HRM- RESEARCH PROPOSAL IMPACT of COMPENSATION, PERFORMANCE EVALUATION, and PROMOTION on the PERFORMANCE

of EMPLOYEE

ADNAN UL HAQ

Abstract This study is to critically evaluate the influences of HR practices particularly Promotion, Compensation and Performance evaluation on the actual performance of employees working in the aviation industry. In view of the fact that numerous investigative studies have been carried out to find the actual impact of mentioned HR practices on the performance on organisation (Guest et al., 2003; Wall and Wood, 2005). Despite the fact that research in past have been executed but those studies had not been completely able to identify the one instrument or a method that systematically relate the practices of HR with organisational performance (Wright and Gardner, 2003). This research study has a prime focus on these three policies to check whether these are the mechanisms to link HR practices with performances of employee to improve the organisations performance. The investigative study also tends to find the experiences of employees due to these HR practices and how does the behaviour of employee correlate the HR practices with the employees overall performance at work setting. The three mentioned practices that are currently in practice at the aviation industry of United Kingdom is similar to a degree to what was conducted by Lepak and Snell (1999) in terms of making a map to work out plan for drawing the analysis. Moreover, this research will investigate and identify the ways which will create a correlation between the specific HR practices and particular performance of worker. To carry out my research investigation I have considered journals about the practices and policies of HR including the ethical issues attached with those policies and practices. Since Ryanair is a selected case study so articles and secondary research is done before research, the questionnaire containing questions related to the topic were circulated so that a genuine employees feelings are discovered about these three practices. The Crew member and top management of Ryanair is interviewed to provide details in interview session.

Introduction:

With the passage of time the importance of Human Resource Management has gain its importance and has emerged as managements effective core function. It is regarded as one of the most primary tool for management of people because it develops the internal culture of an organisation. Moreover, HRM establishes and sustain that the system that provide effective directions to employees so that the working efficiency of entire organisation increases more and more. There are number of practices that are vital part of HR as system and have its own significance for the employers, employees and organisation as whole. HR practices include compensation, training, recruitment and selection, performance management, safety, employee management, benefits, administration, communication, and organisational development and human resource management is itself a mechanism to achieve all of these mentioned practices. There are number of sub processes that are basically the integrated part of this mechanism such as training, career planning, hiring, job description, planning and appraisal, and compensation which has strong influence on organisation and employees. To develop the employees positive attitude and increase his work efficiency, HR department has various approaches and practices. Through number of studies, different types of HR practices are identified that has huge impact on the outcome of organisation and employees (Huselid, 1995; Guest, 1999; Applebaum, 2002). Few of these activities are compensation, performance evaluation and promotion. These practices are enabling the organisation to maintain the good workforce. As Herzberg (1954) identified two factors working on employees at workplace are hygiene and the motivators. HR department ensure that these practices are working as either as hygiene or motivator for workers. For most of employees compensation will be regarded as hygiene factor but promotion and performance evaluation will work as motivators for all most all employees because it increases their working efficiency (Depak et al, 2003). This study also contains the past findings of (Peccei, 2004) which revealed that at workplace the designed and executed HR practices affects the employees experiences in the organisation. The outcomes of employees are persuaded by the ongoing HR practices within the organisation and working experiences of employees (Godard, 2001; Guest 1999). Compensation is HR practice that is to provide assistance to employees in various situations. It is also regarded as remuneration also because of its nature. These are given

as monetary reward in type of cash to employees for either their work efficiency, efforts, or any serious problem they have encountered which causes them loss or injury. It can also be given in shape of benefits like medical allowances or insurance, paid time off etc so that employees are more motivated at workplace. This is a practice that has influence on the performance of employees to a certain degree. Promotion is also a type of HR practise but in this type of practice the employee is given a raise not only in the salary package but also in the position. This means when an employee performs well than organisation reward him by increasing his rank to a higher degree than the existing one. Promotion is generally seen as a practice that is done by the top management to ensure that the employees who are strong asset must be retained in organisation by rewarding them high positions so that their decision making abilities enhances and they perform more vigorously. The performance evaluation is one of the HR practices that are chosen for this research investigation, in broader perspective the performance appraisal and performance evaluation sound similar. In operational term there is not much difference but in close context performance appraisal is objective in nature whereas performance evaluation is subjective. Performance evaluation is a practice carried out by top management to ensure that employees are working up to the standards set by the organisation. It is to measure the abilities and working efficiency of employees.

The performance of employees are one of the most essential aspects for the growth and continuous success of organisation as we know that organisation is not form by help of bricks and materials but the most vital component to shape organisation is people. It will not be incorrect to say that the success of any firm heavily depends on its employees because the culture of organisation shapes up due to the individuals working in it. Therefore, to increase the working capacity of employees numerous types of HR practices are used by the management. Through HR practices organisations tends to improve the actual performance of employees to the level it has perceived. Now the question is if to increase the work efficiency why different types of practices are adopted by firms? The answer is inside the fact that humans have different psychology, they are products of different experiences therefore these different types of practices are

used in different conditions on various types of employees to enhance their working efficiency. For instance, the promotion is a practice to ensure that the best skills remain attached with the firm therefore increase in given in both basic salaries as well in the job post. With this employees are trusted with more responsibilities and they feel more valued due to this type of practice. But if we consider the compensation as HR practice, it is usually for all most all types of employees so that they are not dissatisfied by working within the organisation. It is not giving any extra responsibilities like in promotion practice but to generally avoid the feelings of unwilling and lack of excitement at work. In organisation performance evaluation is to remind the employees that their performance is monitored by the organisation and further career growth depends of their efforts and commitment. From always the researchers are keen to investigate the causes and research deep the ways of appraisal systems of management and the HR policies like compensation, promotion and performance evaluation that enables the organisation to determine the overall performance of employees. Internal customers of firm are also important for any firm and it is therefore important to find out how workers can be more productive and the impact of these practices on various types of employees.

Purpose: This research investigation has a sole purpose to explore the relationship between compensation, promotion, and performance evaluation (HR practice) and employees performance perceived. The existing concept in the management literature is that evaluation of performance, promotion, and compensating employees are linked with the perceived performance of employee in a positive manner. Researches conducted in recent era have drawn the attention of number of scholars to the co relation between the training program and the actual performance of employees. Research Questions: What is the impact of compensation, performance evaluation, and promotion (independent variables) on the employees performance (dependent variable?

Aim: To identify and explore the HR practices like compensation, promotion and performance evaluations influence on the actual performance of employees at Ryanair. Objectives: The objectives to accomplish in this research investigation are as following:

To critically examine the impact of compensation, promotion and performance evaluation on the actual performance of employees.

To investigate the procedures adopted by top management that these practices have significant and constructive impact on the performance of employees through observation, questionnaire and interviews.

To conclude hr practices impact at the aviation industry.

Scope: The moreover scope of this research investigation is within a set time frame reach our targeted sample set in order to find the impact of compensation, promotion and performance evaluation on the actual performance of employees therefore the in depth survey to find the significance of study. The time expected to meet the faculty member and employees of selected organisation is 50 days excluding holidays. The closed ended questionnaire among employees will be circulated by friends in the selected organisation. Literature Review: Preffer (1994) stated that to attain the competitive advantage more often organisations are considering the employees real potential as an important source. In order to retain this source and use the employees skills to best level firms are using the different types

of HR practices to develop a competitive edge. This notion has made the scholar and researchers to discover the correlation between the performance of individual employee perceived and the HR practices particularly promotion, compensation, and performance evaluation. The link between these HR practices and the performance of employee is recognised in a statistical mode already by the previous empirical researches. As a consequence, the basic idea emerged within the researchers that the business performance is not directly affected by the practices of HRM (Katou and Budhwar, 2006). But the behaviour of employee and human capital are firms resources that are being affected by these HRM practices. Delery (1998) and Wright et al., (1994) has presented the opposite idea that the behaviour and human capital eventually leads to the performance of organisation. This statement indicates that the correlation between organisational performance and HR practices are connoted by these variables. Number of researches have revealed the significance and measured the impact of variables for the enhancement of organisational performance (Huselid, 1995; MacDuffie, 1995; Fey et al., 2000; Boselie et al., 2001; Park et al., 2003; Paul and Anantharaman, 2003; Katou and Budhwar, 2006). For instance, Delery & Doty (1996) studied the link between the HR practices and profit maximisation in US banks and the outcome was profitability is related to HR practices in a positive manner. Researches are done in a very confine manner to uncover the procedure for building the HR practices value (Wright and gardener, 2002). Syed et al (2008) has critically analysed the linkage between the HRM practices in a strategic mode and organisational performance. The following study also find out that practices like training, promotion, career planning, performance evaluation and promotion inspire the performance in both financial and non financial manner. According to Syed et al (2008), profitability contribute to financial betterment but vital role to produce a product or services, the job description and job security are essential practices. Marwat et al (2006) commenced an investigation in order to elaborate the correlation between HR practices and performance of employees perceived. The same study further showed that HR practices like training, performance appraisal, career planning, promotion, performance evaluation, selection, participation of employees and job enrichment are linked with the employees performance in a positive and constructive way (Marwat et al, 2006). Huselid (1995) emphasised more on significance of training as a selection practices complement which can enable the behaviour of employee and

the culture of organisation to generate positive outcomes. William et al (1996) suggest that promotion is an effective tool that be used to motivate employees in future and it is a practice that can shape the HR needs in future. Furthermore, this type of practice increases workers inner urge to be more competent and develop their personal career (ibid). According to Datta et al (2003) organisational productivity is in close link with the process of undertaking of HRM practices. Ichniowski (1995) also proposed that employees performance is influenced by the HR practices like promotion, compensation, training, selection, and performance appraisal. Number of researches have given a strong notion that employees outcome are in close relation with the HR practices (Sels, 2006). Singh (2004) carried out a study to examine the important correlation between HR practices and actual and perceived performances of employees by considering the 82 Indian forms and the outcome revealed that there is a healthy link between practices and outcomes. In the research investigation of Sels (2006) compensation and training were the main consideration from set of HR practices. Likewise, Quresh et al (2010) strongly urged that financial performance of banking institutions in Pakistan is exceeding well due to the HR practices as they are vital component to increase the performance. Moreover, Deepak et al (2003) suggested that organisational performance and practices of HR have a relation that helps in lifting to the desired level. The positive relationship between the HR practices like promotion, compensation, and performance evaluation and organisational outcomes is revealed by the study of Quresh et al (2010). Shahzad et al (2008) explored the relationship between practices of HR and individual employees performance and identified that a link is positive between these practices including compensation, promotion practices and perceived performance of employees. On the other hand, performance evaluation practices are not linked with the perceive performance of employees in a significant way (ibid). Shahzad et al (2008) proposed that the practice of compensation need to be reviewed by the universities of Pakistan and also to enhance the level of performance of its professors the career path should be clearly defined. Huselid (1995) have undertaken the Hr practices like grievance procedures, employee training and promotion, personnel selection, information sharing, attitude assessment, performance appraisal, incentive compensation, job design, labour management participation, and recruitment efforts to show their impact on the performance of employees. Additionally, Teseema & Soeters (2006) have also

examined eight practices including selection practices, grievance procedure, placement practices, training practices, compensation practices, recruitment, employee performance evaluation practices, promotion practices, and pension or social security (ibid). Furthermore, Frye (2004) elaborated the connection between compensation based on methods of equity and the organisational performance and reached to a conclusion that between these two variables the link is positive in nature. According to Frye (2004) to retain a high skilled labour within an organisation the vital role is played by compensation practice. Huseild (1995) also emphasised on compensation that it has a strong connection with the both financial performance and the employees individual performance. In addition, Taseema and Soeters (2006) also argued that a relationship that exists between the compensation and the performance of employee perceived is strong one. Ichniowski et al., (1997) stress on point that the employees performance is affected in a positive way by bonus pay plans by creative practices at workplace like involving employees in decision making, training programs, promotion, performance evaluation and employment security. Teseema & Soeters (2006) has identified in their research investigation that connection between variables like promotion and perceived employee performance has a strong positive connection. Moreover, the research of past executed by park et al (2003) revealed that promotion affect the performance of employee in a positive manner. Such step of giving promotion to workers can develop the feeling of justice and help in making employees more committed with their organisations. Campbell (2007) analysed the connection between the financial/nonfinancial performance and the promotion practice and his study identified that decisions regarding the employees promotion and demotion are critical and sensitive to service qualitys nonfinancial measures. The research investigation also showed that decisions of promotion and demotions are receptive to retention of workers. Furthermore, Benson (2006) recommended that employees intension to resign from company reduces if after training they are promoted. The same notion is also highlighted and sustained by the previous research carried by Becker (1965) that elaborated the point that those employees would less reluctant to leave the organisation whose skills are polished and are given a promotion. The model developed by Appelbaum et al., 2000; Batt, 2002; Schuler and Jackson, 1987 to measure the level of performance and the further studies revealed that promotion and compensation are positively linked with the higher level of performance. Moreover, model study suggested that the performance level of employee

are working in lose consideration with the corporate performance and HR practices (Horgan, 2003; Huselid, 1995; MacDufe, 1995). The obstacle that an organisation usually encountered is to use the combination of practices to enhance the performance level of employees (Huselid, 1995; Ichniowski et al., 1997). The studies conducted in recent times shows that performance evaluation is critical to employees and organisations and moreover, the sources that shows the real influence of these hr practise would be workers by themselves as (Gerhard et al 2000) states that competitive advantage is gained by firms through employees (Pfeffer, 1994), argued that to remain competent in market it is firms that need to ensure practices to maintain its workforce. Likewise, Armstrong (2000) suggested that compensation is vital to motivate employee and training to improve the existing behaviour of employee through means of promotion to feel the responsibility in task. Performance evaluation has a direct link with the chances to get a modification through required training or promotion to develop further skills. Ginsberg (1997) revealed in his study that training is essential for employee o get a promotion later on in career as it develops the skills which increase chances for promotion. Moreover, Chand and Katou (2007) investigated that for organisational performance the performance evaluation of employees are a vital practice. The investigation study determined that performance of firm is connected positively with the systems of HRM including compensation practice, promotion practice, training practice, recruitment and selection, manpower planning, job design, and performance appraisal (ibid). Moideenkutty et al., (2011) also proposed that in Gulf Arabian firms enhance their performances through executing HR practices including training, promotion, performance evaluation, career planning and selection. Previous researches associated to practices of HRM and level of employees performance has determined that performance of employee can be evaluated by numerous means, but Dyer & Reeves (1995) suggested specific four methods:
1. Employee Outcomes 2. Organisational Outcomes 3. Financial Accounting Outcomes 4. Market Based Outcomes

Furthermore, these different outcomes are linked with the type of HR practices, exploring affirmative relationships vital to declare that HR practices can be successfully

considered via performance of workers, along with the connection that Prevails move in a right and positive dimension. Previous study also explains that high level of employees performance with related with the practices of HR (Horgan & Mohlau 2006) and that compensation practice and training practice appear to affect the employees in a positive manner (Singh K 2004). Guest (2002) has identified that apart from the fact that HR practices influence the employees in a positive manner but the level of outcomes relay on response of individual worker to particular practices. The perception of practice by worker will affect the impacts level and Qadar Baksh et al (2010) investigated that three distinguish HR practices: Promotion, Performance evaluation, and Compensation practices has a huge and vital influence on employees perceived performance in commercial sector in NWFP Pakistan. Further studies of similar kind has identified the possible links for connecting HR practices and employees performance by scrutinizing particular exercises and their Quit Rates (Batt 2002) who revealed that the level of quit rate in service sector can be reduced by high level HR practices. A condemnation, on the other hand, is that there is not yet a single recognized model within extensive study investigation literature to empirically scrutinize the influences of HR practices precise manner, so any statistical connection between HRM practices and employee performance is as yet somewhat meaningless, restricting the generalizability of outcomes (Rrao, Ganesh, Sriram 2010). Further issues stem from the problems that researchers face in elucidating the causality (track and magnitudes of the variables) and why these HR practices appear to create a difference (Baron 1999). Bibliography: o Anastassova, L. and Purcell, K. (1995), Human resource management in the Bulgarian hotel industry: from command to empowerment?, International Journal of Hospitality Management, Vol. 14 No. 2, pp. 171-85.
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