Employee Commitment and Organizational Performance

Research conducted in different sectors including manufacturing and service reveals

the fact that HR practices have critical role in the success of organisations (Becker
et al. (2001)). In case the organisations fail to implement HR practice for
commitment and compliance negative consequences occur. In such situation
organisations face the real performance related problems such as, low profits, high
costs, poor customer service and low stock prices (Pfeffer (1998)). On the part of
employees, layoffs increases, hiring and promotion restrict, organisation have to
make greater use of part time and contract employees and investment in training
and development will reduce (Burke (2002)). The lack of proper HR practices in
organisations employees show lower job involvement, exhibit dissatisfaction in jobs,
decrease effort, the number of accidents and turnover rises.

Thus poor HR practice is associated with a number of negative work and health
related consequences harming both employees and organisations. The interest of
managing human resource is based around the notion that people at work are the
key source of sustained competitive advantages. We all believe that in this century
organisations are not competing on the basis of product they produce rather the
quality of the people they employ. This belief is based on the expectation that
people can make the difference because of their capabilities and commitment which
are rare, non-substitutable, valuable, and inimitable (Barney (1991)); managing
human resource is the matter of truly strategic importance which distinguishes
successful organisations from the others (Huselid (1995)); managing human
resource is too important because it is recognising an activity which is owned by all
managers (Cunningham & Hyman (1999)); and once HR practices integrated
internally and externally support to achieve its bottom line objective- performance
(Mabey, et al. (1998)).
This clearly exhibits that human resources can contribute a lot to make
organisations more competing and raising value of the firm by making changes at
the workplace. It is believed that the bottom line result of managing human
resource is the performance. Therefore the main concern of managing people in
organisations is to raise performance of employees and subsequently performance
of the organisation. Few authors argued (Schuler (1986); Tsui (1987); Schuler and
Jackson (1987) that there is a kind of bundle and synergetic effect of HR practice
such as recruitment and selection, performance evaluation, training and
development and many other to raise performance. Furthermore there is also a
strong influence of social, cultural, economic and political factors will be on HRM
policies and practices (Budhwar and Khatri, (2001)).
Many researches, therefore, also have exerted their concerted effort to examine
impact of contextual factors on HR practices (Budhwar and Sparrow (1997) Sparrow
and Budhwar (1997)). There is no universally applicable HR practice (Pieper (1990)).
Not surprisingly, countries that are geographically and culturally closer to each
other have similar HRM practices (Dany and torchy (1994); Ryan et al. (1999)). On
the contrary, a number of authors have described about HR best practices (Pfeffer
(1998); Becker and Gehart (1996); Huselid (1995)) that are mostly granted as
culture free. Moreover, few authors have argued that many organisations fails to
use innovative and best HR practices due to little considerations given to the
behavioural factors (Rynes et al. (2001); Adams, (2003)). Thus, contextual and
behavioural considerations are imperative to implement a number of HR practices
instead of direct use of context and culture free HR.

One of distinctive features of the traditional personnel administration was to make

people complying with rules and regulations. As the time changed, HR (the
improved version of personnel administration) focusing on commitment of people at
work together with compliance part. Managing human resource D.R. Adhikari / D. K.
Gautam | SEBON Journal - V (2011) 1-17 5 is the science and practice that deals
with the nature, decisions, actions, and issues relating to the employment
relationship. In practice, it involves an organisations acquisition, development and
utilization of employees as well as employees relation to organisation and its
performance (Ferris et al. (1984)), and concerns with the broader range of important
company function including the recruitment, selection, training and development,
compensation, retention, evaluation, and promotion of personnel within the
organisation (Bernardin and Russell (1998); Guthrie (2001)). These all focus on the
compliance aspect of HR where organisations have to ensure that they have enough
number of people to work with required capability and competence. Now-a-days, HR
literature is more concerned with the proper management of people. People in
organisations want to get more and put less effort (Ulrich (1987)). This clearly
exhibits the need for enhancing commitment of people to make them engaged at
work.
Customer satisfaction and Firm performance
The effect of customer satisfaction for hospitality and tourism firms also have
induced a great deal of attention, and various studies support the importance of
customer satisfaction in terms of a firm's performance (Denizci and Li, 2009 and
Morgan et al., 2005). In order to investigate the importance of customer satisfaction
to the hospitality and tourism industry, numerous researchers have explored
customer satisfaction theories developed by consumer behaviorists in the areas of
lodging (Gagnon and Roh, 2008 and Loureiro and Kastenholz, 2011), restaurants
(Andaleeb and Conway, 2006, Arora and Singer, 2006, Hwang and Zhao, 2010,
Namkung and Jang, 2007, Qin and Prybutok, 2008 and Wu and Liang, 2009), and
tourism (Huang and Chiu, 2006 and Wu, 2007). Studies show that the concept of
customer satisfaction in the hospitality and tourism industry is different from other
industries.
According to Crotts et al. (2009), unlike material products or pure services, most
hospitality experiences are a combination of products and services. Thus, it is
assumed that satisfaction with a hospitality experience such as a hotel stay or a
restaurant meal is a total summation of customer satisfaction with the individual
elements and attributes of all the products and services. For example, satisfaction in
the hospitality industry is a function of satisfaction with two independent elements:
the functional element (i.e., the food and beverage in a restaurant), and the
performance-delivery element (i.e., the service). Therefore, in order to increase
customer satisfaction, hospitality and tourism companies need to concentrate on
not only their product, but also their services simultaneously. Customer satisfaction
from their services as a performance-delivery element can be regarded as an
additional, but significant factor in hospitality and tourism companies.

Due to the mixture of products and services, it is more difficult for the hospitality
and tourism companies to attain higher customer satisfaction. Consequently,
increasing customer satisfaction would entail a high increase in costs for the
hospitality and tourism firms (Chi and Gursoy, 2009 and Dotson and Allenby, 2010),
requiring managers to try more vigorously to understand the relationship between
customer satisfaction and its financial performance.
However, an understanding of the costs of the customer satisfaction in the
hospitality and tourism industry has been relatively less scrutinized (Cugini et al.,
2007). Despite empirical research of this topic during the past twenty years that
addressed the idea that tradeoffs between customer satisfaction and a firm's
profitability are more likely to appear in the service industry (Anderson et al., 1997),
few studies empirically examined the effect of customer satisfaction in the
hospitality and tourism industry. A practical investigation of the financial
performance of customer satisfaction has been an increasing demand in the
hospitality and tourism companies because the findings of these studies can
provide companies with the motivation and justification for considering their
customers satisfaction.