.
RM4 Rewards and incentives are fairly distributed in our organization
RM5 The existing reward and incentive plans motivate us for better performance

TD Training and Development


TD1 Extensive training programs are provided for employees in all aspects.
TD2 I have training opportunities to learn and grow.

TD3 I am selected for training programs that suit my job needs most

TD4 Training needs are identified through a formal performance appraisal


mechanism
TD5 Training programs have improved my decision making and problem solving
skills
TD6 My communication and working relationships with co-workers have improved
due to training programs.
TD7 I feel better equipped to tackle unexpected events with skill and confidence.

EP Employee Performance
EP1 My performance is better than that of my colleagues with similar qualifications
EP2 We have good working relations between me and my colleagues
EP3 I am able to find solutions to the various challenges I encounter in my work We
have good working
EP4 I am able to finish my work on time.
EP5 I rarely have to repeat a task because it was not done properly
EP6 The quality of my output is quite good
EP7 Customers have never raised a complaint about my service
EP8 I am able to provide necessary information that would assist others to complete
their tasks
EP9 We assist each other in handling tasks that are challenging

57
Questioner Interview
1. Does it exist clear recruitment and selection criteria while you open vacant positions
in ministry of Trade and Industry?
2. Is there any training and development practice in your organization? If so how did
you run with it?
3. Is there a performance evaluation practice in your organization? Have you give
comment for employees after you evaluate their performance?
4. Does the reward system depend on employee performance in ministry of Trade and
Industry?
5. What is the contribution of human resource management practice to perceived
employee‟s performance in ministry of Trade and Industry?

Thank You!!

Table 1.1: turnover rate in the ministry of Industry


Items 2006 2007 2008 2009 2010

Employees in respective budget Years 176 195 199 300 318

Beginning year + ending year employee / 2 148 186 197 250 309

Employees Left during the Budget year 69 56 66 42 58

Employees Left during the Budget year/ (Beginning year 46.62% 30.11% 36.04% 16.8 18.77%
+ ending year employee / 2) * 100 %

58
Mean and Standard deviation of Recruitment and Selection
Descriptive Statistics
Recruitment And Selection
N Mean Std. Deviation

Appointments in this organization


270 2.07 .681
is based on merit
Applicants are fully informed about
the qualifications required to 270 2.07 .575
perform the job before being hired
Selection system selects those
having the desired knowledge, 270 2.27 .575
skills and attitude
In this organization, line managers
and HR managers participate in the 270 2.27 .681
selection process
The recruitment and selection
process in MOTI is fair and 270 2.60 .612
transparent
Measurable selection criteria's are
developed and used while filling up 270 2.27 .443
jobs
Cumulative Mean and standard
270
Deviation 2.26 0.6
Source: own survey (2019)

Mean and standard deviation of performance appraisal


Descriptive Statistics
Performance Appraisal N Mean Std. Deviation
There is a formal and written
270 2.09 .675
performance appraisal system
I am informed of how my
270 2.14 .636
performance evaluation is done
Performance of employees is
measured on the basis of objective 270 2.36 .635
quantifiable results
The objectives of the appraisal
270 2.42 .736
system are clear to employees

59
Appraisal system has a strong
impact on individual and team 270 2.33 .721
performance
Appraisal system helps me to grow
270 2.29 .703
and develop my career
Employees are provided with
performance based feedback and 270 2.42 .633
counseling
I feel performance appraisal is just
270 2.48 .765
a formality in this organization
Performance appraisal is fair in this
270 2.59 .543
organization
Cumulative Mean and standard
270
Deviation 2.3 0.7
Source: own survey (2019)

mean and Standard Deviation of reward Management


Descriptive Statistics
Reward Management N Mean Std. Deviation
Pay increments offered by our
270 2.08 .608
organization are satisfactory
Rewards in our organization are
strictly linked to employee 270 2.12 .616
performance.
We are satisfied with the benefits
270 2.31 .592
we receive.
The existing reward and incentive
plans do not motivate us for better 270 2.34 .613
performance
Rewards and incentives are fairly
270 2.30 .729
distributed in our organization
Cumulative Mean and standard
270 2.2 0.5
Deviation
Source: Own survey (2019)

Mean and standard deviation for training and development

60
Descriptive Statistics
Training and Development N Mean Std. Deviation
Extensive training programs are
provided for employees in all 270 2.13 .341
aspects.
I have training opportunities to
270 2.20 .543
learn and grow.
I am selected for training programs
270 2.13 .619
that suit my job needs most
Training needs are identified
through a formal performance 270 1.87 .500
appraisal mechanism
Training programs have improved
my decision making and problem 270 2.13 .807
solving skills
My communication and working
relationships with co-workers have 270 2.33 .790
improved due to training programs.
I feel better equipped to tackle
unexpected events with skill and 270 2.07 .443
confidence.
Cumulative Mean and standard
270
Deviation 2.1 0.6
Source: Own survey (2019)

61

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