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A STUDY ON STRATEGIC HUMAN RESOURCES

MANAGEMENT (SHRM) AND ITS IMPACT ON

ORGANISATIONAL COMMITMENT IN AUTO

INDUSTRY CHENNAI ENVIRONMENT

Dr. M. Sakthivel Murugan Professor-in-Charge,

D.B.Jain College, Chennai – 600 097

E-mail: [email protected]

Dr. S. Ganapathy, Associate Professor, Department of Corporate Secretaryship,

S.A. College of Arts and Science, Chennai – 600077

Email: [email protected]

ABSTRACT

SHRM is a process of developing practices, programmes and policies which

helps to the organizational objectives. SHRM practices are those practices specifically

developed, implemented and executed based on a deliberate company’s strategy. SHRM is

concerned with the relationship between HRM and strategic management in an

organization. SHRM is an approach which relates to decisions about the nature of

employment relationship, recruitment, training, development, performance management,

reward and employee relations. SHRM aims to improve business performance through

people and meet the needs of the organizations employees. This paper focus on identify the

relationship between SHRM practices and Employee commitment.

KEY WORDS

Strategic Human Resource Management, Human Resource Management,

Organizational Commitment, Performance Appraisal System, Personal Relationship,

Employee benefits, Career growth

INTRODUCTION

The ever changing scenario of the economy through liberalization and

globalization brings out drastic changes in Strategic Human Resource Management

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(SHRM) practices in automobile manufacturing companies. This also brings a healthy

competition among the companies. Nowadays, it is very difficult to face the challenges

of quality competition and price competition, according to the global market

conditions. Human resources are truly the most valuable resource as it activates all

other factors of production, physical and financial resources. So, it helps the

organisation to face the challenges in the competitive world.

In an organization, the efficiency of the employees is reflected in the

revenues earned by the organization. The level of global competition and market

demands force the companies to adapt to the changes as quickly as possible. The

growth and success of the companies is to hire and deploy skilled person workforce

available. The proper utilization of Strategic HRM practices ensures the organization

and helps to achieve the goals within the prescribed period.

The above mentioned factors are needed to obtain the maximum utility of

HR to achieve high productivity and profitability of the organization. Hence, this study

is important at this hour.

Strategic Human Resource Management (SHRM) is designing of HRM

functions to help and achieve an organization’s overall objectives. HRM practices are

interrelated with nature and SHRM should ensure that all the practices should

complement each other and are consistent with some substantial set of strategic

principles.

SHRM is a multi-dimensional approach from top to bottom or vice versa. The

dimensions of SHRM practice links the individual employee objectives with the

corporate objectives or organizational objectives.

Theoretically clear guidance is absent; the SHRM practices are the backbone of

the organization to obtain a competitive advantage in the current scenario. It is

impossible for the organization to obtain the goals, HRM practices without strategic

approach.

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RESEARCH QUESTIONS OF THE STUDY

This study focus on the Impact of Strategic HRM Practices on

Organisational Commitment with reference to Automobile Companies and this

research framed the following Research Questions.

1. To what extent SHRM practices were adopted and implemented in the

Automobile Industry?

2. What is the level of Commitment of employees?

3. Whether any significant impact of Strategic HRM Practices on Organisational

Commitment can be measured?

4. Is there any significant influence of Personal and Organisational Variable on

Employee Perception towards Strategic HRM Practices?

How can one validate the elements of Strategic HRM Practices with empirical evidences?

SCOPE OF THE STUDY

The present study aims at identifying and classifying the factors which

leads to SHRM practices prevailing in the Automobile industry. It also aims to identify

the relationship between the SHRM practices and Employee Commitment. The study

proposes the influence of SHRM practices towards the Employee Commitment.

Further, the study analyses the relationship of SHRM practices with the organizational

commitment.

RESEARCH METHODOLOGY

The study is conducted using both analytical and descriptive type of

methodology. The study primarily depends on primary and secondary data.

STUDY AREA

The primary data is collected from the automobile manufacturing companies

located in and around Chennai City. Chennai has numerous automobile manufacturing

companies, so the location for the study makes it realistic and meaningful. Chennai is a

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major industrial city with shipping centres as regard to the automobile industry.

Industrialization brings out many new industries to the country. Since the automobile

manufacturing companies have entered in the globalization arena, their role play has

uplifted the economic standing of young and educated professionals. Chennai, being

one of the strong metropolitan cities in India, it truly represents employees belonging

to various strata of the society.

SAMPLE DESIGN

The primary data has been collected through well formulated

Questionnaire. Convenient Sampling is applied for generating data. Samples for the

purpose of this study have been selected systematically. The five popular companies

with high turnover are selected to collect samples. 600 questionnaires in total were

distributed among the employees in the Automobile Companies of Ashok Leyland, TVS

Lucas, Rane Breaks, Hyundai Motor India and Sundaram Clyton. Among the distributed

questionnaires, 513 questionnaires have been found usable for primary data analysis.

Hence, the correct sample size is 513.

SAMPLE SELECTION

The multi stage convenient sampling method is applied to collect the

primary data. This sampling method is justified as follows: The whole Automobile

Industry is downsized into five Companies in a conveniently random method in the

first stage of sampling. The second stage is concerned with selecting the employee

working with the five Automobile Companies at random. After these two stages, the

convenient sampling method is applied to obtain the responses from the employees.

Hence, the multistage convenient sampling method is justified in collecting the samples

from Automobile Companies.

LITERATURE REVIEW

The review of literature elaborates summaries, evaluates and clarifies the

Strategic Human Resource Management and Organizational Commitment. It provides a

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theoretical basis for the research review.

Brian E. Becker et.al. (1999) stated that Strategic HRM in leading firms has the

relative emphasis on Strategic and operational HR roles throughout each business.

Strategic HRM contributes a strong base for the organizations to achieve their success

in the business.

Debra J.Mesch, James L.Perry, Lois Rocas Cino Wise (1995), they are

comparing two personnel systems, one is uniformity and centralization, which typifies

the bureaucratic model of HRM and the other is decentralized. It gives more latitude to

line managers who are representatives of Strategic HRM. Their findings show that

there are no significant differences that can be attributed to the personnel systems.

Abdul Kadir, DanlamiSani (2012) they were analysed Strategic Human

Resource Management, which is important to tackle the challenges leading to

organizational objectives and also Strategic HRM Practices are used to achieve the

firm's performance.

Mark A.Huseilid, Susane E.Jackson, Randall S.Schuler, (1997), focused on

Strategic HRM effectiveness and firm performance and concluded that the organization

gains competitive advantage and firm performance through Strategic HRM practices.

David P.Lopak, et.al., (2006), addresses several conceptual and

methodological issues regarding HR. The authors supported that HR systems targeted

the strategic objectives as well as operations which are influenced by the employee’s

knowledge, skills and abilities, employee motivation and effort, and opportunities that

contribute to their organizations.

GAPS IN LITERATURE REVIEW

There are many research studies conducted by the researchers in the field

of Human Resource Management Practices, Strategic Human Resources Management

Practices and Organizational Commitment in various industries like hospitals, schools,

universities etc.

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Human Resource Development with organizational commitment to the

automobile industry is also studied, but no one has analyzed the problem statement on

the impact of Strategic Human Resource Practices. There are researchers who have

selected Strategic HRM and Organizational Commitment as their problem statement

separately but have not united them.

So, the researcher identified the problem statement of the Impact of Strategic

HRM practices on Organizational commitment in the automobile industries.

The research objective is to identify the elements of HRM practices which are all

to be combined with the existing SHRM practices in the organization. In the midst of

the identified elements which are all have the coherence is analyzed with the data.

Further, the influence of these SHRM factors on organizational commitment is also

being analyzed and concluded.

DATA ANALYSIS

This analysis is carried out to identify the relationship between SHRM and

organizational commitment with the help of developing SEM Model.

Structural Equation Model (SEM) - A model of Relationship between SHRM

Practices and Organizational Commitment

After reviewing the National and International literature pertaining to SHRM

Practices, the researcher identified six SHRM Practices viz., Recruitment and Selection,

Training and Development, Performance Appraisal System, Career Growth,

Interpersonal Relationship and Employee Benefits are suitable and appropriate for

Automobile Companies in the geographical base of Chennai City.

It is important to validate the six components of SHRM practices and its

subsequent relationship with Organizational Commitment.

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In the case of Organizational Commitment the researcher applied Explanatory

Factor Analysis must also be confirmed and validated like the factors of Strategic HRM.

The present model of finding the relationship between Strategic HRM practices and

Organizational Commitment can be done through two stages, namely validation of

factors of SHRM and Organizational Commitment and then finding the impact of SHRM

practices on Organizational Commitment. This clearly shows that the model consists of

six independent variables of SHRM practices, namely Recruitment and Selection,


Interpersonal Relationship and Employee Benefits and five dependent variables of

Organizational Commitment namely Affective Commitment, Continuous Commitment,

Normative Commitment, Relationship Commitment and Goal Achieving Commitment.

The model consists of validation of factors and finding the impact of

independent factors of SHRM on the dependent factors of Organizational Commitment.

The validation is done through Confirmatory Factor Analysis and impact is measured

through Linear Multiple Regression Analysis. It clearly shows that the model consists

of two tools, namely Confirmatory Factor Analysis and Linear Regression Analysis.

This combination is called Structural Equation Model (SEM). The conceptual

model of this research work is presented below.

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This conceptual model is validated and proved with respect to the

perception of employees in Automobile companies in and around Chennai city. The

total average scores of Independent SHRM factors and Organizational Commitment

factors are considered for the operations of factors of SHRM and Organizational

Commitment and the subsequent impact of SHRM Practices on Organizational

Commitment can be identified through the best model fit indices. These fit indices have

their benchmark for the best satisfaction level of model fit.

The following table indicates the model fit indices and the benchmark values.

S.No. Fit Indices Values Bench Marks

1. Chi-square value 2.249 -

2. P value 0.693 >0.05

3. Comparative Fit Index 0.971 >0.09

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(cfi)

4. Goodness of Fit (gfi) 0.967 >0.9

5. Normed Fit Index (nfi)

0.962 >0.9

6. Root Mean Square Error of Approximation (RMSEA)

0.07 <=0.08

From the above table and diagram it can be ascertained that all the fit indices

exactly satisfy the required benchmark values. It confirms best fit of the model.

It further implies that the Independent SHRM factors of Recruitment and Selection,

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Interpersonal Relationship and Employee Benefits, Dependent five Organizational

Commitment factors of Affective Commitment, Continuous Commitment, Normative

Commitment, Relationship Commitment and Goal Achieving Commitment are

validated. Besides this validation the researcher also found that there is a deep

relationship and impact of SHRM practices in Automobile Companies on Organizational

Commitment of the employees in Automobile Companies.

Hence the following relationships are obtained and all the 3 hypotheses and their

sub hypothesis are tested through this model.

H01. The factors of Strategic HRM Practices do not differ significantly.

The model rejects the hypothesis framed and accepts the alternate hypothesis that

the factors of Strategic HRM Practices differ significantly. There is a relationship

among the factors of Strategic HRM Practices.

H01a.The Recruitment and Selection practices were the one of the factors of SHRM

practices in Automobile Companies.

H01b.The Training and Development practices were the one of the factors of SHRM

practices in Automobile Companies.

H01c.The Performance Appraisal System is the one of the factors of SHRM practices in

Automobile Companies.

H01d.The Career Growth is the one of the factors of SHRM practices in Automobile

Companies.

H01e.The Interpersonal Relationship is the one of the factors of SHRM practices in


H01f.The Employee Benefits are the one of the factors of SHRM practices in Automobile

Companies.

This validates that all the factors combined together and have high explanatory

power for SHRM practices. Similarly, the research identified that H02. The factors of

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Organizational Commitment of Employees do not differ significantly. The alternate

hypothesis is accepted that the dimensions of organizational commitment have a deeper

relationship with the organizational commitment.

H02a. Affective Commitment is one of the components of Organizational Commitment

in Automobile Companies.

H02b. Continuous Commitment is one of the components of Organizational

Commitment in Automobile Companies.

H02c. Normative Commitment is one of the components of Organizational


H02d. Relationship Commitment is one of the components of Organizational


H02e. Goal Achieving Commitment is one of the components of Organizational


These results validated the factors of Organizational Commitment.

The model also revealed the following results

There is a deep impact on SHRM practices on Organizational Commitment of


SHRM – Commitment – High Performance Model

This model is developed for the study to indicate the influence of the SHRM factors as

well as Commitment factors to achieve the High level performance in the Automobile

Companies. There are numerous SHRM factors followed by the management of different

industries. The researcher selected the elements of SHRM on the basis of the Review of

Literature, such as Recruitment and Selection, Training and Development, Performance

Appraisal System, Career Growth, Interpersonal Relationship and Employee Benefits

prevailing in the Automobile Industry. These factors are very essential for the

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successful running of the business. These factors are the chain like process; they are

interlinked with each other. But these factors are the ones which play vital role in the

Organization.

SHRM – Commitment - Performance Model

In Automobile Industry the management follows transparent Recruitment and

Selection procedures, which gives more faith in the organization. So that the

organization gets the right person for the right job and also skilled employees for their

organization to work without any bias and efficiently.

The quote ‘Practice makes the man perfect’ says that more the practice makes

perfect performance. Here the practices relate to the proper Training and Development

procedures, which give the essential skill-set of the employees to develop their Career

in the Organization. Time to time Training for the employees makes them up to date

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knowledgeable as well as it is implemented in their day to day working practices.

Updated knowledge never routes to the mistakes. Proper Training avoids wastages and

accidents in the organization, which in turn gives quality products. It is not only

beneficial to the organization, but also to the society.

Performance Appraisal System gives pay for performance. The well performed

employee always gets paid equally according to the efforts he puts in the work. Well

defined and structured Performance Appraisal System will always gain the goodwill of

the employees. The result based Performance Appraisal System followed by different

type of organization. HRM Practices always focused on the Performance Appraisal

System, which is beneficial to both the employees as well as employer.

Career Growth is the chance given to the employee to climb up in his position.

Career Growth opportunities are offered by the employer to their employees. The

selection of job by the employees based on the Career Growth available in the

organization they opt for. The chances for upliftment in the Career are more important

for both the ends. Career is not meant for the job presently working for; it is also the

future benevolence. Career Growth should provide the Career related betterments.

Interpersonal Relationship is the key factor in the organization to succeed in the

long run. It includes the communication among the employees, working according to

the instruction of the team, problem solving skills along with critical thinking and

professional attachment towards their organization. These factors are helpful for the

employees to maintain a good Interpersonal Relationship to achieve the goals of the

organization.

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CONCLUSION

The present study was carried out to measure the impact of SHRM Practices on

Organizational Commitment among the employees of Automobile Companies by using

the self- administered questionnaire on a five point Likert scale (1=Strongly Disagree

to 5=Strongly Agree) whereby respondents were asked to give their opinion of

satisfaction level. The mean score of the statements was above three, which clearly

shows that the employees’ of Automobile Companies expresses that their company

follows SHRM Practices in a well manner which is the factor for the employees’

commitment towards their organizations.

The study concluded that the Automobile Companies in Chennai City have

significant level of Strategic HRM Practices like Recruitment and Selection, Training and

Development, Performance Appraisal System, Career Growth, Interpersonal Relationship

and Employee Benefits. The study inferred that the dimensions of Organisational

Commitment such as Relationship Commitment, Affective Commitment, Normative

Commitment, Continuous Commitment and Goal Achieving Commitment are also having

significant level.

From the study it is concluded that the six independent variables (Recruitment

and Selection, Training and Development, Performance Appraisal System, Career

Growth, Interpersonal Relationship and Employee Benefits) have a quite strong and

positive impact on the five dependent variables (Relationship Commitment, Affective

Commitment, Normative Commitment, Continuous Commitment and Goal Achieving

Commitment). Hence every change in the independent variable will have the positive

impact on dependent variables among the employees of Automobile Companies in

Chennai City.

SEM (Structural Equation Model) has concluded that the Recruitment and

Selection, Training and Development, Performance Appraisal System, Career Growth,

Interpersonal Relationship and Employee Benefits are one of the factors of Strategic HRM

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Practices, Relationship Commitment, Affective Commitment, Normative Commitment,

Continuous Commitment and Goal Achieving Commitment are one of the factors of

Organisational Commitment and impact of Strategic HRM Practices in Automobile

Companies on Organizational Commitment of the employees of the Automobile

Companies.

REFERENCES

1) Brian E.Becker and Mark A.Huselid, 1999, Overview: Strategic Human Resource

Management in Five Leading Firms, Human Resource Management, winter, 38 (4),

287-301

2) Debra J.Mesch; James L. Perry ; Lois Rocascino wise (1995), Bureacratic and Strategic

Human Resource Management : An Empirical Comparison in the Federal Government,

Journal of Public Administration Research and Theory, 5(4), pp. 385-402.

3) Abdul kadir Danlami sani, 2012, Strategic Human Resource Management and

organizational Performance in the Niegerian Insurance Industry: The impact of

organizational Climate, Business Intelligence Journal, 5(1), 8-20

4) Mark A.Huseilid, Susane E.Jackson, Randall S.Schuler, 1997, Technical and Strategic

Human Resource Management Effectiveness as Determinants of Firm Performance,

Academy of Management Journal, 40, 1, 171-188

5) David P. Lepak, Hui Liao, Yunhyung Chung and Erika E. Harden, 2006, A Conceptual

Review of Human Resources Management Systems in Strategic Human Resource

Management Research, Research in Personnel and Human Resources Management,

Volume 25, 217–271, ISSN: 0742-7301/doi:10.1016/S0742-7301(06)25006-0

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