Here is a Research Methodology Assignment based on the title "Impact of HR Practices on Organizational Performance of RMG sector in Bangladesh".

1. Research Methodology - RSM7301
Assignment - 2
on
“Impact of Human Resource Policies on Organizational
Performance of Ready-made Garments Sector in Bangladesh.”
Submitted to
Prof. Dr. Wan Fadzilah Wan Yusof
Professor
Putra Business School
Submitted by
Mohammed Jahirul Islam Robin
PBS21203193
Program: MSC in Management
May 16, 2022

2. Table of Content
Chapter 1: Introduction
1.1 Introduction ……………………………………………………………………….... 1
1.2 Background ................................................................................................................ 2
1.3 Problem Statement ..................................................................................................... 3
1.4 Research Questions .................................................................................................... 3
1.5 Research Objectives ................................................................................................... 4
1.6 Significance of the Study ............................................................................................ 4
1.7 Scope of the Study ...................................................................................................... 5
1.8 Summary ……………………………………………………………………………. 5
Chapter 2: Literature Review
2.1 Introduction ……………………………………………………………………….... 7
2.2 Conceptualisation of key variables ............................................................................ 7
2.3 Organizational Performance (Dependent Variable) ................................................... 8
2.4 Human Resource Management Policies (Independent Variable) ............................... 8
2.4.1 HR Planning ……..................................................................................................... 9
2.4.2 Recruitment and Selection ....................................................................................... 9
2.4.3 Training and Development .......................................................................................10
2.4.4 Performance Evaluation ...........................................................................................10
2.4.5 Compensation and Benefits ..................................................................................... 11
2.4.6 Motivation ................................................................................................................ 11
2.5 Underlying Theory ...................................................................................................... 11
2.6 Relationship between variables ................................................................................... 12
2.6.1 HR Planning and Organizational Performance ........................................................ 12
2.6.2 Recruitment and Organizational Performance ......................................................... 13
2.6.3 Training and Organizational Performance ............................................................... 13
2.6.4 Performance Evaluation and Organizational Performance ...................................... 13

3. 2.6.4 Compensation and Organizational Performance ...................................................... 14
2.7 Mediating Variables .................................................................................................... 14
2.7.1 Job Satisfaction ......................................................................................................... 14
2.7.2 Organizational Commitment ..................................................................................... 15
References ......................................................................................................................... 16

4. 1
1.1 Introduction
The ready-made garments (RMG) industry is one of the fastest growing export-oriented business
sectors for both social and economic development of Bangladesh. This sector is rapidly changing
the economic environment of the country. According to Bangladesh Garment Manufacturers and
Exporters Association (BGMEA), 4000+ factories are currently serving all major global fashion
brands. As a result, this sector has an extensive opportunity to develop the economy of Bangladesh
from where profit from a foreign country can be easily generated. In this study, we hope to
contribute to a better understanding of the role of human resources and how human resource
management (HRM) policies can make an impact on organizational performance in the ready-
made garments sector of Bangladesh.
Although HRM policies on organizational performance have been a well-investigated topic in
developed countries for years, there have been insufficient studies in developing countries.
Alcazar, Fernandez, and Gardey, (2005) showed that HRM performance linkage models have
emerged to augment the other constructs, variables, or linkages by incorporating the influence of
HR policies on organizational performance. Recent evaluations have revealed a significant
correlation between HRM and organizational performance is considered like a ‘black box’
meaning the lack of lucidity concerning ‘what leads to what exactly’ (Gerhart, 2005). For instance,
by using a questionnaire survey, data were collected from almost 180 organizations in the Greek
manufacturing sector and the results showed the relationship between HR policies and
organizational performance is sometimes mediated by HRM outcomes (satisfaction and
commitment). The results indicated that HR policies may effect organizational performance
through HRM outcomes which are associated with business strategies (Katou, A. A. 2008). The
simplest terms of HR decisions that influence organizational performance is that they must
improve efficiency or contribute to growing the revenue of the organization. In many
organizations, labour costs are the single largest operating cost (Saratoga Institute, 1994).
Therefore, If the employment is reduced for minimizing the costs, strategies need to be undertaken
to restructure operations. Sometimes those decisions create values for an organization as the new
structures that are applied can be more appropriate (Becker, B., & Gerhart, B. 1996).
According to Ahlstron, Foley, Young, & Chan (2005) and Zupan, Kase (2005), a few studies have
been induced in transitional countries where markets are rising. The research has shown that most

5. 2
studies on the association between HRM and organizational performance are undertaken in the US
and UK (Huselid, 1995; Guest, Michie, Conway, Sheehan, 2003). Therefore, for further
experiments and filling the gap, on the impact of HR policies and organizational performance, it
is important to conduct research in a non-US/UK context rather than in developing countries.
However, to compete with other organizations, HR needs to improve its performance by following
some strategies like cost reduction, innovating of new products and quality, increasing
productivity, and innovation of new processes innovation (Becker, B., Gerhart, B. 1996).
So, the prime purpose of our study is to explore and investigate the impact of HR policies on the
organizational performance of the ready-made garments industry in the context of Bangladesh. We
have tried to review theoretical work which has suggested that organizational performance may be
improved by implementing HR policies, especially how HR policies will be a source of gaining
competitive advantage.
1.2 Background
During 1920, the management perspectives were influenced by the human aspect in the workplace.
In 1924, Hawthorne conducted a study at the Western Electric Company and showed that when an
employee is treated positively, the productivity of that organization automatically increased.
People have different needs and those needs can be changed over time and the organizations should
respond to their needs, according to the modern approaches. From these ideas, systematic and
situational planning emerged which implies that workers are all interconnected elements and
working together for the same goal (Noe et al, 1994; Schermerhorn, 2002). Human resources are
traditionally viewed as a cost as well as a source of gaining efficiency. According to Chang &
Chen (2002), the practices of HRM affect organizational performance which is significantly
increasing. Previously, some researchers suggested that the HRM of an organization should act
like a proactive role where they act reactively. HR decisions in an organization have been regarded
as a source of creating value (Hamel and Prahalad 1994). Considering the development and
strategic plan in an organization, current and potential human resources are important and this
concept concludes that sustainable competitive advantage can be obtained by HR practices (Wright
& Mc Mahan, 1992, Jackson & Schuler, 1995, Porter, 1985, Schuler,1992). However, Fisher et al.
(1999), suggested that the human resources of an organization are the most significant factor in
terms of gaining a competitive advantage and improving performance.

6. 3
1.3 Problem Statement
Over the last few years, the relationship between HR and organizational performance has become
a significant subject of immense debate. Different researchers have shared different study and
opinion on it. Some researchers measured the relationship between HRM and organizational
performance whereas others studied the impact of HR practices on firm’s performance specifically
in the Middle East region. Besides, some researchers have found both the positive and negative
relationship between HR and organizational performance. Few researchers have showed the
progress and prospects of HRM and organizational performance. A huge number of HR policies
are related with firm’s performance which showed a gap (Sun et al, 2007). It is also not clear that
how HR affects the organizational performance and capabilities (Wright et al, 2001). There is a
gap between HR policies and organizational performance in many organizations that further study
needed (Ngo, H. Y., Lau, C. M., & Foley, S. 2008).
To achieve sustainable competitive advantage, many organizations have believed that for
surviving in the market, human resources are the most vital resources. Nowadays, every modern
business is focusing on human resources and their roles which significant impact in the
organization. Thus, it is important to study HR policies and their performances in the context of
garments industries in Bangladesh. The study endeavours to identify the relationship and measure
the influence of HR policies on organizational performance of ready-made garments industries in
Bangladesh.
1.4 Research Questions
The following research questions are addressed in the study.
RQ 1: What are the effects of HR policies on organizational performance in the ready-made
garments industry?
RQ 2: Is there any relationship exists between HR policies and organizational performance?
RQ 3: What HR policies can be followed to improve organizational performance?

7. 4
1.5 Research Objectives
The following objectives of the study were considered.
RO 1: To identify the impact of HR policies on organizational performance.
RO 2: To address the relationship between HR policies and organizational performance.
RO 3: To develop a framework that will help for a better understanding of how HR policies
influence the organizational performance.
RO 4: To offer some measures that how organizational performance can be enhanced in the
garments sectors of Bangladesh.
1.6 Significance of the Study
Human resources are now regarded as one of the most important sources of achieving
organizations' objectives. Human resources make the organization so competitive in the market.
As a result, human resources must be handled effectively and efficiently for the firm to fulfil its
goals (Cania, L. 2014). In the field of industrial relation and organizational psychology, HR
policies impact on organizational performance is a vital topic (Boudreau, 1991, Kleimer, 1990).
The roles and responsibilities of HRM are mainly oriented to HR planning, recruitment and
selection, training and development, motivation, performance appraisal, and labour relations
(Dessler, 2007). In fact, HRM department of an organization is mainly responsible to provide
various important programs to help the workforce to understand their task and improve their
performance in their profession and career development prospects.
Generally, organizational performance indicates the effectiveness and efficiency of an
organization meaning whether an organization can achieve its objectives and uses its resources
properly. Besides, employee and customer satisfaction, innovation of new products or services,
quality of products and services, etc. also depend on the organizational performance (Dyer &
Reeves Delaney & Huselid, 1996, Katou & Budhwar, 2007). These are some dependent variables
that are used in organizational studies today (Rogers and Wright, 1998). Organizational
performance is positively affiliated with comprehensive training activities (Lee and Bruvold,
2003). Organizational performance depends on the training and development of HR where an
organization spends millions of money (Kiyana, L. C., & Bett, S. 2017). Organizational
performance may be indicated by an employee's objectives aligning with the organization's

8. 5
objectives If an employee supports the organization's culture (Armstrong, 2006). Therefore, the
study is important as it will enable to establish the strategic HR policies to improve organizational
performance.
1.7 Scope of the Study
The study is used based on the measurement of the questionnaire about HRM policies and
organizational performance. In this study, a total number of 300+ structured questionnaires will be
distributed in 30+ export-oriented ready-made garments to do the study. The primary data from
the questionnaire provides more accurate and authentic information. The investigation will also be
done based on the literature of previous research, and the secondary data will need to be collected
from BGMEA. In the study, the primary data is very important and worth considering to evaluate
the impact of HR policies on organizational performances. In future studies, there is more scope
to do further study on this topic, especially in service sectors with a larger sample size. Besides,
qualitative research like case studies, interviews, and focus groups, longitudinal studies may also
need to be undertaken in this sector.
1.8 Summary
At present, every organization is trying to achieve its goal and become more competitive in the
market. They are committing to managing their people resources to achieve the desired
organizational performance. Organizational performance is getting more important, especially in
a market with greater competition and dynamics. Human resources are playing the most important
role in achieving these performance indicators. In the study, we have tried to investigate the effect
of HR policies on the organizational performance of the ready-made garments industry in the
context of Bangladesh. Several scholars like Delaney & Huselid, (1996); Tzafrir, (2006) Katou &
Budhwar, (2007) showed in their studies times and again, that HR policies in different sectors like
the banking sector, educational sector, manufacturing industry, etc. have a significant impact on
organizational performance. But unfortunately, there are not a sufficient number of studies related
to HR policies and organizational performance in the garments sector of Bangladesh and other
developing countries. Although every organization has its HR policies, we have tried to identify
the best possible way to improve the performance of the garments industry. If the outcomes of the
study are implemented by the ready-made garments of Bangladesh, they might be able to compete
with other organizations.

9. 6
Chapter 2
Literature Review

10. 7
2.1 Introduction
According to scholars like Barney (1991) and Wilson (1994), Human resource management
(HRM) is far more challenging than financial or technological management. In the 1990s, the
universalistic approach to examining best practices in HR policies became popular (Delery &
Doty, 1996). Nonetheless, throughout their research, each expert identified various best practices.
According to Armstrong 2006, if some suitable number of HR policies and processes can be
designed and implemented efficiently, HR in an organization will have a substantial impact on that
organization's performance. In the knowledge economy, human resources have been recognized
as a strategic instrument and vital to organizations' profitability and sustainability (Khan, 2010:24,
pp157-158). Many firms highly consider HR policies, activities, functions, and systems to be
critical to accomplishing organizational objectives.
This chapter reviews the findings of previous researcher’s studies as well as the study's dependent
and independent variables and their relationships. The literature discussed how HRM policies such
as recruiting, training and development, HR planning, job analysis, compensation, performance
evaluation, participation and involvement in decision making, etc. impact organizational
performance.
2.2 Conceptualization of Key Variables
HR Policies
 Recruitment and Selection
 Training
 HR Planning
 Performance Appraisal
 Motivation
 Involvement and Participation
 Compensation and Benefits
Organizational
Performance
 Efficiency
 Turnover
 Employees’ Loyalty
 Quality
 Productivity
HR Outcomes
 Satisfaction
 Commitment
Mediating
Variable
Independent
Variable
Dependent
Variable

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2.3 Organizational Performance (DV)
Organizational performance is known as the gap between the value that a business creates and the
value that owners expect from the business (Alchian & Demsetz, 1972). According to Rogers and
Wright (1998), it is one of the most commonly utilized dependent variable to do organizational
research. Generally, organizational performance is measured by effectiveness which refers to an
organization's ability to achieve its goals, gain efficiency, effectively uses its resources, meet
employee and customer satisfaction, and innovate new products or services with excellent quality.
(Katou & Budhwar, 2007; Delaney & Huselid, 1996; Dyer & Reeves, 1995; Guest, 2001).
However, the organizational performance construct has yet to be defined definitively and
specifically in research on HRM performance. Several studies have used effectiveness, efficiency,
satisfaction, turnover, employee loyalty, employee happiness, customer satisfaction, employee
commitment, and other behavioural aspects to determine firm’s performance. Other studies
measure a firm’s performance using objective criteria such as financial and market data.
In another approach, Brumbrach (1988) expressed the idea of performance as follows:
Performance encompasses both actions and outcomes. The performer's actions turn the
performance from abstraction to action. This definition of performance leads to the conclusion that
both inputs as behaviour and outputs as results must be addressed when controlling performance.
In contrast to ‘management by objectives’ (MBO) systems, it is not necessary to mention if the
targets are met or not.
As a result, there are different theories for assessing organizational performance and academia’s
uses a number of indicators and criteria to evaluate the performance. That is why, a precise theory
of organizational performance is required (Janssens and Steyaert, 2009).
2.4 Human Resource Policies (IV)
Human resource management (HRM) refers to the process of HR planning, job analysis,
recruitment and selection, training and development, compensation, performance appraisal etc.
that involved in carrying out the ‘human resources’ within the organization (Dessler, 2007). It also
defines to the actions of an organization focusing on human resources and ensure that the resources
are distributed to the correct place and time for the purpose of achieving the organization's
objectives (Schuler & Jackson 1987; Schuler & Macmillan 1984; and Wright & Snell 1991). It is

12. 9
a systematic procedure through which an organizations human resources are recruited as well as
managed those resources in such a way that helps the business to achieve its goals and objectives,
based on present structural backdrop. In fact, HRM is concerned and responsible for the welfare
of both the organization and the human resources that are involved. Hence, HR department in an
organization helps to select the appropriate person for the right job as well select as at the precise
time in the proper place.
2.4.1 HR Planning
Human resource planning is the most important part of an organization's HRM. HR planning
defines future workforce size and skill requirements (Burack and Mathys, 1987). It is the process
of determining which roles the company will need to fill and how those positions will be filled
(Dessler, 2007). According to Abdullah et al. (2009), HR planning has a direct impact on company
performance. HR planning primarily involves the construction and formulation of personnel
management and control strategies. It also calculates the number and types of workers needed to
achieve the desired results. However, the factors that build the professional aspect of employees
constitute the majority of HR planning. Employees and the company both get benefits from
professional growth. The HR management of an organization delivers employees various
educational programmes and training to improve themselves in their profession. Apart from that,
the HRM department of an organisation offers personal and professional development options like
further education and training. Furthermore, the HR function takes the lead in establishing the
employee communication system.
2.4.2 Recruitment and Selection
According to Fisher et al. (1999), recruitment and selection is the process of finding and attracting
people to fill job vacancies. It may also be described as an organizational technique or action aimed
at discovering and attracting potential personnel (Noe et al. 2008). As HRM is interested in
building a diverse set of policies to manage people, recruitment and selection will be critical factors
from which employees get benefits from such policies (Storey, 1995). Other academics have
underlined that most organizations should focus on recruiting the right people for their
organization so that they can operate their business efficiently and successfully. The recruitment
and selection process is mainly controlled by the HR department in an organization. Generally, the

13. 10
selection process is based on the applicant's qualifications, merit, and talent. Besides, the CVs are
sorted according to the specifications of the open post throughout this step (Meagher, 2015).
2.4.3 Training and Development
Training is the method that provides new or existing employees with the necessary skills,
knowledge, information, and other abilities to perform their jobs appropriately (DeNisi and Griffin,
2001). According to Herold and Fedor (2003), every employee undergoes training to improve their
skills, knowledge, and capabilities. Individuals, as well as organizations and teams, get benefits
from training because it helps them establish positive attitudes toward growth and change (Paul,
2009). According to Storey (1995), training and development of employees are the core elements
of HR functions. Therefore, it is important to gain the required performance for the workers from
the day of orientation and provide them with the necessary training to ensure that they perform
satisfactorily on the job. Supervisors must be well-trained to establish high-performance standards
that are required for the employees (Heisler, Jones, and Benham, 1988). According to Burke and
Day (1986) managers' performance is influenced by their level of training. Similarly, Bartel (1994)
discovered that investing in training improves staff morale and productivity and employees can
get more competencies through training to do their tasks more efficiently and effectively.
2.4.4 Performance Evaluation
The process of identifying and monitoring an employee’s performance while performing the job
with a view to setting an improvement plan is known as performance evaluation (Young et al.
1995, Byars and Rue, 2004). It is used to enhance individual along with team performance in an
organization to achieve the organization's goals and objectives. In today's world, it is one of the
organizational strategies or systems to increase organizational performance through developing
human resources as well as improving group performance. Grind and Sliwa (2007) suggested that
performance management is essential and helpful to achieve organizational goals and objectives.
It monitors and evaluates employees' performance and provides them feedback so that they can
learn from their mistakes along with improving their strengths and growth. Organizations may use
some data obtained from employee appraisals to improve their recruiting and training procedures,
as well as create the behaviours and attitudes of workers that the organization desires (Danlami,
Sulu, and Salami 2012). It will be hard to manage a business without having proper information
on how effectively its personnel is functioning (Kahalas 1980).

14. 11
2.4.5 Compensation and Benefits
Compensation is a system of rewards that an organization offers to its employees in exchange for
their willingness to undertake various professions and duties inside the firm (DeNisi and Griffin,
2001). To feel valued by the organization, every employee must be given appropriate and equal
compensation with the benefits for their dedication, efforts, and commitment to the organization
(Fisher et al., 1999). Compensation and benefits help a firm to manage employee performance and
reward the employee for excellent performance. Researchers studying high-tech remuneration
suggested that performance-based compensation is linked to better business performance.
Researchers like Galbraith and Nathenson (1978); Milkovich (1987); Turbin and Rosse (1988);
highlighted the importance of salary strategy in their studies which attracts and retain the employee
most. However, Balkin and Gomez-Mejia (1990) found incentive-based remuneration which is
also a strategy to motivate employees to perform well.
2.4.6 Motivation
According to Latham and Ernst (2006), motivation is a kind of psychological process that
influences an individual’s decisions, efforts, and persistence which result in mutual connection
between the individual and the environment. Armstrong (2006), showed that people like to perform
well in something if they feel and believe it will provide the desired outcomes. They are strongly
motivated to carry out acts to achieve the stated goals. According to Kanfer (1990), it is a
phenomenon that cannot be immediately observed. In today’s rapidly changing businesses, the
motivation of employees is essential. Highly motivated employees, contribute better to the
organizational performance and become more productive at work. To be effective, a manager must
understand what brings out the best in his or her employees with the function they play. Motivating
the employees is undoubtedly the most difficult aspect of a manager's job (Lindner, K. J. 2005).
2.5 Underlying Theories
According to Boxall, Purcell, and Wright (2007), a theory is required to identify performance
criteria, performance levels and dimensions as well as restrictions on how the situation should be
measured and the extent to which performance should be measured. Campbell's (1999) theory
defined performance as an action that can be monitored in order to achieve organization's goals.

15. 12
Besides there is a widely supported theory called ‘the social exchange theory’ means interacting
the relationship between employee and organization (Strohmeier and Piazza, 2013). This theory
indicated that human behaviour is driven by exchange activities resulting in incentives and
payments. Besides, Appelbaum, Bailey, Berg, and Kalleberg (2000) developed a theory named
'AMO Theory,' which states that HRM effects performance in relation to employees' competence,
motivation, and opportunity to participate. Apart from this, Delery and Doty (1996)
found contingency theory in their study states that in order to be effective, organization's HR
policies must be consistent with other components of the organization. As a result, there are
different theories for assessing organizational performance and academia’s uses a number of
indicators and criteria to evaluate the performance. Therefore, a precise theory of organizational
performance is required evaluate the organizational performance (Janssens and Steyaert, 2009).
2.6 Relationship between variables
2.6.1 HR Planning and Organizational Performance
According to Noe et al. (2007), recruiting, training, HR planning, employee relations, etc.
influence behaviors, attitudes, and performance of employees which can positively impact
organizational performance. Miljus and Smith (1987) found that internal management
development and staffing are often linked with high performance in businesses, but only if they
are associated with management and career development programs. Academics like Osman et al.
(2011); Qureshi et al. (2010); Katou and Budhwar (2006); DeNisi and Griffin (2001) believed that
HR planning has an impact on individual and organizational performance. For example, data were
used from 197 Taiwanese high-tech businesses by Chang and Chen (2002) to conduct research to
evaluate the relationships between HR policies and a firm’s performance. HR policies like training,
HR planning, compensation and benefits, teamwork, performance evaluation, etc. showed a major
impact on productivity and performance. Though, Chang, and Chen (2002) discovered HR
planning has a major impact on productivity and performance, Lee and Lee (2007) showed
employee turnover has a negative link with benefits and HR planning. However, previous research
has consistently proven that HR planning has both positive and negative influences on business
success.

16. 13
2.6.2 Recruitment and Organizational Performance
One of HRM's most important functions that help managers in attracting and selecting the best
personnel, leading to greater organizational performance is recruitment and selection (Rehman,
2012). For over 50 years, effective hiring of new employees from diverse sources has been a
significant concern for every organization in order to improve performance (Zottoli and Wanous
2000, Breaugh 2008 and Rehman 2012). Ferris et al. (2002) discovered that the efficacy of
recruiting and selecting process has an impact on organizational performance. Likewise, this
statement was also accepted by Pfeffer (1994); Storey (2007); Zheng et al. (2006); Werther and
Davis (1996) that a good recruiting and selection process will result from strong organizational
performance as well as gaining competitive advantages.
2.6.3 Training and Development and Organizational Performance
According to Barzegar and Farjad (2011), Lee et al. (2012), and Tung-Chun (2001), training
improves the performance of both trained and untrained, and the tasks would be highly efficient
that will be completed by the employee. Employee capabilities are enhanced by training which
increases a business's overall performance (Mackelprang et al., 2012; Millar and Stevens, 2012).
Several prior researchers like Huselid (1995); Katou and Budhwar (2006); Qureshi et al. (2010);
Abdullah et al. (2009); Singh (2004) showed in their study that there is a significant relationship
exists between training and organizational performance. Two HRM functions that increase
employee performance by providing applicable skills are training and development. According to
Paul (2009), employee training is critical for organizational performance, since it allows
organizational culture and employee behavior to be linked to outcomes.
2.6.4 Performance Evaluation and Organizational Performance
Several studies like Qureshi et al. (2010), Abdullah et al. (2009), Lee and Lee (2007), and Chang
and Chen (2002) discovered a major a connection between performance evaluation and a firm’s
performance. Brown and Heywood (2005) suggested that formal training and incentive
compensation are examples of complementary HRM policies that promote productivity and
improve organizational performance. According to Meyer and Kirsten (2005), managing employee
performance is an important aspect of every business. Furthermore, inefficient performance
evaluation can result in undesired issues such as reduced employee productivity, and a lack of
desire to support corporate goals, all of which contribute to lower organizational performance

17. 14
(Osman et al., 2011). A good performance assessment should be part of a bigger context that allows
the whole process to run smoothly (Giles et al., 1997).
2.6.4 Compensation and Organizational Performance
Several renowned researchers like Chang and Chen (2002); Katou and Budhwar (2006); Tessema
and Soeter (2006); Giorgio and Arman (2008); Danish and Usman (2010); Qureshi et al. (2010);
Shin-Rong and Chin-Wei (2012), found a relationship between compensation and organizational
performance. Besides, Mayson and Barret (2006) discovered that an organization’s ability to hire,
inspire, motivate as well as retain its employees is only possible if the organization provides their
employee with strategic compensation and worthy rewards which will result in the organization's
growth and success. In contrast, Ine and Pedro (2011) found that sales compensation structure has
a significant impact on a salesperson's performance. According to Steven & Loring (1996) and
Denis & Michel (2011), many businesses are looking for innovative pay schemes which will help
to increase organizational performance to obtain a competitive advantage.
2.7 Mediating Variables
In the study, we found that HR outcomes (job satisfaction and organizational commitment) as
mediating variables. HR outcomes mediate the relationship with both HR policies and
organizational performance. There is a direct or indirect link between HR policies and
organizational performance that exists through HRM outcomes. Baron & Kenny (1986) found that
HRM outcomes (job satisfaction and organizational commitment) partially moderate the
relationship between HR policies and organizational performance. Therefore, if an organization
wants to improve its performance, both job satisfaction and organizational commitment must also
be improved.
2.7.1 Job Satisfaction
Job satisfaction is now one of the most vital factors in an employee's capacity to perform
successfully in a firm, for both the person and the company. It provides a sense of success and job
stability to employees. It refers to a person's overall attitude (Syed and Yan, 2012). Employee
satisfaction and commitment are increased when HR policies are incorporated, which leads to great
individual and team performance (Green et al., 2006 Khan, 2010). Additionally, Katou (2008)

18. 15
asserted that management should empower employees to make decisions, as this would affect
employee commitment and job satisfaction. Furthermore, research has shown that building
equality in employees may enhance their happiness, dedication, effort, and performance. R.G.
Folger and R. Cropanzano, 1998.
2.7.2 Organizational Commitment
Organizational commitment is described as an employee's capabilities to recognize an organization
by expressing a strong urge to stay in the organization, be a part of the organization, a strong desire
to achieve the company's aims, and a willingness to put in substantial effort on the company's
behalf (Armstrong, 2010: p 427). According to Green et al. (2006) and Khan (2010), employee
satisfaction and commitment will rise with an integrated approach to HR policy, leading to
exceptional individual and team performance. A recent study by Billah, Prince, and Islam (2009)
discovered that HR practices had a substantial relationship with employee turnover and
organizational commitment in the context of Bangladesh. Consequently, suitable HR policies work
as a facilitator for promoting employee participation, satisfaction, and commitment to the
organization.

19. 16
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