Entrepreneurship and Innovation Management Journal http://www.absronline.

org/eimj
ISSN: 2310-0079
Volume: 1, Issue: 1 (November 2013), Pages: 60-72
2013 Academy of Business & Scientific Research

Impact of Employee Relation on Employee Performance in

Hospitality Industry of Pakistan

Muhammad Shahzad Chaudhry1*, Farrukh Sohail2 & Naureen Riaz3

1. Assistant Professor, Department of Management Studies, National University of Modern

Languages(NUML), Lahore Campus, Lahore, Pakistan.
2. Research Scholar, Department of Management Studies, National University of Modern
Languages(NUML), Lahore Campus, Lahore, Pakistan.
3. Lecturer, Department of Statistics, Lahore Garrison University (LGU), Lahore, Pakistan.

Human Resource Management (HRM), Employee Relations, Conflict handling, Unions

and CBA, Discipline, Participative Leadership, Benefits, Training, Motivation, and
Employee Performance have been discussed. Theoretical Framework has been established
on the basis of a set of Employee Relations comprises of six known practices and a research
model is presented to better understand the relationship between independent variables,
mediating variable and dependent variable. Brief introductions of Employee Relations
Practices (Independent Variable) including Conflict Handling and Unions, Discipline,
Participative Leadership, Benefits, Training, Motivation (Mediating Variable) and
Employee Performance (Dependent Variable) have been provided to understand their role.
Data has been collected through Assessment Questionnaire sent to 241 employees of total
28 hotel organizations running with at least 4 operational and one Employee Relations
Department of 3 star, 4 star and 5 star category hotels. Conflict Handling and Union &
Collective Bargain Agreement are positively and significantly correlated. Conflict
Handling and Participative Leadership are positively and significantly correlated. Union
& Collective Bargain Agreement and Participative Leadership are positively and
significantly correlated. This study finds overall support for the hypothesis that Employee
Relations Practices Impact positively on Performance of Employees working in
Hospitality Industry of Pakistan as the relationship specified in Hypothesis is found to be
significant.

Keywords: employee performance, employee relation and motivation

INTRODUCTION
Employee Relations is a set of organizational
functions and practices that deals with issues
related to people as staffing, compensation and
benefits, performance management, organization
development, health and safety, communication,
and administration. Employee Relation Practices
are viewed as ambiguous over the past years.
Competition forced Employee Relations to
perform a strategic role as a business partner

*Corresponding author: Muhammad Shahzad Chaudhry,

Assistant Professor, Department of Management Studies,
National University of Modern Languages (NUML), Lahore Campus, Lahore, Pakistan.
E-Mail: almoeed@hotmail.com
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Entrepreneurship and Innovation Management Journal
ISSN: 2310-0079
Volume: 1, Issue: 1, Pages: 60-72

instead of adopting ER practices only to take
disciplinary actions and advocating employees.
Michael (2005) defined that Employee Relations is
to manage relationship between employer and
employees with ultimate objectivity of achieving
optimum level of productivity in terms of goods
and services, employee motivation taking
preventive measures to resolve problems that
affect adversely the working environment.
Employee Relation Managers exercise their
expertise to provide guidelines to the line
managers how to improve performance and
behavior of the employees. Employee Relation
Managers provide assistance to the Business
Managers in resolving employee grievances,
disputes and legal matters. This is one of the basic
responsibility of Employee Relations Department
to provide information to internal customers about
rules, regulations, policies, goals and targets of the
organizations to communicate vision and mission
of the Management.
Companies provide best quality services enjoy
high level of customer retention and
comparatively good rate of employee retention.
Customers Retention leads to good business and
ultimately increases employee retention level.
Retention of employees refers to satisfied
employees that results loyal customers. Employees
are considered as internal customer as they require
the same level of satisfaction against their services
rendered for the company as the customer of
corporate services or corporate products requires.
Employee Relations deal its employees as its
customer because ER Managers run their day to
day business with the help of its employees and
for these employees. Satisfied customers exhibit
revenue growth and firms level of performance.
Progressive Employee Relations practices are
found behind success of leading organizations. ER
practices are commonly known by the traditional
titles but it is up to the management that chooses
the best fit practices to fulfill the requirements
matching to the culture of the organization.
Organizations implement Employee Relation
Practices to polish skills of its employees which
ultimately lead to better organizational
performance.
ER practices impart a significant role to enhance
performance of organizations indirectly.
Performance of employee depends upon job
satisfaction, compensation and benefits structure,
reward plans, promotions, motivation,
environment, training and succession planning.
Along with this, modern tools, techniques and
sophisticated technology used by organizations for
Employee Relations create competitive advantage
over competitors. Performance Management of
Employees is a complex and integrated process of
setting up a common employees understanding
about targets to be achieved in an organization and
aligning the corporate objectives with the
measures like skills, competencies required for a
job, employee development plans and the ultimate
results delivered by them. The main focus of
performance management is on continuous
improvement, learning advanced and new
technologies and skill development to achieve set
targets through overall corporate strategy and to
construct a workforce that can perform with the
highest standards. The responsibilities of
Employee Relations Department have been viewed
as ambiguous over the past years. By the evolving
Information Technology and arising need for new
management techniques ER professionals were
given importance. ER department enriches
organization from Job Identification to Exit
Interviews. It was not clear to intellectuals whether
to assign manpower handling duty to Accounts or
to Admin Managers. ERD was not clear in its
responsibility whenever established. ERM was
called on to develop systems to increase
performance.
Since the evolution of modern ER Management,
motivated employees and employee turnover in an
organization have been the core issues for ER
Managers. Business managers need motivated
employees and want to retain experienced
employees but did little to find real time solutions.
This study has been conducted to explore practices
and theories to retain experienced employees and
to motivate them at work stations. Issue of
employee retention affects the performance of the
entire company. Organizations are realizing that
their people are, by far, their most important asset.
Motivation creates passion leading to performance.
We came up with some useful rewards that cost

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Impact of Employee Relation on Employee Performance
less but resulted significantly. The most effective
were Appreciation Letters, paid Time off from
work, Self-respect, Flexible timing and lunch hours
and performance review meetings. Organizations
motivate employees by investing in them
financially and emotionally and in return they
result positively.
This study is an attempt and aimed to find the
Impact of Employee Relations Practices on
Employee Performance in the Hospitality Industry
of Pakistan. These Employee Relation Practices
include Conflict handling, Unions, Discipline,
Participative Leadership, Benefits and Training.
Objective and Purpose of the Study
The objective of this study is to understand
Employee Relation Management Role in
enhancement of employee performance in the
Hospitality sector of Pakistan. It is essential to
understand the effectiveness of Employee
Relations activities and practices which are
contributing positively towards Employee
Performance.
SIGNIFICANT LITERATURE
Arbab, Mahmood, Ayoub, & Hussain (2011)
reported employee retention rate at Serena
Faisalabad due to Training and development,
balanced working life and satisfaction level of
employees at jobs, reward or salaries affected their
retention level least. No doubt that employees
showed their concerns on rate of wages and
salaries, the reason is cost of living that tends to
increase in Pakistan. Prestige, learning
environment, promotions at upper levels, career
growth, power to take decisions and ownership,
facilities, ease of communication, retirement plans
and flexibility in work are the reason of employee
retention and motivation at Sarena Faisalabad.
These factors ultimately enhance the employee
performance in hospitality industry.
Howes (2010) researched that better
communication and attention to personal needs of
employees are to improve motivation and
performance. Smith (2010) stated that Nigerian
Organizations who are focusing on workforce
development, are moving towards a more
competitive and productive workforce. Successful
Chaudhry et al.
companies, who invest in skills development
process of employees and recognize efforts of
employees, improved their profits and financial
figures far more than other do. Anton (2009)
researched that Businesses are recognizing people
who are skilled, knowledgeable and motivated
and can make a significant difference. Competency
is developed through education, training, working
exposures, skill development, reinforcement and
interpersonal roles. Economic benefits of training
and development include revenue, quality,
productivity, cost, cycle time and increased return
to shareholders. He stated that the senior
leadership role in the training and development
includes, developing awareness, demonstrating
commitment, integrating employee development
plan in the strategic plan and developing
competent HR professionals in the organization.
Developing employees is a big milestone yet to
achieve for the business leaders.
Hansen (2009) stated that Air Force asked
members to increase productivity as significant
downsizing created a need for HR Improvement
and employees had to perform more. Air Force
sent officers to get knowledge and skills at Staff
Colleges.
Werbler & Harris (2009) researched that employees
are ready to make an extra effort if they are
satisfied with strategic decisions of their
organizations. Employees give importance to
employers for their communication procedures
that affect their efficiency and motivation level.
Poor communication from management is always
at the top of the list. Too many rules, less career
enhancement plans, sense of being ignored,
absence of training, complex strategy are far below
in the list.
Asghar & Siddi (2008) reports that apprenticeship
training is used to ensure availability of skilled
employees in Pakistan as per Apprenticeship
Ordinance 1962, employers are liable to provide on
job apprenticeship opportunity to graduate
students of various trades like electrical,
mechanical, chemical, textile, quantity surveyors
and staff of hotel sector, and they pay them a
nominal scholarship while working as trainee or
apprentice but after completion of training some
employers provide them permanent jobs.
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Volume: 1, Issue: 1, Pages: 60-72
Afaq & Khan (2008) reported training for trades in
Pakistans hotels that are Management, safety &
health, Communication, Sales, reservation,
Customer Relations, Housekeeping, Laundry,
Chef, Guest Services, Room Services, Waiters,
Language Skills, Cooking and hygiene etc. Reports
reflect that employees showed a positive increase
in their performance after training as compared to
previous evaluations, in work safety, hotel
hygiene, guest interactions and rooms preparation
and food hygiene training to hotel workers will
have a greater effect on attitude.
John (2007) stated that HR responsibilities are
organizational design, planning, work analysis,
restructuring, job design, recruitment, orientation,
selection, promotion, termination, work
performance, training, rewards, Labor law, health
and safety issues. Fida (2007) researched that
where role of leadership is supportive; where
employers take interest in efforts of HR in training
and development of employees. Effective training
and development can bring significant returns as a
key driver in sustaining a competitive advantage.
Skilled manpower is capable and takes interest in
getting control over their jobs as they acquire
positive attitudes. Woods & King (2006) stated that
conflict occurs to get control over resources, desire
to achieve targets and interdependence, unclear
power structure, struggle to enjoy better power
level and status, Communication barriers and
differences in experties. It is reflected from their
study that managers can handle it through their
Listening skills, Feedback skills, Conflict-
management styles, selection of right conflict,
Evaluation of participants in conflicts, assessing
sources and by knowing and opting best conflict
management options. Okoroafor (2006) further
analyzed the set of Employee Relations which was
presented by Ubeku (1983) and stated that these
are also applicable in Hotel Industry but after
making a few modifications. He examined that the
management of labour relations revolves around
interaction between management and employees
on these matter and the Management reserves the
rights to manage, take decisions, hire and fire, and
defend other companys prerogatives.
Management believes that their rights are their
prerogatives and that nobody should encroach into
that area and the Company retains the exclusive
right and responsibility to manage the business
and plant and to direct the working forces. He
stated that the right of union here refers to the area
where both management and labour should take
joint responsibility for certain actions. Another
union right is right of recognition by the
management. In Hotels, above rights are
acceptable in the labour - management
relationship. From time to time, problems come
from these two rights areas- rights to
recognition and right to participate in decision
making processes. In the final analysis of his
research he stated that the parties should
realistically, interpret the rights and prerogatives
and not to give excessive and undue emphasis on
them so as to foster good management/ labour
relationship within Hotel and Tourism
establishments. Okoroafor studied that
Subcontracting, Unqualified Assumption, Unfair
Labour Practices- Wrongful Dismissal, Denial of
Fringe Benefits, and Distrust, Threat and Fear are
the conflicts that usually take place in hotel
industry.
Babatia, Sipos, Ispas, & Nagy (2005) studied that
successful Leaders understand innovation as
growth achieved through the best HR with a
common persistent attitude and zeal to perform to
solve problems and for shifting their ideology into
real practices. Innovation is always has bases on
your organizational resources and capability to
recognize and converting chances into confirmed
success. There are three fundamental
characteristics of an efficient leader are Integrity,
Partnership Culture and Motivator. And Leaders
in this hospitality industry must be very close to
their employees and they really must encourage
support in the organization. Integrity, Shared
Success, Motivation and Innovation lead towards
better employee performance and ultimately it is
organizational success.
Francis (2005) states that Continuous Improvement
is an approach to organizational change requires
active involvement of skilled and motivated
employees possible through training and
development. Employees are expected to
participate in various organizational change
activities aimed at improving organizational
performance. The sustained need for training and
development arises to maintain superiority in
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Impact of Employee Relation on Employee Performance
market, developing skills of employee and their
knowledge and increasing organizational
productivity.
Arthuer, Bennett, Edens, & Bell (2003) researched
that the training need assessment and effectiveness
of training sessions are correlated with each other.
In the design of training programs, identify the job
requirements to be trained, identifying
participants for the training sessions and the
training programs should result positively.
Brown & Ostroff (2004) state that HRM system is a
situation that occurs where system is an authority
considering Human Resource Management
functions as of highly reliable and sophisticated
activity. This is a situation where HRM
significantly enjoys support of top leadership in an
organization and where optimum performance
level is achieved by investing in famous Human
Resource practices and functions. They further
elaborate that high performance rate of employees
can be achieved by giving utmost preference to
HRM Practices including top leaderships beliefs
on the importance of human capital, investing in
human resources and with a participation in
decision making of HRM professionals in the
organizational and corporate strategic planning
process. Their study proves that high level of
performance standards and HRM practices are
significantly related. Sisson & Bach (1989)
presented that four main areas in which HR
department performs are: employee involvement,
training and development, rewards and work
practices. HR responsibilities vary due to
environment, culture, size, economic activity,
management ideology, legislations, strategy,
structure and age of organization. Activities,
policies and decisions that affect employees are
concerns of HRD. Over the years it is observed that
HRD responsibilities include Job/work design, job
analysis, training, staffing, compensation, benefits,
communication protocol, performance appraisal,
security, health and safety and defining SOPs.
Ubeku (1983) stated that Employee Relations are
about collective bargaining which concerns
Matters for negotiation at National Level including
Overtime rates, Hours of work, Annual leave,
Leave allowances, Sick benefits, Out- of-station
allowances, Redundancy benefits, Acting
allowances, Transfer/ disturbances allowances,
Chaudhry et al.
Housing allowances etc. and Matter for discussion
at enterprise level including Method of
production, Increased efficiency, Safety, Welfare,
Training of workers, Disciplinary procedures,
Christmas bonus, Scholarship awards, Long-
service awards, Compassionate / casual leaves,
Medical facilities, Death benefits etc.
Peters & Waterman (1982) stated that it has been
asserted that employees are preeminent resources
to achieve outstanding performance. Human
resource practices and management system
provides employee the best platform to practice
and enhance their ability to contribute in the
organizational performance.
THEORETICAL FRAME WORK
Conflict handling and Unions
In its basics the conflict is difference of opinion.
This difference of opinion occurs due to some
reasons like your targets and goals or preferences,
no chemistry between decision makers, lack of
available resources, style of interacting with
people or communication and sometimes the
reason of conflict is ethics and principles.
Confliction does not matter but how the
organizations handle conflicts does matter a lot. It
has been observed that the most separations are
because of conflicts over communication style and
personalities and more over these separations take
place where conflicts are not handled properly.
Nankervis (1993) stated that the role of unions is
not effective in the Australian hotel industry. A
comparative study suggests that maximum from
hotel industry have about 50% of their employees
involved in union activities and they take it as
their basic right to enjoy unionism to solve their
issues on wages and benefits.
Discipline
Rules, Regulations, Procedures, Laws,
Constitutions and religious books define a
framework to perform the routine tasks in
personal and professional life within a circle. These
are called discipline and disciplinary procedures
which are defined by the organizations are set to
maintain discipline. The disciplined forces usually
bring better results that undisciplined forces. Same
is the scenario in hospitality sector that the service
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providers perform as per defined procedures set
by the hoteliers keeping in view rating standards.
Obviously these disciplinary procedures bring
about better performance and streamline work
attitude to satisfy the corporate objective that is to
please the guest. Abiding by the rules of the hotel
during shift hours creates a chain of tasks done
that brings good results within given time.
Participative Leadership
Leadership defines ways and traditions to the
followers and make them to follow their
prescribed and defined way in order to achieve set
targets through motivation, decision making,
training and orientation. Participative leadership
tends towards making collective decisions after
taking recommendations and suggestions from
subordinate line staff therefore establishing a sense
of participation in decision making process for
better results and to create sense of responsibility
one decisions are taken.
Benefits
This is self explainatory term that referes to the
benefits which an employee receives at job yet
need to qualify for certain benefits. Mainly benefits
are included annual leaves, sick and casual leaves,
short working hours, medical assistance plans,
child education plan for employees, gratuity,
provident fund, bonuses, free meal coupons,
transport facility, uniform, recreational tours,
discount coupons etc. Employees focus on the
benefits plans offered at the time of joining any
orgnization and compare it with the market trends
in the same industry.
Nankervis (1993) researched that in hospitality
sector where all operational departments are
running the daily affairs the house-keeping staff is
recruited at base level pay and get promotions on
supervisory levels later on but it takes years. Hotel
salaries are lower than average even though they
contribute significantly to overall operating costs.
The low levels of pay results low level
performance therefore he suggested pay plans
should have a minimum salary and maximum
incentive mix of Pay Structure to recruit and retain
new and old employees and total package should
be enough to provide incentives and encouraging
employees to stay. He defined that less than one
third 5 star hotels, resorts and four-star pay as per
official wage rates.
Training
Training is a well planned and organizaed process
to mend and improve employees attitude, their
level of knowledge, enhancing skills and changing
behaviour through continuous learning and
feeding in order to achieve a set level performance.
Its purpose is to develop abilities, to increase job
satisfaction and motivation among employees, to
enahnce process efficiencies to gain financial
benefits, to adopt new technologies and to increase
innovations, to reduce employee turnover, to build
company image, to manage risk, to provide chance
of growth within the Organization, to have ample
number of well trained staff to meet the corporate
objectives, To provide information about
company's history, to provide introduction of the
other departments of the hotel and to provide
information about Human Resource policies, rules
and regulations resulting Reduced Learning Time.
Memon (2009) researched that the employees de
leads to the improvement in the decision making
participation, empowerment, improved system of
goods production, training and skills development
sessions of employees and performance contingent
incentives are the tools to improve the
performance of employees that leads to the
performance of the organization. The firms create
environment that provide knowledge and skills in
development of workforce that provides
competitive advantage because it is difficult for
competitors to imitate these skills.
Amernic (2007) narrated that it has been identified
that training and development is associated with
improved recruiting procedures, well defined
system for rewards and procedure for
accountability, friendly and open environment at
workplace, style of the Management to
communicate with the employees and wise and
effective use of resources. The ability to create
exclusive team through in-house training and
development sessions are cost effective way to get
sustainable advantage.
Motivation
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Impact of Employee Relation on Employee Performance
Motivation is the desire to achieve some given
targets at any given time. It is a difference between
sleeping state of mind and action on ground. The
can do approach and the procrastination are best
examples to clearly edfine motivation. Basically it
is instinct to complete internal motives. Motivation
is a self esteem any can have in ones innerself yet
requires a stimulus for bein motivated. Motivated
emploees are the asset of an organization
especially in the hospitality industry where the
guest of strange nature comes with a mind to get
satisfaction out of paid bills. These are the service
people who provide best services only to listen
that this the best I have ever seen anywhere
Howes (2010), Ernst & Youngs Office of
Workforce Retention (2000), Handin (2000), Cuthie
(2010) and Werbler & Harris (2009) stated that best
Practices for improving Employee Retention and
having motivated employees are summarized such
as Selection Process, Leadership, Growth &
Development, Meaningful Work & Ownership,
Rewards, Organizational Influences, Individual
Influences, Financial Benefits, Good working
conditions, Personal loyalty to employee, Tactful
discipline, Empowerment, Creativity and
Innovation and Quality of Life. Further its is stated
that employees have opinions like show me the
money, show me respect and show me attention or
show me the door. Acceptance is more important
to me than money. Employers who announce
small merit raises may do more harm than good
because employees become irritated that their hard
work yielded so little.
RESEARCH METHODOLOGY
Data has been collected through Assessment
Questionnaire sent to 241 employees of total 28
hotel organizations running with at least 4
operational and one Employee Relations
Department of 3 star, 4 star and 5 star category
hotels. It was ensured that all these hotels should
have Employee Relations Department working
under the guidance of a qualified Employee
Relations Manager to establish better results. The
size of the firms ranged from 250 to 2000
employees.
Employees who were requested to send completed
questionnaire were from Office Managers, Room
Division Managers, Executive House Keepers,
Chaudhry et al.
Laundry Managers, Food and Beverage Managers,
Employee Relation Managers, Accounts Managers,
Security In-charge, Purchase Managers, Executive
Chefs, General Managers, Chief Executive Officers
and Business Directors through stamped return
envelop and some questionnaires were completed
by visiting personally. The response through
return envelop was astonishingly very low
therefore personal visits, request through personal
contacts and friends were sent to the target
population to achieve the required level of data.
Data has been collected to fulfill the objective of
the study to measure the Impact of Employee
Relations Practices on Employee Performance. Five
Point Likert scale has been used to rate from 1 =
Strongly Disagree, 2 = Disagree, 3 = Neutral, 4 =
Agree and 5 = Strongly Agree.
The research data was collected through
questionnaire that consists of nine sections. The
questionnaire consists of mainly closed-ended
questions.
DATA ANALYSIS AND RESULTS
In this chapter the data analysis of the variable of
the study are being presented. Data Edition
process of the collected data has been discussed in
this chapter for the purpose of analysis. The effect
of employee relations and motivation on employee
performance, the effect of Employee Relations on
Employee Performance and the effect of Employee
Relation on Motivation has been measured and
presented in this chapter that shows that how in
the presence of mediator Employee Relation
Practices effect Employee Performance working in
the Hospitality Sector of Pakistan.
Correlation Matrix
Some of Employee Relations Variables are
significantly and positively correlated and some
Employee Relations Variables are negatively and
significantly correlated while some are
insignificantly correlated.
Conflict Handling and Union & Collective Bargain
Agreement are positively and significantly
correlated. Conflict Handling and Participative
Leadership are positively and significantly
correlated. Union & Collective Bargain Agreement
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Volume: 1, Issue: 1, Pages: 60-72
and Participative Leadership are positively and
significantly correlated.
Participative Leadership and Training are
positively and significantly correlated.
Participative Leadership and Motivation are
positively and significantly correlated. Training
and Motivation are positively and very
significantly correlated.
Conflict Handling and Benefits are positively but
insignificantly correlated. Union & Collective
Bargain Agreement and Benefits, Union &
Collective Bargain Agreement and Trainings,
Union & Collective Bargain Agreement and
Motivation, Discipline and benefits and
Participative Leadership and Benefits are
positively and insignificantly correlated.
Conflict Handling and Discipline, Conflict
Handling and Training, Conflict Handling and
Motivation, Unions & Collective Bargain
Agreement and Discipline, Benefits and Training,
and Benefits and Motivation are negatively and
insignificantly correlated.
Discipline and Participative Leadership, Discipline
and Training and Discipline and Motivation are
negatively and very significantly correlated.
The Effect of Employee Relation and Motivation
on Employee Performance
Employees Performance has been taken as
dependent variable and Employees Relation and
Motivation were taken as independent variables.
The results from the analysis showed the
coefficients for regression from independent
variables to dependent variables. In order to
observe the effect of Employee Relation and
Motivation on Employee Performance, the SPSS
(16) has been used to run multiple regression
analysis.
Following tables were generated from regression
analysis using Enter method. Table 1 presents
model summary, ANOVA and coefficients of the
variables.
Dependent Variables: EP
In the Model Summary Table; the correlation
coefficient (R) = 0.529 indicates medium positive
correlation between Employees Performance,
Employees Relation and Motivation. R-square
indicates the proportion of variance in the
dependent variable (Employees Performance)
which can be explained by the independent
variables (Employees Relation and Motivation). R-
Square 0.280 means 28% variation in the
Employees Performance is accounted for its linear
relationship with the independent variables
(Employees Relations and Motivation). This is an
overall measure of the strength of association. The
value of R-Square shows that 28% variation in
Employees Relation is being explained by the
predicting variables and remaining variation in
Employees Relation would be due to some other
factors. In the ANOVA Table: of F-Statistic 22.706
and P-value = 0.000<0.01 shows that overall model
is significant, indicating that using the model is
better than guessing the mean.
The un-standardized coefficient Employees
Relation = 0.076 shows that as Employee Relations
increases one unit the Employees Performance
increase 0.76 unit. This is significant as with p-
value=0.009<0.01. Similarly, Motivation =0.361
means that as motivation increase one unit
Employees Performance increases 0.361.
Motivation is also significant as p-value =
0.009<0.01. Therefore, both the independent
variables have significant and positive relation
with Employees Performance. This has proved the
hypothesis is true that Employees Relation and
Motivation has a positive relationship with
Employees Performance.
The findings of this study agree with the findings
of various researchers and prove that Employee
Relations and Motivation have significant impact
over employee performance.
Delaney & Huselid (1996) proved through their
study that a set of fit Employee Relations Practices
which stimulate various attributes of employees
including personal and professional skills,
motivation and work structure are significantly
positively related to their performance that leads
to ultimate organizational performance. They
proved that if there is close correlation between
various adopted ERM Practices of a fit group
significantly positively effect performance of the
organization and employees. Their research
proved that there is a significant positive
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Impact of Employee Relation on Employee Performance
relationship between ERM Practices like training
and selection and firm performance that is result of
individual performance of employees.
Boselie, Paauwe & Richardson (2002) proved in
their research that Organizations with
commitment human resource systems enjoys
relatively better employee performance
(organizational performance) whereas
organizations that adopts control human resource
systems are far behind in achieving better level of
employee performance. Their research explores
that Commitment Human Resource Systems are
including Selection Process, Benefits and
Incentives, Motivation, Training, Skills
Enhancement Programs, Decentralization,
Empowerment of Employees, Conflict Handling,
Job Designs etc.
The Effect of Employee Relations on Employee
Performance
Employee Performance is a linear function of
Employee Relations that is
EP = f(ER) = + ER + Employee Performance (DV) has been used. The
Employee Relation is Independent Variable and
Employee Performance is Dependent Variable.
Following tables were generated from regression
analysis using Enter method. Table 2 presents
model summary, ANOVA and coefficients of the
variables.
Employee Performance = 2.739 + 0.24 ER
In this Model Summary R-Square 0.005 means
0.5% variation in the Employees Performance is
explained by its linear relationship with
Employees Relation. The F value 0.573 with P-
value 0.450 indicates that overall model is
insignificant. The un-standardized coefficient of
Employees Relation = 0.024 indicates that as
Employees Relation increases 1 unit results
Employees Performance 0.024, but this is
insignificant as P-value = 0.450 > 0.05.
Therefore the result reflects that in the absence of
Motivation that is mediating variable, the
Employee Relation have no effect on Employee
Performance.
A variable is perceived a mediator to the degree it
brings the effect of an independent variable upon a
dependent variable. Mediation takes place where
Chaudhry et al.
Independent Variable significantly effects the
mediator and/or where the Independent Variable
significantly effects the Dependent Variable
directly and/or where the mediator significantly
uniquely effects the Dependent Variable and/or
where the effect of the Independent Variable on
the Dependent Variable reduces if mediator is
taken into the model.
In the figure below, IV is independent variable i.e
Employee Relation Practices, DV is dependent
variable i.e Employee Performance, and A is
unstandardized regression coefficient for the
relationship between Employee Relations and
Motivation. Where sa is standard error of A, B is
unstandardized coefficient for the relationship
between the Motivation and the Employee
Performance and sb is standard error of B.
In order to get a and sa, Regression Analysis with
Employee Relation (IV) estimating the Motivation
(Mediator) and in order to get b and sb, regression
analysis with the with Employee Relation (IV)
alongwith Motivation (mediator) predicting the
obtained figures for a, b, sa, and sb placed into the
related fields and this calculated the indirect effect
of the ER (IV) on the EP (DV) through Motivation
(mediator).
The Sobel Test Statistic can be obtained with the help of
following equation
Equation for Sobel test is
z-value = a*b/SQRT(b2*sa2 + a2*sb2)
Where 6.68 is the t statistics of the Motivation
obtained from SPSS Output Coefficient Table 1.
Where -3.016 is the t statistics of ER obtained
from SPSS output Coefficient Table 3. Results
reflects that this is a Complete Mediation case as
the p-value 0.0059 is less than (0.05). Therefore
there is a significant and complete mediation effect
of Motivation between Employee Relation and
Employee Performance.
CONCLUSION AND RECOMMENDATIONS
This study finds overall support for the hypothesis
that Employee Relations Practices Impact
positively on Performance of Employees working
in Hospitality Industry of Pakistan as the
relationship specified in Hypothesis is found to be
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Entrepreneurship and Innovation Management Journal
ISSN: 2310-0079
Volume: 1, Issue: 1, Pages: 60-72
significant. Therefore, the proposed direct
relationships between a set of Employee Relation
Practices and Motivation and between Motivation
and Employee Performance are empirically
validated. The mediating effect analysis reflected
that a set of six famous Employee Relations
Practices impact Employee Performance
significantly through Motivation.
The area of study is restricted to the known cities
of Pakistan as the researcher believes that the
resolution in these big cities could be relevant to
the hotel industry of Pakistan. There was not a
good response from hoteliers while returning filled
questionnaire forms i.e. 49%. Another constraint in
this research was information. The hotel industry
in Pakistan in general is very loath to provide
documented information saying that policies of the
hotels are secret and therefore cannot be provided.
However, through personal contacts the required
information somehow gathered to complete this
study and there were some hoteliers who helped
by providing the copies of policies and procedures.
A matter of concern that could have been obvious
is the confidentiality of the responses to the
questions asked. The fact is that the respondents,
who are employees of hotel industry that is
somehow orthodox in its nature, were given the
questionnaire to complete on their own. The
researcher had no way to know if the respondents
got assistance of other employees in completing
the questionnaire or they did it by their own.
Conventionally focal point of Employee Relation
Management system has been viewed as short-
term and the system has been used by the most of
the organization and ER Managers
bureaucratically instead of aristocratic are trying to
enhance employee performance. ER Practitioners
and researchers are agreed that human resources
are a source of competitive advantage through
strategically managed and implemented ER
practices. Employee Relations can result positively
significantly only if best fit set of ER Practices are
adopted. Employee Relations Managers mostly
focus on administrative policies and procedures to
maintain performance of employees through
discipline and increments which is not a right way
to get results. Research proved that Motivational
practices effect employee performance positively.
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APPENDIX

Table 1 Correlation Matrix

CH UCBA DIS PL Ben Tra

UCBA .219*.

DIS .967 .30

PL .212* .859** -.411**

Ben .708 .082 .114 .726

Tra -.013 .158 -.275** .192* -.139

Mot .889 .086 .003 .037 .130 .000

Table 2 a & 2b

72