Introduction
Recruitment,
management and providing direction within the banking and finance industry are
what the Human Resource Management key functions.
Human
Resources Management deals with issues such as hiring, organizational
development, performance management, wellness, benefits, safety, motivation,
training, communication and etc in the banking and finance industry. This is
also a strategic approach in managing people within a work place and to make
them get adapted to the work place culture and environment. This enables the
employees to work effectively with productivity which helps the overall
accomplishment of the company direction involving goals and objectives. The new
role of Human Resources Management involves strategic direction to demonstrate
value
In
HRM the term “Psychological Contract” was used in early 1960s and became more
popular after 1990s. This increased the relationship between the employee and
the employer of the organization. This was renowned from the legal contract of
employment. Looking at the reality of the situation was also being done by the
psychological contract. This directly affects the employees’ behavior from day
to day. Psychological Contract tells the employees what is required and
expected from their job.
In
Sri Lanka there are a few financial institutions namely, Central Bank of Sri
Lanka, Licensed specialized banks, licensed commercial banks, specialized
leasing companies, pension and provident funds and etc. This facilitates
payments and settlements associated with real sector transactions. Stability of
the above depends on the changes of both internal and external changes.
Financial system is a legal framework related with the financial
infrastructure.
Problem Statement
What
types of relationships arises between disclose practice with remuneration
committee report and company performances.
Problem Justifications
The
value of any approach to HRM control can be augmented or diminished by
simultaneously matching the HRM to the type of business strategy.
In
society and Human Resources Management the popular used theoretical model is
the behavioral perspective. In the above the theory focuses on the employee
behavior between the strategy and firm performance. The purpose is to extract
and control employee attitudes and behaviors. These differences are being
required by the organization’s strategy. What HRM does is to obtain and
reinforce those behaviors.
Example:
According to, Schuler and Jackson’s (1987) connecting the practices with
competitive strategies where the behaviors differ such as repeating and
innovation behavior, Taking high and low risks and flexible and
nonflexible to change.
According
to (Wright and McMahan, 1992), there are three types of behavioral
perspectives.
ONE:
The hypothesized role behaviors required by different strategies.
SECOND:
Focusing on the different types of HRM practices and how effective in including
these role behavior.
THIRD:
The theory of the behavioral perspective is that strategies which directs to
employee role behaviors to a number of outcomes to provide benefits to the
firm. This could used to regulate performance.
Objectives
•
Find out the existing trends in disclose practices of
remuneration committee report and company performances in the banking and
finance industry.
•
To find out the relationships between disclose practices of
remuneration committee report and company performances.
Significance of the study
After
justifying the opinions in the representing facts above the importance of this
study will be going to the stake holders, employees of the finance and the
banking sector and the end users of the finance and banking industry.
Scope of the study
To
achieve the objectives above, a research in finding the relationship between
business strategy and the performances of the in banking and finance sector
should be kept in limits by the HRM control.
The
control systems which are used by the banking and finance industry to be
sustain in the industry. Limited to selected Colombo stock market listed banks.
Literature Review
Business Strategy
A
strategy is a set of commitments and actions to develop competencies and to
gain a competitive advantage.(Slevin and Covin,1997). Business strategy is
designed to give out to gain a competitive advantage by providing value to
customers by developing specific individual competencies (Dess et al., 1995)
Relating
to the competitors of the firm the business strategies are made (Porter, 1985),
and also positioned in favor of the competitive advantage of the industry
competition. According to Miles and Snow’s (1984), types of business strategy,
it involves defenders, prospectors and analyzers. As mentioned in classified
strategies (Porter, 1985) into three common types cost leadership,
differentiation and focus. But Schuler and Jackson (1987) implied differently
from Porter where business strategy stated in three types; Cost reduction,
innovation and quality enhancement.
Strategy Performance
Cost
reduction involves by enhancing the competitiveness by lowering the prices of
the services and the products involved (Schuler and Jackson, 1987). This method
helps in order to increase the product efficiency and to deduct expenses. By
adopting new technological skills to the banking and the finance industry,
expand and upgrade the scale of production. Finally the firm could sell
services and products at a lower cost.
Innovation
strategy is where unique or different products and services than the
competitors come into the market. Product or the service being better quality
is the success of quality enhancement.
HRM control
Research
in SHRM literature (Society of Human Recourses Management), the most popular
theoretical models used is from the behavioral perspective (Jackson et al.,
1989; Schuler and Jackson, 1987). The employee behavior is being focused
between firm performance and strategy. Variety of HRM practices are being used
to control employee attitudes and also behaviors.
I.e.:
Model of Schuler and Jackson’s (1987) links HRM practices with strategies.
(Innovation quality-enhancement, and cost-reduction)
The
Research of the behavioral perspective and threefold (Wright and McMahan,
1992), hypothesized role behaviors are specified by different strategies. Then
the types of HRM practices. Finally, assumption of the behavioral perspective
leads to HRM practices. Control perception is constant with behavior
perspective.
The
process which helps to support the individuals’ actions with the interests of
the firm is called control (Tannenbaum, 1968). According to the work of Snell
(1992) Snell and Youndt (1995), it’s main focus is on technical methods. This
is not being used at the formal HRM practices such as training, rewards,
performance appraisal and etc. The above study is connected to the control
systems. It could be combined into three control systems:
•
Behavior control
•
Input control
•
Output control
According
to Snell and Youndt (1995, p. 713), responsibilities are fixed and compulsory
for actions and methods. Employees are responsible for their actions.
Performance appraisals are based on the head of department observation of
behavior. The feedback form is used and the corrective tool. This means
behavior control. Reliability and efficiency are one of the main issues HRM
focuses to regulate (Ouchi, 1978; Ouchi and Maguire, 1975). As long as the job
environment is stable the behavior control stays effective.
According
to agency theory, behavior based contract is most favorable when the behavior
of the representative is observed. Above is a simple scenario of complete
information. Due to incomplete information the outcome may differ. Performance
in HRM rooted on behavior control where it is positively related to the
performance and the knowledge of the firm complete (Snell and Youndt, 1995)
Input
control means “rigorous selection and training that help to socialize employees
to ensure they have requisite abilities as well as understand and internalize
the values and goals to the organization. In this way they are likely to act in
the interest of the firm on their own (Snell and Youndt, 1995).” This helps to
create goals and to compare within the firm employees who need necessary
requirements from the firm. Performance goes higher when the approach to HRM is
through input control (Snell and Youndt, 1995).
Output
control means to “mutually set performance targets. Subordinate performance
appraisals are based on the results they achieve, and monetary rewards are
closely linked to performance outcomes (Snell and Youndt, 1995).” Reaching to
the firm’s targets combining the personal interests gives the employee a good
judgment which would finally benefit the firm (Kerr, 1985). Due to this reason the firm goals can be
specified the control system and also it would help to obtain the firm
performances.
Investigation
Methodology
This
document has been complied according to the journal articles and annual reports
of selected banks such as Commercial Bank, Seylan Bank and Hatton National Bank
from the year 2008 to 2012 (5 years) related to the relationship between
disclose practice of remuneration committee report and company performance.
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