Chapter Two

Review of Related Literature

2.0 Introduction

Human resource planning (HRP) is a strategic process that aligns an organization’s human

resources with its long-term goals and objectives. It involves forecasting future workforce needs,

assessing current human resources, and implementing strategies to ensure that the right number

of employees with the necessary skills are available when needed. Effective HRP is crucial for

optimizing resource allocation, enhancing productivity, and maintaining a competitive advantage

in a dynamic business environment.

The impact of HRP on organizational performance has been extensively studied, with research

highlighting its significant role in various aspects of organizational success. HRP not only aids in

effective talent acquisition and retention but also ensures that human resources are aligned with

the strategic goals of the organization. This alignment is essential for achieving operational

efficiency and business objectives.

Moreover, HRP facilitates continuous employee development through targeted training

programs, which are crucial for improving performance and fostering innovation. Succession

planning, another key component of HRP, prepares organizations for future leadership

transitions, ensuring stability and continuity in leadership roles. HRP enhances employee

engagement and morale by aligning personal development goals with organizational objectives,

leading to higher productivity and job satisfaction.

1
2.1 Conceptual Framework

2.1.1 Concept of Human Resource Planning (HRP)

A message that is normally found in organization ;0n's mission and vision statements and their

annual reports is that employees are organization's most important asset. Having the right

employee at the right time and at the right place is essential for the success and survival of the

organization. Organizations state that person1n .el00200 0a0re the basis of their competitive

advantage. The organization's performance depends upon

3 human resources of the organization Abdalkrim (2019). The concept of “human resource

planning” has been commonly used in the previous decade. Before that, this concept was usually

known as “management of personnel”. (Daud, 2021). Some researcher has made no

discrimination between management of personnel and HRP and explained that this concept of

human resource used by organizations. Furthermore, staffing practices management is new

extended version of long-established helps to choose right candidate for right job at right time

concept of planning of personnel due to technological and that candidate is capable to perform

the given tasks, change and modernization in the work setting and due generates a sense of

superiority and generates high to change in principles and standards. Researcher clarify potential

of performance Abdalkrim (2019). The variation among management of personnel and Staffing

practices are those human resources by declaring that management of personnel just management

practice used for personnel planning and focus upon employee's management while human

forecasting, recruiting, screening and selecting the right resource management focus upon

resource management. Personnel for the right job, has exposed a positive impact Research

focusing on the consequence of human on organizational performance. The specific staffing

resource management practices on organization's practices such as recognition of recruiting

2
sources performance HR planning has become popular in (internal or external) and then use

formal test like aptitude latest years. Test, psychomotor test, job knowledge test and carried out

the analysis that focus on the personality tests shows a positive relationship with profit

performance effects of specific HR methods, that margin include training and development and

information sharing and research observe the effect of systems of HRP.

Incentive Practices: The role of incentives has expanded methods on organizational output.

Although several considerably. Researchers have investigated that there is studies have

accounted a considerable effect of a variety a strong impact of incentive management on risk-

taking of HR methods on goals and organization's which enhance the organizational

performance. The performance, impact of incentives on behaviour has been well explained.

Incentives may be in monetary resource management practices as whole rather than rewards

forms or other types of incentive-based individual practices. The reason at the back of this

compensation which are stock option, share ownership argument is that organizational

performance is improves (partnership) and additional benefit like bonuses and by human

resource management practices as whole that rewards. Employees’ performance can be improved

support each other and that have a mutual effect on through different incentive plans which are

demonstrate employee's involvement in organizational performance by innovative work follows

(Ichniowski 2017).

Staffing Practices: Organizations can implement a mixture in affecting the organizational

performance or not. On practices of HR to increase employee proficiency, some researcher

argued that incentives should be focus on either improve the quality of the associated with the

3
accomplishment of previously set personnel's hired or increase the expertise and capabilities

goals and mission. Incentives are basically use to improve existing workers productivity.

Employees can be hired motivate employees to become more productive in order through refined

recruitment and selection methods to enhance the organizational performance Mohamad (2019).

To select very best potential employees, motivation is another important factor highlighting

research point out that screening and then finally HRM and firm's performance. Researcher said

that human selection of staff is positively associated with attitude can be examined by two

components: organizational performance Schmidt (2022). Secondly, organizations can get better

quality of existing workers by organizing Economic gains different training programs after

screening of potential Social acceptance employees. Considerable verification suggests that

investments in training improve organization's overall. These two components are basically an

incentive for performance Bartel (2022). Today firms are facing many challenges of arrangement

between worker and managers to maintain screening and holding effective employees. To

increase and express working relationships between them, organizational performance the

organization should have. Research shows that incentives encourage employee to effective

staffing practices. To make best hiring decisions increase their output and organizational

performance staffing practices are the tools for evaluation which are (Ana-Maria, 2023).

Training Programs: Many researchers examine the effect of training programs on output and

where both worker and manager, owner/boss can share the benefits from training programs Conti

(2023). On the other hand, research focused on the generalization of training to organizational

output exposed that on the job training programs does not improve the organizational

performance whereas off-the job training improves the organizational performance. Additional

Barrett (2022), stated that off the job training programs has strong effect on organization's

4
performance whereas on the job training programs does not. Through efficient training programs

would not only help to achieve the organization's goals by adding the satisfaction and better

output of employees, it would also helps to equip employees with knowledge and expertise that

are necessary to perform that specific job. Past researchers exposed that training provides

sufficient ability to a worker to do better in a given job and then improve the organizational

performance. However, researcher stated that training programs is a costly ways to improve the

human output Mohamad (2019). One of the main challenges is training programs of employees

that HR managers will face in the upcoming days. As organizations come into existence, they

need to work in an interdependent world. Training programs are useful for the success of any

organizational strategy and help to compete with changes in the near future. The competitive

advantage of companies is the good quality of their human resources in the highly competitive

environment. In addition great emphasis on internal training that is firm specific training, rather

than external or general training Stavrou-Costea (2019). To compete in today's world (in 21st

century) the organizations need to invest in the development of their human resources to

continuously update the skills, knowledge and work practice of employees. Researches point out

that investment in training programs of employees increase the firm performance. The training &

development is basically refers to a process to improve the current and future skills, knowledge

of workers.

Organizational Performance: As Mohamad (2019).said that Organizational performance has

been researched in the past broadly. Some of the points which decide organizational performance

are:

i. Output/productivity

5
 ii. Profitability

iii. Turnover

Some researchers argued that human resource planning is known as the fundamental business

concern that forms the deeds, thoughts and output of the employees, thus HR practices plays a

vital role in organizational performance. When workers are not loyal to their organization then

this will decrease the output and deprived service quality. Barrett (2022), Carried out a study to

examine the relationship between HR and output found that through HR practices the

performance of the companies can be improved. This is further supported by Horgan (2022) that

some HR practices are linked with good employee performance and resulting the increase in

organizational performance. Though, the HR planning have influence on organizational

performance when the employees contributing in organizational output. The consequence of

human resource planning on organization's performance were examine in past researches where

human resource planning were associated with personnel's turnover rate, personnel’s loyalty with

their organization and better job skills and actions of the employees.

2.1.2 The Strategic Role of Human Resource Planning

Human resource planning (HRP) at UAC Foods plays a pivotal strategic role in enhancing the

company's competitive advantage and operational efficiency. This strategic focus on HRP has

been essential between 2019 and 2024, helping UAC Foods navigate a dynamic business

environment and achieve sustainable growth.

A significant component of HRP at UAC Foods is talent acquisition and development. The

company emphasizes recruiting skilled professionals and fostering their development through

continuous training programs. This approach not only improves individual employee

6
performance but also aligns with the company’s strategic objectives, ensuring a workforce

capable of meeting current and future business challenges (Akanbi, 2020).

UAC Foods integrates HRP with its broader business strategy, ensuring that HR initiatives

support long-term organizational goals. This alignment is crucial for fostering a culture of

performance, innovation, and continuous improvement. For example, UAC Foods has adopted

strategic HR practices that promote employee engagement and retention, crucial for maintaining

a motivated and high-performing workforce (Oladipo, 2019). Diversity and inclusion are

strategic elements in UAC Foods' HRP. The company recognizes the value of a diverse

workforce in driving innovation and achieving business success. Consequently, UAC Foods has

implemented policies to ensure equal opportunities for all employees and to cultivate an

inclusive workplace culture. These efforts help the company attract and retain a wide range of

talents, thereby enhancing its innovative capacity and market competitiveness (Ilesanmi, 2021).

The COVID-19 pandemic has underscored the importance of adaptable HR strategies. UAC

Foods has responded by enhancing its HR policies to support remote working and prioritize

employee well-being. This includes introducing flexible work arrangements and robust health

and safety protocols, which are vital for maintaining productivity and employee morale in

challenging times (Akanbi, 2020).

Performance management is another critical aspect of HRP at UAC Foods. The company

employs comprehensive performance management systems to ensure employees are aligned with

organizational goals. This includes setting clear performance metrics, providing regular

feedback, and recognizing high performance. Such practices not only boost individual

productivity but also contribute to the overall success of the organization (Oladipo, 2019). UAC

Foods focuses on employee engagement and skill development. By implementing effective

7
engagement programs and skill development initiatives, the company ensures that its employees

are motivated and equipped with the necessary skills to perform their roles effectively. This

strategic focus on human capital development is essential for driving organizational growth and

maintaining a competitive edge in the food industry (Ilesanmi, 2021).

2.1.2 The Relationship between Human Resource Planning And Organisational

Performance

Human resource planning (HRP) plays a pivotal role in enhancing organizational performance by

aligning the workforce with the strategic goals of the company. Effective HRP ensures that an

organization has the right number of employees with the necessary skills at the right time,

directly impacting productivity and efficiency.

Talent Acquisition and Retention

HRP involves forecasting future workforce needs and developing strategies to meet these

demands, which is crucial for talent acquisition and retention. Effective recruitment and retention

strategies help organizations attract and keep skilled employees, leading to higher productivity

and morale. A study by Abdalla Hamza et al. (2021) highlighted the positive relationship

between strategic recruitment, selection practices, and organizational performance.

Strategic Alignment

HRP ensures that human resources are aligned with the strategic goals of the organization. By

anticipating future HR needs and aligning them with strategic objectives, HRP optimizes

resource allocation and enhances the ability to achieve these goals. Wright and McMahan (2011)

emphasize the importance of aligning HR practices with business strategies to improve

8
organizational performance.

Employee Development and Training

Identifying and addressing skill gaps through targeted training programs is a key component of

HRP. Continuous employee development leads to improved performance, innovation, and

adaptability to market changes. Research by Tharenou, Saks, and Moore (2019) shows that

investment in employee development significantly boosts productivity and organizational

outcomes.

Succession Planning

Succession planning is an integral part of HRP that prepares organizations for future leadership

transitions. By developing a pipeline of potential leaders, HRP ensures leadership continuity and

minimizes disruptions, which is vital for maintaining performance. According to Rothwell

(2020), effective succession planning supports long-term organizational stability and success.

Employee Engagement and Morale

HRP fosters higher levels of employee engagement and morale by aligning personal

development with organizational goals. Engaged employees are more productive and committed,

contributing positively to organizational performance. A study by Govender (2022) on

performance management in South Africa underscores the importance of engagement in boosting

performance and achieving business objectives.

Organizational Adaptability

In a rapidly changing business environment, the ability to adapt quickly is crucial. HRP enhances

organizational flexibility by enabling timely adjustments to workforce levels and skills, helping

9
maintain competitiveness and operational efficiency. Ulrich (2013) discusses how adaptable HR

practices are essential for sustaining performance in dynamic markets.

The relationship between human resource planning and organizational performance is numerous

and robust. Effective HRP ensures the right alignment of workforce capabilities with strategic

goals, fosters continuous development, prepares for leadership transitions, and enhances

engagement and adaptability. These elements collectively drive superior organizational

performance, as supported by recent studies and expert analyses.

2.1.3 Human Resources as A Source of Competitive Advantage

The concept of competitive advantage was formulated by Michael Porter. Competitive

advantage, Porter asserts, arises out of a firm creating value for its customers. Porter emphasized

the importance of differentiation, which consists of offering a product or service ‘that is

perceived industry-wise as being unique’, and focus – seeing a particular buyer group or product

market ‘more effectively or efficiently than competitors who compete more broadly’. He then

developed his well known framework of three generic strategies, -cost leadership, differentiation,

focus- that organizations can use to gain competitive advantage. Porter’s widely accepted view

suggests that the industry environmental determinants- affects a firm’s performance. Resource-

based view, on the other hand, asserts that the basis for a competitive advantage of a firm lies

primarily in the application of the bundle of valuable resources at the firm's disposal.

Competitive advantage, according to this view differs from the environmentally focused strategic

management paradigm in that its emphasis is on the links between the internal resources of the

firm, its strategy and its performance.

10
The resource-based view suggests that human resource systems can contribute to sustained

competitive advantage through facilitating the development of competencies that are firm

specific Ghobadian (2018). The sustained superior performance of many companies has been

attributed to unique capabilities for managing human resources to gain competitive advantage.

Conversely, to the extent that HR systems inhibit the mobilization of new competencies and/or

destroy existing competencies, they may contribute to organizational vulnerability and

competitive disadvantage. In the closing years of the twentieth century, management has come to

accept that people, not products, markets, cash, buildings, or equipment, are the critical

differentiators of a business enterprise. All the assets of an organization, other than people, are

inert. They are passive resources that require human application to generate value. The key to

sustaining a profitable company or a healthy economy is the productivity of the workforce.

What is important to recognize is why success through human resources can be sustained and

cannot readily be imitated by competitors. The reason is that the success that comes from

managing people effectively is often not as visible or transparent as to its source. Culture, how

people are managed, and the effects of this on their behaviour and skills are sometimes seen as

the "soft" side of business, occasionally dismissed. Even when they are not dismissed, it is often

hard to comprehend the dynamics of a particular company and how it operates because the way

people are managed often fits together in a system. It is easy to copy one thing but much more

difficult to copy numerous things.

HRM needs to achieve the following strategic goals in order for the company to gain and sustain

competitive advantage:

1. to invest in people through the introduction and encouragement of learning processes

designed to increase capability and align skills to organizational needs,

11
 2. to ensure that the organization identifies the knowledge required to meet its goals and

satisfy its customers and takes steps to acquire and develop its intellectual capital,

3. to define the behaviours required for organizational success and ensure that these

behaviours are encouraged, valued and rewarded,

4. to encourage people to engage wholeheartedly in the work they do for the organization,

5. to gain the commitment of people to the organization’s mission and values.

To achieve these goals it is necessary to understand the linkage between HRM and business

strategy.

2.1.4 HOW HRP IMPACTS ON ORGANIZATIONAL PERFORMANCE

Many organizations face a volatile market situation. In order to create and sustain competitive

advantage in this type of environment, organizations must continually improve their business

performance. Increasingly, organizations are recognising the potential of their human resources

as a source of sustained competitive advantage. Linked to this, more and more organisations are

relying on measurement approaches, such as workforce scorecards, in order to gain insight into

how the human resources in their organisation add value.

The increasing interest in measurement is further stimulated by a growing number of studies that

show a positive relationship between human resource management and organizational

performance. The relationship between HRM and firm performance has been a hotly debated

topic over the last two decades, with the great bulk of the primary scientific research coming

from the USA and, to a lesser extent, the United Kingdom. Both organizations and academics are

striving to prove that HRM has a positive impact on bottom line productivity. The published

research generally reports positive statistical relationships between the greater adoption of HR

12
practices and business performance Oludele (2021). In a world in which financial results are

measured, a failure to measure human resource policy and practice implementation dooms this to

second-class status, oversight, neglect, and potential failure. The feedback from the

measurements is essential to refine and further develop implementation ideas as well as to learn

how well the practices are actually achieving their intended results.

Compensation policy

Performance-based compensation is the dominant HR practice that firms use in order to evaluate

and reward employees’ deeds (Collings and Clark, 2013). There is consensus that performance-

based compensation has a positive effect upon employee and organizational performance

(Stevens, 2014). Employee motivation, based on perceived expectations, can provide the link

between compensation and performance. Expectancy theory posits that pay level will influence

employee performance when:

a. employees perceive that a relationship exists between their efforts and

performance and

b. employees gain specific benefits if they perform well (Ngo et al. 2018).

Empirical studies on the relationship between performance-related pay and company

performance have generally found a positive relationship, but a growing body of empirical

evidence suggests that it is not just pay level that matters, but pay structure as well (Singh 2015).

Delery and Doty (2016) identified performance-based compensation as the single strongest

predictor of firm performance. Both performance-based compensation and merit-based

promotion can be viewed as ingredients in organizational incentive systems that serve to

encourage individual performance and retention (Uen and Chien, 2014). Widener (2013)

13
developed a binary logit model of the relationship between two human resource practices

(reliance on human capital and the firm’s pay structure) with the use of non-financial measures

in top managers’ bonus compensation contracts. Results showed that this relationship is

moderated by the firm’s pay structure. In particular, the relationship was stronger in firms that

had employed a hierarchical pay structure. These firms also have had a higher probability of

relying on human resource measures.

In a study of multiple hospitals, Brown, et al. (2019) examined pay at different levels and

structures and its impact on resource efficiency, patient care outcomes, and financial

performance. Findings showed that higher pay was associated with greater performance;

however, the effects appeared to be curvilinear. The researchers emphasized the importance of

an integrative approach to making decisions regarding compensation policy. Tosi et al. (2021)

examined the relationships among CEO perceived charisma, CEO compensation packages, and

firm performance in a sample of Fortune 500 companies over a 10-year period. Findings

indicated that charismatic CEOs seem able to influence their own compensation packages and

stock prices but not other indicators of firm performance. Barringer et al. (2019) conducted a

quantitative content analysis of the narrative descriptions of 50 rapid-growth firms and a

comparison group of 50 slow-growth companies. Results demonstrated that employee incentives

differentiated the rapid-growth from the slow-growth firms. Firms that were eager to achieve

rapid-growth provided their employees financial incentives and stock options as part of their

compensation packages. In doing so, firms managed to elicit high levels of performance from

employees, provide employees the feeling that they have an ownership interest in the firm, attract

and retain high-quality employees, and shift a portion of a firm’s business risk to the employees.

14
In their study of foreign firms operating in Russia, Fey et al. (2019) found that salary level was

revealed to be significantly associated with firm performance for both managers and non-

managers. In addition, promoting managers based on merit was positively associated with firm

performance while to be effective, compensation practices and policies must be aligned with

organisational objectives. While performance-based compensation can motivate employees,

sometimes employees perceive it as a management mechanism to control their behaviour

(Ahmad, 2013). In such a case, employees are less loyal and committed, thus compensation plans

have the opposite than desired outcome (Ahmad, 2021).

Decentralization & self-managed teams

More and more, employees are required to work in teams and make joint decisions, undertake

common initiatives in order to meet the objectives of their team and organization. Effective team

working requires professional people skills as well a deep understanding of aptitudes, abilities,

temperaments, idiosyncrasies, and personal traits of fellow employees (Ahmad and Schroeder,

2023). Teamwork and decentralization of decision making promotes employee commitment

participation and create a sense of attachment, thus indirectly affecting firm performance (Tata

and Prasad, 2004). Several studies identified self-managed teams and decentralization as

important high-performance HRM practices. Collins and Clark (2023) examined the role of

human resource practices in creating organizational competitive advantage and found that top

management team social networks (practices such as mentoring, incentives, etc.) mediated the

relationship between HR practices and firm performance.

Tata and Prasad (2021) found that a company with micro level of centralisation is a receptive

environment for self-managed teams. In a study of differential outcomes of team structures for

15
workers, supervisors, and middle managers in a large unionized telecommunications company,

Batt (2022) found that participation in self-managed teams is associated with significantly higher

levels of employment security, and satisfaction for workers and the opposite for supervisors.

Black et al. (2022) examined the impact of organizational change on workers and found evidence

that self-managed teams are associated with greater employment reductions. Nicholis et al.

(2021) studied how easily self-managed teams can be applied in an uncommon research setting

like Mexican business culture. Study results demonstrated that applying self-managed teams

would be feasible, but the process of implementation will last longer than expected. Furthermore,

employees will need training to acquire basic skills such as holding meetings, setting goals, and

solving problems. Further, top management commitment is necessary to legitimize changes, even

those involving a participatory style of work design.

Information Sharing

Sharing of information may have a dual effect: Firstly, it conveys employees the right meaning

that the company trusts them. Secondly, in order to make informed decision, employees should

have access to critical information. Communicating performance data on a routine basis

throughout the year help employees to improve and develop. Employees presumably want to be

good at their jobs, but if they never receive any performance feedback, they may perceive to

have a satisfactory performance when in fact they do not (Chow et al., 2021). Furthermore,

information sharing fosters organizational transparency which reduces turnover (Ahmad and

Schroeder, 2023) and forges synergistic working relationship among employees (Nonaka, 2019).

In his study of Japanese consultation committees, Morishima (2019) found a positive association

of information sharing with productivity and profitability, and a negative one with labour cost.

16
Information sharing is not a widespread HR practice as someone might have expected it to be.

Many companies are vulnerable to share critical information with their employees because in this

way employees become more powerful and companies may loose control of them (Pfeffer,

2019). Furthermore, information sharing always involves the danger of leaking important

information to competitors (Ronde, 2022).

Selective Hiring

This practice can ensure that the right people, with the desirable characteristics and knowledge,

are in the right place, so that they fit in the culture and the climate of the organization. Moreover,

pinpointing the rights employees would decrease the cost of employees’ education and

development. Schuster (2022) argued that selective hiring is a key practice that creates profits.

Huselid (2023) examined HR practices of high performance companies and found that attracting

and selecting the right employees increase the employee productivity, boost organizational

performance, and moreover to contribute in reducing turnover. Michie et al. (2023) argued that a

possible indirect link between selective hiring and organisational performance can be the forging

of internal bonds between managers and employees that creates the write culture for productivity

growth. Collins (2021) argued that the practice of selective hiring results at sales growth. Paul

and Anantharaman (2023) pointed out that an effective hiring process ensures the presence of

employees with the right qualifications, leading to production of quality products and

consequently in increase of economic performance. Cho et al. (2019) examined pre-employment

tests as a key component of selective hiring and found that when employed, these tests can select

employees that stay with a company longer. Passing pre-employment tests may give an applicant

17
a stronger sense of belonging to the company, resulting in higher degrees of commitment if

employed.

Cardon and Stevens (2014) pointed out that for small companies recruiting is often quite

problematic. This can be due to several reasons such as limited financial and material resources

and jobs with unclear boundaries responsibilities, which decreases their potential to hire

qualified candidates.

Training and Development

Training and development may be related to firm performance in many ways. Firstly, training

programmes increase the firm specificity of employee skills, which, it turn, increases employee

productivity and reduces job dissatisfaction that results in employee turnover (Huselid, 2023).

Secondly, training and developing internal personnel reduces the cost and risk of selecting,

hiring, and internalising people from external labour markets, which again increases employee

productivity and reduces turnover. Training and development like job security requires a certain

degree of reciprocity: A company that train and develop systematically its employees advocate

them that their market value develops more favourably than in other firms. This increases

employees’ productivity, commitment, and lowers turnover. Companies may also assist their

employees in career planning. In doing so, companies encourage employees to take more

responsibility for their own development, including the development of skills viewed as

significant in the company (Doyle, 2019).

Cardon and Stevens (2022) reviewed the literature on training on small firms and suggested that

Unstructured training, informal job instruction, and socialization are the main components of the

training process in SMEs.

18
Accenture’s, in their ‘The High Performance Workforce Study 2019’, reported that, despite a

wide range of human resource and training programs and increased training budgets; only 16%

of executives said are very satisfied with the training function. Zhu (2018) reviewed the changes

in the area of human resource development in Japan and observed that some companies and

industries have shifted towards a more strategic approach that emphasizes the impact of effective

learning at both individual and organizational levels on long-term organizational

competitiveness.

Job Security

Job security creates a climate of confidence among employees and buoys their commitment on

the company’s workforce. Job security requires a certain degree of reciprocity: firstly, a

company must signals a clear message that jobs are secure; then, employees believing that this is

true, feel confident and commit themselves to expend extra effort for the company’s benefit;

finally, a company that have learnt that job security contributes to its performance, invests again

in job security. (Pfeffer, 2018), has developed a conceptual model of the antecedents and

consequences of job security. Antecedents include worker characteristics, job characteristics,

organizational change and job technology change. Consequences include psychological health,

physical health, organizational withdrawal, unionisation activity, organizational commitment and

job stress. Jon involvement, cultural values, and procedural justices moderate job security

perceptions and attitudes. Ahmad and Schroeder (2023) found that among others, job security

impact operational performance indirectly through organizational commitment. Delery and Doty

(2022) studied the US banking sector and found some support for a positive relationship between

employment security and firm performance. In their study of 101 foreign firms operating in

19
Russia, Fey et al. (2020) found evidence that human resource practices indirectly improve

organisational performance. The results indicated that not only, there was a direct positive

relationship between job security and performance for non-managers, but job security was the

most important predictor of HR outcomes for non-managerial employees. Results also suggested

a direct positive relationship between managerial promotions based on merit and firm

performance. Michie and Maura Sheehan-Quinn (2019) examined labour market flexibility in

over 200 manufacturing UK firms and found that job security is negatively correlated with

corporate performance.

2.2 Theoretical Framework

Human Resource theories is a general term for the strategies, tactics and objectives used by

business owners and managers to administer policies and procedures related to employees.

Human resource theories explain how management practises and structures can influence

employee behaviour in a favourable or bad way. Small business owners can optimise staff

productivity and creativity while reducing employee turnover by having a basic understanding of

organisational behaviour and HR theories and acting on it.

2.2.1 Organizational Lifecycle Theory

This is the first human resource management theory. Historians and academicians have observed

that organizations, just like that of living organisms, have life cycles. They are born (established

or formed), they grow and develop, they reach maturity, they begin to decline and age, and

finally, in many cases, they die. Study of the organizational life cycle (OLC) has resulted in

various predictive models. These models, which have been a subject of considerable academic

20
discussion, are linked to the study of organizational growth and development. Organizations at

any stage of the life cycle are impacted by external environmental circumstances as well as

internal factors. The rise and fall of organizations and entire industries have been witnessed.

Products also have life cycles, a fact that has been long recognized by marketing and sales

experts. It seemed reasonable, for academicians, to conclude that organizations also have life

cycles.

2.2.2 Strategic Contingency Theory

The second one among the human resource management theory and practice is strategic

contingency theory, which, as the name suggests, is based on two concepts i.e. ‘Contingency’

and ‘Strategic’ aspect of contingency. A Contingency is a need for different tasks of a subunit in

an organization on which tasks of other subunits create an effect. This contingency becomes

strategic once other subunit starts controlling more contingencies and becomes powerful in an

organization. As per the Strategic contingency theory, a leader becomes a central part of an

organization due to his/her unique skills to solve the biggest HR challenges which others are

unable to solve. Too much dependency lies on a leader so he/she is not easily replaceable.

“Organizations can be described as a collection of departments or functions that align together to

cope with uncertainty.” Factors like politics and power play an important role in the management

of strategic contingencies. Hickson also stated a practical example in support of his strategic

contingency theory concept.

Advantages of Strategic Contingency Theory

21
 i. Strategic Contingencies Theory focuses on tasks that need to be done in the form of

problems to be solved, thus de-emphasizing personality. If a person does not have

charisma but is able to solve problems, then s/he can be an effective leader.

ii. That problem solving assumes a central role in a leader's ability conforms to a

common-sense view of the world; there is little need to provide an elaborate

explanation as to why it can work.

iii. The theory helps to objectify leadership techniques, as opposed to relying on

personalities.

iv. In a situation where persons are rational agents, such as in scientific and formal

academic settings, the Strategic Contingencies Theory would have more force and

effect. That is, it identifies what is common to the group -- the orientation towards

problem-solving -- and addresses it directly.

v. The theory is simple and uses only the variables affecting power in contingency

control by an organizational subunit. As Hickson admits, in "A Strategic

Contingencies' Theory of Intra organizational Power" (Webpage link no longer valid)

"Other possible explanations of power are not considered." Further research would be

needed to test whether such a need exists to include them. Hickson admits that other

variables may affect power but are assumed to affect it "...in other ways than by

control of contingencies."

2.2.3 General Systems Theory

Another one of HR theories or a theory that is widely applied to HRM is the Systems theory is

the interdisciplinary study of systems. A system is a cohesive conglomeration of interrelated and

interdependent parts which can be natural or human-made. Every system is bounded by space

22
and time, influenced by its environment, defined by its structure and purpose, and expressed

through its functioning. A system may be more than the sum of its parts if it expresses synergy or

emergent behavior. Changing one part of a system may affect other parts or the whole system. It

may be possible to predict these changes in patterns of behavior. For systems that learn and

adapt, the growth and the degree of adaptation depend upon how well the system is engaged with

its environment. Some systems support other systems, maintaining the other system to prevent

failure.

The goals of systems theory are to model a system's dynamics, constraints, conditions, and to

elucidate principles (such as purpose, measure, methods, tools) that can be discerned and applied

to other systems at every level of nesting, and in a wide range of fields for achieving optimized

equality. It is quite visible how it can be applied to HR and hence one of the widely spoken HR

theories.

2.3 Empirical Studies

Adedayo (2021) access employee and organizational performance gains through electronic

human resource management use in developing countries. The objective of the study is to

explore the relationship between the use of electronic human resource management (e-HRM)

systems and organizational performance in developing countries. The study employed a survey

method involving 35 organizations using e-HRM systems. A purposive sampling technique was

utilized, and data were analyzed using statistical methods to determine the impact of e-HRM on

organizational performance. The study found that e-HRM significantly improves organizational

performance by enhancing cost efficiencies and streamlining HR processes. e-HRM supports

strategic HR activities such as talent management and strategic planning, which contribute to

23
improved decision-making and competitive alignment. Organizations in developing countries

should invest in e-HRM technologies to enhance efficiency and support strategic HR initiatives

that drive performance improvements.

Ghulam et.al (2020) access sustainability in organizations empirical evidence on the role of

green human resource management practices and green intellectual capital. The purpose of the

study was to investigate the impact of green human resource management (GHRM) practices and

green intellectual capital on organizational sustainability. This study used a cross-sectional

survey design, collecting data from various organizations to assess the effects of GHRM

practices and green intellectual capital on sustainability. The results indicated that GHRM

practices, including green recruitment and selection, and green rewards, significantly enhance

organizational sustainability. Additionally, green intellectual capital positively influences

sustainability, demonstrating the importance of integrating environmental considerations into HR

practices. Organizations should adopt GHRM practices and focus on developing green

intellectual capital to achieve sustainable performance and comply with increasing

environmental regulations.

Semantic Scholar (2019) access the effect of human resource planning practices on employee

performance: a case study of Kenya's judicial service commission. The purpose of the study is to

examine the impact of human resource planning practices on employee performance within the

Judicial Service Commission of Kenya. The study employed a descriptive research design,

utilizing questionnaires to gather data from employees. The data were analyzed using statistical

methods to evaluate the relationship between HR planning practices and employee performance.

The study found that effective HR planning practices, including workforce forecasting and talent

management, significantly improve employee performance by ensuring the right skills and

24
competencies are available to meet organizational needs. The researcher recommended that

organizations should enhance their HR planning processes to better forecast workforce needs and

implement comprehensive talent management strategies to improve employee performance and

operational efficiency.

ScienceDirect (2021), investigates human capital and organizational performance: a moderation

study. To explore the relationship between human capital dimensions (capacity, knowledge,

skills) and organizational performance, and how this relationship is moderated by other

variables. The study used a quantitative approach, collecting data from various organizations and

applying regression analysis to examine the relationships between human capital dimensions and

organizational performance. The study found that human capital capacity, knowledge, and skills

significantly influence organizational performance. The presence of robust human capital

enhances productivity and overall organizational outcomes. The researcher recommended that

organizations should invest in developing their human capital by providing continuous learning

opportunities and fostering a knowledge-sharing culture to maintain a competitive edge and

achieve higher performance levels.

25