Table of content

Acknowledgement…………………………………………………………………………i

Executive Summary……………………………………………………………………….ii

List of Tables………………………………………………………………………………iii

List of Abbreviation…………………………………………………………………….....iv

Chapter: 1 introduction……………………………………………........................................1

1.1 Background……………………………………………………………………..............1

1.2 Problem Statement…………………………………………………............................3

1.3 Research Objective………………………………………………………...…………...3

1.4 Significance of Study……………………………………………….............................3

1.5 Scope Of The Study…………………………………………………..........................4

Chapter: 2 Literature Review…………………………………………………………………..5

2.1 Strategic HRM........................................................................................................5

2.2 Dimensions of Strategic HRM……………………………........................................6

2.3 Formal Training System, Result Based Appraisals, Employment Security as Determinant

of Managerial Capabilities……………………………………...............7

2.4 Result Oriented Appraisal, Employment Security, and Formal Training System

as A Determinant of Social Capital…………………….…………………….......................8

2.5 Social Capital….....................................................................................................8

2.6 Relationship between SHRM & Social Capital………………………………….….10

2.7 Managerial Capability…………………………………………………………………11

2.8 Relationship between Strategic HRM and Managerial Capabilities……...….......11

2.9 Relationship between Social Capital and Managerial Capabilities…...................13

2.10 Theoretical Framework…………………………………………………….………….16

CHAPTER: 3 Research Methodology………………………………………….……….......17

3.1 Sampling Process………………………………………………………….…................17

3.2 Research Design………………………………………………………………...............17

3.3 Sampling Population………………………………………………………………........17

3.4 Sample Size……………………………………………………………………………….17

3.5 Research instrument…………………………………………………………………......18

3.6 Data Collection methods…………………………………………………………………18

3.7 Measurement Scale………………………………………………………………………18

3.8 Data Analysis………………………………………………………………….................18

3.9 Time horizon…………………………………………………………………………........18

3.10Variables……………………………………………………………………………......19

3.11 Independent variables……………………………………………………..................19

3.12Dependent variables………………………………………………………................19

3.13Hypothesis…………………………………………………………………………......20

Chapter 4 Data Analysis and Discussion………………………………………..................21

4.1 Finding and Data Analysis………………………………………………………..……...21

4.2 Reliability Statistic………………………………………………………………..............21

4.3 Testing Hypothesis………………………………………………………………...……..21

4.4 Linear Regression Analysis……………………………………………………..……....22

4.5 Multiple regression analysis…………………………………………………..…………23

4.6 Correlation Analysis………………………………………………………………………25

4.7 Discussion…………………………………………………………………………………28

Chapter 5 Conclusion and Recommendation………………………………………...........29

5.1 Conclusion…………………………………………………………………………..........29

5.2 Recommendations………………………………………………………………………..30

5.3 Limitations…………………………………………………………………………...........30

Bibliography

Appendix-1

EXECTIVE SUMMARYThe man objective of research project is to examine the impact of strategic HRM on Managerial

Capabilities and Social Capital in public sector of Pakistan. After extensive literature review and

research it is conjectured that there is significance positive relationship between Strategic HRM

and Managerial Capabilities and Social Capital.

In order to measure the impact of strategic HRM on managerial capabilities and social capital, a

sample of 100 employees from different public organizations was drawn through convince

sampling technique .Questionnaire was adopted, starting from strongly disagree to strongly

agree.

Data analysis was carried out through SPSS software package (SPSS Inc, 2000) version

13.correlation and linear and multiple regression analysis were carried out to test the predictive

nature of independent variable i.e. strategic HRM and its dimensions and its impact on dependent

variable i.e. managerial capabilities and social capital.

The research concluded that the strategic HRM having different dimensions indicate positive

influence on managerial capabilities and social capital. Different dimension such as return on

appraisal, training, internal career opportunities and employee security, participation has

significant impact on managerial capabilities.

The dimensions of strategic HRM such as training, participation, internal carrier opportunities,

return on appraisal, employee security has significant impact on social capital. But participation

has no significance impact on managerial capabilities. The value of climate and internal carrier

opportunities shows highest value and they influence managerial capabilities, however in the

case of social capital, employee’s security and climate shows highest value it means that these

two variables influence social capital.

List of Tables

Table 4.1 Reliability Statistic…………………………………………………............................33

Table 4.2 Linear regression analysis of strategic HRM and managerial capabilities………34

Table 4.3 Linear regression analysis of strategic HRM and social capital………………......35

Table 4.4 Relationship of training, internal career opportunities, employee securities,

Result oriented appraisal and participation with Managerial Capabilities……………………36

Table 4.5 Relationship of Training, Internal Career Opportunities, Employee Securities,

Result Oriented Appraisal and Participation with Social Capital………………………….....37

Table 4.6 Correlation Analysis……………………………………………………………….....38

List of Abbreviations

SHRM Strategic Human Resource Management

MNCS Multinational Companies

TR Training

ES Employee Security

ROA Return on Appraisal

PT Participation

ICO Internal Carrier Opportunity

CHAPTER 1

INTRODUCTION

1.1 Background

Success seems to be connected with actions. Successful people keep moving. They make mistakes but they don’t quit. Conrad Hilton

Employees are the asset to organization and investment on employees is the source of making

them valuable for the firm, enhancing organizational performance, retain employees and

motivate them as well. One of the main factors that can increase organizational performance

through its employees is SHRM, and by providing employees a favorable/learning climate lead

the organization towards success. Most of the organizations use SHRM but they fail to

implement the main reason is they fail to align organizational strategy to SHRM and employees

practices to organizational practices. Being a successful organization, it needs to align

organization strategy to SHRM.

It can also be source of competitive advantage for the organization by aligning employee’s

practices to organizational practices. SHRM has been tested using 1945 employees in more than

10 countries has showed that employees or the managers who are committed are more likely to

use and implement HR practices.

In Asian countries like china and Japan they heavily invest on employees to motivate them and

to make organizations successful through their employees. Japan is focusing on their employees

and in china it has been increasingly observed that China is focusing on trainings in MNCs and

the results are positive.

In Malaysia employee’s turnover is higher in 2004 as compared to 2003; the organizations are

providing attractive salaries but research has revealed that salary is one of the factors to retain an

employee’s but SHRM is very important in reducing employee’s turnover.

PAKISTAN having a population of about 160 million people in Asia and most interestingly

public sector have the same structure after independence in 1947, the structure and the strategies

are the same up till now there is no development in public sector and is a main factor of

inefficiency according to Coggburn (2005). HR department will be identifying by its norms of

being rigid, slowness, complex and unresponsiveness.

In Pakistan SHRM is practicing in private companies and in private companies the main focus is

on SHRM as well as employees to retain their employees in comparison public sector is not

focusing on SHRM and there is no performance evaluation so private is developing day by day

and their employees are motivated to work. In Pakistan employees face multifaceted business

environment that’s why employees need different capabilities that match to the environment

complexities and attainment of strategic goals.

This study is an attempt to find the effect and influence of SHRM on social capital and

managerial capability by using a moderator employees relation/climate which includes the effect

of trainings, employees motivation, benefits and perks and the effect of these factors on

managers and its effect on society in terms of communication, joint ventures and departmental

and non departmental relations.

Managerial capabilities can be enhanced by sharing skill and knowledge, friendly environment

as well as learning environment, keen thinking, growth and trainings. Managerial capabilities can

be enhance by proving trainings and SHRM practices to motivate them by providing a learning

environment and have a good employee relation/climate.

Social capital is sharing of resource, and it can be strengthen by providing collaborations and

joint ventures. it is very important for the organization to have good relations with other

organizations because maintenance of relationship with employees and outside the organization

is of great importance and mostly structural and personal dimension is both are necessary.

1.2 Problem statement:

What is the impact of strategic human resource management on managerial capabilities and

social capital by using the employee relation/climate as moderator?

1.3 Research objective:

The main objective of our research is to know the impact of SHRM on social capital and

managerial capabilities by using employee relation/climate as a moderator in Pakistan and to

find:

The integration of HRM to SHRM.

Importance of strategy and SHRM.

The importance of alignment of organizational strategy and SHRM.

The effect of implementing SHRM on organizational performance.

1.4 Significance of study:

The study has following significances:

It will help us to know that either SHRM help in enhancing managerial capabilities or

not.

How SHRM is applicable in organizations and how it will help the organizations to make

their employees motivated, committed, innovative etc.

It will also help us to know either SHRM help to enhance social capital or not.

It will also help in identification of different dimensions of SHRM and SOCIAL

CAPITAL which will give incentive to understand their impact on employee’s relation

and climate.

1.6 Scope of the study

SHRM is useless without implementation and alignment with organizational strategy so it is

beneficial when it is properly implemented, help organizations to achieve desired goals, for that

human resource department should identify the key areas where man power is require and only

identification is not only enough but identifying the best person who fill the vacancy by ideal

candidates who will helpful in achieving organizational goal.

In this research we are going to study telecommunication sector ,whether this sector implement

SHRM and align organizational strategy to SHRM and how managerial capabilities and social

capital is enhanced to increase organizational performance ,the firm from where we can collect

data includes:

OGDCL Telecommunication sector

CHAPTER 2

LITERATURE REVIEW

2.1 Strategic HRM

Strategic HRM can be defined as the organizational plans that an organization wants to achieve

its goal through people and alignment of HRM with the organizational policies and consider

employees as strategic resource for competitive edge. The main focus of strategic HRM is the

actions that make a differentiation from its competitor (purcel, 1999).Its systematically linking of

employees with the firm it includes trainings, recruitment and selection, development,

compensation etc (Ashok Swarup Jan, 2007).

In 1980 scholars need to add word “strategy” to HRM the idea behind this concept is to upgrade

the position of HRM professionals in companies (Purcell and Ahlstrand, 1994). And there is an

alignment between organizational practices and policies with the strategy to have a competitive

advantage. The last 25 years of development in business sector is the proof of implementing

HRM which result in the increase in organizational performance and increasing competition

among organizations.

According to Henry and Pettigrew (1986) Strategic HRM also known as:

□ Employment of management skill(planning)

□ An approach that is orderly and consistently related to each other

□ Alignment of business strategy to HRM policies

□ Employees are strategic resource for organizations competitive edge

Aim of strategic HRM must consider both employees and owners, basically there are two

aspects: soft strategic HRM and hard strategic HRM

Soft strategic HRM is important for continuous development, quality maintenance,

Etc and hard strategic HRM consider investment in human resource (storey’s 1989).

Resource based view has a direct link between firm strategy and HR Capital.

Organizational development and strategy management is directly linked to resource based view

(Barney 1991, Conner 1991, Penrose 1959, Wernerfelt 1984), it can be represented in the form

of figure as:

Firm strategy HRM Practices HR Capital

RESOURCE BASED VIEW

Resource based view can be differentiated from the traditional one only on the basis of RBV

assumption that all resources of the organization i-e. physical, capital, human and how different

from other organizations as well that will lead an organization to have a competitive advantage

and it is the ability that an organization invest more on human capital by making superior human

resource management is basically a source of attaining competitive advantage.

2.2 Dimensions of SHRM

Researchers worked on 456 Chinese enterprises to check the effect of SHRM on organizational

performance. It has been clearly mentioned that there are seven dimensions of SHRM (Delery

and Doty (1996), its effectiveness and the overall impact of these dimensions to organizational

performance. The dimensions include Internal Career Opportunities, Formal Training Systems,

and Results-Oriented Appraisals, Employment security, Participation, Job Descriptions and

Profit Sharing. These are universally practiced and the approach is called as best practices.

So according to research it has been showed that some dimensions effect service and product

performance while some contributes to financial performance of an organization. It has been

observed that training, participation, results-oriented appraisals, and internal career opportunities

increases financial position and it also have a positive relationship on the productivity. And some

dimensions effect only productivity i-e, employment security and job description and one last

dimension that are profit sharing that increases the financial position. (Syed Akhter, Daniel

Z.ding and Gloria L.Ge 2008).This dimension laid very important effect on the organizational

performance it defines the priorities that an organization should focus while appointing or hiring

employees (Delery & Doty, 1996).

All seven dimensions affect organizational performance and when there is positive employee

relation and a learning environment the relationship or the effect of dimensions on social capital

and managerial capabilities will be strengthen.

2.3 Formal training system, Result based appraisals, Employment security as

a determinant of managerial capabilities

In multinational companies’ trainings is the key stone for the competitive edge. In research it has

been shown that in china SOEs spend some little money on trainings it was about less than

RMB¥30 per employee (U.S. $1 = RMB¥8.07) which is equivalent to nothing and the results are

obviously the same that good employee relationship with peers and have a learning environment

can strength the effect and relationship of training system to both social system and managerial

capabilities.

Employment security is one of the determinants that affect motivation level of employees which

ultimately effect managerial capabilities, (Ariff 2004). United States is the second largest

investor in Malaysia and Japan is third largest invest despite of that the employees working in

Malaysia are not willing to stay with the organization for more than three years. The reason

behind this attitude is low motivated staff and no job security, a survey by Malaysian employer’s

federation (2001, 2005) annual turnover rate

in 2003 is higher than 2004. Employees must have given as employment security to retain them

and to motivate them.

A research has been taken by (Yin Teng Chew 2005) that Japanese employees show a positive

behavior towards work and this positivity is due to the employees training through which the

employees become motivated towards work ,they have emergence of different cultures and due

to increase in the number of interactions with different people that’s why Japanese firm invest

heavily on their employees to motivate them so that the effect of trainings on employees as well

as managers is positive (Hashimoto 1990,Mueller 1992).

2.4 Result oriented appraisal, employment security, and Formal training

system as a determinant of social capital

A research has been made in china in 2004 there were an increase in opening foreign investments

Enterprises the amount is of 43,000 more investment have been made and according to research

there was a 6.29% increase over 2003 and hence there was an increase in direct investment and

that increase is about 13.3% over last year. These changes occur due to the reasons of three

factors introduction of labor contracts, performance-related reward system and contributory

social security (Warner 2004), according to research new investments were due to HRM

practices which positively affect social capital (Warner 2004).

Training system is an important part of human resource management through which employees

are trained and polish to increase the skill, abilities and expertise. Secondly through trainings

employees will be more confident and have communication skills that will have a positive effect

on social capital while building and maintaining employee’s relationship and bridging with other

organizations and this sharing of values shows a positive step of making, building and maintain

relationships with other organizations that will help to have a diversity in the work group and

multi talented group of people will lead to success of organization (Syed Akhtar, Daniel Z.Ding

and Gloria L.GE 2008).

2.5 Social capital

Social capital is defined as it is a process of socially interaction and communication within

groups and other group and is defined firstly by Bourdieu (1980:2), for example two companies

have a joint venture they share their values and it’s a way of development.

Social capital can be differentiated from other capitals due to the reason that it considers the

maintenance of relationship but not the ownership of property because if the parties have a joint

venture but no relationship in this case social capital ends.

According to past research it has been observed that the drawback of social capital is that the

situation may worse if there is any intergroup conflict (Labianca et al., 1998), black holes

(Hedaa, 1999), dark side of social capital (Gargiulo & Benassi, 1999).

It has been observed that in china guanxi is built on the basis of trust that managers have with

other people. (Li and Atuahene-Gema 2001, Park and Luo 2001, Peng and Luo 2000).

Hence social capital is basically a mixture of resources that increase productivity and

organizations can avail the chance of convert their ideas to innovation which ultimately is a

source of achievement and success for the organization. (Adler & Kwon 2002, Nahapiet &

Goshal 1988, Pfeffer & Slancik 1978, Sandefur & Laumann 1998).

Social capital is further divided into two parts (Granovetter’s 1992)

1-structural dimension

2-relational dimension

i. Structural dimension

This type of dimension shows a relationship in which the relationship is based on non personal

terms between peoples it may be within or with other groups or parties.

ii. Relational dimension

This type of dimension identifies a relationship based on personal terms based on historical

interactions. Example: friendship.

Social capital of both dimension are very important for the organizations to be innovative joint

ventures, development and new forms of associations.

This leads to an innovative and developed organization (fukuyama1995, Jacobs 1965, Putnam

1993).

2.6 Relationship between SHRM & social capital In the past research it has been noted that SHRM effected social capital, when organization train

their employees provides bonus and give them a learning environment where they have to

maintain their relationship with or within groups. It motivated employees and they have known

that they have been trusted in return employees became more committed, trusted and appreciated

and this will increase work commitment and decrease the turnover. In past research bridging has

given importance because the main focus is exchange relationship, within the organization

between the departments and with other Organizations and it is the social capital (Marielle

Sonnenberg, Bas Koene, and Jaap Paawe 2011).

According to exchange relationship it has been noted that employees must have a balance in their

relationships. The main focus of this theory is the maintenance of communication in the

employment relationships (Blau 1964, Shore et al 1995).

According to some scholars for the organizations to gain a competitive edge it is very important

to have a social capital (Chung and gibbon 1997) .Hence through employees training ,motivation

,providing bonus etc leads to a have a competitive human resource in return the employees will

be committed to work, decrease the turn over and employees have a learning environment have a

sustainable relationship and communication within their organization and outside the

organizations as well, this will result in a social capital to be a competitive edge.

Social capital leads to competitive edge

SHRM leads to competitive edge

Social capital leads to competitive edge and SHRM also leads to competitive edge in the way

that firm capabilities and resources are shaped through certain strategies of development leads to

sustain competitive edge (Barney 1991,Hill and Jones 2001).

2.7 MANAGERIAL CAPABILITY

Managerial capabilities are the skills and knowledge of manager and it should be improved and

developed continuously to employ it in the organizations. (Abraham, Karns, Shaw, & Mena,

2001; Adner & Helfat, 2003; Caldeira & Ward, 2003; Helfat & Peteraf, 2003). Managerial

capabilities appear to form a vital aspect for survival and the achievement of competitive

advantage (Habbershon, Williams, & MacMillan, 2004). It is an important ability of managers

which are useful to create a strong workplace and environment which help the employees to

grow and engage and with this the goals and objectives of the business are achieved. It can be

defined as: how manager applied their skills and knowledge at the workplace and is therefore

important to show how managers’ skills and knowledge applied in the organizations to give life

to these managerial capabilities.

In broad terms, managerial capabilities are skills, understanding and familiarities that are basic

and broadly-based. It has been recognized as that “search individuals those have skills and

knowledge that they need to carry out managing activities.” (Massey, et al., 2005, p. 2) for

example, a constellation of people such as a team can give extra services as the ones rendered

by individual managers, because working with each other ‘capable them to offer services that

are exclusively important for the operations of the particular group with which they are

associated’ (Penrose, 1959: 46).

Managerial capabilities are in the form of competences these are as follow:

High performance competences

Cognitive competences

Interpersonal competence

Presentational competences

Motivational competences

2.8 Relationship between Strategic HRM and Managerial Capabilities

The different context that we can identify within organizational learning capability (e.g. learning,

growth, keen thinking, knowledge sharing) may be positively affected by solid human resources

policies. Thus, human capital becomes a strategic factor, and human resource management a

basic tool for leading the organization towards a culture of learning and knowledge transfer

(McGill et al., 1992; Jones and Hendry, 1994; Koch and McGrath, 1996; Kamoche and Mueller,

1998).

In global market there are high competitions between companies therefore companies are trying

to search out the ways to improve managerial capabilities (productivity and quality) therefore the

Strategic HRM helps them to enhance their capabilities.

In the prior research there are two types of managerial capabilities that effect human capital.

Professional HRM capability

Business related capability

Strategic HRM effectiveness will be associated with both capabilities. Professional HRM

capabilities describe those skills and expertise that helps to perform excellently traditional HRM

functions .Business related capabilities are business experience of HRM staff have had outside

the function specialty. These capabilities help them in choosing and accomplishment of strategic

policies and practices that match the attribute of the organization like size, structure, culture.

(Jackson & Schuler, 1995).

Resource based view also help the employees to enhance managerial capabilities and assert the

organization to gain competitive advantage (Wernerfelt, 1984; Barney, 1986, 1991; Peteraf,

1993). It identifies that employs (human capital) can be power to provide a source of competitive

advantage.(cf.Barney, 1991; Wright McMahan, & McWilliam, 1992).

How managerial capabilities are formed?

In past research little evidence has been found about formation of managerial capabilities

according to (Adner and Helfet (2003) any firm can attain managerial capabilities through

interrelation between three vital pillars: social capital, social managerial capital, cognitive

managerial capital. Human managerial capital comes from knowledge and individual capabilities

(van Den Bosch & Van Wijk, 2000).

Social managerial capabilities are the abilities of senior most employees (CEO) to share and

promote knowledge to develop social relations. (Gupta and Govindarjan, 2000).

Cognitive managerial capital is related to attainment of the information whether through logic

(Adner & Halfat 2003).

All above capabilities are developed through strategic human resource management and

managerial science into organization behavior. SHRM help to develop human skills and

knowledge of Individual within the firm. A theory named strategic management theory given by

different authors focuses on intangible resources. According to them, human resource is a source

of competitive advantage. (Collis, 1994; Hamel & Prahalad, 1996; Prahalad & Hamel, 1990;

Werner felt, 1984, 1995).

2.9 Relationship between social capital and managerial capabilities

Past research has been shown that managerial learning capability is directly linked to the social

capital. If social capital is provided to manager then their managerial capabilities will improved

they become more competent and perform their work more effectively. Everyone can use their

own experience and related understanding to understand the information and their implications in

a particular situation and to determine what are the actions to take in particular situation. Social

capital can increase the ability of individual within a firm to identify who to make contact for

related information. This means that internal social capital help in the development of novelty

through the accomplishment of information and knowledge from internal and external networks.

According to the Coleman, Social capital can be consider as the result of such phenomena as

mutual reliance’s, social interaction, social groups, work group in a social system. All these

features separate social capital from other capital and it help the organization to achieve

competitive advantage and success.

Those firms which have higher level of social capital can be more successful as compare to those

firms which have low level of social capital. (Nahapit & Gushal,1998,p 250). Managerial

capabilities can b developed through social capital and communication with individual in such a

way individual can share the knowledge and skills through interaction and in this ways it

increases the capability of individual (Oorschot, 2010, p. 180).

In past research shows that there s a positive relationship between social capital and employee

loyalty, management of different task that perform within the firm, firms flexibility, and develop

high level of intangible capital. Therefore social capital can increase firm’s performance.

(Bolyno et al, 2002, 507).Social capital can be used as an asset for both for the firms (through

formation of importance) and for the employees of the firms (increasing skills of staff). (Lina and

Von Bern, 1999, p.538).

Social capital can help us in following ways

Increase profession success.

Help the employs to find job and give a better group of works for the firm.

It provides the facility to exchange tangible resources and intangible resources.

It also increases motivation, loyalty, logical capital formation and efficiency and

effectiveness of teams.

It also helps in the decline of job changes.

It also gives strength to relationship between employees, staff and firms learning.

That organization who focuses on Social capital it gives the opportunity of freedom and

flexibility to the employees to follow their plan without any specific pattern (Stoner et al, 1995,

p.170). Therefore people who have higher social capital can utilize more resources and

information and it can affect the process of development and progress of the business.

Those people who have less interaction with people and have limited capability they face

difficulty in decision making regarding any task therefore they need to make external relations

and connections to get necessary information for decision making.

According to the Roof (2002) social capital has an important role in innovation people in social

environment expected to provide valuable ideas that is directly linked with innovation therefore

innovation is depend upon social relations.

2.10 THEORETICAL FRAMEWORK

STRATEGIC HRM

1-internal career opportunities 2-formal training systems 3-results-oriented appraisals 4-employment security 5-participation 6-job descriptions

Managerial capabilities

Social capital

MODERATOR

Employee relation/climate

CHAPTER 3

RESEARCH METHODOLOGY

3.1 Sampling process Sampling is the act, process, or technique of selecting a representative part of a population for

the purpose of determining the characteristics of the whole population and authenticity of

outcome is only possible when there is proper technique development used for sampling. For our

research we have chosen convenient sampling technique to get ideal results so the number of

employees who will participate is not predetermined employees are given questionnaire and

given complete information and guidance to fill that questionnaire so that the outcome of results

are authentic.

3.2 Research Design

This study is conducted in the natural work environment of the organization .variables are

neither controlled nor manipulate.

3.3 Sampling Population

In this study the population of study includes the employees of OGDCL and Tele communication

in Islamabad.

Sample size is nether too large nor too small we are running test on the employees of

telecommunication sector and OGDCL only .sample size was not pre determined that’s why

convenient sampling technique was used.

3.4 Sample Size

Sample size of our research consists of 60 employees from OGDCL and 60 employees from

telecommunication sector, these organizations are operating in Pakistan.

3.5 Research instrument

Questionnaire is used to collect data which is filled by the employees of OGDCL and

telecommunication sector in Pakistan.

3.6 Data Collection method

The data is collected through questionnaire, in which there are 34 questions to know the affect of

strategic human resource management on managerial capability and social capital using

employee relation/climate as a moderator.

3.7 Measurement Scale

For this study a five point LIKERT scale is used this scale is started from strongly disagree to

strongly agree (1-5).

3.8 Data Analysis

SPSS software is used to run the data in which we used different statistical methods in order to

check the data some of the techniques we used are correlation analysis and regression analysis to

check the impact of Strategic human resource management on managerial capability and social

capital by using an employee relation/climate as a moderator.

3.9 Time horizon

All the employees have given questionnaires and after filling these questionnaires by the

employees we will not be consulted again to them so this study is a cross sectional.

3.10 Variables

3.10.1 Independent variables

STRATEGIC HUMAN RESOURCE MANAGEMENT

SHRM is an independent variable that affects the dependent variables like turnover, employee’s

commitment and loyalty, organizational performance and employees’ motivation and

competitive edge.

3.10.2 Dependent variables

i. Managerial Capabilities

This is a dependent variable if employees have given a formal trainings, job security and

participation then moral of employee’s increases, employees will show good performance they

will be more attached to their work, competent, give importance to their work so managerial

capabilities will increase.

if the human capital is best utilized so if an organization has given more training to their

employees, in return employees perform well hence organizational performance increases. And it

is also important to know that whether SHRM increases managerial capabilities or not.

ii. Social capital

Social capital is basically sharing of resources and form of networking in this article this is a

dependent variable, as in joint ventures organizations merge and share their values and resources

to get multiple benefits like maintenance of relationship and to achieve the objective. Mostly

SHRM has a positive relationship with social capital.

3.11 HYPOTHESIS

Following hypothesis will be based on tested against the objective set in the study:

(H1) Internal career opportunities have positive impact on managerial capabilities.

(H2) Formal training systems have positive impact on managerial capabilities.

(H3) Results-oriented appraisals have positive impact on managerial capabilities.

(H4) Employment security has positive impact on managerial capabilities.

(H5) Participation has positive impact on managerial capabilities.

(H6) climate has positive impact on managerial capabilities.

(H7) Internal career opportunities have positive impact on social capital.

(H8) Formal training systems have positive impact on social capital.

(H9) Results-oriented appraisals have positive impact on social capital.

(H10) Employment security has positive impact on social capital.

(H11) Participation has a positive impact on social capital.

(H12) climate has a positive impact on social capital.

Chapter 4

DATA ANALYSIS AND DISCUSSION

4.1 Finding and Data Analysis

Before analyzing the data, it would be appropriate to have a look at the descriptive statistic

of the sample.

4.1.1 Reliability Statistic

Table 4.1

Reliability Statistics

Cronbach's Alpha

Cronbach's Alpha Based on Standardized Items N of Items

.873 .867 40

Source: Researcher’s Own Processing

In above table the Cronbach’s alpha value is 0.873, which is the indication of high level of

internal consistency for the selected scale.

4.1.2 Testing Hypothesis

Once of the major objective of research is to find out the impact of strategic HRM on managerial

capabilities and social capital. Research hypothesis develop earlier for the observation of

strategic HRM on managerial capabilities and social outcomes testing of hypothesis and analysis

is organized under the following heading:

4.1.3 Linear Regression Analysis

For empirical testing of the model, the researcher used strategic HRM as independent variable

having different dimensions internal career opportunities, formal training systems, results-

oriented appraisals, employment security, participation, job descriptions, profit sharing and

managerial capabilities and social capital as a dependent variable. Testing of hypothesis is

performed through linear regression analysis.

Following are the finding of linear regression analysis:

Linear regression analysis of strategic HRM and managerial capabilities

Table 4.2

Model Summary

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

1 .569(a) .324 .288 .61081

a. Predictors: (Constant), ROA, participation, employee security, training, internal carrier opportunity

R value

It indicate the correlation coefficient between strategic HRM and managerial capabilities the

value of R should be in the range from 1 to -1 .in this study the value of R =.569 which shows

that there is positive relationship between strategic HRM and managerial capabilities.

Adjusted R Square value

The value of adjusted R square is .288 which shows that there is 28% of variance is the

dependent variable.

Linear regression analysis of strategic HRM and social capital

Table 4.3Model Summary

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

1 .513(a) .263 .224 .55474

a. Predictors: (Constant), ROA, participation, employee security, training, internal carrier opportunity

R value

The value of R =.513 which shows that there is also positive relationship between strategic HRM

and social capital

Adjusted R Square Value

The value of adjusted R square is .224 it means that there is 22% of variance in the dependent

variable

4.1.3 Multiple regression analysis

Multiple regressions show the association between multiple independent variables on a single

dependent variable. The researcher used training, internal career opportunities, result oriented

appraisal, employee security and participation in strategic HRM as independent variables and

will check the impact of managerial capabilities and social capital as dependent one by one.

Testing of these hypotheses is performed through multiple regression analysis.

Relationship of TR, ICO, ES, ROA and PT with Managerial Capabilities

(H1) Internal career opportunities have positive impact on managerial capabilities.

(H2) Formal training systems have positive impact on managerial capabilities.

(H3) Results-oriented appraisals have positive impact on managerial capabilities.

(H4) Employment security has positive impact on managerial capabilities.

(H5) Participation has positive impact on managerial capabilities.

(H6) climate has positive impact on managerial capabilities.

Table 4.4Coefficients (a)

Model

Un standardized Coefficients

Standardized Coefficients t Sig.

B Std. Error Beta1 (Constant) 1.005 .460 2.183 .032

Training .194 .098 .190 1.971 .052Participation -.041 .094 -.037 -.435 .665Employee security .003 .094 .003 .032 .975Internal carrier opportunity .450 .123 .367 3.654 .000ROA .164 .087 .195 1.898 .061

a. Dependent Variable: managerial capabilities

Source: Research’s Own Processing

In above table the beta values illustrate that there is positive relationship between training,

internal career opportunities, and return on appraisal, employee security and managerial

capabilities. And it also shows that internal career opportunities has greater impact on managerial

capabilities as compare to other independent variables while participation has less and negative

effect on managerial capabilities.

Relationship of TR, ICO, ES, ROA and PT with Social Capital

(H7) Internal career opportunities have positive impact on social capital.

(H8) Formal training systems have positive impact on social capital.

(H9) Results-oriented appraisals have positive impact on social capital.

(H10) Employment security has positive impact on social capital.

(H11) Participation has a positive impact on social capital.

(H12) climate has a positive impact on social capital.

Table 4.5

Coefficients (a)

Model

Un standardized Coefficients

Standardized Coefficients t Sig.

B Std. Error Beta B Std. Error1 (Constant) 1.172 .418 2.802 .006

Training .039 .089 .044 .441 .660Participation .135 .086 .142 1.578 .118Employee security .216 .085 .268 2.538 .013Internal carrier opportunity .079 .112 .074 .710 .479ROA .163 .079 .221 2.069 .041

a. Dependent Variable: social capital

Source: Research Own Processing

The beta value shows that there is a positive impact of training, participation, employee security,

internal career opportunities and return on appraisal on social capital and it also shows that

employee security has greater impact on social capital as compare to other independent variables.

4.1.4 Correlation Analysis

Correlation measures how variable are related. Pearson correlation coefficient variable has been

used to determine the magnitude of the relationship between each of the variables. The variables

with this magnitude greater or equal to .20 are significant at p<0.01 level and greater than or

equal to .12 are significant at p<0.05

CorrelationsTable 4.6

trainingParticipation

employee security

Internal carrier opportunity

social capital

Managerial capabilities climate ROA

Training Pearson Correlation

1

Participation Pearson Correlation

.120 1

Employee security Pearson Correlation

.342(**) .123 1

Internal carrier opportunities

Pearson Correlation

.187 .045 .463(**) 1

Social capital Pearson Correlation

.262(**) .215(*) .417(**) .305(**) 1

Managerial capabilities

Pearson Correlation

.339(**) .030 .306(**) .483(**).366(**)

1

Climate Pearson Correlation

.332(**) .052 .333(**) .361(**).398(**)

.503(**) 1

ROA Pearson Correlation

.429(**) .142 .372(**) .413(**).391(**)

.424(**) .411(**) 1

** Correlation is significant at the 0.01 level (2-tailed).* Correlation is significant at the 0.05 level (2-tailed).

Source: Research Own Processing

The above correlation indicate that there is a quite strong and significant relationship exist

between climate and managerial capabilities (.503**) then the relationship between internal

career opportunities and managerial capabilities (.483**) is weak but it is also highly significant

then the relationship between return on appraisal and managerial capabilities (.424**) is

significant then the relationship between training and managerial capabilities (.339**) which

shows that it is weak but very significant relationship then the relationship between employee

security and managerial capabilities (.306**) is weak but it is also significant and the

relationship between participation and managerial capital (.030) is weak and less significant.

The result also shows that the relationship between social capital and employee security (.417**)

is quite strong and highly significant then the relationship between social capital and climate

(.398**) is weak but it is also significant then the relationship between social capital and return

on appraisal (.391**) is weak but it is also significant then the relationship between social capital

and internal carrier opportunities (.305**) is weak but significant then the relationship between

social capital and training (.262**) is too much weak but significant and the relationship between

social capital and participation (.215*) is also very weak and less significant as compare to other

variables.

4.2 Discussion

Companies are the assets of the any country and it also play a vital role in the establishment of

the economy and Pakistan has no exception. Government plays a vital role to establish these

assets.

The major objective of the study is to investigate the impact of strategic HRM on managerial

capabilities and social capital and to explore whether strategic HRM is best strategy to adopt and

is it beneficial for employees and organization as well. Is it helpful to achieve the objective, to

fulfill the target and satisfaction of employs?

After a broad literature review, we concluded that strategic HRM having different dimension

such as return on appraisal, training, internal career opportunities and employee security,

participation has significant impact on managerial capabilities

The dimensions of strategic HRM such as training, participation, internal carrier opportunities,

return on appraisal, employee security has significant impact on social capital. But participation

has no significance impact on managerial capabilities.

According to the framework, we empirically tested this in public sector of Pakistan. The data is

collected from OGDCL, PTCL and SONERI BANK. After the collection of data, the analysis is

carried out through SPSS software (SPSS Inc.2000) version 13.In analysis we run correlation

and regression to test the analytical nature of independent variables.

The value of climate and internal carrier opportunities shows highest value and they influence

managerial capabilities, however in the case of social capital, employee’s security and climate

shows highest value it means that these two variables influence social capital.

.

Chapter 5

CONCLUSION AND RECCOMENDATION

5.1 Conclusion

The above study has been conducted to examine the impact of strategic HRM on managerial

capabilities and social capital in the public organization of the Pakistan. For that survey we

choose OGDCL, PTCL and SONERI BANK. The result of survey show different perception

regarding strategic HRM.

It is obvious from the result and discussion that there is a positive relationship between strategic

HRM and managerial capabilities and social capital.

When any organization adopt any strategy like training, return on appraisal etc. it increase the

motivation of employees and it also enhance the commitment of employees toward their

organization.

The finding of the survey shows that different dimensions of strategic HRM have different

impact on managerial capabilities and social capital. Such as training, internal carrier

opportunities, return on appraisal and employee security has supplementary impact on

managerial capabilities and social capital. And participation has impact on managerial

capabilities but it does not contribute in social capital.

In public organization these dimensions like participation does not work to enhance social capital

because top management or supervisors does not allow them to take any help from their

subordinates regarding any problem or to make any decision. In public organization normally all

decisions have been done by the top management that way there is negative correlation exist

between participation and social capital.

If the organization provide climate and give their employees carrier opportunities and give them

job security then their managerial capabilities and social capital can increase and they become

more motivated and become loyal with the organization which in return increase the productivity

of the organization .if the manager treat their subordinates with care, trust and motivate them

then they shows greater level of commitment and innovative behavior. Therefore it is necessary

to create a friendly and disciplined environment in the organization to get better outcomes.

5.2 Recommendations

According to the study, following are the recommendations that can be given to all organization

either public or private in order to enhance their managerial capabilities and relationship between

employees, manager and subordinates which will lead to maximize employee’s outcomes,

employee’s loyalty toward the organizations etc.

These recommendations are:

i. Managers should give the opportunity to their subordinates to participate in decision

making.

ii. Manager should not be very rigid with their employees he should have to be supportive

and trust worthy which will help them to achieve maximum outcomes.

iii. There is too much competition in the organization therefore there should be a training

program for their employees that will give them the awareness about new technology,

different strategies to compete etc.

iv. Give incentives and benefits to their employees that will also increase their motivation to

achieve maximum outcomes.

5.3 Limitations

Following are the limitation we have face while doing that research:

i. The sample size of 100 is small to examine the impact of strategic HRM in public

organizations.

ii. Limited access to employees of organization and having limited time for the research

work.

iii. As the result has been drawn on the basis of the information provided by the respondent

therefore there are high chances of errors.

iv. Each respondent may have different perception regarding questionnaire that ways gap of

perception may be occurred.

v. The research is based on selected variables which are mentioned in the questionnaire any

other variable are not taken into the investigation.

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APPENDIX-I