Challenges and Prospects of HRM

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Challenges and prospects of HRMin developing countries: testing theHRM–performance link in the Eritreancivil service

Mussie Teclemichael Tessema and Joseph L. Soeters

Abstract In this article, the authors examine how, when and to what extent HR practicesaffect performance at the employee level. As performance is a multi-faceted andcomplicated concept, HRM outcomes were used as mediating factors between HRpractices and employee performance. The data were collected among civil servants inEritrea, Africa’s youngest and poorest country. Although the results generally are in linewith previous studies using Western data, their implications in this particular country maybe different. Therefore, the challenges and prospects of HR practices in Eritrean civilservice organizations are critically analysed and discussed. In the authors’ opinion, that theEritrean economic and political environment within which HR practices operate has notbeen conducive in maximizing the impact of HR practices on performance. These findingshighlight the situation of most developing countries.

Keywords Human resource management; HRM–performance link; civil serviceorganizations; Eritrea; developing countries.

Introduction

Every organization, whether it be a public, private or NGO, must operate with andthrough people. Public organizations in particular are judged on the basis of theperformance of their human resources. Ingraham and Kneedler (2000: 245) underlinethat ‘government activities are typically highly personnel intensive. And thus, HumanResource Management (HRM) practices are central to improving the quality of servicesoffered by the governments.’ In the words of Pfeffer (1994: 33), ‘having good HRM islikely to generate much loyalty, commitment, or willingness to expend extra effort forthe organization’s objectives’. Moreover, Stone (1998: 4) remarks that ‘HRM is eitherpart of the problem or part of the solution in gaining the productive contribution of people’.

The above quotes suggest that organizations need to effectively manage their human

resources if they are to get the maximum contribution of their employees. But thequestion is, how and when does HRM affect performance? Recently, the dominant focus

The International Journal of Human Resource Management

ISSN 0958-5192 print/ISSN 1466-4399 online q 2006 Taylor & Francis

http://www.tandf.co.uk/journals

DOI: 10.1080/09585190500366532

Mussie Teclemichael Tessema, Tilburg University (IVO), the Netherlands and University of

Asmara, Eritrea: PO Box 90153,5000LE, Tilburg, The Netherlands (e-mail: [email protected]).Joseph L. Soeters, Tilburg University and Royal Netherlands Military Academy, the Netherlands:

PO Box 90002, 4800 PA Breda, the Netherlands ([email protected]).

Int. J. of Human Resource Management 17:1 January 2006 86 –105



servants in many DCs (Bennell, 1994; Budhwar and Debrah, 2001; Das, 1998; Grindle,1997; Prah, 2004). More than anything else, thus, it is the personnel crisis in the civilservice organizations in DCs that has to be addressed if meaningful improvementsin service delivery are to be realized.

Cohen and Wheeler (1997) as well as Hilderbrand and Grindle (1997) summarized thecurrent situation of HRM in many DCs as follows: low salary levels, lack of effectiveperformance standards, inability to fire people, too few rewards for good performance,recruitment procedures that do not attract appropriately trained people, promotionpatterns based too much on seniority or patronage and too little on performance, slowpromotion and lack of reward for hard work and initiative, inadequate and demoralizingmanagement by supervisors (ineffective leadership), underemployment and lack of stimulating assignments. Moreover, Bennell (1994) and Budhwar and Debrah (2001)disclosed that many DCs are trapped by outdated and ineffective HRM systems that putunintended roadblocks in the way.

The situation discussed above being the existing situation of many DCs, one maywonder how HR practices affect performance under such conditions. Recently, thedominant focus on HRM literature has been to demonstrate the importance of effectivelymanaging human resources of organizations (e.g. Ahmad and Schroeder, 2003; Delaneyand Huselid, 1996; Ichniowski et al., 1997). Many scholars have identified a number of HRM-related practices that greatly affect performance. For example, Pfeffer (1994)advocated the use of 16 HRM-related practices to achieve higher performance; Deleryand Doty (1996) identified seven HRM-related practices. More recently, researchershave found that bundles, or systems, of HR practices had more influence on performancethan individual practices working in isolation (Arthur, 1994; Baron and Kreps, 1999;Huselid, 1995; MacDuffie, 1995). In other words, a greater use of those specifiedpractices results in higher performance across all types of organizations or countries. Aswill be discussed, in this study, we used eight HR practices that we assume affect

performance.Performance, as underlined by Paauwe (1998) and Guest (1997), is a multifaceted andcomplex phenomenon. It is difficult to clearly know to what extent HRM affectsperformance. When it comes to measuring public sector performance, the problem iseven more difficult (Guest, 2001: 1100; Hays and Reeves, 1984: 290; Ozgediz, 1983: 59).Performance is, therefore, not the direct result of any one factor such as HRM. Rather,HRM is only one important component of a diverse set of influences that determineperformance level. If we are to speak with any certainty about the extent (net effect) towhich HRM affects performance, one would first need to isolate HR practices effects bycontrolling the rest of the variables bearing on performance. Only when we have madeprogress in measuring the independent and dependent variables can we begin to give fullattention to the way in which they are linked (Guest, 1997: 274). As remarked by Legge(2001: 30), ‘there is a need to open up the “black box” of the process that links HRM andorganizational performance’. This is mainly due to the existence of intervening variables.

Unless very careful controls are used to take account of all factors affecting performance,it is possible that the results may overstate or understate the influence of HRM onperformance (Fey et al., 2000; Guest, 1997; Wright et al., 2003). What has so far beenachieved is a skeletal finding and we need to put a lot of flesh on the bones (Boxall, 2003;Guest, 1997; Paauwe, 1998).

Although our knowledge of the net impact of HRM functions on performance is stillincomplete, there is no shortage of assumptions and theories regarding the role that HRMplays in positively affecting performance. In other words, despite the absence of unambiguous proof or net impact of HRM on performance, there is evidence that a

88 The International Journal of Human Resource Management



positive relationship does exist between the two (e.g. Becker and Gerhart, 1996; Huselidet al., 1997; Wright et al., 2003; Youndt et al., 1996). Recently, there has been a growingbody of research that seeks to examine the impact, if any, of HR practices onorganizational performance. The most notable studies are those that use large data setsand interrogate data using sophisticated statistical techniques. In general, the availablestudies appear to reveal impressive evidence of robust impacts and outcomes. The nowclassical studies in the United States include those by Becker and Gerhart (1996);Huselid (1995); Huselid et al. (1997); Icheniowski et al. (1997); and MacDuffie (1995).In Britain, the major studies include those by Guest (1997) and Patterson et al. (1997).In the Netherlands, studies include those of Boselie et al. (2001); Paauwe (1998); andDen Hartog and Verburg (2004).

Recently, studies have begun to use HRM outcomes such as employee competence,motivation and role clarity in explaining the HRM–performance relationship. As can be

seen from Figure 1, HR practices lead to HRM outcomes, which subsequently affectemployee and organization performance (e:g: Fey et al., 2000; Guest, 1997; Paauwe,1998). The assumption here is that HRM outcomes serve as mediating variables between

HRM and performance. ‘HR practices give rise to HRM outcomes, which will influenceperformance in and of the organization’ (Paauwe, 1998: 5).

Basically, there are a number of theoretical arguments (e.g. expectancy theory,resource-based theory, human capital theory) supporting the idea that HR practices affectperformance (e.g. Guest, 1997; Paauwe, 1998; Pauuwe and Boselie, 2003; Youndt et al.,1996).These theoretical arguments provide some insights into howHR practices translate

into higher performance. Thus, the logic connecting the HR practices and performance isintuitively appealing and supported by theoreticalarguments from a number of disciplines.Below, a brief discussion is given on the theoretical arguments of expectancy theory

mainly due to the fact that there is a growing consensus that the concept of expectancytheory can provide one possible route to an explanation of how HR practices have an

impact on performance (Becker and Gerhart, 1996; Guest, 1997; MacDuffie, 1995).Expectancy theory assumes that if an employee is to be productive, three elements

must be in place: competence, motivation and role clarity (MacDuffie, 1995). Putsomewhat differently, it has been proposed that HRM outcomes (employee competence,motivation and role clarity) mediate the relationship between HR practices and employee

Figure 1 Conceptual framework for analysing the challenges and prospects of effective HRM incivil service organizations

Teclemichael Tessema and Soeters: HRM in developing countries 89



performance. Employee performance, in turn, positively affects performance at theorganization level. However, given the situation of most DCs, like Eritrea, facingthe problem of retention of professionals, our conceptual framework adds employeeretention as the fourth HRM outcome that affects performance (see also Aredo, 2002;Fey et al., 2000; Hilderbrand and Grindle, 1997; World Bank, 1994b, 1997). Theargument is that if civil service organizations are to provide the needed quality of services (high performance), they must be able to retain professionals (competentemployees who are willing to stay and do not have the intention to leave). As contendedby Taormina (1999: 1060), ‘employee turnover has high potential to negatively affect anorganization since the loss of trained employees would mean a reduction in organizationperformance’. Employee retention is not a frequently cited HRM outcome in thedeveloped world as contrasted with the situation in most DCs. Employee retention maybe particularly important in DCs like Eritrea in which, on the one hand, the country hasbeen experiencing acute shortages of qualified and experienced human resources and, onthe other hand, a high brain drain of qualified civil servants exists (Aredo, 2002; Das,1998; ECA, 1989; Kiggundu, 1989, 1998; ILO, 1998). That is why, recently, it has beenargued that it is a paradox of today’s world that the DCs (such as Eritrea) that have thegreatest need to use professionals to help them along the road to economic and socialdevelopment are not using them efficiently and in fact are losing many of their besteducated young men and women to the developed societies.

To facilitate understanding, different parts of the conceptual framework (Figure 1) arepresented in the following manner: environmental factors such as economic and political(A1–A2) affect HR practices. HR practices (B1– B8) affect HRM outcomes (C1–C4),which subsequently affect employee performance (D). The conceptual framework reveals that HRM outcomes serve as mediating variables between HRM andperformance. Our conceptual framework provides a clear chain of causation. It isassumed that other things being equal, employees who are motivated are more effective

and productive than apathetic employees; competent employees are more effective andproductive than incompetent employees; employees with clear duties and responsibilitiesare more productive than employees with role ambiguity and confusion; and employeeswho do not have an intention to leave are more productive than those who have anintention to leave the organization. Thus, the higher the above HRM outcomes in place,the better HR contribution would be (e.g. Becker and Gerhart, 1996; Den Hartog andVerburg, 2004; Guest, 1997, 2001; Paauwe, 1998).

Given the scheme in Figure 1, one may ask which HR practices impact on theaforementioned HRM outcomes: employee competence (ability to work), motivation(willingness to work), role clarity (clear duties and responsibilities), retention(willingness to stay)? A considerable amount of research has been done concerningthe relationships between HR practices and the above-mentioned HRM outcomes.Although, the research so far conducted is unable to recognize clearly the net impact of each HR practice on HRM outcomes, many of the studies found that different HR

practices are positively correlated with the HRM outcomes. For example, stableconnections have been found between compensation programmes and motivation/ job-satisfaction (e.g. Huselid, 1995; Lienert, 1998), and between promotion opportunitiesand motivation (e.g. Ahmad and Schroeder, 2003; Hilderbrand and Grindle, 1997).Others have also found unequivocal relations between investment in training andemployee competence (e.g. Kalleberg and Moody, 1994), between recruitmentand selection and employee competence (e.g. Hsu and Leat, 2000; Huselid, 1995),between job descriptions and placement and role clarity (e.g. Becker and Gerhart, 1996;Fey et al., 2000) and between compensation and retention (Hilderbrand and Grindle,




1997; Aredo, 2002; Taormina, 1999). The above-mentioned studies, therefore, supportour main argument stating that HRM outcomes can serve as mediating variables betweenHR practices and performance.

In this study, we empirically tested the impacts of eight HR practices on HRMoutcomes. We also tested the impacts of both HR practices and HRM outcomes togetheron performance, as perceived by the respondents.

Research methodology

This study is based on a sample of ten Eritrean ministries. The data were collected usingtwo methods:

1 A questionnaire distributed to 400 civil servants: in this survey-study, a multi-stagesampling procedure was used: first, ten out of 16 ministries were randomly

included in the sample; next 40 civil servants from each ministry were randomlyselected. In order to create a representative sample, the respondents were equallydrawn from the following five services: administrative service, professional andscientific service, sub-professional service, clerical and fiscal service, and craftsand manual service. All in all, 400 questionnaires were distributed, of which 313usable questionnaires were returned, leading to a response rate of 78 per cent.In total, 23 per cent of the respondents were from the administrative service,24 per cent of them were from the professional and scientific service, 25 per centof them were from the sub-professional service, 16 per cent of them were from theclerical and fiscal service, and the remaining 12 per cent were from the crafts andmanual service. Hence, the non-response rate is somewhat larger in clerical/fiscalas well as crafts and manual services. The questionnaires were developed in theEnglish language and subsequently translated from English into the local language,‘Tigrigna’. Back-translation was not deemed necessary, since the translation was

done by the first author who has mastered both languages. Questionnaire data werecollected in April and May 2003.

2 Interviews with ordinary civil servants and management bodies: specifically, in-depthinterviews were conducted with: (a) ten HR managers, (b) ten HRD managers, (c) theEritrean Civil Service Commissioner, (d) the Director General of the Eritrean HRDProject, and (e) 50 ordinary civil servants. As to the process of conducting theinterviews, first we identified relevant concepts from the literature to be used as asignpost for us in order to focus the interviews on the most important issues. Theintervieweesrespondedin thelocallanguage to facilitate communications andwe thentranscribed the interviews into English on the same day the interview was conductedwhile observations and information were fresh in our memory. The transcribedinterviews were read and the essential issues reported were annotated.

The questionnaire we administered contained eight HR practices, which included the

following items: recruitment and selection practices with five items, placement practiceswith three items, training practices with six items, compensation practices with sixitems, employee’s performance evaluation practices with six items, promotion practiceswith three items, grievance procedures with three items, pension programme (socialsecurity) with three items. In addition, four items with regard to HRM outcomes andthree items with regard to performance as perceived by the respondents were included(see Appendix 1 for the specific measurements). The model therefore consists of eightHR practices as predictor variables and HRM outcomes as well as performance asdependent variables. Respondents were asked to indicate the degree to which they agreed




or disagreed with the items related to the above HRM issues (see Appendix 1). All theitems were measured on a five-point scale ranging from 1, ‘strongly disagree,’ to 5,‘strongly agree’ (see Table 1 for explanation and scale reliability). The analysis alsoincludes three ‘control variables’. Except for the variables ‘tenure’ and ‘monthly salary’,which are simply entered in the equation as continuous variables, ‘gender’ is measuredwith a dummy variable.

Table 1 portrays the alphas to check the reliability of the eight HR practices and HRMoutcomes as well as the perception of performance. All alphas range from .71 to .92,which can be considered satisfactory. We also performed ANOVA tests to discoverwhether there are differences among the ten sample ministries; the tests, however,demonstrate that the perceptions of the respondents are found to be statistically notsignificant among the ten sample ministries. This is mainly due to the fact that the tensample ministries are part and parcel of the Eritrean Ministries (civil serviceorganizations) operating under fairly similar conditions.

Results

As Table 1 discloses, the overwhelming majority of the variables were rated fairly low(mean values ranging between 2.1 and 2.9 on a five-point scale), which in turn signals themagnitude of the problems associated with HR practices, as will be discussed later.

Table 2 presents the correlations between the variables included in the analysis. Thereare a number of item correlations; hence, potential multicollinearity had to be considered.We computed variance inflation factors (VIFs), which indicated that multicollinearitywas not a problem for the variables in the regressions whose results appear in Tables 3and 4. As predicted, with the exception of placement practices, the other seven HRpractices are significantly positively correlated with HRM outcomes (see Table 2). Suchcorrelations may disclose that HR practices affect HRM outcomes, as demonstrated in

our model (see Figure 1). Overall, the pattern of results reported in Table 2 is consistentwith our study’s underlying theoretical premise, that HR practices are positivelycorrelated with HRM outcomes (see also Ahmad and Schroeder, 2003; Becker andHuselid, 1998; Guest, 2001; Ichniowski et al., 1997; Paauwe, 1998).

One of the goals of the present study was to test to what extent the eight HR practicesexplains the HRM outcomes, which are the mediating variable between HR practices andperformance. To that end, we performed a regression analysis (see Table 3). Table 3demonstrates that five out of the eight HR practices identified in this study show astatistically significant positive impact in explaining the change in HRM outcomes andare greater than or equal to b ¼ .10. The five significant HR practices are recruitmentand selection practices, training practices, compensation practices, grievance procedures,and pension or social security programmes. In addition, the eight HR practices altogetherexplain about 54 per cent of the change in HRM outcomes (R2

¼ .54). Generallyspeaking, we found reasonably good support for the propositions of our model. This may

suggest that the more the HR practices are in place, the more HRM outcomes would beup to standard, which subsequently would positively affect performance (e.g. Guest,1997; Ichniowski et al., 1997; MacDuffie, 1995; Paauwe, 1998; Wright et al., 2003).Hence, we have found that the more HR practices are in place, the more the civil servantsare competent, satisfied with the existing HR practices, have sufficient role clarity in their job and have no intention to leave the organization. These findings are in line with thepredicted relationships and thus support our model.

Results presented in Table 3 also show that compensation and pension practices arethe major contributors to the HRM outcomes (b ¼ . 24 and .21). One of the main reasons




Table 1 Descriptive statistics and Cronbach’s alphas

Variable in model High value means Alpha Mean M

Recruitment and selection practices (5 items) Strongly agree that effective recruitment

& selection practices exist

(.75) 2.7

Placement practices (3 items) Strongly agree that effective placement

practices exist

(.92) 2.7

Training practices (6 items) Strongly agree that effective trainingpractices exist

(.75) 2.7

Compensation practices (6 items) Strongly agree that effective compensationexists

(.82) 2.4

Employee performance evaluation practices(6 items)

Strongly agree that effective employeeperformance evaluation practices exist

(.73) 2.9

Promotion practices (3 items) Strongly agree that effective promotion

practices exist

(.74) 2.4

Grievance procedure (3 i tems) Strongly agree that effective grievance

procedures exist

(.72) 2.7

Pension programme (3 items) Strongly agree that effective pension

programme exists

(.86) 2.1

HRM outcomes (4 items) Strongly agree that high HRM

outcomes exist

(.71) 2.6

Performance (3 items) Strongly agree that respondent’s own performanceis relatively good

(.74) 2.9

Gendera M/FTenure Years of work experience 17.2 Salaryb Monthly salary level in Nackfa 1463 2

Notes:a 33% were female;b monthly salary is in terms of Nackfa. US$1 ¼ 13.5 Nackfa as of September 2003.



Table 2 Correlations matrix

No Variables 1 2 3 4 5 6 7 8 9 10 11

1 Gender

2 Tenure 2 .0453 Salary 2 .24** .27**4 Recruitment and selection

practices

.13* 2 .05 2 .10

5 Placement practices .00 .04 .06 2 .076 Training practices .08 .03 2 .10 .63** 2 .15*7 Compensation practices .05 2 .08 2 .12 .41** .06 .42**8 Employee performance

evaluation

.04 .11 .01 .43** 2 .10 .52** .43**

9 Promotion practices .09 .06 2 .10 .55** 2 .04 .72** .49** .47**10 Grievance procedure .07 2 .08 2 .10 .46** 2 .01 .50** .59** .37** .50**11 Pension programme .04 .03 2 .11 .50** 2 .08 .49** .52** .45** .55** .43**12 HRM outcomes .10 .01 .00 .57** 2 .06 .59** .59** .48** .56** .54** .58

13 Performance level .15** .04 2 .07 .57** 2 .09 .66** .38** .65** .48** .42** .45

Notes:

**Correlation is significant at the 0.01 level; and *correlation is significant at the 0.05 level (two-tailed).



why the contributions of compensation and pension practices are found to be the highest

is that, given the poor economy and volatile environment of most DCs including Eritrea,one may expect a greater impact of these two HR practices on HRM outcomes. As

previously discussed, compensation issues affect most HR practices or functions either

directly or indirectly. For instance, compensation affects employee motivation (Huselid,

1995; Lienert, 1998) and retention–intention to stay in the organization (Becker and

Gerhart, 1996; Grindle, 1997; Pfeffer, 1994).In model 2 in Table 3, when gender, tenure and salary are added, the R 2 change that

we found was only .01. However, in connection with the importance of compensation

Table 3 Results of regression analysis on HRM outcomes

Variables Model 1a Model 2 a

Recruitment and selection practices .17** .16**

Placement practices .00 2 .02Training practices .20** .20**

Compensation practices .24*** .25***

Employee performance evaluation practices .06 .05Promotion practices .01 .00

Grievance procedure practices .10* .10*Pension practices .21*** .22***

Gender .06Tenure .00

Salary .11**

F 44.0

***

33.3

***

R2 .54 .55

R2 change .01*

Notes:a Standardized regression coefficients are reported; * p , .05; ** p , .01; *** p , .001; n ¼ 313.

Table 4 Results of regression analysis on performancea

Variables Model 1b Model 2b Model 3b

Recruitmentment and selection practices .19 *** .18 *** .12 *

Placement practices .03 .03 .03Training practices .37 *** .37 *** .30 ***

Compensation practices 2 .03 2 .03 2 .12*Employee performance evaluation practices .40 *** .40 *** .38 ***

Promotion practices 2 .12* 2 .12* 2 .12*

Grievance procedure .06 .06 .02Pension or social security .07 .07 2 .01Gender .08* .06

Tenure .00 .00Salary 2 .01 2 .05HRM outcomes .35 ***

F 49.1*** 36.4*** 42.0***

R2 .56 .57 .63

R2 change .01 .06***

Notes:a Performance as perceived by the respondents themselves.b Standardized regression coefficients are reported; * p , .05; ** p , .01; *** p , .001; n ¼ 313.




practices, salary was also found to be significant, which in turn suggests thatcompensation-related issues considerably affect HRM outcomes such as employee’smotivation and retention, as already mentioned.

As indicated in the introduction, we have gone further to inspect the impact of the eight HR practices plus HRM outcomes together on performance as perceived by therespondents (see Table 4). Table 4 also depicts some important results: three of the eightHR practices show a statistically significant positive impact in explaining the change inperformance, namely recruitment and selection practices, training practices, andemployee performance evaluation practices. In addition, the eight HR practicesaltogether explain about 56 per cent of the change in performance (R2

¼ .56). Asrevealed in Table 4, employee performance evaluation is found to be a major contributorto performance (b ¼ .40, p , 0.001). This may be because employee performanceevaluation is crucial for most HR practices in that, if it is done properly, it could serveseveral purposes: first, for taking proper personnel actions such as salary increment,promotion and other incentives; second, for assessing the strengths and weaknesses of employees and taking the appropriate training and development measures; and third,for assessing the effectiveness of HR practices such as recruitment, selection andtraining (Baron and Kreps, 1999; Bowen and Ostroff, 2004; Kalleberg and Moody, 1994;Pfeffer, 1994).

An interesting finding of our study is that, although we expected that the impact of HRpractices would weaken as we go to the right side of our conceptual framework – i.e.towards performance ‘D’ in Figure 1 (Fey et al., 2000; Guest, 1997; Legge, 2001;Paauwe, 1998) – we found that the eight HR practices altogether explain 56 per cent of the change in performance (R2

¼ .56). Thus, contrary to our expectation, the impact of the eight HR practices on performance (R2

¼ .56) exceeds that of HRM outcomes (R2¼

.54) (see Tables 3 and 4 and Figure 1).In model 3 in Table 4, when gender, tenure, salary and HRM outcomes are added, the

R

2

change that we found was .06, which is significant at p ,

.001. Besides, HRMoutcomes are found to show a considerable positive impact, which in turn may suggestthe importance of HRM outcomes in affecting performance. All these results confirm ourexpectations based on theoretical insights. Clearly, the HRM–performance link that hasbeen demonstrated in the Western hemisphere also exists in the Eritrean context.However, there is one exception. In all three models of Table 4 we found significantnegative correlations to exist between the existing promotion practices and employeeperformance. This finding suggests that the respondents with a (claimed) betterperformance record are less convinced that the existing promotion practices are based onwritten, formal policies and that priority is given to merit and seniority when decisionson promotions are taken (see Appendix 1). Obviously, those respondents feel thatdecisions on promotions are too much influenced by other, mainly politicalconsiderations, which is a well-known point of concern in the Eritrean civil service(e.g. Soeters and Tessema, 2004; Tessema and Soeters, 2005).

Discussion

One of the main goals of this study has been to discuss the HRM challenges facing civilservice organizations in DCs such as Eritrea. To that end, we have presented the impactsof HR practices on HRM outcomes, which subsequently affect performance at theemployee level. Again we have to stress that our results have demonstrated a strongHRM–performance link in the Eritrean civil service. As such, our study aligns to a largedegree with other studies on the HRM–performance link in Western countries. However,




the situation is not fully comparable to the situation in Western parts of the world. In thissection, we need to go further to relate the empirical findings to the actual economic andpolitical environment of Eritrea. One important issue is the role of the environmental factors (economic and political), which are decisive in influencing the impact of HRpractices on the performance of civil servants in DCs (see also Austin, 1990; Budhwarand Debrah, 2001; Grindle, 1997; Jaeger et al., 1995; Kiggundu, 1989; Wasti, 1998).Environmental factors, according to Kiggundu (1989: 75), ‘can be very instrumentaleither in facilitating or in hindering the operation of an organization’. However, aspreviously described, the Eritrean economic and political environment within which theeight HR practices operate has not been conducive in maximizing the impact of HRpractices on performance. As a consequence, these eight HR practices were rated fairlylow (between 2.1 and 2.9 on a five-point scale) by the respondents.

Most DCs are known for their economic problem in financing different projects andprogrammes, including HRM programmes (e.g. Freeman and Lindauer, 1999; Jaegeret al., 1995; Kiggundu, 1989; Prah, 2004). Almost all of the senior civil service managersinterviewed pointed out that because of the deteriorating Eritrean economy (see alsoUNDP, 2002; National Statistics Office, 2003), they were unable to allocate the requiredresource for the eight HR (mainly compensation) practices. This demonstrates that, in aperiod of budget constraints, the ability to pay has become the key criterion in paydetermination, overshadowing any broader conceptions of comparability. For instance,according to the CPA (2002a), as of 2002, employees of international NGOs and theprivate sector were earning a salary that is about three times higher than that of the civilservants. This implies that there is a wide gap between the public and international NGOsand private-sector pay, in favour of the latter. The existing compensation practices havebeen adversely affecting most HR practices (see also Amanuel and Tesfagabir, 2002;CPA, 2002b; Soeters and Tessema, 2004).

The prevailing situation has made it increasingly difficult for Eritrean civil service

organizations to attract qualified and suitable applicants, which in turn affects their abilityto be selective in their hiring exercise. Moreover, it has adversely affected the impact of training in that although many civil servants have been given training opportunities bydonor agencies and countries, they have been unable to utilize their expertise effectively,mainly due to the unattractive compensation programmes. As a consequence, civilservants tend, once they have obtained better qualifications through training, to move overto the private sector or International NGOs or overseas. This phenomenon is widespreadin numerous developing countries (e.g. Cohen and Wheeler, 1997; Das, 1998; Grindle,1997; ILO, 1998; Tessema et al., 2005; World Bank, 1994b). Thisis mainly due to the factthat if training is not supplemented with necessary incentives, it may not increaseemployees’ motivation as well as their commitment to the organization. Prah (2004: 3)argues that in most SSA countries, middle-level officials can still barely feed, let aloneadequately house, clothe and educate their family. It was also underlined that temporarysolutions like increasing salaries on a project basis or earmarking foreign assistance to

enhance remuneration were not found to be sustainable for the aforementioned problem(Das, 1998; Maggregor et al., 1998). Unattractive compensation has been important inundermining the previously existing capacity (see also Cohen and Wheeler, 1997: 137;Hilderbrand and Grindle, 1997: 42). The prevailing economic context, within whichHRM is taking place in most DCs like Eritrea, has therefore adversely affected theimpacts of HR practices (Analoui, 1998; Lienert, 1998).

Furthermore, like many DCs, the Eritrean political environment does not seem tomaximize the impact of the eight HR practices. It has been underscored thatorganizations in developing countries often face a highly volatile and unstable political




environment (see also Austin, 1990; Kanungo and Jaeger, 1990; Kiggundu, 1989). Forexample, according to Kiggundu (1989: 62), many developing countries arecharacterized by unexpected political changes, which create so much environmentaluncertainty and complexity that managers consider almost any planning or strategicmanagement responses impossible. DCs in general and sub-Saharan African (SSA)countries in particular are characterized by low predictability of events, unstable politicalclimates and corrupt legal practices (see also Chabal and Daloz, 1999; Prah, 2004; Smith,2003). Continuity of government policies is also hindered by frequent changes in rulinggroups or individual government officials. In some instances, these political groups striveto gain and consolidate their power through coercive means. Patrimonial tendencies arestrong (Beugre and Offodile, 2001; Chabal and Daloz, 1999). Patrimonialism grew out of the single-party, military or one-man-rule states, which have characterized many DCs.By and large, the consequences of political instability for HR practices are significant.Indeed, it is frequently cited as one of the main reasons for qualified civil servants tomigrate to the West (ILO, 1998; Aredo, 2002).

It is also interesting to note that the civil service of many DCs has been politicized.As noted by Das (1998: 19), ‘politicization of the civil service has resulted in totalerosion of traditional civil service values such as political neutrality, probity,rectitude, and objectivity’. Interviews conducted with the civil servants uncovered thatthe politicization of the Eritrean civil service has affected many HR practices, such asrecruitment and selection, placement and promotion, and compensation. For instance,about 34 per cent of the interviewees believed that recruitment and selection practicesare inconsistent with modern principles such as open, fair and merit based. That iswhy many scholars noted that favouritism, nepotism and political loyalty have beenaffecting recruitment, selection and promotion practices in many developing countries(e.g. Bennell, 1994; Beugre and Offodile, 2001; Das, 1998; Soeters and Tessema,2004; World Bank, 1994b). About 38 per cent of the interviewed civil servants also

believed that the existing environment diminished the link between performance andreward, which in turn suggests that employee performance evaluation is often largelybased on compliance rather than productivity. The finding of our study also reflectsthe general situation of the civil service in most developing countries (e.g. Analoui,1998; Bennell, 1994; Beugre and Offodile, 2001; Soeters and Tessema, 2004). As aresult, many HRM decisions have been taken subjectively. As Waiguchu (Waiguchuet al., 1999: 198) puts it, ‘in an authoritarian setting, an appraisal system isunavoidably one-sided. In such a case, the supervisor’s view of the subordinates’performance prevails.’

Interviewed senior civil service managers noted that placement and promotion toupper middle and top civil service positions are very much politicized in that the majorityof the senior positions in the Eritrean Civil Service (Minister, General Director, Director,and Unit Head) are held by individuals who are loyal to the government. Although a civilservice is composed of both political appointees and career civil servants, of whom the

political appointees are few in number and occupy top or most senior positions (Heady,1996), the Eritrean case reveals that the political appointees have even been holdingpositions that conventionally are occupied by career civil servants (see also Pool, 2001;Soeters and Tessema, 2004). Hence, non-merit considerations have been very muchaffecting promotion decisions, which in fact we have shown in our regression analyses(see Table 4). Up to now, there is no clear dividing line between administrationand politics. As Heady (1996) argues, some systems are ‘civil service’ in name only andactually function as ‘spoils’ systems. That is, the government’s personnel systems maybe nominally merit based but practically politically based.




The foregoing brief discussion demonstrates that in an environment where there are nopromising economic and political factors (peace and stability as well as goodgovernance), it is unlikely that a higher impact of HR practices on employee performancewill be achieved. For instance, the Eritrean case shows that, although many scholars andgovernment leaders like Bill Clinton cited it as a beacon of Africa, after seven years of economic growth and political stability, it was again involved in a border war withEthiopia, which in turn has adversely affected the economy as well as the politicalcondition of the country, which further diverted the government’s priority to nationaldefence. It should be noted that the border war between Ethiopia and Eritrea (1998–2000) has affected either directly or indirectly most HR practices. For instance, duringthe border war, about 300,000 Eritreans were mobilized, that is, about 10 per cent of theentire population or more than 50 per cent of the population of working age (Amanuel,2002). Thus, the war had made the normal continuation and effective implementation of many HR practices a very difficult task indeed. One can argue that such an environmentis likely to adversely affect the impact of HR practices on performance.

Heady (1996: 217), after analysing the management of civil servants in developingcountries, underlines that: ‘In single or dominant party political systems, party claims to amonopoly on policy making and executive make it imperative that civil servants passwhatever test of party loyalty may be imposed and that they suffer not only loss of statusor position for falling short, but suffer in other ways as well, including imprisonment,banishment to the countryside, or death . . . in such circumstances, the behaviour of civilservants who want to remain in the civil service is overwhelmingly determined by what isrequired of them by the current party line as to their roles.’

What Heady underlines has great relevance to the actual situation of many DCs andparticularly that of SSA (including Eritrea) where the administrative crisis is most critical and the enforcement of personnel rules and procedures has been brokendown (e.g. Chabal and Daloz, 1999; Prah, 2004; Smith, 2003). For the above reason, one

may argue that the rational, hierarchical and meritocratic model has failed in many DCs.One can also suggest that there is nothing wrong with the civil servants of developingcountries, rather there is a problem in the management of the civil servants. The existingsituation has also led to widespread absenteeism, petty corruption, moonlighting (to useoffice hours and equipment for private purposes), and a general breakdown in morale anddiscipline (see also Lienert, 1998: 43; Prah, 2004: 3; World Bank, 1997: 95). One maythen argue that civil service organizations in developing countries such as Eritrea, are notprestigious places that can attract, motivate and retain qualified and experiencedpersonnel (see also Das, 1998; ECA, 1989; Hilderbrand and Grindle, 1997).

The question is, what would be the prospects of HRM in the Eritrean civil serviceorganizations as well as those of other developing countries? One can reasonably arguethat the prospects of effective HRM would be contingent mainly upon the country’seconomic and political condition. That is, if there are improving economy as well aspolitical conditions, there is a high probability of successfully putting into effect all HR

practices thereby positively affecting performance (Dia, 1996; World Bank, 1997).As previously indicated, given the above-stated environmental factors, the impact of the eight HR practices on HRM outcomes in the Eritrean civil service organizations ismore or less in line with the predicted relationships (see Tables 1 to 4). This may suggestthat our findings support the underlining premise of expectancy theory in particular andother theories such as human capital theory and resource-based theory in general (e.g.Paauwe and Boselie, 2003; Youndt et al., 1996). In particular, the findings of this studysupport the idea advocated by expectancy theory in that HRM outcomes could bemediating variables between HR practices and performance at the employee level. Thus,




an important finding of this study is that the assumption of expectancy theory may work not only in the developed world but also in developing countries such as Eritrea.

Our findings can also be viewed in the context of the growing body of research onHRM and performance relationship (e.g. Ahmad and Schroeder, 2003; Delaney andHuselid, 1996; Guest, 1997, 2001; Ichniowski et al., 1997), and the role of theeconomic and political environment in that respect. The present study can be seen asadding to this literature in that, unlike most prior research, we empirically tested themodel in the public sector as well as in the context of DCs. This is because priorresearch has relied mostly on manufacturing industry and other parts of the world. Inthis regard, the key contributions of the present research are: first its attempt to openthe black box (the process aspect) by answering the following questions: ‘how, whenand to what extent do HR practices affect HRM outcomes, which subsequently affectperformance?’ (Becker and Huselid, 1998; Guest, 1997, 2001; Legge, 2001; Paauwe,1998); and second, its attempt to relate the findings to the economic and politicalenvironment, in explaining the HRM challenges facing civil service organizations inDCs. Hence, our study has important implications for the theoretical and practicaldebate in the area of the HRM–performance relationship.

Conclusion

This paper concludes that if the civil service organizations in developing countries likeEritrea are able to successfully implement HR practices, they could achieve themaximum contribution of their employees, although, at present, the economic andpolitical environment within which HR practices operate is not that conducive (see alsoHilderbrand and Grindle, 1997; Jaeger and Kanungo, 1990; Kiggundu, 1989; Prah, 2004;Wasti, 1998).

This study provides further evidence with regard to the link between HR practicesand performance and relates the findings to environmental factors such as economic andpolitical influences. This study joins a growing body of research that attempts to open theblack box by explaining how, when and to what extent HR practices affect performanceat employee level. And thus, it is believed that this study contributes to research on theHRM and performance relationship in general and that of the civil service of developingcountries in particular.

While this study is an important step forward in understanding how, when and towhat extent HR practices affect performance, as well as the challenges and prospectsfor effective HRM in developing countries, it also leaves some questions open forfuture research. First, the sample size may not be very large to generalize the findings;second, this study is the first of its kind and thus we have not found prior studies againstwhich to compare our findings. This is because similar studies in a similar environmenthave not been conducted. Hence, in order to generalize and validate the findings of thisstudy, we suggest that the same study is conducted with a larger sample size in other

developing countries.

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Appendix 1: Measurement of items

Respondents were asked to indicate the degree to which they agree or disagree with thefollowing items related to different HRM issues. All the items were measured on a five-point scale ranging from 1, ‘strongly disagree’ to 5, ‘strongly agree’.

I Recruitment and selection practices

1 Presence of written and operational recruitment and selection policy2 Presence of clear job description and specification

3 Presence of attractive salary scales that can attract qualified applicants4 High role of merit in recruitment and selection exercise*5 Presence of a good image that attract qualified applicants




II Placement practices

1 Assignment to the best position

2 Presence of clear duties and responsibilities*3 Presence of good supervision

III Training practices

1 Presence of clearly written and operational training policy2 Presence of continuous training needs assessment*3 Presence of written & operational trainee-selection procedure

4 Presence of government’s commitment to training*5 Presence of linkages of training to other HR programmes6 Continuity of monitoring and evaluation of training programmes

IV Compensation management practices

1 Presence of attractive compensation system

2 Presence of equitable internal salary3 Presence of equitable external salary

4 Presence of salary that reflects performance*5 Presence of salary that encourages better performance6 Presence of salary that reflects the standard of living

V Employee performance evaluation (EPE) practices

1 Presence of written and operational EPE

2 EPE results has a lot to do with salary*3 EPE results has a lot to do with personnel decisions4 Provision of feedback of EPE results

5 EPE is considered as important task by superiors6 Performance evaluators are knowledgeable

VI Promotion practices

1 Presence of written and operational promotion policy

2 Provision of priority to merit in promotion decision3 Provision of priority to seniority in promotion decision

VII Grievance procedure

1 Presence of written and operational grievance procedure

2 Presence of written and operational disciplinary programme3 Presence of superiors who are knowledgeable in solving personnel-related problems

VIII Pension programme or social security

1 Presence of attractive pension programme2 I feel secure financially in the future *3 I save money in a bank for the future

IX HRM outcomes

1 I have got training that makes me competent (competence)2 I am satisfied with HR practices (satisfaction/motivation)

3 I do not have role ambiguity and confusion (clarity of role)4 I do have an intention to leave the organization (retention)*

X Performance as perceived by the respondents

1 My performance is better than that of my colleagues with similar qualifications2 My performance is better than that of employees with similar qualifications in other ministries3 The performance of my ministry is better than that of other ministries

*Items that were phrased as negative are reversed in the analysis in order to be in the same direction. Thus, all

items are measured on the same underlying dimension.


Challenges and Prospects of HRM

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