The SIJ Transactions on Industrial, Financial & Business Management (IFBM), Vol. 1, No. 2, May-June 2013
Human Resource Management:
A Rationale behind Organisations’ Value
Chain
Jyoti Bahl*
*Assistant Professor, Department of Commerce, Udhampur Campus, University of Jammu, Jammu, Jammu and Kashmir, INDIA.
E-Mail: jyotibahl71182@gmail.com
Abstract—Human resource management is one of the most important support activities of organisations‟ value
chain, which is a series of activities the organisation performs in order to sustain in the competitive
environment. The human resource management comprises of various human resource practices, viz.,
performance appraisal system, potential appraisal system, counselling and feedback system, career
development system, promotion policy, and training and development system. The survey has been conducted
over the fifty retail stores and their customers in the limited locality of the Jammu City selected on the basis of
convenience sampling method. The paper studies the provision of human resource practices for the employees
in these stores. Further, the performance of these retail stores has been measured on the basis of customer
satisfaction and customer retention. Thus, the satisfaction level of employees and its impact on customer
satisfaction level and the customer retention has been studied. The results indicate that the organisations with
good human resource practices have satisfied employees resulting in satisfied customers and customer
retention also.
Keywords—Customer Retention, Customer Satisfaction, Human Resource Management, Value Chain, Sales
Turnover
I.
INTRODUCTION
HE term „value chain‟ has been first incorporated by
Michael Porter in his book “Competitive Advantage:
Creating and Sustaining superior Performance”,
[Hines, 1993] in which he described value chain as a series of
activities that the organisation performs in order to sustain in
the competitive environment. The concept of value chain has
been widely defined as the composition of some inter related
value-adding activities that helps the organization in
converting inputs into outputs in an efficient and effective
manner and helping to create and sustain competitive
advantages [Hines & Rich, 1997; Walters & Lancaster,
2000]. Thus, it comprises of all activities within and around
an organisation meant for strengthening the organisation‟s
position among its competitors. It evaluates the value added
by each and every activity of the organisation to its products
and services. In fact, an organisation is a hub of various
interlinked activities. Some activities are directly associated
with production of goods and services and some act as
supporting activities. The direct or primary activities are
those, which are directly concerned with the creation or
delivery of a product or service. These are inbound logistics,
operations, outbound logistics, marketing and sales and lastly
service. The support activities on the other hand help to
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improve the effectiveness and efficiency of the organisation.
These activities are procurement, technology development,
human resource management and infrastructure [Porter,
1985; Closs et al., 1998]. The value chain in spirit identifies
various activities being performed in an organization and
evaluates all these activities as to what extent they prove to
be the strengths or become the weaknesses of the
organisations while dealing with the competitive market
situations [Anderson & Mittal, 2000; Ballou et al., 2000]. In
this study the role of one of the support activity that is,
human resource management in enhancing the organisational
performance has been considered. The human resource
management comprises of various human resource practices,
viz., performance appraisal system, potential appraisal
system, counselling and feedback system, career development
system, promotion policy, and training and development
system.
II.
REVIEW OF LITERATURE
The value chain of an organisation is its way to reach the
market and its proper management ensures best products and
services entering the market and serving the ultimate
[Allnoch, 1997; Walters & Rainbird, 2004]. Value chain
management implies the analysing the value chain of the
© 2013 | Published by The Standard International Journals (The SIJ)
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The SIJ Transactions on Industrial, Financial & Business Management (IFBM), Vol. 1, No. 2, May-June 2013
organisation, of the customers, of the competitors and finally
adding value to the product or service and converting into a
unique one satisfying the demand of the customer [Corbett &
Blackbum, 1999; Gereffi et al., 2005]. Thus, value chain
management is an important tool in the hands of an
organisation that ensure its success and growth, and also
helps an organisation to devise new strategies for attaining
and sustaining an unchallengeable position [Balsmeier &
Voisin, 1996; Agrawal & Pak, 2001]. The human resource
management is an important support activity of the value
chain management [Porter, 1985]. Better Human Resource
practices leads to better employee behaviour which in turn
leads to desired customer behaviour and ultimately better
organisational performance [Pickles et al., 1999].
III. OBJECTIVE OF THE STUDY
The objective of the study is to analyse the role of human
resource management as a value chain activity of an
organisation. The study links the performance of the
organisation with its value chain and identifies the relation
between the organisational performance and human resource
management, a major support activity of organisations‟ value
chain.
IV. METHODOLOGY
The survey has been conducted over the fifty retail stores in
the limited locality of the Jammu City selected on the basis of
convenience sampling method. The respondents of the study
comprise of the employees working in these retail stores and
the customers who visited the stores. The employees have
been contacted personally and they were asked questions
regarding their satisfaction regarding the various human
resource practices being applied in their respective stores.
Further, they have also been enquired of the role they feel
human resource practices are performing as a supporting
activity of the value chain of the organisation. Maximum
number of retail stores in Jammu City is owned by individual
owner and employees working in these retail stores range
from four to five mostly with designations of sales persons.
The Interview method has been used to collect the data from
employees. The customers have also been interviewed
regarding their satisfaction with the current visit and their
desire to revisit the store.
V.
FINDINGS
The value chain management ensures benefits to the
customers and before them; it ensures benefits to the
employees. The reason behind is that only satisfied
employees can behave appropriately with the customers and
ensure their satisfaction. The efficient human resource
management is a panacea for the organisations‟ to sustain in
the competitive environment. Since this study has taken the
human resource management activities of the value chain in
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its gamut, the employees have been enquired of the level of
human resource management they feel in their working place
as well as how much is the contribution of human resource
management practices in adding value to the working system
of the organisation. The interviews conducted on these issues
indicated that employees feel their employers regard their
contribution towards the store as an essential mode of profit
enhancement. The sales personnel are infact the prime source
of interaction of an organisation with their customer. They
provide the customers with the initial information they wish
to acquire about the organisation and provide the organisation
with the feedback the customers have regarding the goods or
service provisions of the organisation. The organisations thus
motivate their employees by both financial and non-financial
incentives. The performance of employees remains a bigger
criterion for providing them with different incentives. The
employers usually measure the performance of the employees
on the basis of the sales turnover and customer satisfaction.
The numbers of customers attended by individual employees
also add up to their performance. The potential of employees
is observed and they are given appropriate jobs in accordance
with their capabilities. They are also promoted from sale
persons to junior sales executives, senior sales executive and
floor managers on the basis of their performance. As far as
training is concerned there is regular training process in
which junior employees work under the supervision of the
senior employees and get frequent selling solutions. Thus
there is regular mentoring of the new employees by the old
employees as they share their experiences with them and help
them finding ways to attract their customers, satisfy their
requirements and make them desirous to visit the retail store
again. The employer also provides their employees with
proper counselling whenever needed.
The findings show that the retail stores execute proper
human resource management. However, these being single
owner organisations, there are no separate departments to
handle human resource management function and the
employer or the owner of the retail stores themselves
manages their human resource. The owner of retail stores
having employees more than five however has delegated a
portion of their duties to the senior employees.
The study further finds the relation of effective human
resource management activity of value chain and its impact
on customer satisfaction and retention. The organization can
create value chain management in accordance to the customer
preference and has the chance to fulfil customer expectations
[Verma et al., 1999; Waller et al., 1999]. There is no better
advertisement than fully satisfied customers and on the other
dissatisfied customers are the worse [Gummesson, 1996].
Satisfaction resulted long term relationship with the customer
and it is always the best for the company if the retention and
loyalty rate is high [Taylor, 2005]. The study has taken
customer satisfaction and retention as two measures to
evaluate store performance. The customer satisfaction
measured on the basis of the exit interviews of the customers
immediately after they leave the store and customer retention
© 2013 | Published by The Standard International Journals (The SIJ)
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The SIJ Transactions on Industrial, Financial & Business Management (IFBM), Vol. 1, No. 2, May-June 2013
measured on the basis of the frequency of visiting the same
retail store.
Analysing the response of the employees and the
customers of the same retail stores indicate that there is
strong relationship between the human resource value chain
management and store performance evaluated on the basis of
customer satisfaction and customer retention. The employees,
who feel satisfied with the human resource management
activities of the value chain of their retail stores, make their
customers satisfied and thus customer retention also become
possible. Thus, store performance turns better with better
human resource activities of the value chain.
[8]
[9]
[10]
[11]
VI. CONCLUSION
The human resource practices for the employees in the retail
stores add great value to the working of the organisation. The
performance of the retail stores has been measured on the
basis of sales turnover and customer behaviour towards the
organisation. The level of customer satisfaction and customer
retention is directly related to the level of employees‟
satisfaction in the organisation. The organisations with good
human resource practices have satisfied employees resulting
in satisfied customers and thus help in retaining customers
also. The human resource management activities facilitate the
value chain of the organisation by upgrading the performance
of the retail stores. However, the interview method has been
used to conduct the study arising to the limitation of the study
as individual biasness can affect the results. Further study can
be done on testing these results using appropriate statistical
tools.
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Jyoti Bahl is an Assistant Professor in the
Department of Commerce, Udhampur
Campus, University of Jammu, India for the
last six years. She has done post graduation
in Commerce from University of Jammu and
Business Administration from IGNOU. She
completed her M Phil project on “Impact of
Human Resource Development on the
Competence Development of the University
teachers”. She is presently pursuing a PhD on “Internal Corporate
social Responsibility and its impact on employee attitudes”. Her
research is acknowledged in national journals such as Strategic
Service Management, Researcher, Multidisciplinary journal of
University of Jammu, Pezzottaite Journal, International Journal of
Organisational behaviour and management Perspectives, Asian
Journal of Multidimensional Research and International Journal of
Research in Commerce, IT and management. She has presented
papers at various national seminars and conferences.
© 2013 | Published by The Standard International Journals (The SIJ)
51