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HRM Practices and its Impact on Employee Satisfaction: A Case of

Pharmaceutical Companies in Bangladesh

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 International Journal of Research in Business and Social Science
IJRBS Vol.2 No.3, 2013 ISSN: 2147-4478
available online at www.ssbfnet.com

HRM Practices and its Impact on Employee Satisfaction: A Case of

Pharmaceutical Companies in Bangladesh

Mostafizur Rahmania, Rafia Akhtera, Solaiman Chowdhuryb, Saiful Islamc,

Md. Reiazul Haquec

a
Department of Management,Hajee Mohammad Danesh Science and Technology University,Dinajpur-5200, Bangladesh
b
Department of Management Studies,University of Rajshahi,Rajshahi-6205, Bangladesh
c
Department of Accounting,Hajee Mohammad Danesh Science and Technology University,Dinajpur-5200, Bangladesh

Abstract

This paper aims to investigate the impact of HRM practices on employee satisfaction in the pharmaceutical companies of Bangladesh. A structured
questionnaire was developed and distributed amoung 108 employees of four pharmaceuticals companies, whereas 96 employees answered rightly.
Statistical tools like z test, mean and proportion analysis was used to assess the impact of HRM practices on employee satisfaction. The study
reveals that employees in pharmaceutical companies are satisfied with the recruitment and selection, and training and development policy and
practices of pharmaceutical companies. On the other hand, employees are dissatisfied with the human resource planning, working environment,
compensation policy, performance appraisal, and industrial relations. The study suggests that the pharmaceutical companies should develop proper
human resource policy and given emphasis on proper human resource practices to enhance the satisfaction of their employees and build them
effective human resources.

Keywords: Human resource management practice, Employee satisfaction, z- test, Pharmaceutical company, Bangladesh

© 2013 Published by SSBFNET

1. Introduction
Pharmaceuticals industry is a rising economic sector in Bangladesh. It produces and design pharmaceutical products
are drugs, infusion products, and medical equipments. The product is not confined only open sale but it also deals with
doctors, nurses, hospitals, pharmacist and researchers for further development. Bangladeshi pharmaceuticals
companies produce products not only for the home country but also they are exporting their medicine to Australia,
Brazil, Afghanistan, Cambodia, Guyana, Jordan, Kenya, Malaysia, Myanmar, Nepal, Philippines, Hong Kong, Sri
Lanka, Vietnam, United Kingdom, and among others. This trend of exporting volume and profit generation is up
warding. There are 250 licensed pharmaceutical companies in the economy and they are contributing 1% in gross
domestic product (GDP). Top 20 companies earned 80% revenue in 2011.
Human resource management (henceforth HRM) is the effective management of people at work. Beardwell, Holden
& Claydon (2004) regard HRM as the philosophy, policies, procedures, and practices related to the management of
people within the organization. Senyucels (2012) sees HRM as a combination of people centered management
practices that recognize employees as assets geared to creating and maintaining skillful and committed workforce for
achieving organizational goals. Mondy and Noe (2005) believe that HRM is the utilization of individuals to achieve
organizational objectives. Denishi and Griffin (2009) suggest that HRM is the comprehensive set of managerial

i
Corresponding Author

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activities and tasks concerned with developing and maintaining a qualified workforce. Human resource is a way that
contributes to organizational effectiveness. In most of today’s organizations, the role of HRM has become quite
important (Blake 1995).
Satisfied and efficient human resources are the key factor for any organization to face the challenges of today’s
business. Moreover, the growth, development and expansion of the organization are highly dependent on their
performance. In addition, employees’ performance is related with the satisfaction of employees. To create a satisfied,
productive and efficient workforce, for any organization, proper HRM policies and practices are imperative. It is also
true for pharmaceuticals companies in Bangladesh. Proper HRM practices can ensure satisfied and efficient workforce
to continue the pace of growth of this industry. The study is an attempt to find out the impact HRM practices on the
employees’ job satisfaction of pharmaceuticals companies in Bangladesh.
2. Literature Review
HRM is the prominent success factor of an organization. The five functional areas are associated with effective HRM:
staffing, human resource development, compensation and benefits, safety and health, and employee and labor relations
(Mondy and Noe 2005). Edgar and Greare (2005) identified that HRM practices had a significant impact on employee
attitudes such as job satisfaction, organizational commitment and organizational fairness. Yu and Egri (2005) found
that HR practices had a significant impact on the affective commitment of employees on Chinese firms. Aswathappa
(2008) argued that the organization should have better HR plans to motivate its employees. Sophisticated recruitment
and selection system can ensure a better fit between the individual’s abilities and the organization’s requirement
(Fernandez 1992). Katou and Budhwar (2007) discussed in a study on Greek manufacturing firms that recruitment and
selection was positively related to all organizational performance variables such as effectiveness, efficiency,
innovation, and quality. The motivation and opportunity focused bundles of HR practices positively related to
affective commitment and negatively related to turnover (Gardner, Moynihanand & Wright 2007). The best human
resource practices areas are recruitment and selection, socialization, job design, training, communication/participation,
career development, performance management, employee reward and job security (Huselid1995). HRM refers to the
policies and practices involved in carrying out the human resource 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). Training and development has a significant positive impact on
employees’ job satisfaction (Garcia 2005). Thang and Buyens (2008) believed that training and development lead to
superior knowledge, skills, abilities, attitudes, and behavior of employees that ultimately enhance excellent financial
and nonfinancial performance of the organizations. DeCenzo and Robbins (1996) suggested that employee training has
become increasingly important as job have become more sophisticated and influenced by technological changes. Shaw
et al. (1998) assert that involuntary turnover is affected by staffing practices (recruitment and selection process) and
employee monitoring (performance appraisal). Bernardin and Russel (1993) opined that over the years, training has
become increasingly popular as HR tool for improving employee and managerial performance in organization. Buck
and Watson (2002) indicated nine important HRM practices such as deIcentralization, compensation, participation,
training and development, employment security, social interactions, management style, communications, and
performance appraisal. Klaus, LeRouge& Blanton (2003) expressed that, through better job assignment or work
design; employees may display greater commitment, leading to better job performance. The above literature review
shows that there have been several studies on HRM practices and job satisfaction. In Banladesh, however, there is a
research gap in this area especially on pharmaceuticals companies. Hence, the study is undertaken. To find out the
impact of HRM practices on employees job satisfaction, the human resource planning, working environment, training
and development, compensation policy, recruitment and selection, performance appraisal and industrial relations has
considered as HRM aspects.
3. Methodology
The study was conducted on the basis of both primary and secondary data sources from four renowned pharmaceutical
companies namely Square Pharmaceutical Company Ltd., Beximco Pharmaceutical Company Ltd., Renata
Pharmaceutical Company Ltd., and Eskayef Bangladesh Ltd. Primary data were based on a face to face interview and
collected thorough structured questionnaire which was administered personally to the 108 pharmaceutical employees,
27 from each company. Out of 108 employees, 96 respondents (89%) were answered properly. The questionnaire
consists of questions from the seven aspects of HRM practices i.e., human resource planning, working environment,
training and development, compensation policy, recruitment and selection, performance appraisal and industrial

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relations. The design of questionnaire was based on five point Likert scale, where 1= dissatisfied, 2= poorly satisfied,
3= satisfied, 4= moderately satisfied and 5= highly satisfied. The secondary sources of data were books, published
research articles, and web sites. In this study statistical tool like z-test, mean and proportion analysis were used to
analyze the employee’s satisfaction. On the basis of different factors that affect the HRM practices, the following
hypotheses were developed for the study:
H1: Employees are satisfied with Human Resource Planning
H2: Employees are satisfied with Working Environment
H3: Employees are satisfied with Training and Development
H4: Employees are satisfied with Compensation policy
H5: Employees are satisfied with Recruitment and Selection
H6: Employees are satisfied with Performance Appraisal
H7: Employees are satisfied with Industrial relations
4. Findings
4.1 Analysis of Study Factors
The table 1 shows the percentage analysis of employees’ satisfaction under HRM. In HRP 40.63%, employees are
satisfied and 34.38% employees are poorly satisfied. In WE 41.67% employees are poorly satisfied weather 30.21%
employees are satisfied. In TD 16.67%, employees are highly satisfied, 18.75% employees are moderately satisfied
and 20.83% satisfied; whereas 36.46% employees are poorly satisfied. In CP 31.25%, employees are satisfied, 27.08%
employees are poorly satisfied, and 36.46% employees are dissatisfied. In RS 27.08% and 26.04%, employees are
poorly satisfied and moderately satisfied respectively. In PA and IR 30.21% and 40.63%, employees are poorly
satisfied. From the analysis, it is evident that employees are not satisfied with the human resource practices in
pharmaceutical companies in Bangladesh.
Table1: Percentage of employees in different level of satisfaction under HRM Factors:

HRP1 WE2 TD3 CP4 RS5 PA6 IR7

1= Dissatisfied 7.29% 13.54% 7.29% 36.46% 8.33% 27.08% 22.92%

2= Poorly satisfied 34.38% 41.67% 36.46% 27.08% 27.08% 30.21% 40.63%

3= Satisfied 40.63% 30.21% 20.83% 31.25% 22.92% 20.83% 13.54%

4=Moderately Satisfied 13.54% 8.33% 18.75% 2.08% 26.04% 8.33% 17.71%

5= Highly satisfied 4.17% 6.25% 16.67% 3.13% 15.63% 13.54% 5.21%

Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

HRP1 = Human Resource Planning; WE2 = Working Environment;

TD3 = Training and Development; CP4 = Compensation Policy;
RS5 = Recruitment and Selection; PA6 = Performance Appraisal;
IR7 = Industrial relations.

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4.2 Hypothesis Testing

H1: Employees are satisfied with human resource planning
In this hypothesis, it was assumed that the employees of pharmaceutical companies are satisfied with their human
resource planning. The calculated value of z in table 2 is 2.83, the table value of z= 1.96 at 5% level of significance in
two tailed test. The calculated value of z is higher than the table value; therefore, the null hypothesis is rejected.
Hence, the employees of pharmaceutical companies in Bangladesh are not satisfied with their human resource
planning.
H2: Employees are satisfied with working environment
The assumed hypothesis is that the employees of pharmaceutical companies are satisfied with their working
environment. The result from table 2 shows that the calculated value of z= 4.54 which is much higher than the table
value z= 1.96 at 5% level of significance in two tailed test, thus the assumed null hypothesis is rejected. Hence, the
employees of pharmaceutical companies in Bangladesh are not satisfied with their working environment.
H3: Employees are satisfied with training and development
This hypothesis assumed that the pharmaceutical employees are satisfied on training and development facilities. The
result from table 2 shows that the calculated value of z= 0.08 is lower than the table value of z= 1.96 at 5% level of
significance in two tailed test. Therefore, the null hypothesis is accepted. Thus, it can be concluded that the
pharmaceutical employees are satisfied with training and development.
H4: Employees are satisfied with compensation policy
The assumed hypothesis is that pharmaceutical employees are satisfied with the compensation policy of their
companies. The test result (table 2) shows that z= 8.82 which is much higher from table value z= 1.96 at 5% level of
significance in two tailed test. So the null hypothesis is rejected. Therefore, the employees are not satisfied with
compensation policy.
H5: Employees are satisfied with recruitment and selection
In this hypothesis, it is assumed that the employees of pharmaceutical companies are satisfied with the recruitment and
selection process. The result from table 2 shows that the calculated value of z= 1.12 is lower than the table value of z=
1.96 at 5% level of significance in two tailed test. So the assumed null hypothesis is accepted. Hence, the
pharmaceutical employees are satisfied with recruitment and selection.
Table 2: Computation of z value

Factors of employee Sample Mean Standard Standard z- Value Mean

satisfaction Size Deviation error Rank
(Calculated)

Human Resource Planning 96 2.73 0.93 0.10 2.83 03

Working Environment 96 2.52 1.04 0.11 4.54 04

Training and Development 96 3.01 1.24 0.13 0.08 02

Compensation policy 96 2.08 1.02 0.10 8.82 07

Recruitment and Selection 96 3.14 1.22 0.12 1.12 01

Performance Appraisal 96 2.51 1.34 0.14 3.59 05

Industrial relations 96 2.42 1.18 0.12 4.83 06

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H6: Employees are satisfied with performance appraisal

The assumed hypothesis is pharmaceutical employees are satisfied with performance appraisal. The calculated result
shows that z= 3.59 (table 2) which is higher than the table value z= 1.96 with 5% level of significance in two tailed
test. So the assumed null hypothesis is rejected. Therefore, the employees are not satisfied with performance appraisal.
H7: Employees are satisfied with industrial relations
The assumed hypothesis is that the employees of pharmaceutical companies are satisfied with industrial relations. The
result from table 2 shows that the calculated value of z= 4.83 is higher than the table value z= 1.96 at 5% level of
significance in two tailed test. So the assumed null hypothesis is rejected. Hence, the employees of pharmaceutical
companies are not satisfied with industrial relations.
The results of z-test analysis and mean rank (table 2) represent the employees are satisfied with recruitment and
selection (mean rank 1), and training and development (mean rank 2). The employees are poorly satisfied respectively
with human resource planning (mean rank 3), working environment (Mean Rank 4), performance appraisal (Mean
Rank 5), industrial relations (Mean Rank 6), and compensation policy (Mean Rank 7).
5. Conclusion and Recomedation
The study shows that HRM practices are very poor in pharmaceutical companies in Bangladesh that leads poor
satisfaction of employees. The study found employees are satisfied to recruitment and selection process, and training
and development of pharmaceuticals companies. Employees are dissatisfied about human resource planning. The
pharmaceuticals companies should have the right process to forecast the demand and supply of human resources, to
estimate the external supply and to match proper demand and supply. Working environment is always an important
variable of employee satisfaction. Congenial working environment provides additional satisfaction toward work;
conversely, irritative working environment creates problem to do the work simply. However, the study shows
employees are not satisfied with working environment. It is recommended that pharmaceuticals companies will ensure
proper working environment for their employees. The most of the pharmaceutical employees have a high
dissatisfaction on compensation policy. It is suggested that the pharmaceutical companies should restructure their
compensation policy to grab and retain valuable human capitals. Performance appraisal evaluates employees’ job
performance both in qualitative and quantitative aspects that cause positive intension toward work and enhance
employees’ productivity. The study shows that employees are poorly satisfied with the performance appraisal system
of the pharmaceuticals companies. The pharmaceutical companies have to undertake apposite methods of performance
appraisal for procedural evaluation and supervision of employees. The proper industrial relations imply harmonious
and peaceful relation between labour and management. It leads to sound industrial environment, industrial democracy,
social peace, etc. and it causes satisfaction for both parties. The study demonstrates that most of the employees are not
satisfied with the industrial relations. The companies should take necessity actions as soon as possible for pleasant-
sounding industrial relations. Therefore, the study suggests that the pharmaceutical companies should develop proper
human resource policy and given emphasis on proper human resource practices to enhance the satisfaction of their
employees and building them effective human resources.
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