Jordanian business environment
While the factor of employee engagement and retention is always important to any organization for its sustenance and development, the same can even turn crucial under unique situations, like the one in Jordan business environment, where the psyche of the employees due to the influence of the prevailing cultures proves detrimental in employee engagement and retention.
Therefore this study explored the nuances of both Jordanian business environment and the relevant literature of HRM on employee engagement and retention before conducting research and analysis of the whole to come up with the conclusion that successful inculcation of intrinsic motivation is the key to Engage and Retain Employees in Jordan and that is possible through adopting servant leadership style and HPWS (High-Performance Work System), and finally recommending a package of the same.
This chapter begins with the research agenda, followed by problem statement, background and purpose of this study, before moving on to the research questions, hypothesis, significance and organization of the study, motivation and and the keywords used in the study. 1. 1. Brief Overview Attracting and retaining the right employees are critical to the growth of any company, which clearly point to the significance of managing human capital towards creating a
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Therefore, it is a clear fact that companies can achieve such outcome by developing and engaging the employees, which would lessen the rate of employee turnover and save additional expenses. It is for this reason, the organizations try to attract top quality employees and retain the key people who will help drive further growth in their business.
This study thus explores the possibility of enhancing the state of employee engagement and retention in Jordanian companies that contains a considerable labor force of 1. 512 million (2006 Est. ), besides exploring the ways and means to attract quality employees for Jordanian organizations. According to the survey (the war for talent, 2001), what distinguished the high-performing companies from the average performing was the top companies’ belief in the importance of talent and actions as they seriously cared for strengthening their talent pool. Therefore, without such a mindset, the purpose of recruitment and retention can be lost more often than not, as an absence of plan in that process may always be the cause of failure in achieving the desired company outcome with its low-quality performance.
The challenge of attracting and retaining talented employees has always been a matter of concern to the companies, because research showed time and again that while pay and benefits matter, one cannot solely depend on money to attract and retain qualified employees, especially those who get other employment opportunities. It is not that the companies are oblivious of the key drivers of attracting and retaining employees, like challenging and stimulating workplace environment, chance to learn and grow, a good supervision, and great people to work with.
However, there is a gulf of difference between knowing and effectively applying that knowledge, because that require systematic approach to the issue and under the present context of business environment, it is increasingly becoming difficult to formulate a viable plan towards attracting and retaining quality employees. In the case of Jordanian organizations, there are additional issues that need to be tackled towards achieving employee engagement and retention – issues like ethnicity, unimpressive state of industry (20% of GDP), state of education, social customs or climatic condition heavily impact on employee engagement or retention.
1. 2. Background and Problem Statement. The increasing pressures from dramatic changes that are occurring in business environment and the field of human resources management led to variety of responses from the organizations, including the ones in Jordan, regarding attracting and retaining qualified employees to achieve sustain development and competitive advantages. However, Jordanian companies are plagued with a unique situation, where in spite of fluctuating state of economy and increasing state of globalization, they are finding it hard to attract, engage and retain quality employees.
The prevailing trend as observed in the mindset of the employees is to expect more from the employer and to keep one eye busy for finding better opportunity to move on (reference). Accordingly this study has chosen “employee intention to stay or leave” as the focal dependent variable for the following reasons. Firstly, employees purportedly view retaining as acceptable commodities for exchange with benefits (Settoon, Bennett,and Liden,1996).
Secondly, these variables have been demonstrated as salient with regard to a variety of exchange relationships between employee and employer (Eisenberger, Fasolo , Organ and Konovsky, 1989; Shore and Wayne, 1993). A number of researchers have assessed several changes to organizations both in terms of organization structure and employer and employee relationships (Allan and Sienko 1997; Fierman 1994; Kitay and Lansbury 1997; Kraut, and Korman, 1999).
During this period, changes in the economic environment have impacted on both the formal and informal contracts of employment. This, in turn, has affected employee motivation and organizational commitment. Adjusting successfully to this relationship change “have enormous implications in terms of sustained competitive advantage based on the ability to attract and retain a committed skilled workforce” (Kissler 1994, p. 335).
Studies of the concept of attracting and retaining (Mowday, Porter and Steers 1982; Meyer and Allen 1991) have established that when the employee are retained to an organization it generates a positive influence on their job performance and a negative influence on their intention to leave the organization or to employee turnover. Empirical evidence strongly supports the position that intent to join and stay is strongly and consistently related to the working conditions, job security, career planning, pension pay and benefits.
(Dalessio, Silverman and Schuck 1986; Fishbein and Ajzen ,1975; Griffeth and Hom, 1988; Lambert, Hogan and Barton 2001; Mathieu and Zajac ,1990). In general, the three primary factors are considered as the drivers of employee engagement, attraction or retention, and they are Great company Great Job Great Compensation. Therefore, it can be seen that the issues like employee engagement, retaining employees or employee turnover are based on the following factors: 1. Company philosophy 2. Quality leadership 3. Motivation and Reward System 4.
Workplace environment. Out of them, the last two factors are dependent on the quality of human resource management of the organization, because HR activities are largely responsible to contribute to these factors. HRM practice grossly influences the employees’ intention to join and stay with the organization by ensuring their satisfaction in many ways. Accordingly HR activities include staffing, training and development, performance appraisal, compensation management, safety and health management, besides fostering industrial relations (Huang, 2000).
HRM is responsible to develop a positive work environment where employees are recognized and rewarded for good performance, where they are benefited by smooth flow of communication at every level, and where they can share the excitement of being a part and parcel of a successful organization. Attracting and retaining qualified people have major implications for customer satisfaction, revenues and profits, but that advantage is lost when the companies find it difficult to attract and retain enough qualified candidates for open positions.
Virtually all organizations experience difficulty in hiring quality employees, especially top talents. There can be several reasons behind that, like poor vision of the management or inept handling of the affairs by HRM personnel, or the workplace situation, whatever, but no company principally wants to settle for settle for average or marginal performers, because it can bring many negative outcomes to the company.
Organizations experience loss of money as well as reputation with employees who are poor or at best average performers, besides experiencing employee turnover, that may include both talented and poor performers, because of the poor performance of the company due to poor state of workmanship. Thus it can be seen that there is high cost associated with hiring marginal performers, not the least of which is turnover cost. Several studies also suggest that high-involvement work practices enhance attracting and retention of the employees (Arthur, 1994; Huselid, 1995).
Great managers spend half of their time in scouting for quality talents for their organization, picking the right people for positions, grooming young stars, developing global managers, dealing with under-performers, and reviewing the entire qualified pool. Accordingly, HR Managers in Jordan organizations to know and agree that attracting quality employees and their retention management are ways to achieve sustainable competitive advantage. But surprisingly, three out of four organizations do not conduct “talent management programs” on priority basis.
Hiring process in Jordan Organizations often is random, where intuition mostly leads to decision making, thereboy ignoring a principal mechanism of modern business that human resource needs to be effectively managed for the sake of garnering competitive advantage in the current dynamic business environment. The in inherent principles and beliefs of HRM have all the potential to influence the processes of attracting and retaining employees in organizations, besides bringing out the best in them.
All these are usually reflected in their policies towards developing the organization in a systematic way with the practices like recruitment and selection, training and development, performance management, remuneration systems, occupational health and safety, industrial relations, HRM information system, legal issues management, etc. , which eventually create an excellent relationship between the management and the employees and bind all with the company vision and missin (Delery and Doty 1996; Jackson and Schuler 1995; Oakland and Oakland 2001).
1. 3. Purpose of this Study The main objective of this study is to investigate the role of human resource practices on attracting and retaining qualified employees in any organization with the aim of providing an effective solution for engaging and retaining employees in Jordan organizations through a comprehensive action plan. The entire process of research or its final outcome carries a single focus and that is, to provide a solution of Jordanian organizations towards achieving more success to make their mark in the global economy.
Alongside, this study would also serve the purpose of providing a framework of action on employee engagement under special situation like one in Jordan. 1. 4. Research Questions Aligning with the objectives of study, the primary research question takes shape in the following manner: “What could be the primary drivers in attracting, engaging and retaining employees in Jordanian organizations? ” The primary research question accordingly underpins the following areas like a. Company Philosophy b. Leadership Approach c. Motivation and Reward System d. Cultural/Demographic Influence.
Subsequently the secondary research questions take shape in the following manner: 1. What type of organizational philosophy can bind the employees with the organization? 2. What kind of leadership can motivate the employees to stay? 3. What kind of reward system can motivate the employees to stay? 4. What kind of workplace culture can influence the employees to stay? The above secondary questions boils down to the final research question of this study: “What can be the best solution for employee engagement and retention in Jordanian organizations? “
The additional factors like cultural influence over the Jordanian business ambience, has impacted the formulation of the hypothesis of study, that the psyche of the Jordanian employees has to be changed and for that matter they need to be changed from the core, and again, for that matter they require to be intrinsically motivated. Therefore, the hypothesis of this study stands like below: “Successful inculcation of intrinsic motivation is the key to Engage and Retain Employees in Jordan and that is possible through adopting servant leadership style and HPWS (High-Performance Work System)”. 1. 5.
Significance of this Study This study aimed to contribute to the management literature in two layers: one, it would contribute to the theory and practice in the human resource management and how to increase the productivity in a company to achieve the competitive advantages over its competitors, and to, it would contribute to the progress and development of Jordanian industry. The findings of this research would also contribute in the development of human resource recruitment and retaining programs by imbibing the philosophy of seriously considering the significance of attracting and retaining quality employees.
It may also help the employers in selecting employees with potential to become good assets to the organization – employees with high abilities who would be able to maximize the chances of organizations. This study would also highlight several important facts, like loss of key talent results in the stripping of valuable human capital, critical skills and institutional memory (Entrekin 2001), or that the process of retention starts with hiring people with strong skills match, company fit and job match.
This study would also try to instill the idea among employers and HR professionals at Jordan organizations that companies not only suffer from lost productivity due to employee turnover, but also lose the knowledge reservoir that these critical employees possess, and which could have been highly instrumental for company benefit. High-performing employees know the industry, competitive strengths and weaknesses, products, customers and processes. The information in their heads is a significant part of corporate equity (Gutherie, 2001; Horn and Griffeth, 1995; Huselid 1995; Oh, 1997).
There has also been considerable interest in the management literature concerning the development of qualified employees in order to enhance corporate competitiveness and performance (Prahalad and Hamel, 1990). Thus this study would turn the spotlight on one the most vital drivers of business for any organization, as management scholars argue how employees are managed is becoming a more important source of competitive advantage because traditional sources (product and process technology, protected or regulated markets, access to financial resources and economies of scale) are less powerful than they once were (Lawler, 1996; Pfeffer, 1994).
1. 6. Organization of Study This study uses six-chapter format to answer the above-stated research questions. The first chapter introduces the topics under consideration, the importance, relevance and rationale of the study, and provides definition of key terms used. The second chapter introduces the working habits and approach of Jordanian employees to work, where it highlights the trends in Jordanian business environment with the help of statistics, and the instances of cultural influences in the social and business environments of Jordan.
The third chapter consists of critical review of the relevant peer-reviewed and scholarly literature concerning human resource management issues as they relate to the recruitment and retention of qualified employees in general and these issues as they relate to the Jordanian situation in particular, i. e. , what elements are instrumental to transform human psyche or how to motivate them, or what are the major drivers of motivation, along with the role of leadership in bringing and sustaining such changes.
Chapter four of the study describes the research methodology used, besides the qualitative interview to HR managers of 10 organizations in Jordan, covering both the dependent and independent variables phase by phase, where Phase I carries interviews with HR managers of Jordanian companies, Phase II deals with the survey of qualified employees of Jordanian companies, before justifying this approach with the aid of theoretical background and revisiting the research questions and hypothesis.
Chapter five provides an analysis of the quantitative statistical data derived from the literature review and a summary of the quantitative questionnaire survey data derived from Jordanian organizations from different industries, before reaching its result. Finally, chapter six summarizes and explains all findings and results as a whole issue, including the implications, recommendations, study limitations and areas of future researches and the conclusion. 1. 7. Researcher’s Motivation
The dearth of literature complete with empirical study on HRM practice in Jordanian organizations has been the primary influence of this study, which eventually fueled the urge of this researcher to discover a quality solution for a burning global issue like employee engagement and retention, and thereby contributing to the advancement of HRM literature on the emerging trends of the 21st century, with special reference to the state of employee turnover as well as retention and engagement in Jordanian organizations.
1. 8. Keywords: Servant Leadership: An improvised version of transformational leadership style that aims to change from core; OCE (Opportunity Creation and Exploitation), a business philosophy; SCA (Sustainable Competitive Advantage) a business philosophy; SHRM (Strategic Human Resource Management): Company-specific HRM practice; HPWS (High-Performance Work System): An application tool of SHRM.