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“High-Performance Work System’s Impact on Employee Performance in Telecommunication Company in Nepal.”

I. Introduction

            In recent years, HPWS which is the integral concept of Human Resource Management, are brought into practices by various big to small organizations and firms because of its various advantages that serves into its overall growth. Motivation and rewards are one of that part of HPWS which has made significant change in performance of employees and has become increasingly significant aspect of HRM. A review of the literature reveals that theoretical perspectives which provide a framework to analyze the strategic approach linked to the long-term development of the organization’s high performance work system.  

High-Performance Work System      

There is no universally agreed meaning for the term HPWS due to quite broad differences regarding the theoretical, empirical and practical approaches adopted. Appelbaum et al (2000) stated that high-performance work systems facilitate employee involvement, skill enhancement and motivation. An HPWS is ‘generally associated with workshop practices that raise the levels of trust within workplaces and increase workers’ intrinsic reward from work, and thereby enhance organizational commitment’. They define high performance as a way of organizing work so that front-line workers participate in decisions that have a real impact on their jobs and the wider organization. Many empirical studies have also found that HPWS are linked to various desirable outcomes, such as better job performance, creativity, and innovation (Jiang et al., 2013; Chang et al., 2014; Costantini et al., 2017), more organizational citizenship behavior (Kehoe and Wright, 2013), greater organizational commitment and job satisfaction (Messersmith et al., 2011; Korff et al., 2017), higher organizational performance, and lower employee turnover rates.(Huselid, 1995; Sun et al., 2007; Jiang et al., 2012).                           

Although previous research has almost exclusively focused on organizational -level HPWS, an emerging stream of work has suggested that organizational-level HR practices may not be applied uniformly across employee groups (Liao et al., 2009; Aryee et al., 2012). That is, a possible disconnection can exist between organizational-level HPWS and employee experienced HPWS. Organizational-level HPWS refer to HR systems that firms develop and implement, not only on paper (Den Hartog et al., 2013), but also to manage employees and redesign work systems. Organizational-level HPWS reflect the goals and intentions of organizations as they involve the decisions about how organizations manage their employees (Den Hartog et al., 2013). This inconsistency will lead employees to inaccurately understand the goals of organizations and to engage in behaviors that deviate from the strategic intentions of organizations. Therefore, it is critical to explore the causes of this misalignment. However, few studies have identified factors that narrow the gap between organizational-level and employee experienced HPWS.  Nishii and Wright (2008) suggested, “workgroup leaders likely implement HR policies quite differently, yet we know little as to what might explain the result from such differences”. Line managers undertake more HR responsibilities (e.g., recruitment, training, performance appraisal, and promotion) today than in the past (Jiang, 2013; Kuvaas et al., 2014). Line managers may acquire HPWS information from HR departments and implement and convey HR practices to employees. As a result, line managers play a vital role in implementing HPWS (Bos-Nehles et al., 2013; Brewster et al., 2013; Sikora et al., 2015; Pak and Kim, 2016). Research has also argued that line managers are increasingly recognized as the agents of organizations to enforce HR practices in their groups (e.g., Kulik and Bainbridge, 2006; Purcell and Hutchinson, 2007). Furthermore, it is widely accepted that the majority of HPWS studies have been undertaken using the quantitative approach, leaving much unknown about the real results of quantitative research because there is no qualitative research for commentators to compare with. Taken together, Beltrán-Martín et al. (2008: 22) suggest that research should be embedded in the “next generation” of HRM and proposes a more in-depth study of how and why HPWS influences firm outcomes. Other scholars suggest that further examination is needed to provide a more in-depth understanding of the HPWS and innovation linkage (Fu et al., 2015, Jiang et al., 2012

a).    Employee Motivation           

In the current global economy with its prevailing competitive environment, firms frequently determine that their employees are their overall most useful resource. Firms’ organization structures are heavily dependent on employees, which influence the organization through their engagement, attitudes and motivation. (Bruzelius & Skärvad, 2004) The future of corporations are in the hand of people acting on behalf of the company as employees, and the importance of human resources have been brought to center stage, more than ever before (Bhattecharya & Mukherjee, 2009). Whiteley (2002) describes that all people are concerned with motivation to some extent and one thing that all employees have in common is the fact that higher motivation increase performance. However, to get employees to outperform during all conditions is one of the most difficult challenges managers are facing (Nohria, Groysberg & Lee, 2008). Bruzelius and Skärvad (2004) argue that to get employees motivated to work more efficiently and to support the company’s values and goals, they need to get compensated through rewards. The reward structure should encourage skilled employees to stay within the organization as well as increase the motivation and commitment to the organization and therefore increase the productivity. (Brickley et al, 2002).       Intrinsic rewards are those that exist in the job itself. Examples are achievement, variety, challenge, autonomy, responsibility, and personal and professional growth. They also include status, recognition, praise from superiors and co-workers, personal satisfaction, and feelings of self-esteem (Mahaney and Lederer 2006: 43). Intrinsic rewards increase feelings of self-esteem and accomplishment (Honig-Haftel and Martin 1993: 261). Intrinsic rewards are derived from the content of the task itself and include such factors as interesting and challenging work, self-direction and responsibility, variety, creativity, opportunities to use one’s skills and abilities, and sufficient feedback regarding the effectiveness of one’s efforts (Mottaz 1985: 366). Employees are thought to be motivated to work hard to produce quality results when they have pride in their work, they believe their efforts are important to the success of the team, and their jobs are fun, challenging, and rewarding (Mahaney and Lederer 2006: 50).      Extrinsic rewards, on the other hand, are external to the job itself. They comprise such elements as pay, fringe benefits, job security, promotions, private office space, and the social climate. Other examples include competitive salaries, pay raises, merit bonuses, and such indirect forms of payment as compensatory time off (Mottaz 1985: 366, Mahaney and Lederer 2006: 43). Firms are able to improve worker productivity by paying workers a wage premium- a wage that is above the wage paid by other firms for comparable labor. A wage premium may enhance productivity by improving nutrition, boosting morale, encouraging greater commitment to firm goals, reducing quits and the disruption caused by turnover, attracting higher quality workers and inspiring workers to put forth greater effort (Goldsmith, Veum and Darity 2000: 352). As a result, people are attracted to well-paying jobs, extend extra effort to perform the activities that bring them more pay, and become agitated if their pay is threatened or decreased (Stajkovic and Luthans 2001: 581). Extrinsic rewards are used to show that the company is serious about valuing team contributions to quality. The monetary rewards consist of a cash bonus allocated to each team member. The team bonus would be given separately from the salary. On the other hand, team rewards must be used in ways that avoid destroying employees’ intrinsic motivation to do their job. The need for continuous improvement requires employees to be innovators; devising novel solutions that improve a work process or that delight the customer. The use of extrinsic rewards that are tightly linked to team performance may teach team members to become money hungry and undermine their intrinsic interest in the work itself (Balkin and Dolan 1997: 43).  


Perceived self-efficacy is defined as people’s beliefs about their capabilities to produce designated levels of performance that exercise influence over events that affect their lives (Bandura, 1994). The construct of self-efficacy represents one core aspect of Bandura’s social-cognitive theory (Bandura, 1994). Bandura (1994) postulates that these expectations determine whether or not a certain behavior or performance will be attempted, the amount of effort the individual will contribute to the behavior, and how long the behavior will be sustained when obstacles are encountered. Self-efficacy beliefs determine how people feel, think, motivate themselves and behave. Such beliefs produce these diverse effects through four major processes, namely cognitive, motivational, affective and selection processes.  

Personal well-being and human accomplishment are enhanced by a strong sense of efficacy in many ways. People with high assurance in their capabilities approach difficult tasks as challenges to be mastered rather than as threats to be avoided (Bandura, 1994). It can be regarded as an optimistic and self-confident view of one’s capability to deal with certain life stressors. Such an efficacious outlook fosters intrinsic interest and deep engrossment in activities. People, with high self-efficacy set themselves challenging goals and maintain a strong commitment to them while they also heighten and sustain their efforts in the face of failure. After failures, they quickly recover their sense of efficacy. They attribute failure to insufficient effort or deficient knowledge and skills which are acquirable, therefore approaching threatening situations with assurance that they can exercise control over them.    In contrast, when individuals doubt their capabilities, they shy away from difficult tasks which they view as personal threats. They easily fall victim to stress and 24 depression. In terms of feeling, a low sense of self-efficacy is associated with depression, anxiety, and helplessness.

Persons with low self-efficacy also tend to have low self-esteem, and they harbor pessimistic thoughts about their accomplishments and personal development according to Schwarzer (1992). Bandura (1997) and Schunk (1995) confirm the contention that efficacy beliefs mediate the effect of skills or other self-beliefs on subsequent performance attainments. Researchers have also demonstrated that self-efficacy beliefs 30 influence these attainments by influencing effort, persistence, and perseverance (Bandura & Schunk, 1981; Bouffard-Bouchard, 1990; Schunk & Hanson, 1985). Motivation has been defined by social cognitive researchers as a process in which goal-directed behavior is instigated and sustained (Pintrich & Schunk, 2002).

Motivation can manifest itself in various forms such as effort, persistence, and choice of activities. In terms of effort, two measures have typically been employed in research; the rate of performance and expenditure of energy (Zimmerman, 1995). There is supporting evidence for the association between self-efficacy and both indexes. Zimmerman’s model of self-regulation incorporates various motivational processes such as self-efficacy, outcome expectations, and task interest or value. The model predicts that self-efficacy, being the key motivational element, will be related to the other motivational processes. Pajare (1996) states that there is ample reason to believe that self-efficacy is a powerful motivation construct that works well to predict self-beliefs and performances at varying levels. This study will investigate the possible link between commitment and self-efficacy, as it is believed that self-efficacy predicts commitment levels.        

The Dark Side of HPWS        

While increasing competitive pressures globally have made human resource managers turn to HPWS as a key to maintaining global competitiveness, researchers that advocate a critical perspective of HPWS propose a difference between the soft and hard practices of HRM, which refer to systems that aim at increasing commitment or control respectively (Guest, 2002). This means that if organizations aim to increase employee’s commitment they need to explore both positive and negative perspective of HPWS, as this is one of the sources of competitive advantage in the present era.  HPWS can be defined as an umbrella term for the range of innovative human resource management practices, organizational structure and work processes which when used in certain combinations or bundles, are mutually reinforcing and produce synergistic benefits (Huselid, 1995). These systems draw their strength from the following core HR policy principles:
(1) Sophisticated selection and training;
(2) Behavior-based appraisal and advancement criteria;
(3) Contingent pay systems;
(4) Job security; and
(5) Employee involvement initiatives (Guest, 2002).Firm data used in HRM studies are often biased at the management level as it gives insufficient attention to the employees, who are at the receiving end of the HR policy (Thompson, 2011).  This is one of many reasons why the literature on links between HRM and performance using firm data often fails to provide findings that could be consistent or conclusive. 

A key problem with HPWS research is that workers are taken as abstract “objects: against which researchers measure certain responses to a given set of assumptions. As workers are themselves active agents and “subjects” who have an impact and that they shape the world around them(Grant & Shields, 2002; Dundon & Ryan, 2010) therefore there is a need to investigate the effectiveness of HPWS form the perspective of employees who are active agents of HRM activities of any organizations. It is therefore important to explore beyond the firm based data to focus on the relevance and the role of employees in shaping the outlook of HPWS. This is further supported by research that organizational–level performance improvements can be due to work intensification (Ramsey et al, 2000) rather than greater discretionary effort Boxall &Macky (2009), improved trust management (Thompson, 2011), or higher job satisfaction (Guest, 2002). A gap in employee perceptions of HPWS practices is related to the behavioral outcomes in terms of injustice and unfairness (Jensen, et. al, 2013). This raises a need to investigate the behavioral outcomes of employees in presence of HPWS. Further, Grant and Shields (2002) pointed at the distinction that can be made in HRM practices at various levels. In the holistic review of the literature (Fan et al., 2014) we can conclude that the employee psychological outcome can serve as a potential mediating link that has been neglected in HPWS research when examining negative employee behavior at the workplace.                                                
 II. Background and Significance     

The telecommunications business is not only a capital-intensive industry, in which accesses to capital is a key factor to ensuring the development and expansion of a robust network but also one in which management skills, competencies and the capabilities of qualified people are solid drivers in accelerating the expansion and sustainability of the businesses (Guislain & Qiang, 2006). The telecom industry is an interesting industry to study, not only due to its volatile nature in terms of technological breakthrough and its policies, but also due to the high growth rate of this industry over the past few decades and the significant contribution of the industry to the economies of the nations. In Nepal, operating any form of telecommunication service dates back to 1970. There are now six telecom operators and twenty internet service provider in Nepal.   Currently, Nepal Telecom has become the largest telecom operator in terms of number of subscribers. The market share of Nepal Telecommunication is around 48 percent and Ncell stands the second with 45 percent market share. Smart telecom, the third largest operator with 5 percent market share is expanding its mobile network and known to operate it in the capital city. The pie chart below shows the market share coverage of telecom in Nepal.   Source: Nepali Telecom 2016   Fig1: market share coverage of telephone operators.   The number of internet users in Nepal is growing very fast. Considering the latest data, the internet penetration in Nepal has reached a whopping 63%. And as more people are starting to use the services like FacebookInstagramYouTube, Online Games, E-class, etc., many are installing internet. However, Nepal still doesn’t have good internet service. The Internet connection people choose can have a major impact on the productivity. Unfortunately, most of people don’t have the time to invest in thoroughly exploring all the options. As a result, people often wind up making a hasty, less than ideal choice.         Source: People choice survey February 2018                                        
Fig2: people’s choice for internet service operators.     This means Nepal has a lot of potential market in extending the telecommunication services reach. So, Nepal needs to bring efficient technologies with sufficient policies and resources (infrastructure, spectrum).
For its growth skilled and experienced human resource (HR) personnel are needed to be hired to manage the businesses as well as the absence of comprehensive HRM policies and practices within the companies concerned.              

All in all, the telecom sector in Nepal remains at a developing stage and has also suffered from various obstacles due to lack of management and trust. It also faces immense technical and commercial challenges and urgently requires competent HR to execute financial portfolios and manage the sensitivity of a capital-intensive investment in a rapidly innovating technological industry. To ensure that HR are able to apply technologies effectively in their jobs and deal with technological changes, companies ought to have competitive HR development strategies. The main aim of this study is to explore managers’ and employees’ understanding of and attitudes towards HRM in the Nepal telecom sector, which is a good example of a service-based business, which needs diversified strategies to manage and develop people in responding to rapid technological innovation and satisfying customer expectations.  

Problem Statement

Organizations which want to excel in a competitive market need some factors that boost up a firm to work hard to achieve its goal. The most important factor in any company is its work force. Any organization can develop itself by motivating and enhancing the efficiencies of their workers by implementing some sort of appreciation techniques which is an integral part of HPWS. The more the employees get motivated the higher the performance of employees is achieved. Markova and Ford (2011) argued that readiness of workers to use their creativeness, skills, and knowledge determines the success of an organization.

For improving the performance of employees, benefits, and incentives can be used as an effective tool. (Cropanzano & Mitchell, 2005) argued that when an organization invests in the development of personnel, then they act in a constructive way for the wellbeing of organization.    

In recent years, the change in the job and the less interest of working in the same organization for any employees in Nepal has been increasing. This is despite the organizations effort to make the proper and effective HPWS techniques. The organization has to motivate and give opportunities to their employees time and again that the problem like job switch won’t appear again. Therefore, a better and highly qualified Human Resource Department with strongly focusing on HPWS theories should necessarily be adopted and should also investigate more into the motivational factors of employees in an organization.     

Research Objective

The main objective of this study is: To identify the methods and tactics adopted by the managers inside various telecommunication industries. To analyze the skill and knowledge enhancement of employees through high performance work system process. To suggest ways to improve the influencing factors to the benefit of future researchers and practitioners, in the telecom industry of Nepal.      

Research Question

The research clarifies “The need for adoption of High-Performance Work System” by exploring the following research questions as following:   What are the key factors of HPWS in an organization? Can HPWS help to maximize better employee performance for better intrinsic and extrinsic incentive? Are Nepal’s organizations adopting the method of HPWS for employee better performance outcome? Are employees able to accept the impacts of HPWS?

Research Model

The research design comprises of independent variable, dependent variable and mediators. High performance work system is the independent variable, intrinsic and extrinsic incentive are the mediators and employee performance is the dependent variable. HPWS   1.      Intrinsic Incentive                                                                Team WorkSelf-EfficacyEmployee’s Support     2. Extrinsic Incentive   Improved Working ConditionProfit Sharing     Fringe Benefits                              
Employee Performance                                                          

Research Design

There will be the method of several questionnaires in the telecommunication companies of Nepal targeting managers and employees as a target group for the collection of data as they are the major focus group. It will basically be done in order to understand the ways on how HPWS is carried out by the company and how employee’s performance is being affected by it. The study will be carried out in major telecommunication industries of Nepal with the target population of around 200 to 400 employees.  


The previous chapters have focused upon literature review and the theoretical background of HPWS and Employee Performance. This study is focused on determining the relationship between HPWS and employee performance with various motivational tools as a mediator. As mentioned before the objective of this study are to identify the methods and tactics of HPWS adopted by the managers inside various telecommunication industries, to analyze the skill and knowledge enhancement of employees through high performance work system process and to suggest ways to improve the influencing factors to the benefit of future researchers and practitioners, in the telecom industry of Nepal. This chapter will discuss about the hypothesis that is relevant for this study.   H1: There is a relationship between High performance work system’s impacts leading to team work of employees. Team Work      
H1b H1a                                High Performance Work System   Employee Performance    
H1c             Fig 3: Team work as a mediator.     H1a:  There is a relationship between HPWS and Team work. H1b:  There is a relationship between Team Work and Employee Performance. H1c:  There is a relationship between HPWS and Employee Performance.   We begin our discussion by suggesting that the distinct and consistent role of team managers in enforcing HR policies in their work groups may be critical for enhancing team performance. By its very nature, HRM concerns the implementation of strategy (Mathis & Jackson, 1985). Once strategy is formulated, HR practices are designed in a way that enables the organization to realize its strategic objectives (Schuler & MacMillan, 1984). HRM contributes to improved performance by clearly defining the roles and responsibilities of individuals and motivating them to work toward performance goals during strategy implementation (Schuler & Jackson, 1987). Thus, performance may be explicated in terms of the extent to which intended HR practices are enforced within the organization. Although HPWS at the team level is a worthwhile subject for investigation, only a few empirical studies have examined its effect on work group outcomes (e.g., Lee, Pak, & Kim, 2014; Pak, Kim, & Li, 2015). However, several scholars have asserted that HPWS at the team level may be positively related to team performance (TP). For instance, a recent study by Fu, Flood, Bosak, Morris, and O’Regan (2013) suggests that HPWS positively influences team formation. Individuals placed on the right team cooperate better with clients, which improves organizational performance. Messersmith, Patel, Lepak, and GouldWilliams (2011) reported that HPWS is positively associated with collective job satisfaction, commitment, and organizational citizenship behaviors (OCB). In addition, Takeuchi, Lepak, Wang, and Takeuchi (2007) confirmed that the HPWS-performance relationship is mediated by enhancement of collective human capital and social exchange. Thus, we also posit that the intensity of implementation of HPWS at the team level is positively associated with Team Performance.   H2: There is a relationship between High performance work system’s impacts leading to self-efficacy of employees. Self-Efficacy        
H2b H2a                                                                              High Performance Work System   Employee Performance    
Fig 4: Self Efficacy as a mediator.             H2a:  There is a relationship between HPWS and Self-Efficacy. H2b:  There is a relationship between Self-Efficacy and Employee Performance. H2c:  There is a relationship between HPWS and Employee Performance.   Many studies have reported significant correlations between self-efficacy and subsequent task performance (Bandura, 1982; Bandura & Adams, 1977; Bandura, Adams & Beyer, 1977; Chambliss & Murray, 1979; Feltz, 1982; Locke, Frederick, Lee & Bobko, 1984).  Efficacy perceptions still predict subsequent performance, even in studies where efficacy perceptions have been altered.  Bandura (1977a) notes that although active mastery yields the greatest increase in self-efficacy, correlations between self-efficacy and performance remain high for non-enactive modes such as modelling.  Several studies have found self-efficacy to be a better predictor of subsequent performances than past behavior (Bandura, 1977a; Bandura, 1982; Bandura & Adams, 1977; Bandura et al., 1977; Bandura et al., 1980; Chambliss & Murray, 1979).  However, other studies contradicted this, for example Gist (1987).  Studies conducted by Feltz (1982) provided some evidence that as experience with a task increases, past performance becomes more predictive than self-efficacy.  It needs to be noted that Feltz’s study involved a task in which subjects were unable to observe their performance and no feedback was provided (Gist, 1987).  Under these circumstances self-efficacy may have lacked veridicality. Bandura (1997) and Schunk (1995) confirm the contention that efficacy beliefs mediate the effect of skills or other self-beliefs on subsequent performance attainments.  Researchers have also demonstrated that self-efficacy beliefs influence these attainments by influencing effort, persistence and perseverance (Bandura & Schunk, 1981; Bouffard-Bouchard, 1990; Schunk & Hanson, 1985).     H3:   There is a relationship between High performance work system’s impacts leading to employee’s perceived support. Employee’s Perceived Support   High Performance Work System   Employee Performance    
H3b H3a  
Fig 5: Employee’s Perceived Support as a mediator.     H3a:  There is a relationship between HPWS and Employee’s Perceived Support. H3b:  There is a relationship between Employee’s Perceived Support and Employee Performance. H3c:  There is a relationship between HPWS and Employee Performance.     Employees acquire economic gains, status, personal relationship and social benefits through work (Cropanzano, Kacmar & Bozeman, 1995, Halbesleben, 2011). Workers provide their talents and energies and expect something in return. However, these rewards are not limited to economic rewards only (pay and monetary benefits) rather they encompass a wide array of social benefits as well. If employees perceive that they are not being given appropriate monetary and non-monetary reward, it would create a sense of de-motivation among them. Further, employees certainly expect organizational support in what they do on daily basis. If the organization provides support to them, it will enhance the motivation level of employees which in turn would lead to better individual and organizational performance in terms of profitability and growth (Mowday, Porter, & Steers, 1982; Zhong, Wayne, & Liden, 2016). Employees are actually engaged in a social exchange with the organizations they work in where they put in more efforts with the expectation of high rewards in return of this exchange process. For many years, organizational researchers have described the employment contract in the context of social exchange theory which states that employees’ efforts and loyalty to the organization is contingent on the provision of socio-economic benefits (March & Simon, 1958; Etzioni, 1961; Levinson, 1965; Porter, Steers, Mowday, & Boulian, 1974). This characterization of the employee–organization relationship stresses the fact that organizations’ attainment of desirable outcomes could be possible through the favorable treatment of employees.     According to Meyer and Allen (1997), employees who receive proper and fair treatment from their organizations are more likely to demonstrate more commitment and work beyond the call of explicitly prescribed duties. They also respond with greater flexibility to the problems an organization confronts in uncertain situations (George & Brief, 1992). The notion of organizational commitment and employees’ motivation has attracted considerable attention of both researchers and practitioner as an attempt to understand the stability and intensity of employees’ devotion to their duties in modern organizations. Workplace Support (WS) is one of the key areas which affect employees’’ commitment as well as their motivation (Shore & Shore 1995). Workplace support is employees’ perception about how much their organization provide them support in difficult situations performing various tasks.   Sources of Data The data for this study will draw from two main sources including primary and secondary data sources. Primary Data The primary data sources are those original data collect and analyze from the field. These are mainly obtained from the responses of respondents of the telecommunication industries employee’s. It will be obtained through questionnaire. Secondary Data The secondary sources of data refer to data collected by a person or researcher other than the user of the information. This kind of previously collected information is not case-specific but it can be relevant to the studied problem. This study to a significant extent depended on information from telecommunication industries in Nepal and their HPWS strategy relevant materials form and other documented relevant information. Available handbooks, annual reports, performance reports, employment policies, relevant information from the organization’s website, blogs, journals, newsletters and other documented materials made up the secondary data used by the researcher. The data obtained from these sources will be scrutinized for reliability, validity, adequacy and suitability in answering research questions. The use of multiple independent sources of data was to establish the truth and accuracy of any claim; thus it is expected to enhance the reliability and validity of the study.   Target Population The target organizations will be conduct with telecommunication industries in Nepal. The interviews will be semi‐structured and will conduct with employees in each organization, including at least one HR specialist (normally, the senior HR professional), senior and functional managers as well as non‐managerial staff.              

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