This chapter includes research framework, research hypotheses, research methods, operational definitions of the variables, research procedures, research subjects, instrumentation, data collection, data analysis, reliability and validity of the scales used in this research study.
Research Framework
This study has identified three vital variables including HR effectiveness, job satisfaction and organizational performance. The researcher intends to examine whether there is any significant difference in HR effectiveness and job satisfaction among different companies.
HR effectiveness has influence on job satisfaction and organizational performance respectively and whether job satisfaction has influence on organizational performance as Figure 3.1 illustrates.
Figure 3.1. Research framework Job Satisfaction
HR Effectiveness Organizational
Performance
PGR SGR ROE WOPJ
Pay
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Research Hypotheses
Based on the framework, the following are developed for this research study:
H1: There is a significant difference in HR effectiveness among different companies.
H2: There is a significant difference in job satisfaction among different companies.
H2-1: There is a significant difference in employees’ perceptions of the content of their jobs among different companies.
H2-2: There is a significant difference in employees’ perceptions of their salaries among different companies.
H3: The higher the HR effectiveness, the higher the job satisfaction will become.
H3-1: The higher the HR effectiveness, the more satisfied the employees will feel toward the content of their jobs.
H3-2: The higher the HR effectiveness, the more satisfied the employees will feel toward their salaries.
H4: The higher the HR effectiveness, the better the organizational performance will become.
H4-1: The higher the HR effectiveness, the higher the PGR will become.
H4-2: The higher the HR effectiveness, the higher the SGR will become.
H4-3: The higher the HR effectiveness, the higher the ROE will become.
H5: The higher the job satisfaction, the better the organizational performance will become.
H5-1: The higher the job satisfaction, the higher the PGR will become.
H5-2: The higher the job satisfaction, the higher the SGR will become.
H5-3: The higher the job satisfaction, the higher the ROE will become.
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The researcher defines HR effectiveness as “how much HR activities or systems contribute to the outcome of the company.” The first type of variable is the nine variables of Strategic HRM Functional Tasks that measure HR effectiveness:
Work Flows
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Employee Relations Employee Rights
International Management
2. Job satisfaction
The researcher defines job satisfaction as “how satisfied the employees feel toward their jobs regarding the tangible and intangible feedbacks they are getting from their jobs.”
The second type of variable is the two variables of the short version of JDI that measure employee job satisfaction:
Work on Present Job Pay
And for the purpose of simplicity, the variable, Work on Present Job, will be abbreviated as WOPJ throughout the text.
3. Organizational performance
The researcher defines organizational performance as “the outcome of a company’s operations, generated from managing resources such as manpower, capital and equipment, etc.” In the study, the researcher will look at it from a financial perspective. The third type of variable is the three common financial indicators used to measure organizational performance:
PGR (Profit Growth Rate) SGR (Sales Growth Rate) ROE (Return on Equity)
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Research Methods
A quantitative approach was adopted for conducting this research study to investigate the relationships among HR effectiveness, job satisfaction and organizational performance.
Questionnaire was employed for data collection. The instrument for HR effectiveness was adopted from Strategic HRM Functional Tasks developed by Gomez et al. (2001). The instrument for employee job satisfaction was adopted from Job Descriptive Index developed by Bowling Green State University (1997). For organizational performance, three financial indicators (PGR, SGR, ROE) were adopted from Taiwan’s highly recognized and notable magazine in the field of management, Common Wealth Magazine.
Research Procedure
The procedure of this study is shown in Figure 3.3.
Phase 1: The researcher establishes the research background and purpose and then puts together all relevant literature to form the research framework and the hypotheses of this study.
Phase 2: The researcher adapts instruments developed by renowned researchers to design the questionnaire based on the research framework and hypotheses.
Phase 3: The researcher begins engaging in the process of collecting data and then proceeds to analyze the collected data and test the hypotheses with statistical software SPSS.
Phase 4: The researcher prudently interprets the findings of this study and its implications and provides suggestions for future research.
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Figure 3.3. Research Procedure Research Background
Research Purpose
Literature Review
Design of Questionnaire
Data Collection Data Analysis
Hypothesis Testing
Conclusion Recommendation Phase 1
Phase 2
Phase 3
Phase 4
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Research Subjects
The researcher adopted the method of convenience sampling. With the help of known associates, the questionnaire was distributed to the general employees of totally five companies, two in financial industry, two in manufacture industry and one in service industry.
To be more specific, “general employees” in this context actually refer to people who work in non-managerial positions, which cross over a variety of areas, be it administrative or technical areas.
Instrumentation
The questionnaire of this study consists of two parts: HR effectiveness and job satisfaction.
HR effectiveness scale
The instrument for measuring HR effectiveness was adapted from Gomez-Mejia et al.
(2001). Nine items were measured including work flows, staffing, employee separation, performance appraisal, training and development, compensation and benefits, employee relations, employee rights and international management. This instrument underwent the process of rigorous expert consultation, so the validity had been proven to be solid. The respondents were asked to evaluate the performances of their HRM departments in their companies on each of the nine HRM functional tasks (Cronbach’s = 0.947).
The researcher confirmed the properness of the Chinese version of this scale by using the mutual translation method. First, the researcher translated the items from English to Chinese and then had a Chinese person who had high level of literacy in both English and Chinese translated those items from Chinese to English. The researcher and that person worked together to compare the difference and make adjustments until both parties came to an agreement. The category and definition of the nine items are listed respectively in Table
54 3.1.
Table 3. 1. HR effectiveness scale
Category Definition
1. Work flows The ways tasks are organized to meet production or service goals.
2. Staffing HR activities designed to secure the right employees at the right place at the right time.
3. Employee Separation
Occurring when employees leave the firm, either voluntarily or involuntarily.
4. Performance appraisal
Managers assess how well employees are carrying out assigned duties by conducting performance appraisals.
5. Training and Development
Designed to help organizations meet their skill requirements and to help their employees realize their maximum potential.
6. Compensation The payment that employees receive in exchange for their labor.
7. Employee Relations
Refer to the interaction between workers-either as individuals or as represented by an union and management.
8. Employee rights
Concern the relationship between the organization and individual employees.
9. International management
A set of strategic HRM options regarding how to manage human resources on a global basis.
Source: Gomez-Mejia et al., 2001.
Job satisfaction scale
The instrument for job satisfaction was adapted from Bowling Green State University (1997). In this study, this instrument was used to measure the dependent variable of employee satisfaction. The JDI contains 90 items intended to measure employee satisfaction in the
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following categories: work on present job (18 items), present pay (9 items), opportunities for promotions (9 items), supervision (18 items), coworkers (18 items), and the job in general (18 items). The validity of JDI has been tested and confirmed to be a valid instrument by many researchers such as Smith et al., Vecchio and Kerr over the past four decades. For the reliability of JDI, Smith et al. (1975) pointed out that the internal consistency scores for each scale were as follows: work (Cronbach’s = 0.84), pay (Cronbach’s = 0.80), promotion (Cronbach’s = 0.86), supervision (Cronbach’s = 0.87), and co-workers (Cronbach’s
= 0.88). Six items are listed in Table 3.2 respectively: However, in this study, the researcher was advised by the professor to include only two of the six items (Work on Present Job and Pay) in the questionnaire for the purpose of keeping it short and simple in order to keep the respondents focused and therefore yield higher return rate.
Table 3. 2. Job satisfaction scale
Dimension 1. Work on Present Job
2. Pay
3. Opportunities for Promotion 4. Supervision
5. People on Your Present Job 6. Job in General
Source: Bowling Green State University, 1997.
Financial indicators for organizational performance
The instrument for measuring organizational performance is the three financial indicators, including PGR, SGR and ROE. These indicators, along with the financial data of the five companies are all adopted from the Common Wealth Magazine. The reason for
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choosing Common Wealth Magazine as the primary source of data for organizational performance is because of its everlasting popularity and well-established credibility in Taiwan’s hard journalism. Common Wealth Magazine has had been awarded for numerous times since 1981, and remarkably, it has already received 18 awards from SOPA (the Society of Publishers in Asia) such as Excellence in Special Issue, Excellence in Business Reporting, Excellence in Reporting on the Environment, Excellence in Public Service Journalism, etc, which is considered as the highest honor in Asian journalism, making it the best and finest source of information in the areas of management and economics in Taiwan. The numbers shown in Table 3.3 are the output of the comparison of financial results between 2007 and 2008.
Table 3. 3. Financial performances of the companies in terms of the three indicators
Company SGR PGR ROE
1 7.77% 9.66% 5.55%
2 24.16% 25.54% 63.95%
3 45.88% 0.20% 28.01%
4 58.52% 11.96% 16.21%
5 -32.06% 8.13% 31.68%
Source: Common Wealth Magazine, 2009.
Data Collection
Through the contact of known associates, 200 copies of questionnaire were distributed and 140 copies were retrieved, 14 were invalid due to too many unanswered items, leaving 126 valid ones and therefore yielding approximately 63% of return rate.
Data Analysis
SPSS was used in this study to analyze the data gathered. For hypothesis 1 and 2, one-way ANOVA analysis is conducted in this research study to test the significance of
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difference in HR effectiveness and job satisfaction among different companies. For hypothesis 3, stepwise regression analysis is conducted to test whether HR effectiveness is predictive of job satisfaction. For hypothesis 4, stepwise regression analysis is conducted to test whether HR effectiveness is predictive of organizational performance. For hypothesis 5, stepwise regression analysis is conducted to test whether job satisfaction is predictive of organizational performance.
Reliability and Validity
Reliability of scales
Academically, reliability refers to the consistency or stability of the scale and the coefficient created by L. J. Cronbach is the most common way to test the reliability ( , 2007). DeVellis (1991) defined different ranges of Cronbach’s as: (1) between the range of 0.60 and 0.65, unacceptable; (2) between 0.65 and 0.70, acceptable; (3) between 0.70 and 0.80, good; (4) between the range of 0.80 and 0.90, very good; (5) between 0.90 and 1.0, superb. The result of reliability test was shown in Table 3.3. The Cronbach’s of SHRMFT Scale, Work on Present Job Scale and Pay Scale were 0.883, 0.926 and 0.846, which meet the requirement for research purposes. For SHRMFT scale, item S3 was removed for better Cronbach’s ; for Work on Present Job Scale, item PJ2, PJ4, PJ8, PJ11, PJ12, PJ14, PJ15, PJ16 and PJ17 were removed for better Cronbach’s ; for Pay Scale, item P1, P2, P3, P5, P6 and P8 were removed for better Cronbach’s . All these items would be removed from the original data and the revised data would be used for conducting regression and one-way ANOVA analysis later.
58 Table 3. 4. Reliability of scales
Scale Cronbach’s Standardized
Items
Number of Items
SHRMFT Component 1 (S1,S2,S4,S5,S6,S7,S8,S9) 0.883 0.884 8
Work on Present
Job
Component 1
(PJ1,PJ3,PJ5,PJ6,PJ7,PJ9,PJ10,PJ13,PJ18) 0.926 0.928 9
Pay Component 1 (P4,P7,P9) 0.846 0.845 3
Validity of scales
Academically, construct validity refers to the extent which a scale can accurately measure the concept or characteristics of the theory. Factor analysis was utilized to test the construct validity through principle method analysis and varimax rotation method.
For SHRMFT Scale, the result shown in Table 3.4 that 55.454% of variance was explained by this scale.
For Work on Present Job Scale, the result shown in Table 3.5 that 63.546% of variance was explained by this scale.
For Pay Scale, the result shown in Table 3.6 that 76.469% of variance was explained by this scale.
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Table 3. 5. Summary of factor analysis on SHRMFT scale
Items Component 1 Communalities
S8 Employee Rights 803
S2 Staffing 793
S6 Compensation 792
S4 Performance Appraisal 778
S1 Work Flows 734
S5 Training and Development 712 S9 International Management 706
S7 Employee Relations 623
Total Extraction Sums Squared
Loadings 4.436
% of Variance 55.454
Cumulative % 55.454
KMO Measure of Sampling
Adequacy 0.876
Barlett’s Test of Sphericity
X2 = 454.444 df = 28 p = .000
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Table 3. 6. Summary of factor analysis on work on present job scale
Items Component 1 Communalities
PJ 1 Fascinating 0.863 0.745
KMO Measure of Sampling Adequacy 0.915
Barlett’s Test of Sphericity
X2 = 773.448 df = 36 p = .000
Table 3. 7. Summary of factor analysis on pay scale
Items Component 1 Communalities
P 4 Bad 0.924 0.704
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