Measuring the impact of human resource development (HRD) practices on

employee performance with mediation of employee competence in small

and medium scale enterprises

By
Muhammad Junaid Khan
|&
Fahad Batavia
&
Usman Abbasi

Research student at Kasbit

ABSTRACT

This study reveals important investigational outcomes that make a significant contribution to
clarifying the query of the impact of Human Resource Development practices on performance
of employee. The area that has been covered is this research is that how human resource
development practices impact on employee performance. This study will cover the research
gap of employee competence as a mediator. The mediating role of employee competencies
may include self-competency, team competency, change competency, communication
competency and ethical competency. The purpose of conducting this study is to analyze the
factors which affect the employee performance and analyze the factors of employee
competence as a mediator between HRD practices and employee performance. It will observe
the impact of human resource development practices on employee performance with
mediation of employee competence in small and medium scale enterprises. An incorporated
research model was developed by combining main factors from existing literature. The
results indicate that some human resource development practices impact employee
performance while having employee competence as a mediator. The research was conducted
in small and medium scale enterprises, and the analysis based on cross-sectional data which
cannot be generalized crossways a broader range of sectors. The findings of the study will
help stakeholders, policy makers and management of SME’s in espousing appropriate and
well-articulated HRD practices to improve employee competencies and enhance
organizational effectiveness. This study extends the literature by empirically adducing proof
that, HRD practices impact employee’s performance of small and medium scale enterprises.
Keywords Employee performance, HRD practices, Employee competence
Problem Statement:

This study discloses significant empirical results that make an important contribution to
clarifying the question of the impact of Human Resource Development practices on
performance of employee. The area that has been covered is this research is that how human
resource development practices impact on employee performance. The human resource
practices which has been discussed in this research previously are career development,
training and development, performance appraisal and compensations while the discussed
factors of employees performance are efficiency of work, plan of work, creativity and
innovation and making efforts.

There is a research gap in this study. There can be a mediating role of employee
competencies between Human Resource Development and Employee Performance. The
mediating role of employee competencies may include self-competency, team competency,
change competency, communication competency and ethical competency.

It is the need of this study to include employee competencies as a mediator since without
knowing the employee’s own competencies it’s not possible to derive the results of HRD’s
impact on employee performance.

(Norris, 1991) argue that as implied understandings of the term competence have been
surpassed by the need to describe precisely and to operationalize concepts, the practical has
become covered in theoretical confusion and the seemingly simple has become deeply
complex.

(Hellriegel & Slocum, 2011) recognized self-competence, team competence, change

competence, communication competence, ethical competence, diversity competence and
cross-country competence as the seven key competencies that affects the behavior of
individual, teams and efficiency of an organization. Built on the literature, the following
competencies were observed: self-competence, team competence, change competence,
communication competence and ethical competence.

From the human resources management’s point of view, employee competence refers to the
capability to perform tasks well, and may need specific knowledge, skills, or capacities
(Cardy & Selvarajan, 2006).

Competence features are content information, behavior skills, cognitive processing (IQ),
character traits, values, purposes and rarely other perceptual or sensor motor competences
that exactly forecast some level of performance (Potnuru, Sahoo, & Sharma, 2018). (Cardy &
Selvarajan, 2006) has categorized competencies into two categories: employee (personal) and
organization (corporate). Employee’s competencies are those traits that are learnt by
employees, such as knowledge, skills, ability and personality that differentiate them from
average performers (Cardy & Selvarajan, 2006).
Objective:

The purpose of conducting this study is to analyze the factors which affect the employee
performance and analyze the factors of employee competence as a mediator between HRD
practices and employee performance.

 To identify the effect of self-competence as mediating factor on employee

performance
 To determine the impact of team competence on the performance of an employee
Intorduction:

Organizations have tried to more visibly recognize and emphasis on factors that effect their
success (Reich, 1991). Human resources are considered a definite resource in an organization
which effects a company’s success and its competitive position (Becker & Huselid, 1998).
Human resource development practices are plans designed and applied to improve employee
competences, so that the employees perform efficiently and meet performance potentials
(Indradevi, 2010). Human resource development has been studied in various industries across
the world; yet, relatively less studies exist on HRD in the SME setting (Hill, 2004).

Human resource development (HRD) flourishes as a significant part of research practice.

HRD determined towards advancing a variety of competence of employees and promoting a
energetic work philosophy in the organization to bind the competencies of workers and
inordinately enhances organizational efficiency (Rao, 1987). Such resources take on special
significance when dealing with service businesses, specially the banking industry, where
there is much more extensive direct contact between employees and customers at the service
line (Delery & Doty, 1996). Creating competitive advantage through people needs careful
attention to the practices that best influence these assets. HRD practices are programs which
are considered to be strategically oriented to structural process for managing the development
of human resources to contribute to the total success of the organization (Werner &
DeSimone, 2006). Competence is a characteristic attribute of a person that is connected to
superior performance and a demo of specific talents in practice and application of knowledge
vital to do a job (McClelland, 1973).

An employee’s competence refers to those qualities, skills or attributes that employees need
to do their jobs more effectively (Soderquist, Papalexandris, & Ioannou, 2010). To develop
and maintain employee competencies for future necessity and in the current environment, an
organization must highlight on human resource development (HRD).

HRD practices endlessly improve employee’s know-how and performance through the
current practices of training, performance appraisal and organizational development
initiatives (Garavan, 2007). An organization should generate a learning culture in the
organization, so that employee can share, obtain and create knowledge and skills, which can
modify the performance of the employees. Organizational learning culture mentions a set of
norms and values about the operatives of an organization that supports systematic
organizational learning so that individual knowledge, teamwork, collaboration, creativity and
knowledge distribution have collective meaning and value (Torres-Coronas & Arias-Oliva,
2008).
Literature Review:

Human resource development practices

HRD is generally defined as a set of structured and unstructured learning and performance-
based actions which develop individual and organizational competence, skill and capacity to
cope with and successfully manage change (Simonds & Pederson, 2006). HRD programs are
designed and applied to improve employee’s abilities so that the employees perform
efficiently and meet performance expectations (Indradevi, 2010). Organizations use HRD
practices as a significant strategic mechanism to arouse positive behavior in individuals and
effect their knowledge, skills and attitudes which can grow productivity and performance
(Clardy, 2008). The training and development, performance appraisal, rewards,
organizational development, career development, feedback and counseling, potential
development and job rotation as HRD practices (Rao, 1987).

Employee competencies

(Norris, 1991) argue that as tacit identifications of the word competence have been surpassed
by the necessity to define precisely and to operationalize ideas, the practical has become
covered in theoretical confusion and the apparently simple has become profoundly complex.
A competence is a reliably computable, relatively enduring (stable) characteristic of an
individual, team or organization that causes and statistically forecasts a computable level of
performance (Berger & Berger, 2010). Employee competencies are those features or qualities
that are learnt by employees, such as knowledge, skills, ability and personality that
differentiate them from average performers (Cardy & Selvarajan, 2006).

Employee performance

Employee performance is the performance related to the amount of output, quality of outputs,
timeliness of output, presence or attendance on the job, effectiveness of the work completed
and efficiency of work completed (Mathis & Jackson, 2009). Effectiveness of an organization
involves in the efficiency of each of its distinct employee. Based on literature, the following
employee performance (Mastrangelo, Eddy, & Lorenzet, 2014)
Research Methodology:
3.1: Method of Data Collection

The questionnaire we have prepared on the basis of past studies and after the research we
have come to the motive and started working on our data collection on different variables of
our research model and study. We collected our data on different variables from different age
of people and the public age of our data collection was from 20 to 60 years age limit
respectively. So people who solved our “career development” questions were between the
age of below 20 and those who solved “training and development” questions were from 21 to
30 age on the other side “performance appraisal” questions were solved by 31 to 40 years
people, “self-competency questions were solved by the people who’s age were 50 and above
50 and if we talk about the variable ‘efficiency of the work” they were between 21 to 30
and in the end the “planning of work” questions were solved by the people who below 20
years and the remaining data was collected through social sites, Google, and other web
sources.

3.2: sampling:

Sampling size

If we talk about sampling size then our questions were about 19 and these questions should
be equal to the quantity of 10 so we calculate our 19 questions and multiply these questions
with 10 19*10=190 so the author collected 30% data through papers and the remaining 70%
through online survey and then we collected this date to calculate the overall result of the
study.

Sampling Technique

The author use convenient sampling techniques and collected data manual through question
papers which we gave to different students and other persons and we collected our data
through online questionnaire and the faculty members as well.

3.3: Research Instrument

Questionnaire
HRD Practices:
Career Development
Organization provides coaching to enhance my career
Organization supports my individual development strategy
Organization provides unprejudiced career guidance whenever required
Training and development
Skills are acquired through training program
The activities of the training programs meet the needs of employees

Performance appraisal
Appraisal system in this organization is growth and developmental oriented
Performance is assessed on established objective and measurable outcomes
Training programs are conducted for employees in all facets of quality
Performance review discussions conducted with the highest quality and care

Employee Competencies:
Self –competency
I perform very well in many important situations
I perform very well at a number of things
I deal appropriately with challenges

Team Competencies:
I can contribute valuable insight to a team project
I can easily facilitate communication between people

Employees Performance:
Efficiency of the work
Employees exhibit a sense of earnestness, dedication and ability to take responsibility
Employees carry out the responsibilities in accordance to specified policies and procedures

Planning of work
Effective work planning contributes to the setting and attainment of organizational goals
Employee of the organization possesses the ability to plan and execute the responsibilities in
accordance to planned scheduled
Effective work planning increases employee’s ability to focus to focus on the completion of
their assigned responsibilities automatically
3.4 Research model

3.5 statistical techniques:

Reliability:

For the calculation of correct mathematics and analyze the results corrective we used the
reliability method to be sure that our results are correct and there is no error in these results as
well.

Regression line technique:

Author also used the regression line techniques to check the independent variable effects on
all dependent variables of our study model respectively.
4.1 Demographic

Gender Frequency Percentages

Male 107 56.4%
Female 82 43.6%
Age
Below 20 years 36 18.8%
21 to 30 Year 60 32%
31 to 40 Year 40 21.2%
Above 50 54 28%
Household
Below 25000 34 18.3%
25000-50000 56 29.6%
50000-100000 63 33.5%
Above 100000 35 18.6%
Qualification
Below Intermediate 41 21.9%
Bachelor 83 43.6%
Master 34 18.1%
Diploma certificate and other 31 16.4%
Other

In our study there are almost 4 demographics section, the first section is gender in which 107
are males which is about 56.4% and 82 are females which is 43.6% and the second section is
age in which below the age of people are 36 which about 18.8% and the people from 21 to 30
years were 60 which about 32%, the people with the age between 31 to 40 were about 40
which is 21.2%. now the third section was household in which below 25000 were 34 which is
18.3% and people with 25000 to 50000 were 56 which is about 29.6% now we talk about
people between the household income of 50000 to 100000 which were 35 and in percentage
it was 18.6%. the fourth section is qualification and below intermediate were 41 which is
21.9% and bachelors were 83 which is about 43.6% and if we talk about masters then they
were 34 in persons which is 18.1% and the diploma certificate and other were 31 which about
16.4%. as we collected our data from different ways so majority of our public were from
middle class who helped us to collect our data respectively.