Employees’ performance and human resource management practices:

(A study of Pharmaceutical companies in Pakistan)

Muhammad Bilal'

Muhammad Naeem² Saleem Arshad³

Abstract

In developed countries most of the research work and empirical studies have been done on
the subject of employees’ performance and human resource management practices and found a
significant relationship between HR practices and employee performance. This research is
conducted to check whether those results are also applicable in the under researched country like
Pakistan. Most of the previous studies have been proved that there is a strong relationship
between HR practices and perceived employee performance. The aim of current study was to
find a relation between employee performance and four HR practices including Training, Job
Description, Career planning, and compensation in the pharmaceutical industry of Pakistan. 200
questionnaires were distributed to medical representatives of the pharmaceutical companies
operating in Pakistan. The results indicate that three of the chosen practices of HR training, job
description, and compensations have a significant influence on the performance of medical
representatives in Pakistani environment. However career planning practices have insignificant
impact on perceived employee performance.

Key words: Human resource management (HRM), training, job description, career planning,
compensation, employee performance.

Introduction

At present there are 207 pharmaceutical companies operating in Pakistan out of which 19
companies have their head offices in Islamabad and Rawalpindi. It has been seen that there is an
intense competition between pharmaceutical companies of Pakistan. Medical representatives are
the main strength of these companies and the performance of the company is directly dependent
on the sales force of the company. (Esra Nemli, 2010) stated that HRM practices are one
important source of competitive advantage among Organizations. To compete successfully in
this environment, organizations continually improving their performance, by improving HRM
practices. (Horgan & Mo’hlau, 2006) discussed that HR management system is associated with
higher employee performance.
The authors contributed equally and are listed in alphabetical order.

Muhammad Bilal'| Research fellow at international Islamic university Islamabad, MS finance,

email-id: bilalmba029@gamil.com

Muhammad Naeem² | Research fellow at international Islamic university Islamabad, MS finance,

email-id: mnaeem@gamil.com

Saleem Arshad³ | Research fellow at international Islamic university Islamabad, MS finance, 1

email-id: saleem.arshad@gamil.com
 Many researchers have proved that HR practices have a positive relationship with
employees’ performance. (Marwat, Qureshi & Ramay, 2009) have found that HRM practices are
positively correlated with employees’ performance. (Datta K, Guthrie J, Wright P, 2003) argued
that use of best HR practices shows a stronger association with firm’s productivity in high
growth industry. (Delery and Doty, 1996) argued that there are significant relationships between
HR practices and accounting profits among a sample of banks.
There are several factors which affect on employees’ performance but present study focuses
on the relationship of four HR practices including training, job description, career planning, and
compensation with employees’ performance. (Singh K, 2004) argued that Training and
compensation are having positive effects on organization and employee’s performance.
The purpose of this paper is to study the relation between HR practices and performance of
the employees of pharmaceutical companies in Pakistan. Hence finding will help the
organizations to improve or revise their strategies for HRM practices.
Pakistan is situated in South Asia having a population of about 170 million people. The
country has four provinces Punjab, Sindh, Khyber Pakhtunkhwa and Baluchistan. Each province
has its own emotional and cultural environment while the Federal region, the capital of Pakistan,
Islamabad has a mixed population of all provinces. The current study is conducted in this city
and its nearby to get generalized results. Importance of this study is that a few researches have
been done in this region of Pakistan with these Independent variables.

Literature Review

HRM is defined as employing people, enhancing their capabilities, utilizing, maintaining

and compensating their services in tune with the job and organizational requirement. The Study
shows that Human resources management involves processes to deal with employees and
personnel. These processes can be performed in an HR department, but the evidence is proved
that some tasks can also be outsourced or performed by line-managers or other departments.
When all process is performed effectively and integrated they provide significant economic
benefit to the company.
HRM practices involves Workforce planning, Recruitment means selection Induction,
Orientation, Skills management, Training and development, Personnel administration,
Compensation, Time management, Travel management, Payroll , Employee benefits , Personnel
cost planning, Performance appraisal and Labor relations. Literature relevant to HRM practices
and employees’ performance provides different factors which have direct impact of human
resource management practices on employees’ performance. In 2010 Esra Nemli gave his
opinion that the way an organization manages its human resources has a significant relationship
with the organization’s performance.
The prior studies have shown that those firms and organizations which are practicing HRM
in their organizations have better results in overall performance of the firm. In 2005 Wright &
Gardner argued that correlations with performance measures at all 3 times (past, concurrent, and
future) are both high and invariant, and that controlling for past or concurrent performance
virtually eliminates the correlation of HR practices with future performance. Whenever we study
the relationship between HRM practices and employees’ performance one question came into
mind that how can we compute HR practice. In 2000 Gerhard et al argued that employees are the
preferred source of information for assessment of the actual (as opposed to the official) HR

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practices. No established model yet exists in this research literature, but in 1997, 2003 research
taken by Guest, D., Conway, & N., Dewe, P. and Wright, P.M., Gardner, T.M & Moynihan, L.M
in 2003 provides examples that employee perceptions and evaluations of the existence,
implementation and operations of HR practices are useful in the context of HR and performance
research. As an example, in 2003 Wright et al use survey questions on four domains of HR
practices: selection and staffing, training, pay for performance, and participation. In 2010 Qadar
Baksh et al found the three hr practices; promotion, performance evaluation and compensation
practices have a significant impact on perceived employees performance of the banking industry
in NWFP Pakistan.

Training

Training Methods include On-the-job as well as Off-the-job training. On-the-job training is

delivered to employees while they perform their regular jobs. Off-the-job training techniques
include lectures, special study, films, television conferences or discussions, case studies, role
playing, simulation, programmed instruction and laboratory training. Training Programs include
harassment training, communication skills training, computer and technical skills training,
management and leadership training, diversity training, safety training, conflict management,
workplace wellness, supervisor skills development and team building skills training. In 1997
Patterson et al while discussing impact of people management practices on business performance
has argued that HR practices in selection and training influence performance by providing
appropriate skills. Their research has found that HR practices have powerful impact on
performance. In 1995 Huselid found that training of employees can be helpful to produce
positive results. In 2000 Cooke argue that training is the tool to develop knowledge and skills as
means of increasing employees’ performance.

H1: There is a significant relationship between training and employees’ performance in

pharmaceutical companies of Pakistan.

Job Descriptions

Job descriptions are written statements that describe the duties, responsibilities, most
important contributions and outcomes needed from a position, required qualifications of
candidates and reporting relationship and coworkers of a particular job. In 2006 Qurush, Job
definition is combination of job description and job specification. It clearly outlines duties,
responsibilities, working conditions and expected skills of an individual performing that job. In
other words we can simply say that job description is what to do and how to do. It also provides
individuals with stimulating and interesting work and gives them the autonomy and flexibility to
perform their jobs well. Job description enhances job satisfaction and flexibility, which
encourages high performance and productivity.

H2: There is a significant relationship between job definition and employees’ performance in
pharmaceutical companies of Pakistan.

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Career Planning

Career Planning involves to conduct regularly career-information events that to inform your
workers about their options regarding continuing education and further qualifications. People
create career patterns as they make decisions about education, work, family and other life roles
(Post, Borgen, Amundson, &Washburn, 2002). A number of researches suggest that the role of
employers and employees is changing with reference to career e.g. in 1997 Ball argues that as
employers take less responsibility, employees need to take control of their own development in
order to maintain and enhance their employability. Career planning is a tool that aligns strategy
with future HR needs and encourages employee to strive for his personal development (William
et al, 1996). In 2006 Puah & Ananthram suggests, “Career development has a direct influence on
the achievement of job satisfaction and career commitment. Highlighting its benefits for the
organizations, in 20002 Hartzenberg argues, “Organizations are expecting employees to assume
greater responsibility for their own future as well as for organization’s success. Similarly, in
2005 Johns suggests that employees that have advanced would put more effort into their work.
The company policies play an important role in providing career opportunities. It seems that the
organization may benefit from increasing commitment across all career stages.

H3: There is a significant relationship between career planning and employees’ performance in
pharmaceutical companies of Pakistan.

Compensation

Compensation means paycheck issued by an employer in order to satisfy the compensation

commitment that employer has with the employee. Most compensation managers entirely assume
that high pay levels will maintain and enhance future performance of employees. In 2004 Donald
G. Gardner showed some results of a meditated model that suggests that pay level affects
employee self-esteem, which in turn, affects employee performance. But on contrary (zaini
Abdullah, 2009) concluded in his research that compensation or incentives have no influence on
overall performance in the Malaysian business organizations. Singh (2004) argued that
compensation is a behavior supporting mechanism of employees with business strategy of the
firm. In 2003 Wright et al have argued that an employee will exert unrestricted effort if proper
performance management system is in place and is supported by compensation system linked
with the performance management system.

H4: There is a significant relationship between compensation and employees’ performance in

pharmaceutical companies of Pakistan.

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 Figure-1
According to the existing literature the conceptual model in this study is shown in Figure-1.

Training

Job descriptions

Employees’
performance
Career planning

Compensation

Independent variables Dependent variable

Research Methodology

Questionnaire

The questionnaire developed for this study was used in the past researches by (kuldeep singh,
2004) and (Qureshi et al., 2007), who used to find out the impact of HR practices on employees
performance. Questions regarding independent variables (job description, training, career
planning, and compensation) were not changed but some new questions were added on the
subject of employee performance and some modifications were made in demographics. The
questionnaire required a response to all questions except demographics on five point Lickert
scales having extreme points: 1=strongly disagree, 5=strongly agree.

Participants

Sample of the study are the medical representatives including territory manager, sales
promotion officer, senior territory manager and product specialist of several pharmaceutical
companies. Due to cost constraint a convenient sampling was chosen and 200 questionnaires
were distributed among medical representatives of nine pharmaceutical companies located in
Islamabad and Rawalpindi region. However 191 questionnaires were returned back out of which
5 were discarded due to uncompleted response. As a whole, sample was of 186 members

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showing a response rate of 93 percent. Table-1 shows the demographic characteristics of the
respondents.

Table-1 Demographics
Gender Age Education

Male = 186 (100%) 20-30 = 59 (32%) F.A = 26 (14%)

30-40 = 68 (37%) B.A/B.Sc = 83 (45%)
40-50 = 43 (22%) Master = 59 (32%)
50-60 = 16 (09%) Other = 18 (09%)

Salary “000” Marital status Experience

10-25 = 79(42%) Married = 078(42%) 01-10 = 72(39%)

26-40 = 46(25%) Unmarried = 108(58%) 11-20 = 58(31%)
41-55 = 37(20%) 21-30 = 45(24%)
56-70 = 18(10%) 31-40 = 11(06%)
71-above = 06(03%)

Statistical Analysis

Pearson Correlation and Multiple Regression were used for measuring the
impact of HR practices on Perceived Employees' Performance. Data was
operated by using SPSS 16.

Descriptive Analysis

The highest mean of 3.8 was calculated for training and Job Description which shows that
employees feel that they are well trained and knows what to do and how to do their job. The
calculated mean for other independent variables compensation and career planning are 3.6 and
3.3 respectively; which indicates that employees are some what convinced with these factors.
The mean value of 3.8 for the dependent variable i.e., Employee performance shows that
employees are performing very well.

Table-3 Mean, Standard Deviations and Other Statics

Employee Job Career
performance Description Training Compensation Planning
Valid 186 186 186 186 186
Mean 3.7812 3.8199 3.8002 3.6382 3.3785
Std. Error of Mean 0.03333 0.0364 0.05312 0.05442 .02619
Median 3.9 4 3.8333 3.7143 3.6
Mode 3.9 4.25 3.83 3.71 3.6
Std. Deviation 0.45455 0.49643 0.72453 0.74226 .35717

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Variance 0.207 0.246 0.525 0.551 0.128
Range 1.7 1.5 2.2 2.86 1.17
Table-2 Scale Reliability
Variables Cronbach’s Alpha
Employee performance 0.752
Training 0.646
Job Description 0.791
Career Planning 0.846
Compensation 0.613

Correlation Results

The results of Pearson correlation as shown in table-4 indicate that there is

a statistically significant relationship between the dependent variable Employee
performance and the independent variables Job Description, Training, Career Planning, and
Compensation. Correlation of Training with employee performance is 0.723 which is highly
significant and there is a positive correlation between them. This shows that by conducting
proper training sessions for the employees, high level of employee performance can be obtained.
Job Description has a positive and significant relationship with employee performance and its value
is .668, which shows that by clarifying outlines duties, responsibilities, working conditions and
expected skills a firm can get better performance from their employees. Compensation also
showed a significant correlation with perceived employees' performance
(0.510).

Table-4 Correlations
Employee Job Career
performance Training Description Planning Compensation
Employee Pearson
performance Correlatio
n 1

Training Pearson
Correlatio
n .723** 1

Job Pearson
Description Correlatio
n .668** .166* 1

Career Pearson
Planning Correlatio
n .510** .498** .145 1

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Compensation Pearson
Correlatio
n .209** .317** .288** .071 1

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

*. Correlation is significant at the 0.05 level (2-tailed).

Career Planning has a correlation of 0.209 with employee performance, which is positive but
mildly significant. We can say that Career Planning does not affect the performance of employees
to a larger extent.

Regression Results

The value of adjusted R square i.e., .512 indicates that 51.2% of the variation in the
dependent variable employee performance can be explained by variations in the independent
variables job description, training, career planning, and compensation.
The estimated average value of employee performance is 1.09 when job description, training,
career planning, and compensation are zero. The change in employee performance is 0.385 when
training increases by 1. Similarly, change in employee performance is 0.495 when job description
increases by 1. Changes in employee performance are 0.223 and -0.099 when career planning and
compensation change by 1, respectively.
Except for career planning, the other three variables description, training, and compensation
have positive relationship with employee performance. career planning has a negative relationship
with employee performance. The most influential variables are job description and training
(highest value of 0.495 and 0.385 respectively for Beta).
All the significance levels are well over .05, which indicates that there is a very minor
probability that the independent variables do not influence the dependent variable employee
performance, in the reported method.
The regression results show that the independent variables job description, training, career
planning, and compensation are significantly connected to the dependent variable employee
performance. This shows that factors like better training, clarifying their duties and
responsibilities, providing opportunities for better career raise the level of performance. Negative
value of Beta for career planning indicates that in our culture, career planning may not be a
significant factor for the employees to perform well.

Table-5 Regression Analysis

Adjusted Std. Error of the
Model R R Square R Square Estimate
1 .723 a
0.522 0.512 0.31761
a. Predictors: (Constant), Compensation, Training, Job Description, Career Planning

Coefficients
Model Un standardized Standardized t Sig.
Coefficients Coefficients

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 B Std. Error Beta B Std. Error
1 (Constant) 1.089 0.298 3.66 0
Training 0.385 0.068 0.467 7.264 0.208
Job Description 0.495 0.054 0.54 9.178 0
Compensation 0.223 0.042 0.365 5.345 0
Career Planning -0.099 0.039 -0.158 -2.51 0.013
a. Dependent Variable: Employee performance

Conclusion

In this study we used perceived employee performance as a dependent variable to check the
HR practice, while training, job description, career planning and compensation are independent
variables. For that a number of pharmaceutical companies were selected in Islamabad and
Rawalpindi region. A feedback of 186 questionnaires was analyzed in SPSS 16. We used
correlation matrix and regression analysis, following are conclusion and suggestions.

Statistical analysis indicates that the employees working in the pharmaceutical companies
feel that their jobs performance is improved by the factors like training and job description. The
employees are not satisfied with the pay and the benefits that they get but they are performing
well. The reason behind this fact can be explained as most of the employees are having 1 to 10
years experience, thus, they want to ensure their position at the job rather to give preference to
income they earned. Therefore, there compensation factor matters less to their job performance.
Correlation analysis found the highest correlation for job performance and training which
indicates that if the employees are offered trainings timely and on need basis through fair
decision-making and sound policies, their performance level rises. career planning has not
significantly high correlated with employee performance which specifies that the employees with
low career planning and development also performed well depending on their trainings and job
description.
Regression analysis indicates that the dependence of training and job description on
employee performance is significant, whereas it is not significantly dependent on Career
planning. Compensation has also a role to play in an employee’s job performance.

Suggestions:

Referring to the empirical evidence obtained from this study; to achieve better employee
performance, following factors must be taken into account:

1. HR practices should be taken seriously regarding employees training. On the job and off
the job training programs should carry out as it help employees to improve their skills,
efficiency and performance.

2. A job should be well descriptive on paper, and it must be included in HR practices to tell
the employee his/her duty clearly so that number of errors and mistakes would decrease.

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 3. To improve the employee performance and attitude as a medical representative there
should be more emphasize on compensation, as this increase the motivation level and
employee performance.

4. Employees must be consulted for their career planning and development regarding job.
This may help in improving their performance towards the work. Therefore, it also has taken
in practice to focus on Career planning of the employees so that they work fine.

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