RESEARCH PROPOSAL

Project for Performance Management

MID TERM ASSIGNMENT

MS-MANAGEMNET SCIENCES- HRM (1st Semester)

SUPERVISOR: Dr. SARMAD

SUNILA PERVEZ MALIK

SAP ID 29391
Table of Contents

CHAPTER # 2 HRM FUNCTIONS & PROBLEM IDENTIFICATION..........................................................2

1. FINALIZED PROBLEM DEFINITION.......................................................................................................2

2. RESEARCH OBJECTIVES............................................................................................................................3
3. RESEARCH QUESTIONS............................................................................................................................4
4. RESEARCH GAP...........................................................................................................................................5
5. RESEARCH MODEL.....................................................................................................................................6

5.1 Model...........................................................................................................................................................6
5.2 Hypothesis...................................................................................................................................................6
5.3 Requisite Scale of Variables.........................................................................................................................6

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 CHAPTER # 2
HRM FUNCTIONS & PROBLEM IDENTIFICATION

1. FINALIZED PROBLEM DEFINITION

According to Kloot, and Martin, (2000), An employee’s performance can be evaluated

by Performance Management System. Performance Management System is used to
measure the performance of employees’ and teams. According to Colli, (2013),
Employees are “paid to perform”; therefore, a certain level of outcome is expected from
them. However, without correct performance management standards and system in
place, it won’t be possible to measure that. In order to attain a desired result both
employee and employer should have a clear idea of what is expected level of outcome.
Employees’ job description, Key Performance Indicators (KPIs) and what is expected
from him should be communicated to him clearly and should be monitored at every
level instead of a simple appraisal at the end of the year. It can be achieved by proper
planning of objectives and employee performance, facilitating the employees in
achieving work-related goals.

Employee retention now a day is the biggest challenge that almost all employers are
facing. People join and leave organizations almost all over the world however, this
turnover and re-induction processes cost a lot of finances and efforts to the
organization. Therefore, in order to reduce employee turnover organizations, need to
have a strong employee retention and performance management plan. Like majority of
the organizations, Askari Bank is also finding it difficult to retain employees over a
longer period of time. Employees are always striving for better opportunities in terms
of better compensation packages and work environment. Focus of the organizations
have changed over the period of time, organizational focus has been changed from
turnover to retention of employees in order to save turnover and re-induction cost.

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Job Satisfaction has always played a pivotal role in improving employee’s performance
and his loyalties with the organization. It acts as a base of enthusiasm and motivation
for employees to improve their performance. Excessive work timings, difficult targets
and relationships with supervisors in Askari Bank sometimes results in decrease job
satisfaction which results in decrease employee performance. Organizations needs to
satisfy its employee by providing positive working environment and attractive pay
packages that will ultimately results in increase job satisfaction and ultimately in better
employee performance and retention. By lack of motivation and stressed working
environment employees at Askari Bank start losing interest in job and thus can’t fully
develop loyalties which ultimately results in decreased employees’ satisfaction and
increase turnover. Managing employee turnover is the biggest challenge for Askari
bank.

For this research study I have taken Compensation as independent variable which will
be analyzed in detail with its impact on Employee Retentions and Employee
Performance with a mediating role of Job Satisfaction.

2. RESEARCH OBJECTIVES

With this research I intend to find out the impact of dependent variable (compensation),
mediating variable (Job Satisfaction) on dependent variables (Employee performance and
retention). Besides finding out the impact of variable, this study will also analyze the HRM
functions along with the performance management system and their impact on employees.

The primary objective of this research is:

a. To Find out the relationship between:

I. Compensation and Employee Retention.
II. Compensation and Employee Performance.
III. Mediating effect of Job Satisfaction between compensation, employee
performance and employee retention.

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The secondary objectives achieved by this research includes:

a. To understand the HRM & Performance Management Practices prevailing in

Askari Bank.
b. To understand the impact of Performance Management System on Employees of
Askari Bank.
c. To identify the gaps in effective performance management system and
implemented system.
d. To understand the impact of Job Satisfaction on employee performance and
retention.

3. RESEARCH QUESTIONS

By shaping the above mentioned objectives, following research questions will be

answered:

a. Primary Questions:

I. Is there any relationship between Employee Retention and Compensation?

II. Is there any relationship between Compensation and Employee Performance?
III. Does Job Satisfaction Mediates the relationship between Compensation and
Employee performance and retention?

b. Secondary Questions:

I. What are the standards set by Askari Bank for employees to achieve the
objectives?
II. Do employees have awareness of their job functions and responsibilities?
III. How employees contribute in achieving the objectives/ goals of bank?
IV. What are the gaps between ideal performance management system and
current system of Askari Bank?

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4. RESEARCH GAP

An effective Performance Management System no doubt can play a vital role in

positively supporting both the employee and organization in achieving their goals.
However, the reality of practical implication of performance management is different
(Bragger et al., 2014). Over past few decades Performance Management has witnessed a
paradigm shift in practices implemented in organization which are more versatile and
comprehensive in nature (Rock & Jones, 2015). Despite of a major shift in perceptions
and implantation of Performance Management System, the system is not fully mature.
Individuals’ perception differs from organizations, which results in reduced job
satisfaction and employees start exploring the new opportunities same is the case with
Askari Bank. In most of the situations Pay / compensation is not given as much of
importance for motivation of employees as it deserves. In other words, pay is much an
important motivational factor in performance and retention of employees then it is
reported. (Sara et al., 2004). The objective of this study is to identify that if compensation
has a positive impact on Employee Performance and Retention in Asakri Bank where,
job satisfaction will have a mediating role. The major function of HR is to create a
balance between the needs of employee, his capabilities and company’s goals. By
identifying the importance and impact of above mentioned variables in Askari Bank we
will analyze the impact of these functions on organization. For majority of organizations
it is difficult to assess the satisfaction level of their employees.

5. RESEARCH MODEL

1.1 Model

Mediating role of Job Satisfaction on Compensation, Employee Performance and Employee

Retention is studied. Compensation package is the biggest motivational factor for any
employee and have a positive impact on Employee Performance and Retention. Job
Satisfaction will be used as mediator (direct or indirect) for relationship between
compensation, employee performance and employee retention.

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 1.2
Hy

pothesis

H1: Compensation has positive relationship with the Employee Retention and
Employee Performance.

H2: Employee Retention has positive relationship with Job Satisfaction.

H3: Employee Performance has positive relationship with Job Satisfaction.

1.3 Requisite Scale of Variables

Instrument for data collection will be the questionnaire. Questionnaire will consist of
two sections. In first section respondents will be requested to provide demographic
information. In second section to measure the Performance Management variable, the
questionnaire was based on the questionnaires used by Snell & Dean (1992), Boselie et
al. (2001), Singh (2004), Laka (2004), Qureshi et al. (2007).

7 Items Likert Scale method will be used to measure Compensation System and
Employee Performance (Masood, 2010). 5 items Likert Scale will be used to measure
Job Satisfaction (Macdonald, & Maclntyre, 1997). 7 item Likert Scale to measure
Employee retention (Iqbal, & Hashmi. 2015) will be used.

1.3.1 5 Items Likert Scale

(1) Strongly disagree

(2) Disagree

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 (3) Neither agree nor disagree
(4) Agree
(5) Strongly agree

1.3.2 7 Items Likert Scale

(1) Strongly Disagree

(2) Disagree
(3) Somewhat Disagree
(4) Indifferent/Natural
(5) Somewhat Agree
(6) Agree
(7) Strongly Agree

1.3.3 Independent Variable: Compensation System

Reference:

Masood, T. (2010). Impact of Human Resource Management (HRM) Practices on Organizational

Performance: A mediating role of employee performance. MOHAMMAD ALI JINNAH
UNIVERSITY ISLAMABAD

a. Compensation offered by our organization matches the expectancy of employees.

b. In our organization, salary and other benefits are comparable to the market.
c. In our org., compensation is decided on the basis of competence of the employee.
d. The compensation for all employees is directly linked to their performance.
e. In our org., profit sharing is used as a mechanism to reward higher performance.
f. Our org. offers both financial and non-financial rewards without discrimination.
g. The compensation plan is revised accordingly with the economic situation.
h. Take home pay is enough for my family and me.
i. My last year's salary raise was better than the previous one.

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 j. In general, I understand why I get what I get.

1.3.4 Mediating Variable: Job Satisfaction

Reference:

Macdonald, S., & Maclntyre, P. (1997). The generic job satisfaction scale: Scale
development and its correlates. Employee Assistance Quarterly, 13(2), 1-16.

a. I receive recognition for a job well done.

b. I feel close to the people at work.
c. I feel good about working at this company.
d. I feel secure about my job.
e. I believe work management is concerned about me.
f. On my whole, I believe work is good for my physical health.
g. My wages are good.
h. All my talents and skills are used at work.
i. I get along with my supervisor.
j. I feel good about my job.

1.3.5 Dependent Variable: Employee Performance

Reference:

Masood, T. (2010). Impact of human resource management (HRM) practices on

organizational performance: a mediating role of employee performance. Mohammad Ali
Jinnah University, Department of Management Sciences, Islamabad.

a. Quantity of employees’ work output has improved in last five years.

b. Coming up with new ideas is appreciated in the organization.
c. Most of the employees achieved organizational goals of last 5 years.
d. Targets given to different employees are often met.

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 e. Over all employees targets achievements has improved over the last 5 years.
f. Employees feel happy to work in teams.
g. Majority of employees can work independently and give high performance.
h. Employees in organization have been enabled to make decisions well.
i. Employees’ communication skills have been improved in this organization.
j. Employees’ competencies are in line with the org. operational and strategic goals.

1.3.6 Dependent Variable: Employee Retention

Reference:

Iqbal, S., & Hashmi, M. S. (2015). Impact of perceived organizational support on

employee retention with mediating role of psychological empowerment. Pakistan
Journal of Commerce and Social Sciences (PJCSS), 9(1), 18-34.

a. I’m planning on working for another Institution within a period of three years.
b. Within this Institution my work gives me satisfaction.
c. If I wanted to do another job or function, I would look first at the possibilities
within this Institution.
d. I see a future for myself within this Institution.
e. It doesn’t matter if I’m working for this Institution or another, as long as I have
work.
f. If it were up to me, I will definitely be working for this Institution for the next
five years.
g. If I could start over again, I would choose to work for another Institution.
h. If I received an attractive job offer from another Institution, I would take the job.
i. The work I’m doing is very important to me.
j. I love working for this Institution.
k. I have checked out a job in another Institution previously.

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Reference:

Kloot, L., & Martin, J. (2000). Strategic performance management: A balanced approach
to performance management issues in local government. Management accounting
research, 11(2), 231-251.

Colli, L. A. (2013). The performance management system of the department of economic

development and tourism (Western Cape) (Doctoral dissertation, Cape Peninsula
University of Technology).

Bragger, J. D., Kutcher, E. J., Menier, A., Sessa, V. I., & Sumner, K. (2014). Giving
nonselective downsizing a performance review. Human Resource Development
Review, 13(1), 58-78.

Rock, D., & Jones, B. (2015). Why more and more companies are ditching performance
ratings. Harvard Business Review, 8, 2-4.

Rynes, S. L., Gerhart, B., & Minette, K. A. (2004). The importance of pay in employee
motivation: Discrepancies between what people say and what they do. Human Resource
Management: Published in Cooperation with the School of Business Administration, The
University of Michigan and in alliance with the Society of Human Resources
Management, 43(4), 381-394.

Masood, T. (2010). Impact of human resource management (HRM) practices on

organizational performance: a mediating role of employee performance. Mohammad Ali
Jinnah University, Department of Management Sciences, Islamabad.

Macdonald, S., & Maclntyre, P. (1997). The generic job satisfaction scale: Scale
development and its correlates. Employee Assistance Quarterly, 13(2), 1-16.

Iqbal, S., & Hashmi, M. S. (2015). Impact of perceived organizational support on

employee retention with mediating role of psychological empowerment. Pakistan
Journal of Commerce and Social Sciences (PJCSS), 9(1), 18-34.

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