EMPLOYEE PERFORMANCE RELATIONSHIP Mohammed Jibrin-Bida* , Abdul-Halim Abd

15 Pages·2017·0.37 MB·English

ISSN: 2249-7196
IJMRR/Jan. 2017/ Volume 7/Issue 1/Article No-3/13-27
Mohammed Jibrin-Bida et. al., / International Journal of Management Research & Review

MANAGEMENT SUPPORT AS A MODERATOR IN THE HR PRACTICES-
EMPLOYEE PERFORMANCE RELATIONSHIP
Mohammed Jibrin-Bida*1, Abdul-Halim Abdul-Majid1
1School of Business Management, Universiti Utara Malaysia, Malaysia.
ABSTRACT
There seems an inconsistency in the findings regarding the HRM-performance relationship.
While numerous HRM studies have signified positive effect of HR practices on employee
performance, some other studies indicate the otherwise. Thus, this study investigates the
effect of compensation, performance appraisal, and succession planning on employee
performance. Through cross sectional survey approach, data were collected from 300
employees of state-owned Polytechnics in Nigeria. Partial Least Squares Method (PLS)
algorithm and bootstrap techniques were used to test the study’s hypotheses. The results
provided support for all the hypothesized relationships and signifying positive effect of
compensation, performance appraisal, and succession planning on employee performance.
This implies that effective HR practices (compensation, performance appraisal, and
succession planning) enhance employee performance and thus organizations should entrench
such HR practices in an effective manner. Besides, performance appraisal can impact
performance of the employees if it is properly handled and laden with management support.
Limitation and recommendations were also discussed.
Keywords: employee performance, HR practices, compensation, performance appraisal,
succession planning, higher education institution.
1. INTRODUCTION
In spite of the enormous importance of human resource (HR) practices towards the
realization of employees’ performance, many organizations are not fascinated to emphasize
its optimum. Researchers have shown that no organization can exist unless its workers are
highly productive. Also, performance can be propelled by workers’ evaluation of what they
gain or lose by acting in a particular way (Koshy, & Suguna, 2014).Obviously, the most vital
factor that affects the future of any organization is its employees, as they play an integral role
in achieving organizations’ objective (Koshy, & Suguna, 2014). Therefore, this paper focuses
on investigating human resources practices, particularly compensation, performance
appraisal, and succession planning and employee’s performance within polytechnic setting in
Nigeria. While substantial numbers of research (Delery, Doty, 1996; Huselid, 1995;
Pundziene, Alonderiene, & Buoziute, 2007; Seidu, 2011) have established the link between
human resource practices enhanced employee performance, this kind of research in the
context of polytechnics in Nigeria would solidify the existing body of knowledge in the
research field.

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2. LITERATURE REVIEW
According to Anitha (2013), employee performance refers to employee’s monetary or non-
monetary outcome which is absolutely connected with performance and success. According
to McConnell, (2003), employee performance is the achievement and contribution of an
individual in practical and quantifiable term. Moreover, employee performance is a complex
concept that can be affected by many variables (Popovich, 1998). These variables can range
from age, gender, employee recognition to job satisfaction, performance appraisal techniques,
and task types (Bonett, 2002; Becherer, 1999; Jamil & Raja, 2011; Rahman & Shah, 2012;
Swiercz, Bryan, Eagle, Bizzotto & Renn, 2012; Voltero, 2004). Sarmiento, et al. (2007)
argued that job performance is often the result of at least two aspects: the abilities and skills
(natural or acquired) that an employee possesses, and his/her motivation to use them in order
to perform a job better.
In addition, a number of authors believed that employees can help to improve business
performance through their ability to generate ideas and use these as building blocks for new
and better products, services and work processes. Recently, there have been a behavioural
view which claims that performance involves the results or the outputs. However, that
doesn’t mean business organization should ignore their goals and targets. Thus, performance
comprises all the behaviours that are related to achieving the unit or department goals as well
as organizational goals in which individual works on (McShane & Glinow, 2005; Murphy,
1990). Hence, there are two views of performance: results/output and behaviours, and that
makes it difficult to distinguish between these two aspects of performance and would be
confusing to do so. Nevertheless, behaviour is viewed as the cause of output, and output is
used to measure employee performance and effectiveness (Anitha, 2013; Cardy, & Dobbins,
1994; Waldman, 1994). Many scholars have tried to come up with the best way to explain
employee performance and some of the definitions given are organizational-related (Meyer &
Allen, 1991). Performance is also importance for the individual, accomplishing tasks and
performing at a high level can be a source of satisfaction with feeling of mastery and pride.
(Sonnentag, 2003). Low performance and not achieving the goals might be experienced as
dissatisfying or even as a personal failure (Sonnentag, 2003). Moreover, performance, if it is
recognized by other within the organization, is often rewarded by financial and other benefits.
Organization wantsemployees with highly performance as they would expedite the
accomplishment of their goals, delivery of the products and services, and finally the
achievement of competitive advantage (Sonnentag, 2003).
Furthermore, resources in organizational setting are defined as anything that could be thought
of as a strength or weakness of a given firm including tangible assets (Wenerself, 1984).
There are main organizational resources; human resources, financial resources and
technological resources. The management of human resources involves an approach that
deals on employment management in which it seeks to accomplish competitive advantage via
the tactical utilization of a highly committed and capable workforce, using on array of
cultural, structural and personnel techniques (Storey, 1995). The purpose of HRM is to ensure
that the employees of an organization are used in such a way that the employer obtains the
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greatest possible benefit from their abilities and the employees obtain both material and
psychological rewards from their works (Graham 1978).
Moreover, human resource management is a process, which consists of four main activities,
namely, acquisition, development, motivation, as well as maintenance of human resources
(Gupta, 2014). Gupta (2014) cited Scott, Clothier and Spriegel, (1961) that he defined Human
Resource Management as that branch of management which is responsible, on a staff basis,
for concentrating on those aspects of operations which are primarily concerned with the
relationship of management to employees and employees to employees and with the
development of the individual and the group. Also, Human Resource Management is
responsible for maintaining good human relations in the organisation. It is also concerned
with development of individuals and achieving integration of goals of the organisation and
those of the individuals. Human resource management is also an extension of general
management that is of prompting and stimulating every employee to make his fullest
contribution to the purpose of a business. Human resource management is not something that
could be separated from the basic managerial function. It is a major component of the broader
managerial function. The next section discusses the selected HR practices.
2.1 HR Practices
Human resource practices have received increased attention for its impact on employees’
performance. The majority of the researches in this area have focused on the degree to which
the human resource practices can enhance individual and organizational performance
(Joarder, Sharif & Ahmmed, 2011). There is a lack of information regarding dynamic nature
of human resources in the higher education in institutions, particularly polytechnic Moreover,
it is difficult to generalize the human resources practices of the western setting, and adopt the
western model of human resources practices in the embryonic economy countries (Joarderet
al, 2011). Therefore, there is need for research in the higher education in institutions,
particularly in Nigeria polytechnic (Babagana, 2014; Nura, 2014). Budhwar and Debrah
(2004) opined that there is a greater need to know how employees in various parts of the
world perceive human resource practices in different environment. Thus, this paper is
expected to fill the gap on human resource practices-employee performance link within
Nigeria polytechnic. Three sets of HR practices are highlighted in this present paper which
include (i) compensation, (ii) performance appraisal and (iii) succession planning
2.1.1 Compensation
Compensation, as a HRM practice, deals with all type of rewards that employees receive in
an exchange for what they have performed towards achieving organizational objectives
(John, 2003). Compensation packages vary for different workers depending upon their levels
and types of formal education, experience and training (Pedro & Vicente, 2007).
Compensation has been considered a fundamental issue of concern on employees and a
powerful utility for them to improve their performances (Furnham, 2005; OECD,
2005).Paulsen (2008) argued that pay is the most popular way of motivating employee to
perform and ensures effective performance.
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The rationale for employee’s compensation in organization is always with a common goal to
advance employee performance and overall organizational capabilities. Numerous research
studies highlighted performance-based compensation as highly motivating and an influence
creating HRM practice (Arthur, 1994; Huselid, 1995; MacDuffie, 1995; Delery & Doty,
1996; Shaw et al., 1998; Selset al., 2003). Bonus systems are to motivate employees to work
towards the company’s objectives (Pfeffer, 1994). Some researchers have concluded that the
relationship between pay and performance in the past was stronger and agreed that
compensation played a key role in enhancing employee effectiveness and generalized terms,
it can be said that compensation is used as a motivator to enhance performance. Therefore,
this study proposed the following hypothesis:-
Hypothesis 1: There is significant relationship between compensation and employee
performance
2.1.2 Performance Appraisal
The most difficult and most distasteful human resource management task for line managers to
perform is the process that appraises employee performance and acts on that appraisal termed
“Performance Appraisal”. Performance appraisal (PA) has been and still is the most
problematic HR area and the most avoided/detested HR area for line managers and HR
departments alike (Dessler, 2011). Grote (2010) points out that PA has more influence on
individual careers and work lives than any other management process. Performance appraisal
can both make a business more efficient and help keep employees motivated. By evaluating
people at regular intervals, appraisals help firms show where their employees excel, where
they can improve, and how well they have followed the goals set by the firm.
However, some of the authors are in the view that better performance appraisal result in
improved employee performance, Daoanis (2012) posits that performance appraisal is a vital
tool to measure the frameworks set by any organization to its employees. It is utilized to track
individual contribution and performance against organizational goals and to identify
individual strengths and opportunities for future improvements and assessed whether
organizational goals are achieved or serves as basis for the company’s future planning and
development. Therefore, this study proposed the following hypothesis:-
Hypothesis 2: There is significant relationship between performance appraisal and employee
performance
2.1.3 Succession Planning
Charles (2006) defines succession planning as the process of identifying people who could
presently move into key positions or could do so after specifically targeted development
occurs. The process identifies the better people in the organization and takes a consistent
approach to assembling, analysing, and retaining information about potential leaders and
planning for their further development. Mehrabani et al. (2011) opined that organization’s
future plans may change by some reasons such as retirements, promotions within the
organization, serious illness, death or any voluntary departure from the organization to follow
a career elsewhere. To cover such changes, organizations must have a key employees’
replacement plan. Succession planning is considered as a suitable effort in this regards
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Mehrabani, et al., (2011) cited Sambrook, (2005) there are mainly three focal points of
succession planning as pointed out by Hedum (2010). These are:
 It addresses the needs of the organization as senior leadership ages and retires.
 It helps an organization prepare for an unexpected event such as the sudden illness or death
of a person in a key leadership role in the organization.
 It ensures that an organization has the right caliber of personnel in place to function at peak
efficiency.
Today's dynamic environment filled with global competition and business discontinuities
defines the arena in which succession planning must flourish. To do so, a much more active
orientation is required; one that is better characterized by succession management and its
emphasis on going and integrated processes (Bruer & Bill, 1996). The concept of succession
planning is a positive approach to guarantee continuity in an organization by identifying how
vacant positions that were created due to planned and un planned departures of employees
will be filled (Nink, et al., 2006; Schmalzried & Fallon, 2007). This implies that succession
planning is both a dynamic and systematic leadership and talent development strategy
embarked upon to be able to accomplish future organizational operational needs and goals.
Simply put, succession planning is the life event of an organization. Consequent upon this,
succession planning has been proven to be an antidote to disruption of organizational policies
due to the effects of resignation and loss of talent in organization (Nayab, 2010).Therefore,
this study proposed the following hypothesis:-
Hypothesis 3: There is significant relationship between succession planning and employee
performance
2.2 Relationships between the selected HR practices and employee performance
It has become an empirical fact that relationship between compensation and employee
performance exists, and the studies that establish this include Oluigbo and Hameed et. al.
(2014), Rizal et. al. (2014), Samuel and Esther (2013), Sopiah (2013), and Jensen and
Murphy (1990), and For example, Abdul Hameed, Ramzan, Zubair, Ali and Arslan (2014)
studied the impact of three dimensions of compensation (rewards & incentives, salary and
indirect compensation) on employee performance in some selected banks. From the results of
the correlation analysis, positive compensation-employee performance link was discerned.
While the regression analysis revealed that all the three dimensions of compensation have
insignificant positive impact on employee performance.
Regarding performance appraisal, many empirical studies have established a positive
relationship between performance appraisal and employee performance in organization, the
studies include Mir and Ahmed (2014), Erabai, et. al. (2014), Owoyemi and Georga (2013),
Poursafor, et. al. (2014a; 2014b), Kuvaa’s, (2010), Singh, et. al. (2010), Daoanis, (2012). For
example, Owoyemi and George’s (2013) research concentrates on the link between
performance appraisal system and employee performance in Nigerian context. Sample size
of two hundred and twenty (220) employees of public sector agency was taken. The data for
the study was collected using simple random sampling. The findings indicated that
performance appraisal system significantly correlate with employee performance.
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Similarly, there are some empirical studies that show the significance of succession planning
in an organization, these includes Michel, (2016), Daspit, et. al. (2015), Gomba (2014),
Zahrani, et. al, (2014), Sharmal, et al. (2012), Mebrabni and Mohammed (2011), SuhlerHart
(2011). Based on the observation made by Posthuma et. al. (2013), there is dearth of research
on the effect of succession planning. This implies that despite that succession planning is a
vital HR practice that has its crucial role in the achievement of organizational success, little is
known about its influence on employee performance.
Based on the evaluation of relevant literature, it is proposed that there is enough evidence to
show the linkage between HR practices and employee performance, especially given the
three reviewed sets of HR practices. HR practices are measured through compensation,
performance appraisal and succession planning. While employee performance could be
measured by task and contextual performance. These are postulated to exist in polytechnics in
which higher and better employee performances are important in ensuring organizational
success as well as in sustaining business competitiveness. It is obvious that HR practices are
probable variables that will affect employee performance.
2.3 Underpinning Theory
The proposed research framework is well supported by the Ability-Motivation-Opportunity
(AMO) model, AMO model postulates that performance of the firm can be haste up through
three factors which are ability, motivation and opportunity. The first factor can be attained
through recruiting and selecting quality personnel. Jiang Lepak, Hu, and Baer (2012)
highlighted that ability of the firm’s human capital can be enhanced through all-inclusive
compensation, performance appraisal, and sound succession planning. AMO theory is
commonly accepted at individual level. Thus, this theory pounded the proposed relationships
among the variables of this paper.
3. METHODOLOGY
A structured questionnaire was used in collecting the data from various states owned
Polytechnics in Nigeria. The study used stratifying sampling, choosing disproportionate
sampling is considered appropriate as it allowed the stratum with large number of
departments to have high number of representation over stratum with small number of
departments (Sekaran & Bougie, 2013). Similarly, items used in the questionnaire were
adopted from different scholars, with few modifications includes; Demo et. al, (2012), Priesto
Pastor and Martin Pereza (2014) and Ko et. al,(2013), all in 5-likert scale. 300 questionnaires
were administered, 180 copies representing 60% returned and used in the analysis. SPSS 22v
and PLS SEM were used in the data analysis.
4. STATISTICAL ANALYSES AND RESULT
An early examination of validity and reliability using smart PLS 2.0 was conducted. The
model that involved compensation, performance appraisal, succession planning, MS and EP.

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Compensation

Employee Performance
Performance Appraisal

Succession Planning
Management Support
Fig 1: Measurement Model
4.1 The Measurement Model
Constructs validity and reliability were evaluated and confirmed in an attempt to determine
the accuracy of the measurement; convergent validity as well as the discriminant validity was
run respectively. After calculating PLS algorithm the first thing to consider is indicators
reliability. According (Duarte & Raposo, 2010; Hair et al., 2014; Hair et al., 2012; Hulland,
1999). Any item indicator with loading less than 0.4 should be deleted based on this
justification the model is filtered by deleting all the items that are below 0.4. Following the
rule of thumb for retaining items with loadings between .40 and .70 (Hair et al., 2014), it was
discovered that out of 65 items, 27 were deleted. These include; PA21, PA22, SP23, SP24,
EPTP39, EPTP41, EPTP42, EPTP44, EPTP45, EPTP46, EPCP47, EPCP48, EPCP49,
EPCP50, EPCP51, EPCP52, EPCP53, EPCP54, EPCP55, EPCP56, EPCP57, EPCP58,
EPCP59, MS65), because they presented loadings below the threshold of 0.40. Thus, in the
whole model, only 29 items were retained as they had loadings between 0.50 and 0.95.
Furthermore, the composite reliability and cronbach alpha for internal consistency reliability
of the entire construct meet the requirement range from 0.7 and 0.8 respectively
recommended by Hair, Ringle, and Sarstedt (2011), and Bagozzi and Yi (1988). Similarly,
the average variance extracted (AVE) for convergent validity of all the constructs are
considered accepted as all the AVE meet the minimum threshold of 0.5 as recommended by
Bagozzi and Yi (1988). In conclusion, to justify the discriminant validity the square root of
AVE is compared to correlation square of the interrelated variables of concern constructs
which indicates adequate discriminant validity. Table 1 and Table 2present factor loading
present and discriminant validity.
Table 1: Factor Loading
Items Factor Loading Composite Reliability Cronbach's Alpha AVE
EPTP34 0.7335 0.897 0.866 0.555
EPTP35 0.739
EPTP36 0.7771
EPTP37 0.7543
EPTP38 0.7569
EPTP40 0.7353
EPTP43 0.7152
RS2 0.7351 0.889 0.835 0.668
RS4 0.7913
RS5 0.8938
RS6 0.8408
TD10 0.8271 0.908 0.873 0.663
TD11 0.7769
TD7 0.7784
TD8 0.8298
TD9 0.8566
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Discriminant validity
Discriminant validity refers to the extent to which a particular latent construct is different
from other latent constructs (Duarte & Raposo, 2010). In the present study, discriminant
validity was ascertained using AVE, as suggested by Fornell and Larcker (1981). This was
achieved by comparing the correlations among the latent constructs with square roots of
average variance extracted (Fornell & Larcker, 1981).
Additionally, discriminant validity was determined following Chin’s (1998) criterion by
comparing the indicator loadings with other reflective indicators in the cross loadings table.
First, as a rule of thumb for evaluating discriminant validity, Fornell and Larcker (1981)
suggest the use of AVE with a score of .50 or more. To achieve adequate discriminant
validity, Fornell and Larcker (1981) further suggest that the square root of the AVE should be
greater than the correlations among latent constructs. As indicated in Table 1, the values of
the average variances extracted range between 0.56 and 0.66, suggesting acceptable values.
In Table 1, the correlations among the latent constructs were compared with the square root
of the average variances extracted (values in bold face). Table 1 also shows that the square
root of the average variances extracted were all greater than the correlations among latent
constructs, suggesting adequate discriminant validity (Fornell & Larcker, 1981).
Table 2: Discriminant validity
Variables C EP PA SP
C 0.84
EP -0.58 0.74
PA 0.73 -0.52 0.87
SP -0.63 0.71 -0.58 0.84

Fig 2: Measurement Model
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4.2 Structural Model
After satisfying the condition of the measurement model (construct validity and reliability), is
followed by hypothesis testing, evaluation of R-square, effect size and predictive relevance
through running PLS algorism and Bootstrapping in smart PLS 2.0 version.
Table 3: Path Coefficient and Hypotheses
Hypotheses Beta S E T-st P-val Decision
C -> EP -0.17 0.06 2.70 0.00 Supported
PA -> EP -0.08 0.06 1.34 0.09 Supported
SP -> EP 0.56 0.05 11.22 0.00 Supported

Fig 3: Structural Model
4.3Testing the Moderating effect of Management Support
This study used product indicator approach using PLS SEM to identify and estimate the
strength of the moderating effect of management support on the relationship between HRM
practices (compensation, performance appraisal, succession planning and employee
performance (Chin, Marcolin, & Newsted, 2003; Henseler & Fassott, 2010). Table 4 shows
that management support is found significantly related and moderate the relationship between
performance appraisal and employee performance, That is with management support
employee will perform best at work.
Table 4: Moderating hypotheses
Hypotheses Beta Std Error T-Statistics P-value Decision
C * MS -> EP -0.01 0.08 0.17 0.86 Not Supported
PA * MS -> EP 0.15 0.07 2.100.04 Supported
SP * MS -> EP 0.03 0.09 0.39 0.70 Not Supported

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Fig 4: Moderating effect
Therefore, it can be established that MS moderates the relationship between performance
appraisal and EP at 5% significance level, 2.10-tail. Statistically the moderating effect is
significant, hypothesis supported. However, MS was found no moderate the relationship
between compensation and succession planning and employee performance that is which is
statistically insignificant relationship.
4.4 Evaluation of predictive relevance of the model, effect size, and R2
In PLS SEM, across-validated redundancy measure is used in evaluating the predictive
relevance of this research model by running PLS blindfolding procedure. According to Chin
(1998), Geisser (1974), and Stone (1974), any model with Q2 above 0 has predictive
relevancy, in line with this assertion this model has 0.30which above the threshold. Similarly,
Chin (1998), provided criteria of judging research model predictive relevance by identifying
some values which includes; i) 0.02 is small; ii) 0.15 is medium; and ii) 0.35 is Large.
Therefore, based on the views from Chin (1998); Geisser (1974), and Stone (1974), the
research model has medium predictive relevance.

Fig 5: Predictive Relevance
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