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Impact of HR Practices on Organizational Performance: With Special Reference

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International Journal of Management, Technology And Engineering ISSN NO : 2249-7455

Impact of HR Practices on Organizational Performance: With

Special Reference to LIC of India Meerut Division
DR. PREETI RANI
ASSOCIATE PROFESSOR
DEPARTMENT OF COMMERCE
GOVERNMENT P.G. COLLEGE
KOTDWARA

ABSTRACT
Now a day’s performance of organization depends more on intangible resource rather
than tangible resources, human resource is important intangible resource which significantly
reflect the overall performance of organization. Human resource practices are generally based on
organizations mission and objectives. The main aim of human resource practices is to developed
and managed agreeable sound relationships at workplace and maintaining balance between
organizational goals and individual goals. An organization performs best when all of the human
resource practices are managed well. Impact of human resource management practices on
organizational performance has been a widely researched area for years. This study mainly
focuses on investigating the HR practices that influence organizational performance. This paper
is descriptive in nature, and data has been collected through various primary and secondary
sources. The major finding of the study is that human resource practices are positively related
with organizational performance. Out of HR practices, recruitment & selection is found to have
highly significant impact on organizational performance in comparison to other human resource
practices.

Key words: HR Practices, Organizational Performance, LIC

1. INTRODUCTION
An organization cannot perform better without effective Human Resources. An organization
is made up of a number of people who contribute to the maximum possible effort in order to
achieve both individual and organizational goals. Human Resource is the set of individuals or
personnel within an organization responsible for performing the tasks given to them in order to
improve organizational performance. Human resources practices have a significant impact on the
overall performance of the organization. In the present competitive era most suitable way to
survive and grow is to effectively manage human resource for better development of
organization as well as employees.

In the present competitive market scenario one of the better ways to perform well is to adopt
new strategies and policies for human resource management both for managerial and non

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managerial staff. An organization performs best when all of the human resource practices are
managed well. In the present scenario, organizational performance is an indicator that shows
whether the human resource practices employed in an organization are effectively implemented
or not and able to achieve organizational objectives. Therefore, the performance of organization
needs effective human resource management practices.

Impact of human resource management practices on organizational performance has been a

widely researched area for years. The various studies related to the human resource management
practices and organizational climate are reviewed which related to various industries and field
and no similar study to the present study have been undertaken in the field of government sector,
particularly in Life Insurance Corporation. After assessing the lots of research it was observed
that there was a requirement to measure the impact of human resource practices on
organizational performance. It is an attempt to bring out the level of impact of implemented
effective human resource management practices on the performance of LIC. It was observed that
outcome of the research will provide useful guidelines to the LIC by clarifying whether
implication of human resource practices are effectively improving performance of organization
or not.

1.1 Concept of Human Resource Practices:-

Human resource practices develop the key competencies that enable individuals and
organizations to perform current and future jobs through well planned learning process. Good
human resource practices are instrumental in helping achieve departmental objectives and
enhance productivity. Currently, human resource practices make significant difference for all
those who maintain their position for a long time in the global market.

Now days, if organization want to survive in long run then, it is must that organization
should have skillful and innovative employees to work and achieve organization as well as
individual objective. An organization’s goal can be achieved only when organization have right
type of people in right number and providing them effective working environment and proper
training to gaining competitive advantage. Efficient employees contribute to the growth of the
firm. HR Practices helps in enhancing internal capabilities of an organization to deal with current
or future challenges effectively.

2. LITERATURE REVIEW:-
Chang, (2005), focus on significant impact of human resource management practices at an
organizational level. Result revealed a positive relationship exists between HRM practices, overall
perception and employees‟ satisfaction. He has covered the study of HR practices and taken
perception of employees at individual level. He has analyzed perception of employees about the
organization depends upon human resource management practices. HRM practices play a crucial role
in improving performance of the organization.

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Espinilla et al., (2013) says that performance appraisal system is very effective if organization
use more than one method for evaluating employee‟s performance. He also defined that even a 360
degree performance appraisal system is not effective. The study also defined that performance
appraisal is a effective programme if used properly.

Swaha Bhattatcharya & Monimala Mukherjee, (2013) both had given the information
regarding relationship between human resource planning and organizational performance.
Organization structure, healthy working environment, effective communication, good pay package
etc., affects the efficiency of the employees. Besides this, duration of service has significant impact
upon perceived organizational climate and human resource planning.

According to Gamage, (2014) recruitment policy provides the organization with a pool of
potentially qualified job candidates. The performance of human resource in an organization highly
influence by the quality of applicants because organization is going to select employees from those
who were attracted. Recruitment decides who will join the organization.

3. RESEARCH OBJECTIVES

The present study was conducted to know the following things related to the LIC. The
objectives of the study were:

 To investigate various HR practices in LIC Meerut division.

 To evaluate on various Para- meters the impact of human resource practices on
performance of organization.
 To bring forth suggestion for the improving organizational performance.

4. RESEARCH METHODOLOGY

Research methodology was one of the important parts of research. Therefore it should be
well organized in nature. The main purpose of the present chapter is to focus on how the
hypotheses of this research were investigated by referring to the sample group of respondents
used in the study, the procedure that was followed for conducting the present study and the
measuring instruments used. This chapter has outlines the overall research work, research related
techniques, statistical tools such as correlation, regression analysis, T- test and ANOVA test,
make the research valid and reliable in today’s challenging era of research. The present study
shows the direct effect of independent variable on dependent variable.

4.1Research Design

The present study has adopted a descriptive research design for the purpose for data
collection and its analysis taking into account the quantitative approach. Keeping in mind the
limitations caused due to the time and resource constraints convenience sampling technique was
followed for collecting the data. The sample population was the 200 employees of LIC Meerut
Division.

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4.2 Research Hypothesis

 H1: Training & development is positively influences on organizational performance.

 H2: Recruitment & selection is positively influences on organizational performance.
 H3: Performance appraisal is positively influences on organizational performance.

4.3 Research Area

The study covered the employees of LIC Meerut division. The area why did we select, this
was one of the most important questions. This LIC Unit was near about me so we had no
problem in a stay and collecting the data.

4.4 Data Analysis Tools

.
SPSS, Correlation, Regression, ANOVA and Cornbach’s Alpha test was used to analysis
the data.

4.4.1Variables
Table 4.1

Independent Variable:  Organizational Performance

 Training & Development

Dependent Variable  Recruitment & Selection
 Performance Appraisal
 Organizational Commitment

4.5 Reliability and Validity

The reliability of the factors was checked using Cronbach's Alpha. A cut off value of 0.7
was recommended in order for a factor to be considered significant (Field, 2009). All the
statement which had been used through Cronbach's Alpha should be greater than 0.7, which
means that measures were reliable. From the table no 4.2 it is seen that reliability value was
estimated to be α =.877 to .947,if we compare reliability value of the scale used in the present
study with the standard value alpha of 0.7 then it is observed that data is highly reliable. The
content validity is checked by the experts and content validity of the questionnaires was
adequate. Hence, reliability and validity of the scale are satisfied.

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Table 4.2

Reliability Value of the Scale

Scale No of items Cronbach’s Alpha

Training & Development 7 .921

Recruitment & Selection 7 .877

Performance Appraisal 7 .915

Organizational Performance 10 .947

(Source: Field Survey)

4.6 Limitation of the Study

 The study was limited up to some extend because it was not possible to cover the all
division of LIC.
 The study did not cover all the employees of LIC.

5. DATA ANALYSIS AND FINDINGS

In the present study, we analyzed our data by Correlation, regression and ANOVAs test.
In this context, a linear regression analyzed was performed, by making use of all the discrete
variables (i.e., dependent and independent variables) available in the study.

5.1Correlation between HR Practices and Organizational performance

This section presents correlation between HR practices and organizational performance.

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5.1.1 Correlations between Training & development and Organizational Performance

Table 5.1 Correlations

Training and Organizational

Development Performance
**
Pearson Correlation 1 .749

Training and Development Sig. (2-tailed) .000

N 200 200
**
Pearson Correlation .749 1

Sig. (2-tailed) .000

Organizational Performance
N 200 200

(Source: Field survey)

** Correlation is significant at the 0.01 level (2-tailed).

Interpretation: - It is revealed from the table no 5.1 that training and development is positively
related with organizational performance. Therefore, Hypothesis 1 of the present study was
accepted.

5.1.2 Correlations between Recruitment & Selection and Organizational Performance

Table 5.2 Correlations

Recruitment and Organizational

Selection Performance
**
Pearson Correlation 1 .781

Recruitment & Selection Sig. (2-tailed) .000

N 200 200
**
Pearson Correlation .781 1

Sig. (2-tailed) .000

Organizational Performance
N 200 200

(Source: Field survey)

** Correlation is significant at the 0.01 level (2-tailed).

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Interpretation: It is revealed from the table no 5.2 that recruitment and selection is positively
related with organizational performance. Therefore, Hypothesis 2 of the present study was
accepted.

5.1.3 Correlations between Performance Appraisal and Organizational Performance

Table 5.3 Correlations

Performance Appraisal Organizational

Effectiveness
**
Pearson Correlation 1 .735

Performance Appraisal Sig. (2-tailed) .000

N 200 200
**
Pearson Correlation .735 1

Sig. (2-tailed) .000

Organizational Performance
N 200 200

(Source: Field survey)

** Correlation is significant at the 0.01 level (2-tailed).

Interpretation: It is revealed from the table no 5.3 that performance appraisal is positively
related with organizational performance. Therefore, Hypothesis 3 of the present study was
accepted.

5.2 Regression Analysis of HR Practices and Organizational Performance

This section presents regression analysis between HR practices and organizational performance.

5.2.1 Regression between Training & development and Organizational Performance

Table 5.4
a
ANOVA

Model Sum of Squares df Mean Square F Sig.

b
Regression 315.287 1 315.287 509.660 .000

1 Residual 247.449 200 .619

Total 562.736 201

(Source: Field survey)

a. Dependent Variable: Training & Development

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b. Predictors: (Constant), Organizational Performance

5.2.2 Regression between Recruitment & Selection and Organizational Performance

Table 5.5
a
ANOVA

Model Sum of Squares df Mean Square F Sig.

b
Regression 328.448 1 328.448 626.285 .000

1 Residual 209.775 200 .524

Total 538.223 201

a. Dependent Variable: Recruitment & Selection

b. Predictors: (Constant), Organizational Performance

5.2.3 Regression between Performance Appraisal and Organizational Performance

Table 5.6
a
ANOVA

Model Sum of Squares df Mean Square F Sig.

b
Regression 291.250 1 291.250 470.808 .000

1 Residual 247.447 200 .619

Total 538.697 201

a. Dependent Variable: Performance Appraisal

b. Predictors: (Constant), Organizational Effectiveness

5.3 Hypothesis Testing Results:-

H1: There is positive relation between Training & Development and Organizational
Performance.
H2: There is positive relation between Recruitment & Selection and Organizational
Performance
H3: There is positive relation between Performance Appraisal and Organizational
Performance.
Table: 5.7

SN Hypothesis B Value t- Value P Value Conclusion

H1 T&D--- > OP .261 5.119 .000 Hypothesis Accepted
H2 R&S--- > OP .358 7.432 .000 Hypothesis Accepted
H3 PA--- > OP .223 4.471 .000 Hypothesis Accepted

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5.4 Hypothesis Discussion:-

The hypothesis for the study was developed on the basis of the objectives of the study. These
were proved successfully by application of the statistical tools. The following section deals with the
findings and the justification for the hypothesis.

 H1- Training & Development is positively influences on organizational performance.

The first hypothesis is based on the assumption that training & development is positively
influences on organizational performance. This was found positively correlated with each other, it
is evidenced that Training & development affect organizational performance. If the organization is
not adopts the proper training and development method then, it leads to the decline in performance of
the organization.

 H2- Recruitment & Selection is positively influences on organizational performance.

The second hypothesis is based on the assumption that recruitment & selection is positively
influences on organizational performance. Finding of this study show that organizational
performance is highly correlated with recruitment & selection therefore LIC is required to give
main focus on recruitment & selection for improving organizational performance.

 H3- Performance Appraisal is positively influences on organizational performance.

The third hypothesis is based on the assumption that effective performance appraisal system
improved the performance of the organization. This was found positively correlated with each other,
but according to the result performance of the organization is least depends upon the performance
appraisal.

6. CONCLUSION:-

From the correlation table, the highest positive value of correlation between recruitment
& selection and organization performance clarifies that the LIC is required to give main focus on
recruitment & selection for getting fabulous organizational performance. The findings of the
present study have much relevance for all the LIC division.

7. SCOPE FOR FUTURE RESEARCH:-

The study used only perceptual measure of HR practices and organizational performance.
Only employees of Merrut division were used to collect data. Future studies may be conducted in
context of the LIC with larger sample size. And future studies can compare performance of LIC
different division.

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8. REFERENCES:-

 Geledy.A.Garry, Ivery Mark, “The impact of human resource management and work climate
on organizational performance”,Personnel Psychology, 2003, June 22.
 Ville Nurmi, The trends of HRD in the Finnish pulp and paper industry Human Resource
Development International, Indian Journal of Industrial Relations, Volume 10, Issue 1, March
2007, pp. 107 – 113.
 M.R.R.Nair and T.V. Rao– Excellence through HRD, Tata McGraw Hill Publishing Company
Limited, New Delhi, 1990.
 Aswathappa, K., Human Resource and Personnel Management Text and Cases, Tata Mc-
Graw Hill Publishing, NewDelhi, 2007, PP 225-227.
 Kehoe, R. R., & Wright, P. M. (2013). The impact of high-performance human resource
practices on employees‟ attitudes and behaviors. Journal of Management, 39(2), 366-391.
 Lee, F. H., & Lee, F. Z. (2007, November). The relationships between HRM practices,
Leadership style, competitive strategy and business performance in Taiwanese steel
industry. In Proceedings of the 13th Asia Pacific Management Conference, Melbourne,
Australia (pp. 953-971).
 Mathieu, J. E., & Zajac, D. M. (1990). A review and meta-analysis of the antecedents,
correlates, and consequences of organizational commitment. Psychological Bulletin, 108(2),
171.
 Neter, J., Kutner, M. H., Nachtsheim, C. J., & Wasserman, W. (1996). Applied linear statistical
methods. Irwin, Chicago.

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