THE CATHOLIC UNIVERSITY OF EASTERN AFRICA
THE SCHOOL OF BUSINESS
DEPARTMENT OF MARKETING
The Effect of Human Resource Management (HRM) Practices on Organization Performance: The Case of Carrefour Supermarkets, Galleria Branch
By
ROSE MUTHONI WANJUKI
The Impact of Human Resource Management (HRM) Practices on Organization Performance: The Case of Carrefour Supermarkets, Galleria Branch
This chapter contains the background of the study, the problem statement, the objectives of the study, research questions, assumption of the study and justification, significance, scope, and
limitations of the study, conceptual and operational definition of terms.
Background Information
Human Resource Management (HRM) and organization performance are not new concepts in commerce or business studies. However, constant changes in markets, economies, and human behavior warrant the frequent assessment and updating of the two concepts if continuous growth and improvement are to be ensured. No economic sector requires companies to be more up-to-date and knowledgeable about market transformations than Kenya’s retail sector. Kenyan supermarkets continue to struggle with an unpredictable and unforgiving business environment. A significant number of large players recently exited the Kenyan retail market, including Nakumatt, Game, and Uchumi (Chesula & Nkobe, 2018). The volatility of the supermarket sector magnifies the importance of operational efficiency, strategic communication, corporate social responsibility, and senior management support in the control and improvement of organizational performance. HRM is often cited as the primary tool for managing organizational assets, meaning it harnesses and maximizes their potential (Rasool et al., 2019). In this paper, the best ways to align HRM practices to improve organizational performances are identified, assessed, and conveyed within an African context for organizational behavior.
One of HRM’s primary objectives is to enhance an organization’s performance. Hung (2022) emphasizes the significance of an organization achieving a competitive advantage through its human capital and HRM’s role in gaining this commercial merit. Such a complicated and important position warrants a comprehensive understanding of HRM practices and their impacts. According to Anwar and Abdullah (2021), HRM is defined as a composition of systems, policies, and practices designed to influence employee behavior, attitude, and overall performance. Therefore, by impacting the workers, HRM directly determines the state of the organizational culture within a firm. HRM will cover the allocation of human, financial, and technological resources to ensure the success of company goals and objectives (Anwar & Abdullah, 2021). HRM practices can be reduced to three key functions, namely improving employee satisfaction (1), improving stakeholder satisfaction (2), and building and maintaining critical company capabilities (3). HRM practices prioritize enhancing the workings of internal factors to enable the company to respond to external challenges.
HRM practices are responsible for achieving the company’s vision and mission. There are a variety of practices, but not all remain effective in boosting employee productivity in the contemporary workplace. Foremost, recruiting is cited as one of the top HRM practices (Rasool et al., 2019). Recruitment not only focuses on identifying top talent and skills but also the right personality fit for the organization. Secondly, HRM is responsible for establishing favourable workplace conditions. The working atmosphere should be designed in ways to meet employee needs. Thirdly, compensation and benefits are under the purview of HRM. After successfully hiring, placing, and paying employees, the next HRM function is to ensure employee retention (Anwar & Abdullah, 2021). HRM identifies the most suitable work perks and packages to boost employee loyalty and sense of belonging in the company. Lastly, HRM carries out employee coaching and development. Upskilling employee skills, knowledge, and behaviours helps them grow professionally, in turn increasing their productivity.
Unlike HRM, organizational performance is more difficult to define and conceptualize due to market and company differences. What one business or culture might consider as efficient and effective organizational performance can differ from that of another enterprise or people (Vermeeren et al., 2014). A company’s outcomes best conceptualize organizational performance. It is easier to categorize and distinguish different forms of corporate outcomes, including financial (profits, market share), human (employee turnover, attitudes), and organizational (customer satisfaction, productivity) (Vermeeren et al., 2014). Organizational performance centers on observing, measuring, and controlling proximal outcomes. Since financial outcomes are more long-term, they are often less directly influenced by HRM practices. Therefore, it is essential for management to identify the type of organizational outcome they wish to adjust through human resource allocation.
There is a wide variance in how HRM practices are applied globally. At the international level, the primary objective of HRM is to ascertain the access and availability of a competent and ready workforce within an enterprise (Hung, 2022). Such a focus has taken a turn in recent years with the emergence of remote working, employee-centric, and work-centric workplaces. At the continental level, Africa still practices some indigenous HRM practices. For instance, Kiiza and Basheka (2018) report on the manufacturing sector’s overuse of ‘shadow’ or ‘shepherd’ leadership. The management approach minimizes employee autonomy and self-confidence, which negatively impact their performance. Kenya exhibits a varying level of HRM application, depending on the extent to which a company is modernized. According to Obonyo et al. (2014), the manufacturing and service industries in the country struggle with improving productivity because some HRM practices remain uncommon, especially during employee recruitment. The finding suggests the existence of external factors that influence the uptake of HRM practices in the Kenyan labour market.
Statement of the Problem
The Kenyan business environment is becoming tougher with increased competition and the current global inflation, reinforcing the retailers’ need for improved operational performance. Cytonn Kenya reports that the Kenyan retail sector has experienced subdued growth since the onset of the coronavirus pandemic. According to the independent logistics provider, Kenya’s supermarket economy for 2020 was characterized by the scaling down of outlets (Cytonn Kenya, 2020). The majority of large-scale shops, including Deacons, Tuskys, Naivas, and Shoprite, reduced their number of operational outlets during the year. Even though Carrefour increased the number of branches in Kenya, its ability to expand and grow lies largely with its parent company in France. The retailer’s growth cannot be perceived as a true reflection of Kenya’s business environment. Moreover, as an international brand still adopting western business principles, there is room to believe that Carrefour’s strategies and HRM practices might not be aligned fully with the Kenyan context.
There is a lack of scientific and business consensus on what constitutes a high-performing company in the African context. There is a gap between literature and practice when it comes to the implementation of business concepts in Kenya and Africa. For instance, the laws governing corporate social responsibility are loosely applied in the country, meaning some companies will not consider acting as a good corporate citizen as one criterion determining their organizational performance (Gitau, Abayo & Kibuine, 2020). Despite Africa needing more sociocultural development, CSR is not a factor prioritized in determining organizational performance. The difference in conceptualization and understanding of HRM is the reason why frequent assessments have to be done to ensure Kenyan corporations satisfy prevailing definitions of organizational performance (Gitau, Abayo & Kibuine, 2020). The context must be a key driver of business outcomes for Carrefour to ensure prosperity and sustainability in its Kenyan operations. Foreign companies must develop a mindset considering success in Africa beyond existing economic measures.
Research to understand the managerial implications of HRM practices on African employee behaviors is becoming more urgent with each passing day. Current research on human management in the continent suggests that its people are strongly impacted by endogenous and exogenous factors (Nkomo & Zoogah, 2015). Endogenous elements include socioeconomic factors, such as household income, culture, and education level, among other demographics. On the other hand, exogenous factors involve the increasing trade between emerging economies under globalization (Nkomo & Zoogah, 2015). Trade between African countries and emerging superpowers, such as Brazil, India, and China, gives rise to new business practices and strategies. The transactions also directly affect people by changing their perceptions, cognitions, and other behavioral attributes. As a result, HRM concepts and practices that work in the west might be ineffective in Africa.
In an underperforming economy, there is a growing need to improve the retail sector’s performance while equally boosting employee wellbeing for a societal-level impact. Currently, it is conceptualized that Africa and Kenya have a poor understanding of HRM practices (Gitau, Abayo & Kibuine, 2020). A lack of order, productivity, and motivation within the retail sector affects many organizations. As a result, the breaching of ethical codes and corporate policies is not an uncommon feature. Foremost, a need to conceptualize HRM specifically for the Kenyan retail sector is needed. The subsequent step is to align the Kenyan HRM context with international standards. Therefore, further research on the barriers and challenges present in mobilizing Kenyan talents and skills for global commerce is necessary. The retail sector presents the best opportunity for such a study due to its combination of product and service offerings.
Objectives of the Study
The primary objective of this research is to investigate the effect of HRM practices on organizational performance at Carrefour Hypermarket Galleria. While examining this relationship, the study will prioritize context, which means the findings should be narrow enough to apply to foreign and domestic retailers in the Kenyan market. Certain specific objectives will guide this exploration, including:
- To establish the effect of recruitment and selection on the performance of Carrefour Supermarket Galleria Nairobi
- To find out the effect of training development on the performance of Carrefour Supermarket, Galleria Nairobi
- To examine the effect of reward management on the performance of Carrefour Supermarket Galleria, Nairobi
- To examine the effect of employee participation on the performance of Carrefour Supermarket Galleria, Nairobi
Research Questions
The identified objectives can be deduced further to produce the following research questions:
- What is the effect of recruitment and selection on the performance of Carrefour Supermarket Galleria, Nairobi?
- What is the effect of training and development on the performance of Carrefour Supermarket Galleria, Nairobi?
- What is the effect of reward management on the performance of Carrefour Supermarket Galleria, Nairobi?
- How does employee participation affect the performance of Carrefour Supermarket Galleria, Nairobi?
Conceptual Framework
The research will be based on the Harvard Model, which emphasizes ‘soft-HRM’ strategies in improving organizational performance. The framework focuses on not only the technical details of the workplace, such as work structure and flow but also human details, such as mental and emotional health. Based on the Harvard Model, Figure one highlights the relationship between the independent variable (HRM functions) and its impacts on the dependent variable (organizational performance).
Independent Variables Dependent Variables
H1: Selection and recruitment have a significant association with organizational performance
H2: Employee training and development have a substantial association with organizational performance
H3: Compensation and rewards have a substantial association with organizational performance
H4: Employee engagement has a substantial association with organizational performance
H5: The workplace atmosphere has a substantial association with organizational performance
Significance of the Study
Despite general HRM literature receiving wide attention and review from scholars and acting managers, firms in Kenya’s retail sector continuously exhibit lapses in organizational performance. While some of the forces behind the collapse of known supermarket chains, such as Uchumi and Nakumatt, were external, there is reason to believe these organizations’ internal environment could have impeded their future survival. Therefore, the study’s results will have academic significance because it will highlight the extent to which retail managers are using HRM to add value. For instance, HR practitioners can use the information to advocate for management training and education changes. Extreme results will be indicative of differences between what aspiring managers are learning in school and the reality of HR in Kenyan supermarkets. The recommendations presented in this report might be key to individual retail brands meeting the academic gap through in-house employee development programs.
Demonstrating the unity between particular HRM practices and organizational performance will provide a basis for a different HRM orientation in the country. Vermeeren et al. (2014) posit that HRM as a concept entails more questions than answers. Therefore, it is the role of management to frequently assess the current status of HRM, the main issues of concern in the field, and whether the applied HRM models are in crisis. The outcomes of the study will highlight the dominance of archaic HRM principles and practices in Kenyan supermarkets. Its relation to the poor performance of the retail stores will prompt managers to experiment and adopt modern HRM approaches. Individual supermarkets should be able to use the information to monitor and make conclusions regarding the competence and capability of management to build and sustain high employee performance.
Scholars, educators, and acting managers will make several observations from this report. Foremost, HRM is a concept subject to consistent change as determined by the internal and external business environment (Anwar & Abdullah, 2021). Secondly, any drastic changes that disrupt or alter the business environment can have irreversible implications on work patterns, meaning new criteria for healthy employee relationships. Management will learn the need to maintain an updated understanding of what its workforce requires or perceives as necessary for conducive employee-management interactions. Thirdly, readers will acknowledge the urgency in the need for local businesses to start prioritizing ‘Soft HRM’. Organizations are facing change with each technical advancement impacting the labour market. Thus, it is proposed that a soft HRM orientation is the answer to timely and effective HRM responses.
Scope and Delimitations of the Study
The study will be carried out at Carrefour’s sixth store in Kenya, Galleria Mall. The French Supermarket provides the opportunity to assess how foreign brands are applying HRM when working with local employees. The goal is to target a minimum of thirty respondents, including employees and lower and middle management, to participate in the study. Data collection and participant selection are based on the assumption that upper management has little to do with aspects that touch on employee roles and the nature of the workplace environment. A three-month period should be sufficient for the finalization of the research.
Chapter Summary
The report explores the influence of HRM practices on organizational performance for Carrefour supermarket, Galleria branch. The chapter expounds on the reasons why hypermarkets are struggling with employee turnovers, poor customer reviews, and other elements involved in employee-manager and employee-consumer interactions. The identification of these factors is to be based on literature on the Harvard Model of HRM. The study aims to identify HRM practices that are not well executed in the Kenyan retail sector and to provide credible information that convinces management to adopt different HRM orientations. Chapter two will provide a literature review on contemporary HRM practices, models, and theories. Chapter three covers the research methodology and will include the research design, sampling method, data collection method and instruments, and the data analysis process. The findings will be presented in chapter four before chapter five delivers the discussion, recommendations, and conclusion.
CHAPTER TWO: LITERATURE REVIEW
This chapter assesses the arguments and findings from scientific studies carried out by other academicians and practitioners in HRM. The section identifies the specific HRM functions documented to influence organizational performance, such as employee training and development, selective hiring, and performance appraisal among many others. The literature review is sub-divided into two categories, an empirical review and theoretical review.
2. 1 Empirical Review
2.1.1 HRM Practices
HRM plays a critical role in the contemporary competitive work environment. The style, structure and systems employed in the management of human resources are based on a set of policies designed to maximize employee productivity and organizational integration (Alagaraja, 2013). Literature describes HRM as the strategic and compatible approach to the management of company assets to help people working in an organization to contribute to the attainment of its objectives. The primary objective of HRM is to ensure a company achieves success through its workforce (Alagaraja, 2013). However, there are discrepancies in reviewed literature on whether HRM is limited to the control of human capital alone. Anwar and Abdullah (2021) claim that HRM extends beyond human capital because there is the integration of performance factors, such as technology in the improvement of corporate productivity. All definitions reach the consensus that HR functions provide means to achieving the business strategy.
The concept of HRM is based on the perception of an organization as a social system. The business is influenced by the environment, receiving both internal and external inputs that impact its organizational culture and operational strategies (Rasool et al., 2019). Active organizations can improve on their productivity by reducing the degree of uncertainty caused by its surrounding environment. Three sources, namely financial, physical, and human, are available to an organization to prevent and control such environmental influences (Rasool et al., 2019). Alagaraja (2013) also provides three categories of organizational resources applied by HR personnel. Despite the category, the resources are used to enhance employee performance. Competency development is often perceived as a condition for enhanced corporate competitiveness, explaining why HRM focuses on improving individual and collective productivity. Important to note is that HRM employs inward policies, practices, and procedures to provide an organization with human capital that is geared toward achieving corporate objectives.
2.1.2 Employee Training and Development
Some studies have found that employee training and development has a positive influence on corporate performance and individual welfare. Vermeeren et al. (2014) found that the biggest change associated with employee training and development is the quality of activity execution. Employees become more confident and able in performing routine tasks, adding to their speed and quality of production. Vermeeren et al. (2014) maintain that the main benefit translates into improved employee efficiency. The workers are able to offer the best of their abilities by educating and working with each other. Collins and McNulty (2020) hypothesized differences in the impact of on-the-job training and off-the-job training. The researchers concluded that offsite training and development delivers more net positives compared to training done while on the job. The finding suggests the need to design employee training activities as separate endeavours to normal work duties.
Employee training and development not only boosts employee efficiency but also employee satisfaction and motivation. Research highlights that workers are happier when they have the skills and competencies to fulfil work obligations (Anwar & Abdullah, 2021). Training links needs and skills for the marketplace, meaning it makes a worker feel better about themselves. The employee feels safer in the company because they are able to achieve obligations assigned to them. Training also translates into increase corporate engagements, which is known to motivate and enhance employee commitment to a firm. Frequent short term training has been proven to make employees stay longer at a company (Anwar & Abdullah, 2021). Therefore, HRM employs employee training and development as a strategy for boosting employee retention. Teams that have worked together for years tend to be more efficient and cost-effective compared to new teams. There are fewer instances of conflict and more instances of positive collaboration.
2.1.3 Hiring and Recruitment
2.1.4 Performance Appraisal
Performance assessments are cited to motivate employees to improve on individual and collective performance. Appraisals inform employees on the distance between their performance and organizational objectives, providing a clearer picture of what needs to be done (Anwar & Abdullah, 2021). The clarity acts as an incentive for improved performance due to personal-level and corporate-level pressure to attain set objectives. Kampkötter (2017) performed a comparative controlled study to find teams of employees that did not receive performance appraisals were less motivated and satisfied with their work compared to workers that received periodic assessments. The aggregate effect on motivation was bigger when the assessments focused on particular goals and objectives (Kampkötter, 2017). When the appraisal is in accordance with the employee’s performance, they become more satisfied. Good performance tends to inspire employees to better perform and maintain acceptable corporate behaviours. Such a correlation explains why HRM employs appraisals as a tool for promotion good corporate citizenship (Kampkötter, 2017). The approach helps ensure that employees reduce on their rate of absence and retention for longer periods.
2.1.5 Rewards and Compensation
Compensation practice is perceived as one of the most important and strategic HRM functions in a company. Compensation is defined as the types of monetary rewards or pay given to workers with respect to their employment agreement (Alagaraja, 2013). More recent research define compensation as the range of financial and non-financial rewards offered by an organization for the skill, time, and effort committed by employees towards the pursuit of job requirements and corporate objectives. Monetary rewards can be in the form of cash, bonuses and even corporate-backed loans. Non-monetary rewards are more diverse and require management to be creative to attain positive benefits (Alagaraja, 2013). The majority of existing studies associate compensation with a positive effect on corporate performance. Employees are more likely to perform better and commit to an organization if they receive above-average market salaries and wages for specific job requirements.
The level of influence compensation has on job performance will depend on its type since different types of compensation strategies have divergent impact on employee satisfaction. There is the notion that incentives enhance risk taking among employees, motivating them to be more creative and innovative (Anwar & Abdullah, 2021). Employees are more likely to go outside the box to derive solutions if the outcome is associated with receiving incentives, such as bonuses and allowances. Incentives tend to provide employees with internal praise from management, which acts as a source of motivation. According to Kampkotter (2017), the public recognition is a reward in itself. The practice makes the employee feel more at home and appreciated for their efforts. The assertion highlights the emergence of non-conventional approaches to compensation that might have a bigger effect on employee commitment and performance. Contemporary HRM is charged with the responsibility of developing attractive compensation packages lest risk losing employees to competitors.
2.1.6 Employee Empowerment
Employee empowerment is a concept that revolves around the worker’s sense of confidence with the work environment. One of the major HRM practices associated with employee empowerment is job security. Employees are bound to become more confident and committed to the work environment if they perceive they benefit from high job security (Rodjam et al., 2020). Job security demands some level of reciprocity between management and the employees. Management expresses how safe jobs are and workers tailor their level of commitment to the information. Experimental evidence teaches that high levels of perceived job security has a firm positive effect on employee commitment and organizational performance (Rodjam et al., 2020). However, research is yet to specify the benefits and costs associated with guaranteeing job security. It is unclear whether the gains in organizational performance outweigh the costs of maintaining job positions.
Employee autonomy plays an essential role in enhancing individual performance. Scientific research outlines the negative implications of micromanagement on employee risk-taking behaviour, which implies it is a barrier to creativity and innovation. Acosta Prado et al. (2020) employed experiential research to find that self-managed employees and teams perform better and contribute more to corporate success. Literature on employee autonomy highlight the importance of a decentralized leadership structure. Decentralization creates opportunities for employees to be used as delegates, enhancing their involvement and inclusion in corporate decisions and activities (Acosta Prado et al., 2020). The engaged and autonomous employee is more likely to prioritize accountability and collaboration in their dealings. Rodjam et al. (2020) stipulates that empowering employees also involves including them in the company’s vision and mission.
Employee empowerment is different from training and development because it entails career planning for the employee. Kampkotter (2017) emphasizes the need for HR to engage employees in their career preferences. Workers are positioned and developed in accordance with an action plan that matches their skills and competencies with organizational interests and opportunities. Employees should be able to tell whether there is a career path within their employing company. The prospect of better position, pay, and inclusion in decision-making acts as an incentive for improved performance. HR can ensure career planning addresses both corporate and individual needs through competency alignment (Anwar & Abdullah, 2021). Therefore, competency frameworks, also used in employee training and development, can be used in employee empowerment.
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