EFFECT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON

ORGANIZATIONAL PERFORMANCE: CASE OF ETHIO-TELECOM IN ADAMA

CITY

RESEARCH PROPOSAL SUBMITTEDIN PARTIAL FULFILLMENT OF

THE REQUIREMENT FOR BA DEGREE IN BUSINESS MANAGEMENT

BY:
BEZA TAMIRAT
BONTU TAHIR
MATIOS ENDESHAW
NUMAN AHMED
SEADA HUSSEIN
ADVISER:
YIHUN T.

RIFT VALLY UNIVERSITY

FACULTY OF BUSINESS AND SOCIAL SCIENCE
DEPARTMENT OF BUSINESS MANAGEMENT

ADAMA, ETHIOPIA
FEBRUARY, 2023

1
 ABSTRACT

The purpose of this study is to examine the effect of HRM practices (selection and recruitment
practices, compensation practices, and performance appraisal and training and development
programs) on the organization's performance. A descriptive research design will use.
Quantitative and qualitative study will conduct on employees of Ethio-telecom in Adama city. A
sample of 61 employees of Ethio-telecom in Adama city will select and survey through
questionnaires. In analyzing the data the descriptive statistics will use. The finding reveals that
there are positive relationship between organization performance of Ethio telecom and HRM
practices (selection and recruitment, training and development, performance appraisal and
compensation). In this study result of multiple linear regressions indicated that there will
collective significant effects of independent on dependent variable. This study can be replicate
with a large sample size in similar sector or context or in other sectors. Effects of other
independent variables e.g. information technology, employee empowerment, job rotation, job
security and employee participation could also be used. An expected outcome of this study that
HRM practices are improperly plan, implemented and managed by HR experts of the
organization.
Key words: HRM, Recruitment, Selection, compensation, Training and Development,
performance appraisal, Organization's Performance.

I
 ACKNOWLEDGEMENTS
First of all we will like to all almighty GOD, They give as health and strength. Secondly, we will
like to forward and express my heartfelt gratitude to our advisor, Ms. Yihun (MBA) for her
technical guidelines and constructive comments throughout the preparation to a completion of
this paper as planned a needed. Finally we will like thank you to all those who support as in the
course of study completion.

II
 ACRONYMS

HRM Human Resource Management

OP Organizational Performance

III
Table of Contents
ABSTRACT.....................................................................................................................................................I
ACKNOWLEDGEMENTS................................................................................................................................II
ACRONYMS.................................................................................................................................................III
CHAPTER ONE..............................................................................................................................................1
1 INTRODUCTION...................................................................................................................................1
1.1 Background of the Study..............................................................................................................1
1.2 Statement of the Problem...........................................................................................................2
1.3 Research Questions.....................................................................................................................3
1.4 Objectives of the Study................................................................................................................3
1.4.1 General Objective................................................................................................................3
1.4.2 Specific Objective.................................................................................................................3
1.5 Significance of the Study..............................................................................................................3
1.6 Scope of the Study.......................................................................................................................4
1.7 Limitation of the study.................................................................................................................4
1.8 Organization of the study............................................................................................................4
CHAPTER TWO.............................................................................................................................................5
2 LITRATURE REVIEW..............................................................................................................................5
2.1 Definition of Human Resource Management..............................................................................5
2.2 Theoretical and Empirical Issues on HRM and Performance.......................................................5
2.3 HRM Models................................................................................................................................6
2.4 HRM Forms..................................................................................................................................6
2.5 Human Resource Management Practices....................................................................................7
2.6 Organizational Performance........................................................................................................8
2.7 Recruitment and Selection Practices...........................................................................................8
2.8 Training and Development Practices...........................................................................................9
2.9 Compensation Practices............................................................................................................10
2.10 Performance Appraisal..............................................................................................................11
2.11 Conceptual Framework of the Study.........................................................................................11
CHAPTER THREE........................................................................................................................................12
3 RESEARCH METHODOLOGY...............................................................................................................12
3.1 Research design.........................................................................................................................12
3.2 Data source................................................................................................................................12
3.3 Target Population......................................................................................................................12
3.4 Sampling Techniques.................................................................................................................12

IV
 3.5 Data Analysis and Interpretation...............................................................................................12
3.6 Sample size................................................................................................................................12
3.7 Sample size determination Formula..........................................................................................13
Budget and Time schedule........................................................................................................................13
References.................................................................................................................................................15
Reference..................................................................................................................................................15
Appendix A................................................................................................................................................16

V
List of figures

Figure 2.1: Conceptual framework of the study............................................................................11

List of Table

Table.1.Chart Indicating Budget Breakdown during Research proposal Activities......................13

Table 2 Chart Show the Time Schedule for Research Proposal Activities...................................14

VI
 CHAPTER ONE

1 INTRODUCTION
1.1 Background of the Study
Human Resource Management (HRM) can be described as a strategic, integrated and coherent
approach to the employment, development and well-being of the people working in
organizations. It has a strong conceptual basis drawn from the behavioral sciences and from
strategic management, human capital and industrial relations theories. This foundation has been
built with the help of a multitude of research projects (Armstrong, 2010). Human resource
management (HRM) is the policies, practices, and systems that influence behavior, attitudes, and
performance. There are several important HRM practices that should support designing jobs,
determining how many employees with specific knowledge and skills are needed (human
resource planning), attracting potential employees (recruiting), choosing employees (selection),
teaching employees how to perform their jobs and preparing them for the future (training and
development), evaluating their performance (performance management), rewarding employees
(compensation), and creating a positive work environment (employee relations). An organization
performs best when all of these practices are managed well. At companies with effective HRM,
employees and customers tend to be more satisfied, and the companies tend to be more
innovative, have greater productivity, and develop a more favorable reputation in the community
(Noe, 2011 ).
In any organization performance of organization is very important. The super objective of all
organizations is to improve their performance. The business of the telecom sector is not only
capital intensive, where the important component of capital is to assess to ensure the growth of
the strong network but also the core competencies, skills of management, qualification and
abilities of management are the dense drivers to increase the achievement of organization profits
and the sustainability of business. Consequently, manager play significant role for the purpose of
achieving company’s goal and meet profits, basically the core functions of managers have to
manage the human resource in a way that right number in right way.
Little empirical research has been conducted to examine the effects of HRM practices on
organizational performance of Ethio-telecom in Adama city. In order to effectively investigate
whether human resources practices are capable of organizational performance, it is pragmatic to
1
examine HRM practices in as many settings as possible.
This paper therefore, examines the effect of HRM practice that is selection practices,
compensation practices, training and development programs and performance appraisal on
organization's performance of Ethio-telecom in Adama city. In this study the researcher try to fill
the gap of previous studies and more observe the procedure through which HRM policies,
procedures, techniques and effect of organizational performance, it is important to conduct
analysis in Adama on the telecom sector. The main objective of this research is to examine how
the HRM practices influence the performance of organization, and to enhance the relationship
the researcher takes four variables that are selection practices, compensation practices, training
and development programs and performance appraisal.

1.2 Statement of the Problem

Effect of Human Resource Management practices on organizational performance has been a
widely researched area. Result of studies from different countries has been showing that HRM
practices have significant effect on organizational performance. But unluckily, very insufficient
numbers of studies have been conducted in this area context of Ethiopia particularly on Ethio
telecom sector.
To augment the contemporary knowledge base of HRM practices in Ethiopia, this study will
undertake. This study examines the effect of human resource management on organizational
performance and investigates the effect of human resource management practices (selection,
training & development, performance appraisal, and compensation) on organization
performance. Although, it will accepted that HRM is positively related to organizational
performance, there is a great need for additional evidence to support the HRM-performance
relationship from different contexts. There is no significant work in organizations in the context
of human resource management and the reason is that top management never realizes the needs
and demands of their employees. As a result to develop a better understanding the research is
carried to know the benefits to practice the HRM and Country in the growing phase like Ethiopia
needs to know the contribution of different factors and the intensity of their effect on
organizational performance that leads towards economic development and prosperity. It is also
difficult to get published researches that addressed the effect of human resource management
practices on organizational performance in Ethio-telecom particularly in Adama city.
In the case of many organizations in Ethiopia, we can observe that implementation of appropriate

2
HRM practices are very much neglected. This lack of HRM practices may lead to a higher level
of turnover rate, absenteeism, and job dissatisfaction, which are all directly or indirectly related
to productivity of employees (employee performance). And when employees are not productive
and not using their full potential, it will highly affect the profitability of the organization
(organizational performance)
Therefore this study tries to investigate the significant effect of human resource management
practices (recruitment and selection, compensation, performance appraisal and training and
development) on organizational performance of Ethio-telecom in Adama city.

1.3 Research Questions

1. What is the level of HRM practices and organizational performance?

2. What is the relationship between HRM practices and organizational performance?

3. What is the effect of HRM practices on organization's performance?

1.4 Objectives of the Study

1.4.1 General Objective
The main purpose of the study is to examine the effect of HRM practices on organizational
performance in Ethio-telecom Adama city. In order to materialize this objective, the following
specific objectives will considered.

1.4.2 Specific Objective

The specific objectives of this study are:
 To explore the level of HRM practices and organizational performance.

 To address the relationship between HRM practices and organizational performance.

 To investigate the significant effect of HRM practices on Ethio-telecom's performance.

1.5 Significance of the Study

This study will propose appropriate HRM strategies, processes, programs and practices and the
possible outcomes in the sector. The academic significance of this work is to add to existing
theories on HRM, serve as reference to those engaged in other related studies and create the
leeway for another to further research into HRM practices and organizational performance.
The findings and recommendations will provide a solid basis for Ethio telecom to properly

3
manage its human resources and serve as an opportunity to improve performance with existing
workforce. These studies also add to the knowledge of HRM concepts in the sector and serve as
reference for future studies.

1.6 Scope of the Study

This research will concern with the effect of human resource management practice on the
organization performance of Ethio telecom in Adama city. The researcher takes four independent
variables to minimize the complications of the research. Variable selection is necessarily because
most models do not deal well with a large number of variables. Furthermore, we cannot include
all the variables that exist in every analysis, because there are an infinite number of them out
there.

1.7 Limitation of the study

The studies only focus on Adama city Ethio-telecom employees which is not including sample
from other city. Inclusion of organizational and market data in future studies will add to the value
of the outcome. More reliable sampling techniques are recommended for future research on the
subject. Moreover, the sampling frame will limited to Adama city because of shortage of
resources. Future research on the subject is suggested to have a broader base, including other
variable.

1.8 Organization of the study

The study is organized by five chapters. The first chapter I.e. the introduction section which
contains back ground, statement of the problems, objective of the study, significance of the study,
scope, limitation. The second chapter is literature review it contains the theoretical aspect of
budget. The research methodology and design part is including in the third chapter details with
methodology of the study and budget and time schedule. Chapter four deals with about data
analysis and interpretation, the last chapter five is conclusion and recommendation part.

4
 CHAPTER TWO

2 LITRATURE REVIEW

This chapter describes available literature in the topic. HRM models, forms, practices. It
comprises Theoretical and Empirical Issues, conceptual frameworks and of analysis of previous
studies that have been done by other researcher in the area. This study will conducted on the
bases of different publications on this field.

2.1 Definition of Human Resource Management

The term Human Resource Management (HRM) is a strategic, integrated and coherent approach
to the employment, development and well-being of the people working in organizations. A
particular definition of HRM which this study has found very interesting, is the one provided by
(Cohen, Lawrence Manion and Keith Morrison, 2007) when he defined HRM as "those decisions
and actions which concern the management of employees at all levels in the business and which
are related to the implementation (Cohen, Lawrence.M and Keith. M, 2007)of strategies directed
towards creating and sustaining competitive advantage". This definition of HRM is interesting
because it encompasses the main parts involved in the relationship between HRM practices and
aspects of organizational performance. We can see that this definition stipulates the availability
of HRM practices, performance standards or strategies, and a way of linking the two issues
together in order to have these combinations work.

2.2 Theoretical and Empirical Issues on HRM and Performance

Theories on people management have been shifted, going through so many phases. From the
perspectives of Taylorism, bureaucratic theory, theory X and theory Y till the people
management known as human relations. The era of personnel management surfaced which has
metamorphosed into the present day Human Resource Management. Since then, HRM has
captured the interest of many studies churning out loads and loads of findings that sometimes
generate debates and disagreements.
Despite the growing body of empirical HRM research and theory development the field has been
criticized for lacking a solid theoretical foundation. David Guest, a researcher has called not only
for a theory about HRM but one for performance as well as one for how the two issues are linked
in order to gain a clear understanding of the impact of HRM on organizational performance.

5
(Ahmad, O. and Schroeder, R. , 2003) reported, 'Unless we can develop our own more precise
theory, there is a risk (or the promise) that the field will be colonized by economists as
recognizes the value of human resources and social assets we can expect a significant stimulus to
HRM theory coming from economy theory.
The researcher has taken some important human resource practices which affect the
organizational performance. There is increasing interest in the notion that complementary
bundles of human resource practices enhance organizational performance (William, 2010). The
researchers have chosen this topic because there is the very little study of human resource
management practice in Ethio telecom in Adama city.

2.3 HRM Models

This section reviews some of the HRM models which have been recognized as sources in
adopting HRM practices which could be linked with aspects of organizational performance.
Here, The Harvard Business School HRM Model; The Michigan Business School HRM Model;
and The Best Practice HRM Model have been discussed.
Starting with the Harvard Business School Model and the Michigan Business School Model, the
core theme of the first is to use the talents of employees to enhance aspects of organizational
performance. The latter uses employees to achieve organizational goals. There is a significant
difference between the two views. For example the Harvard Business School Model stresses the
human aspect of human resource Management while the Michigan Business School is considered
as instrumental in the implementation of organizational performance. Thus, the Harvard Business
School Model is widely recognized as drawing its academic lineage from the school of human
relations while the Michigan Business School Model seems to follow the line of the Scientific
Management School and other approaches which ignore the importance of questions about
culture and non-management of human resources (Pfeffer, (1998)). The best practice tool of
HRM is based on Universalism. The assumption here is that asset of practices aimed at high
commitment or high performance will benefit all organizations regardless of context.

2.4 HRM Forms

Human resource management (HRM) has frequently been described as a concept with two
distinct forms: soft and hard. The soft model emphasizes individuals and their self-direction and
places commitment, trust, and self-regulated behavior at the center of any strategic approach to

6
people. In contrast, the hard model stresses the rationalism of strategic fit and places emphasis on
performance management and an instrumental approach to the management of individuals
(Truss, Catherine, Mankin, David, Kelliher and Clare, March 21, 2012)
The hard model is based on notions of tight strategic control while the soft model is based on
control through commitment. A thorough examination of the definitions of these two forms of
HRM indicates that the former is similar to the view of the Harvard Business School Model
while the latter resembles that of the Michigan Business School Model; both have been defined
in the previous section. This section and the previous one reveal that there are two distinct HRM
models, each of which consists of a number of views which have been used to categorize
approaches to managing people according to developmental humanist or utilitarian
instrumentalist principles. The Harvard Business School Model and the soft version of HRM are
represented by the former approach, namely the developmental humanist Principle while the
Michigan Business School Model and the hard version of HRM are represented by the latter
approach, the utilitarian instrumentalist principle. Although these two views, which have been
used to categorize approaches to the management of human resources, are clear in the literature,
it is not easy in practice to identify either form of HRM. (Truss, Catherine, Mankin, David,
Kelliher and Clare, March 21, 2012) Reported, 'We found that no pure examples of either form
existed". This may be due to the fact that organizations pursuing certain strategies tend to adopt
HRM practices, whether they are based on the developmental humanist principle, conducive to
achieve such strategies.

2.5 Human Resource Management Practices

Performance Linkage Over the years, researchers has devoted a great deal of time and attention
to establishing and examining the linkage between HRM practices and organizational
performance. Based on the evidence and findings, it is becoming increasingly clear that HRM is
an important component that can impact on organizational effectiveness leading to improved
performance. Though the link between HRM and organizational performance is however, the
positive relationship between HRM and organizational performance cannot be over emphasized.
It is important to realize that the effectiveness of HRM policies depends on its alignment with
other business strategies. Interestingly, (Hewitt, 2009)Hyde et al examining the impact of HRM
practices on firm profitability found little support for a positive relationship between HRM
practices and firm profitability. (Dyer, L & Reeves, T., 1995) captured the performance

7
outcomes of HRM in the following ways.
1. Financial outcomes; profits, sales markets
2. Organizational outcomes; productivity, quality, efficiency
3. HR related outcomes; attitudinal and behavioral effects on employees satisfaction,
commitment, employee turnover, absence.
(Khan, 2010) conducted a study in Pakistan to investigate the effect of human resource
management practices such as recruitment and selection, training and development, performance
appraisal, compensation and rewards, and employee relations on organizational performance
(product cost, product quality, market share, performance relative to competitors and positive
relationship between these practices and firm performance. (Boohene R, 2011) Stressed that
HRM practices, specifically, recruitment and selection, performance appraisal, compensation,
and training and development have positive impact on organizational performance.
Generally, theories on best practices suggest that universally, certain HRM practices either
separately or in combination yield improved organizational performance. For the purpose of this
research study, the following variables will select and briefly discussed below.

2.6 Organizational Performance

Researchers have different opinions of what performance is. Organizational performance
continues to be a contentious issue in the management research circles. (Javier, 2002) equates
performance to the famous 3Es; economy, efficiency and effectiveness of a certain program of
activity. According to organizational performance encompasses three specific areas of firm
outcomes; financial performance (profits, return on assets, return on investment, etc), product
market performance (sales, market share, etc), and shareholder return (total shareholder return,
economic value added, etc.). We can put organizational performance as the actual output or
results of an organization as measured against its intended outputs, that is; goals and objectives.
Performance should not be confused with productivity; according to (Ricardo, R. & Wade, D.,
2001)productivity is a ratio depicting the volume of work completed in a given amount of time.
Performance is a broader indicator that could include productivity as well as quality, consistency,
effectiveness, efficiency and other factors.

2.7 Recruitment and Selection Practices

Recruitment and selection can play a pivotal role in snapping an organization's effectiveness and
performance, if organizations are able to acquire workers who already possess relevant

8
knowledge, skills and attitudes and are also able to make an accurate prediction regarding their
future abilities. (Al-Ahmadi. H, (2009) ).
Recruitment forms a step in the process which continues with selection and ceases with the
placement of the candidate. It is the next step in the procurement function, the first being the
manpower planning. Recruiting makes it possible to acquire the number and types of people
necessary to ensure the continued operation of the organization. Recruiting is the discovering of
potential applicants for actual or anticipated organizational vacancies.
Selection is the process of locating, identifying and attracting capable applicants. During this
process, efforts are made to inform the applicants fully about the qualifications required to
perform the job and the career opportunities the organization can offer its employees. Selection is
the process of choosing individuals who have relevant qualification to fill existing or projected
job openings (Dessler, 2007) . It is the process of assessing candidates and appointing a post
holder to ensure that the most appropriate candidates are hired.
(Huselid, 1995) examined HR practices of high performance companies and found that attracting
and selecting the right employees increase the employee productivity, boost organizational
performance, and moreover to contribute in reducing turnover. (Cho, 2005) examined pre-
employment tests as a key component of selective hiring and found that when employed, these
tests can select employees that stay with a company longer. Passing pre-employment tests may
give an applicant a stronger sense of belonging to the company, resulting in higher degrees of
commitment if employed.

2.8 Training and Development Practices

Training refers to the methods used to give new or present employees the skills, knowledge,
behaviors and other abilities they need to perform their jobs. Training is improving the one's
capability, capacity, productivity, and performance. Training is positively associated with the job
satisfaction, and job satisfaction is positively associated with the organizational performance
(Jones, Latreille, & Sloane, 2009).
Training is the acquisition of knowledge skills, and competencies as a result of the teaching of
vocational or practical skills and knowledge that relate to the specific useful competencies. On
the other hand, development means the growth of an employee in all respects, it shapes attitudes.
The purpose of training and development programs is to improve employee capabilities and
organizational capabilities. The knowledge and skills of its employees, the investment is returned

9
in the form of more Productive and effective employees. Training and development programs
may be focused on individual performance or team performance. Development needs identified
by a training needs analysis so that the time and money invested in training and management
development is linked to the mission or core business of the organization. For training to have a
better effect on performance, its design and delivery should be well executed. Training remains a
vital to enhancing employee performance.
Training can be categories as follows; on the job training and off the job training. On the job
training, takes place in a normal working situation using the actual tools, equipment, documents
or materials that trainees will use when fully trained, and off the job training takes place away
from the normal work situations implying that the employee does not count as a directly
productive worker while such training is taking place. On the job training has the advantage that
it allows people to get away from work and concentrate thoroughly on the training itself. This
type of training has proven more effective inculcating concepts and ideas (Miller, 1987). There
are many different training and development methods on job training namely; informal training,
classroom training, internal training courses, external training courses, skills training, product
training just to mention but a few, all these are some of the available to use and apply to
individual training needs and organizational training needs.

2.9 Compensation Practices

Compensation processes are based on compensation philosophies and strategies contained in the
form of policies, guiding principles, structures and procedures which are devised and managed to
provide and maintain appropriate types and levels of pay, benefits and other forms of
compensation. This constitutes measuring job values, designing and maintaining pay structure,
paying for performance, competence and skill and providing employee benefit.
However, compensation management is not just about money, it is also concerned with that non-
financial compensation which provides intrinsic or extrinsic motivation (Boohene R, Asuinura E,
2011) Compensation has a motivational effect and therefore implies that having a compensation
structure in which the employees who perform better are paid more than the average performing
employees is vital to enhancing organizational performance (Hewitt, 2009). The growing
recognition and consensus that compensation promotes productivity is consistent with the early
work of Peter (Doyle, 1997) that" happy workers are productive workers"

10
2.10 Performance Appraisal
Performance appraisal means evaluating an employee’s current and/or past performance relative
to his or her performance standards (Dessler G. , 2008). The performance appraisal process
contains three steps: define the job, appraise performance, and provide feedback. Defining the
job means making sure that the supervisor and the subordinate agree on his or her duties and job
standards. Appraising performance means comparing the subordinate’s actual performance to the
standards that have been set. Third, performance appraisal usually requires one or more feedback
sessions. Here the supervisor and subordinate discuss the subordinate’s performance and
progress and make plans for any development required (. (Dessler G. , 2008).

2.11 Conceptual Framework of the Study

This conceptual framework basically develops to describe the relationship between variables.
The variables for my study are Human Resource Management Practices: selection and
recruitment practices, compensation practices, training and development programs, and
performance appraisal which is independent variables and organizational performance which is
dependent variable. And at the end Organizational Performance is dependent variable as it is
expected to vary along with any changes in the Human Resources Management Practices i.e.
independent variable. This is the basic issue of interest in my entire study.
HRM Practices
 Selection Practices,

 compensation Practices, Organization's Performance.

 Training and Development

(Dependent variable)
Programs,

 Performance appraisal

(Independent variable)

Figure 2.1: Conceptual framework of the study

Source: Adapted from previous literature review by the researcher

11
 CHAPTER THREE

3 RESEARCH METHODOLOGY
3.1 Research design
The research designs we will use descriptive survey method, because it is the appropriate
research design to identify the effect of human resource management practices on
organizational performance through various information regarding Ethio-Telecom in Adama
city.

3.2 Data source

Both primary and secondary sources of data will be used. Primary data will be obtained through
structured questionnaires, which will contain close and open ended questions. As part of
secondary sources of data, relevant journal, articles, books and different websites will be.
Structured Questionnaires will be distributed to the selected leaders from top management to
lower level managers and to followers.

3.3 Target Population

The target populations of the study will the current management and non-management staff
members of Ethio-telecom in Adama city.

3.4 Sampling Techniques

In conducting this study the researcher will use to the simple random sampling technique.
Because of it removes personal judgments and provides unbiased sample beside this each
element has equal chance of being selected in the sample. Therefore the total number of
employees the researcher selected 61 to fill the questionnaires.

3.5 Data Analysis and Interpretation

To analyze the data gathered through the different data gathering tools and researchers will use
different techniques to data analysis. The raw data are collected and processed in the primary
edited, coded and classified so as to make further analysis. In order to analysis the collected data
through questionnaires and interviews the researcher analyzes and interprets descriptively. Then
the data will interpret and discuss to reach logical conclusions.

3.6 Sample size

The preliminary survey undertaken by the researcher before the questionnaire will distribute.
There are 90 grand total population/ total staff members of Ethio telecom in Adama city (human
resource Management Departments).

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3.7 Sample size determination Formula

n= 90/1+ {90*0.052}
n=61 respondent
Where
N=the population size
n=the sample size
e=the level of precision/acceptable sampling error.
Therefore, based on the above formula the calculated sample size will become a total of 61. So,
61 samples is selected from the target population and participated in the study.

13
 CHAPTER FOUR

4 DATA PRESENTATION, INTERPRETATION AND DISCUSSION

This chapter presents information on primary data collected from respondents on the effect of
HRM practices on organizational performance in the case of ethio telecom in Adama city. The
data were processed and presented in tables. Interpretations given were on processed data
collected from the field that sought to establish the effect of HRM practices on the organization
performance the company.

4.1 Questionnaire Response Rate

Out of 74 sample respondents 56 respondents filled and returned the questionnaires making a
response rate of 75%. This response rate is excellent and conforms to Mugenda (2003),
stipulation that a response rate of 50% is adequate for analysis and reporting; a rate of 60% is
good and a response rate of 70% and over is excellent. The remaining 18 questionnaires were not
filed and returned due to reluctance of the respondents.

4.2 Demographic Characteristics of Respondents

Frequencies of occurrence of certain variables are determined, from which the percentage are
calculated. Frequency tables of demographic variables are given bellow.

Table 4.1: Respondents’ Background Information

Items Category
Count %

Male 38 62.9

Gender Female 18 37.1

Total 56 100

Less than 20 Years - -

21-30 Years 35 59.3

Age
31-40 years 15 37.9

41-50 years 6 2.9

14
 Items Category
Count %

Above 50 year - -

Total 56 100

Single 26 57.1

Married 31 42.9
Marital status
Divorced -

Total 56 100

Primary School education - -

Secondary School
- -
Education

Certificate - -
Educational
backgrounds Diploma 4 7.9

First Degree 45 84.3

Master Degree and above 7 7.9

Total 56 100

Permanent 49 92.1

type of Contract 2 5.0

employment Temporal 5 2.9

Total 56 100

Source: Survey Result (2023)

The data obtained from the questionnaire, shown in the above table, reveals that out of 140
respondents 88 (62.9%) were males and the remaining 52 (37.1%) were females. This explains
that the number of male respondents were greater than female respondents who were participated

15
in the study.

With regard to respondents` age category, 83 respondents were between 21-30 years representing
59.3% and the next higher groups were between the age of 31-40 years representing 37.9% and
they were 53 in number. The third group of respondents were 4, (2.9%) fall under the age
category of 41-50. So from this we can conclude that the majority groups of respondents are less
than 30 years of age and this implies employees of ethio-telecom are young people. This age
group is known to be very energetic .For this reason the company use of the HRM practices is
the best option to use this energetic work force to meet the strategic goals. The remaining
employees of the sample are between 31 and 40 years which comprised of (37.9%) of the
respondents still this age group is active and energetic.

5 4.3 Descriptive Statistics

6 4.3.1 Descriptive Statistics of Selection and Recruitment

Table 4.2 selection and Recruitment practice of Ethio-telecom in Adama city.

Think of selection practices of the Ethio-telecom and SA A N D SD

choose the number that best describes your agreement and
disagreement to the following
1 Selection and recruitment practices
No Items 5 4 3 2 1
.
1 Applicants are fully informed about the
qualifications required to perform the job before
being hired
2 Advertisements are used by the company to recruit
3 There is formal induction, orientation and
familiarization process designed to help new recruits
understand the organization
4 Selection system selects those having the desired
knowledge, skills and attitude
5 Appointments in this organization is based on merit
6 The company provided a platform for the internal
employees to have equal opportunity for
competition based on their skills and experience
7 I will selected for the job through passing formal

16
 selection processes
Think of training and development practices of your
organization that you are in and choose the number that
best describes your agreement and disagreement to the
following
SA A N D SD
2 Training and Development Practiced
Items 5 4 3 2 1
1 Training and development needs are discussed with
employees
2 There is a training strategy and coherent training
program
3 Training incorporates the interests of the
organization as well as the individual
4 Training needs identified are realistic, useful and
based on the business strategy of the organization
5 Every employee goes through various training
programs every year
6 Extensive training programs are provided for
employees in all aspects.
7 Training programs have improved my decision
making and problem solving skills
8 I feel better equipped to tackle unexpected events
with skill and confidence
9 The training delivery methods used by the trainers
will relevant with the training objectives
10 The training provided to employees played a major
role for the success of the organization
Think of performance appraisal of the Ethio-telecom and
choose the number that best describes your agreement and
disagreement to the following. SA A N D SD
3 Performance Appraisal
Items 5 4 3 2 1
1 In this organization, employees are provided
performance based feedback and counseling
2 The appraisal data is used for decision making like
promotion, job rotation, training, compensation,
transfers and discharge
3 There are corrective measures for under-
performance
4 Appraisal system is growth and development
oriented
5 There is a well-defined performance management
strategy
6 Performance appraisal will base on the goals and

17
 objectives set.
7 There is regular appraisal for promotional
Think of compensation practices of the Ethio-telecom and
choose the number that best describes your agreement and
disagreement to the following SA A N D SD
4 Compensation
Items 5 4 3 2 1
1 Compensation improves performance of the
organization

2 Compensation packages encourage employees to

achieve organization’s objectives
3 Employees are recognized and rewarded
appropriately in this organization
4 Job performance is an important factor in
determining the incentive compensation of
employees
5 I am satisfied with the amount of pay and other
benefits I receive
6 In this organization, pay of employees is directly
linked to performance
7 I appreciate rewards and recognition no matter how
small in this organization
8 The reward and recognition practices motivated me
to do more and perform better to meet the
organization goals and objectives.
9 Compensation practice in the organization is fair and
transparent

Descriptive Statistics

Std.
N Mean Deviation

Applicants are fully informed about the 140 3.20 .732

qualifications required to perform the job before
being hired

Advertisements are used by the company to 140 3.76 .642

recruit

18
There is formal induction, orientation and 140 3.96 .656
familiarization process designed to help new
recruits understand the organization

Selection system selects those having the desired 140 3.34 .756
knowledge, skills and attitude

Appointments in this organization is based on 140 3.95 .808

merit

The company provided a platform for the internal 140 4.16 .712
employees to have equal opportunity for
competition based on their skills and experience

I was selected for the job through passing formal 140 4.26 .672
selection processes

I have been asked my willingness whether or not I 140 3.86 .735

am willing to join the organization prior to other
steps

The Employee Selection process for the 140 3.98 .791

organization was fair and transparent

Valid N (list wise) 140 3.83 0.722

Source: Survey Result (2023)

CHAPTER FIVE

7 CONCLUSION AND RECOMMENDATION

7.1 Conclusion

The main objective of this study is to identify the effect of human resource management
practices on organizations performance. It has been found that the company performance can be
attributed to HRM practices including recruitment and selection, training and development,

19
performance appraisal, and compensation. Based on the results, the researcher concluded that the
effectiveness of implementing HRM practices in ethio telecom does indeed have a major effect
towards the performance of ethio telecom. The findings shows that HRM practices have an
impact of nearly 54.5 percent on organization performance of ethio telecom. Thus, this form of
analysis could help organizations to realize and be more aware of the importance of human
resource practices and the need to integrate and align HRM into the organization.

Overall, the result of this study provides evidence in support of the theory that HRM practices
affect the organization's performance. In this study the effect of HRM practices was seen on
organization's performance in the telecom sector of Ethiopia. A sample of 140 employees was
taken from Adama city. Data was gathered through questionnaires and was analyzed using
correlation and regression techniques through SPSS v24. At the end of this research the
researcher found a significant relationship among all the variables, i.e. selection practices,
compensation practices, training and development, performance appraisal and organization's
performance. This researches are consistent with many prior researches that also found similar
results e.g. Chen et al., 2009, Khan (2010), Huselid (1995), Chang and Chen (2002) and Katou
(2008).
This paper proposes an approach for better organization's performance through effective
management of HRM practices. Findings of the study revealed that the positive and significant
relationship exists between the independent variable (selection and recruitment, compensation
practices and performance appraisal) and dependent variable (organization's performance), but
negative with training and development. This research can be used by the managers to improve
their organization's performance by managing HR through HRM practices. Findings of the study
shows that the organizations should focus on this concept in turn their organization's
performance will be increase.

7.2 Recommendations

Effective recruitment and selection attracts the right quality and quantity of people, develops the
knowledge, skills, and abilities of employees, and retains employees within the organization.
Ethio-telecom need to have an effective recruitment policy to promote scientific selection of
prospective employees. The departments should participate in selection process as they have
different preferences in the candidates. Candidates need to be selected based on requisite skills
knowledge, attitude and qualification using appropriate selection techniques. Besides,
appropriate training program for both academicians and support staff should be organized to
continuously improve the skills of employees. Investing in the improvement of the knowledge
and skills of employees would enable the sector to develop more productive and effective
employees. Furthermore, performance appraisal should be guided by the performance
management policy. Feedback be given to employees on their performance. Organizations that
clearly state the purpose for the appraisal reduce the confusion and ambiguity of the process. The
goal should be that everyone knows why to conduct appraisals.

Therefore a large part of the process should be devoted to determining what actions need to be
taken in the future. Performance-related compensation is critical in enhancing performance;
hence the organization should implement this to motivate those employees who achieve the set
targets. Since HRM practices have a significant impact on organizational performance, managers

20
need to implement them in an integrated and coherent manner (Chen et al., 2009;
Wickramasinghe and Gamage, 2011). This study has an addition to earlier research efforts in
understanding the relationship between organizational performance and HRM practices. The
study provides new dimensions in the research of management by opening a debate on the
importance of HRM practices in organizational performance. Statistically significant correlations
and regression results were indicated that different HRM practices, such as recruitment &
selection, training & development, performance appraisal and compensation system are
significantly related and make positive contributions towards perceived organizational
performance.

References

Reference
Ahmad, O. and Schroeder, R. . (2003). The Impact HRM Practices on Operational Performance:
Recognizing Country and Industry Differences. . Journal of Operations Management 21, , 19-43.
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Armstrong, M. (2010). Essential Human resource Management Practice. A Guide to People
Management: Kogan Page Publishers.
Boohene R, A. E. (2011). The Effect of Human Resource Management Practices on Corporate
Performance. A Study of Graphic Communications Group Limited. Int. Bus. Res. J. 4(1), 266-272.

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Boohene R, Asuinura E. (2011). The Effect of Human Resource Management Practices on Corporate
Performance. A Study of Graphic Communications Group Limited. Int. Bus. Res. J. 4(1), 266-272.
Cho, S. W. (2005). Measuring the impact of human resource management. International Journal of
Hospitality Management.
Corine Robinson,Deanne N. Den Hartog, David P. Lepak. (January 14, 2019). A Systematic Review of
Human Resource Management Systems and Their Measurement. S.M.A, 1-117.
Dessler, G. ( 2008). Human Resource Management . New Delhi, Prentice Hall, of India Private Ltd.: 11th
edition.
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Dessler, G. (2007). Human Resource Management. New Delhi: Prentice-Hall Inc.: 11th Ed.
Doyle, M. (1997). Management development, in Beardwell, I. and Holden, L. (eds). Human Resource
Management. London: Pitman.: A Contemporary Perspective.
Dyer, L & Reeves, T. ( 1995). HR strategies and firm performance: what do we know and where do we
need to go. International Journal of Human Resource Management 6:3 , 656-670.
et, R. (2009). Measuring Organizational Performance: . Towards Methodological Best Practice. Journal
of Management.
Hewitt, A. (2009). Managing performance with incentive pay. Journal of personnel Management, 7(1),
20-31.
Huselid, M. .. (1995). The Impact of Human Resource Management Practices on Turnover, Productivity
and Corporate Financial Performance. . Academy of Management Journal, 38.
Javier. (2002). A Review Paper on Organizational Culture and Organizational Performance. .
www.ijbssnet.com/journals.
Khan, M. ( 2010). Effects of Human Resource Management Practices on Organizational Performance An
Empirical Study of Oil and Gas Industry in Pakistan. . Eur. J. Econ. Financ.Admin. Sci. 24, 157-
175.
Noe, R. A. (2011 ). Fundamentals of Human Resource Management. . McGraw-Hill Higher Education:
Personnel management.
Pfeffer, J. ((1998)). seven practices of successful organizations,. California Management Review, Vol. 40,
No 2, pp. , 96-124.
Ricardo, R. & Wade, D. (2001). Corporate Performance Management: How to Build a Better
Organization through Measurement Driven Strategies Alignment. Butterworth Heinemann.
Truss, Catherine, Mankin, David, Kelliher and Clare. ( March 21, 2012). Strategic Human Resource
Management: Soft and Hard Models of Human Resource Management. Publisher, Oxford
University Press: 1st Edition, P.40.

Appendix A

Rift Valley University Faculty of Business and Social science Department of Business
Management Questionnaire on the Effect of HRM Practices on Organizational
Performance

Dear sir/madam

22
This questionnaire is designed to collect primary information to explore the Effect of Human
Resource Management Practices on Organizational Performance: a Case of Ethio-Telecom
in Adama City. The information gathered through this questionnaire is essentially used for
academic purpose: for a thesis research to be conducted for partial fulfillment of Business
management at Rift Valley University College. Thus, your cooperation and willingness to
participate in this study in responding this questionnaire is quite important for the success of this
study.
As a result, I kindly request your participation in this study by filling up this questionnaire. I will
also like to inform you that any of your responses will be maintained confidentially.

Thank you for your cooperation!

General Instructions

Do not write your name in any part of the questionnaire.

Your frank response is vital for the success of the study.
Put tick marks on your choice for close-ended questions that you assumed to be an answer
Give a short and precise answer for open-ended questions followed by blank spaces.

Section 1: Personal details

23
Please respond to the questions below by ticking

1. Gender: a) Male [ ] b) Female [ ]

2. Marital status: Single [ ] Married [ ] Divorced [ ] other [ ]
3. Age group: a) less than 20 years [ ] b) 21 to 30 years [ ] c) 31 to 40 years [ ] d)
41 to 50 years [ ] e) above 50 years [ ]
4. Education status: a) Primary School [ ] b) Secondary School [ ] c) Certificate [ ]
d) Diploma [ ] e) First Degree [ ] f) Masters and above [ ] Others
(specify)----------------------------
5. What type employment contract do you have? Permanent Full Time [ ] Part-time [ ]
Contract [ ] Temporal [ ]
Others (specify): ...................................................................
6. Job title..............................................................................

Section 2: HRM Practices

1. Selection and Recruitment

2. Training and development
3. Performance appraisal
4. Compensation

Using the scale below (1 - 4) please tick the levels of agreement in each of the items below with
regards to the HRM practices of your organization.
1 Strongly Disagree (SD)
2 Disagree (D)
3 Neutral (N)
4 Agree (A)
5 Strongly Agree (SA)

Think of selection practices of the Ethio-telecom and SA A N D SD

choose the number that best describes your agreement and
disagreement to the following
1 Selection and recruitment practices
No Items 5 4 3 2 1
.
1 Applicants are fully informed about the
qualifications required to perform the job before
being hired
2 Advertisements are used by the company to recruit

24
 3 There is formal induction, orientation and
familiarization process designed to help new recruits
understand the organization
4 Selection system selects those having the desired
knowledge, skills and attitude
5 Appointments in this organization is based on merit
6 The company provided a platform for the internal
employees to have equal opportunity for
competition based on their skills and experience
7 I will selected for the job through passing formal
selection processes
Think of training and development practices of your
organization that you are in and choose the number that
best describes your agreement and disagreement to the
following
SA A N D SD
2 Training and Development Practiced
Items 5 4 3 2 1
1 Training and development needs are discussed with
employees
2 There is a training strategy and coherent training
program
3 Training incorporates the interests of the
organization as well as the individual
4 Training needs identified are realistic, useful and
based on the business strategy of the organization
5 Every employee goes through various training
programs every year
6 Extensive training programs are provided for
employees in all aspects.
7 Training programs have improved my decision
making and problem solving skills
8 I feel better equipped to tackle unexpected events
with skill and confidence
9 The training delivery methods used by the trainers
will relevant with the training objectives
10 The training provided to employees played a major
role for the success of the organization
Think of performance appraisal of the Ethio-telecom and
choose the number that best describes your agreement and
disagreement to the following. SA A N D SD
3 Performance Appraisal
Items 5 4 3 2 1
1 In this organization, employees are provided
performance based feedback and counseling

25
 2 The appraisal data is used for decision making like
promotion, job rotation, training, compensation,
transfers and discharge
3 There are corrective measures for under-
performance
4 Appraisal system is growth and development
oriented
5 There is a well-defined performance management
strategy
6 Performance appraisal will base on the goals and
objectives set.
7 There is regular appraisal for promotional
Think of compensation practices of the Ethio-telecom and
choose the number that best describes your agreement and
disagreement to the following SA A N D SD
4 Compensation
Items 5 4 3 2 1
1 Compensation improves performance of the
organization

2 Compensation packages encourage employees to

achieve organization’s objectives
3 Employees are recognized and rewarded
appropriately in this organization
4 Job performance is an important factor in
determining the incentive compensation of
employees
5 I am satisfied with the amount of pay and other
benefits I receive
6 In this organization, pay of employees is directly
linked to performance
7 I appreciate rewards and recognition no matter how
small in this organization
8 The reward and recognition practices motivated me
to do more and perform better to meet the
organization goals and objectives.
9 Compensation practice in the organization is fair and
transparent
Section 3: Organizational Performance

Think Organizational Performance of Ethio-telecom and SA A N D SD

choose the number that best describes your agreement and
disagreement to the following
Organizational Performance
No. Items 5 4 3 2 1
1 The organization is not able to meet the goals it sets

26
 2 Each section understands the role it plays in
achieving organizational goals.
3 The organization functions smoothly with a
minimum of internal conflict
4 Work in this organization is easier because of laid
down procedures
5 Resources needed for proper functioning of the
organization are always available.
6 The organization has enough human capital to
accomplish its goals
7 The organization is able to satisfy the owner(s)
/shareholders.

Give a short and precise answer for open-ended questions below

Please write any other problems or suggestions

__________________________________________________________________________
__________________________________________________________________________
____________________________________________________________________
Please write any suggestions that the management of Ethio-telecom should do to alleviate
problems related to HRM practices

_____________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
_________________________________

27