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CHAPTER ONE

INTRODUCTION

1.1    Background to the Study

Organizations nowadays are looking forward to have a competitive advantage against the threats present in globalization. Due to the high competency requirements, most organization aim to generate the kind of performance that can bring more profit. In order to do that, the employees are required to perform well and improve their performance (Osman, 2013).

To comply with this, the organization needs to align organizational performance with human resource management practices, which would be shown by organizational output of financial variables (sales growth, goal achievement, good services, productivity) (Chand and Katou, 2015) and non-financial variables (management quality, long-term orientation, continuous improvement, workforce quality) (De Waal and Frijns, 2011; Dimba, 2010) and also other outcomes as commitment, quality and flexibility (Guest,2013). Once a business entity has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a way to measure progress toward those goals (Kaplan and Norton,2015).

Since the 1980s, human resource management (HRM) strategy has become an important topic for the management area.HRM strategy has achieved its prominence because it provides competitiveness and promotes managerial efficiency in the business area. The rise of human resource management in the 1980s brought managerial scholars to the link between the management of people and performance. A number of attempts were made to put empirical facts with the theoretical bones of the knowledge based firms and the specific HRM views concerning how the systems on Human Resource practices, which can make an increment on the organizational performance. The approach that focuses on individual Human Resource practices and the link with the performance continued since early 1990s (Hendry and Pettigrew, 2012).

In a global context, human resource practices are such as recruitment, selection, and appraisal; it directs partially constrain development of specific practices; and overarching philosophies, which specify the values that inform an organization's policies and practices (Gilley et.al., 2012). According to Bulla and Scott (1994), human resource planning is the process of ensuring that human resource requirements of an organization are identified and plans are made for satisfying those requirements. This view suggests several specific, interrelated activities that together constitute Human Resources planning which includes personnel inventory, human resource process, action plan, control and evaluation. An organization needs to adopt specific HR policies and practices for different strategies. Thus, it can elicit employee behaviors that are consistent with an organization’s strategy (Rose and Kumar, 2014).

Human Resource management practices should be an important part of the strategy of any large corporation (Gilley et.al., 2012).Yet researchers basing their views on a behavioral psychology perspective have argued that human resource management practices could contribute to competitive advantage as long as they reinforce the skills, attitudes and behaviors that result in lowering costs and enhancing product differentiation. Therefore, the important role of human resources practices in contributing to a firm’s competitive advantage overlaps with the concept of efficiency as a human resources strategy for effective performance (Ozcelik and Ferman, 2016).

Human resource planning is surrounded by three basic level practices which can increase the organizational performance: To increase the knowledge, skills and abilities among employees, to enhance their empowerment like giving them employment security and organize some participation programs for employees and to give them motivation through both incentive means like giving them compensation and benefits, and also through internal promotion like promoting them with their job status. (Yongme et al., 2015).

Organizational performance can be measured through financial stability and productivity, but when we have to relate human resource planning with the organizational performance, then we consider some of other variables like efficiency and effectiveness, employee motivation, job satisfaction, trust on employees (Cho et al., 2015). To comply with this, the

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