Posted: November 10th, 2014

HR Management Practices and Customer Satisfaction: The Mediating Effect of Effective Supply Chain Management Practices

HR Management Practices and Customer Satisfaction: The Mediating Effect of Effective Supply Chain Management Practices

Project description
do a proper Literature Review on attached study (HR Management Practices and Customer Satisfaction: The Mediating Effect of Effective Supply Chain Management Practices), preferably 1.5 pages.

It should include all the elements of a literature review like the following: what the author wants to study, hypothesis, ways of conducting the study, reporting important findings with referring their significance validity reliability etc. and conclusion etc.
Global Business and Management Research: An International Journal
Vol. 5, Nos. 2 & 3 (2013)

137
HR Management Practices and
Customer Satisfaction: The Mediating
Effect of Effective Supply Chain
Management Practices

Kalpina Kumari
1*
, Sania Usmani
1
, and Javed Husain
2

1
Lecturer and PhD Scholar, Iqra University, Pakistan
2
Dean, Management Sciences, Iqra University, Pakistan
*Corresponding author Email: [email protected]

Abstract
Purpose:  This  article  provides  practical  rationalization  for  a
framework  that  recognizes  important  elements  of  SCM  practices  and
HRM  practices,  and  explaining  their  association  leading  towards
satisfaction  of  customers,  which  is  ultimate  goal  of  every
organization.  It  evaluates  following  four  questions  based  on  this
research:  (1)  Do  organizations  have  high  levels  of  customer
satisfaction,  which  are  excelling  in  HRM  practices  (2)  Do
organizations  have high levels of SCM practices, which are excelling
in HRM practices (3) Do organizations   have  high  levels of customer
satisfaction,  which  are  excelling  in  SCM  practices  (4)  Do
organizations  have  high  levels  of  customer  satisfaction,  which  are
excelling in HRM practices; even though when the effects of effective
SCM practices are controlled.
Design/methodology/approach:  Data  for  the  research  were  gathered
from  6  different  organizations  and  the  relationships  projected  in  the
hypothesis  model  were  tested  by  employing  structural  equation
modeling. In order to investigate these relations an already extensive,
valid,  and  consistent  developed  instrument  has  been  used.
Convenience  sampling  technique  from  non-probability  sampling
method has  been  implemented and survey  method was used to gather
information from the employees for this study.
Findings:  Outcomes  exhibited  positive  correlations  for  the  variables
tested; representing that increase in HRM practices and SCM practice
can  direct  towards  enhanced  satisfaction  of  customers  in  an
organization  and  SCM  also  mediates  the  association  between  HR
management practices and customer satisfaction.
Originality/value:  It  is  anticipated  that  finding  of  this  paper  will  be
very useful and practical for even both academicians and practitioners.
Not only  it  would  broaden  the  extent  of  study  at  the  academic  level,
but may help active managers to comprehend the significance and role
of  human  resource  in  gaining  SCM  effectiveness  which  in  turn  help
out the  managers  to  gain  customer  satisfaction  which  is  ultimate  and
vital goal of every organization

Global Business &
Management Research:
An International Journal

Vol. 5, Nos. 2 & 3, 2013
pp. 137-160
Global Business and Management Research: An International Journal
Vol. 5, Nos. 2 & 3 (2013)

138
Keywords: HRM Practices, SCM Practice, Customer Satisfaction
Paper Type: Research paper

Introduction
Globalization,  technological  advancements,  innovations  and altering  customer’s
demands  and  expectations,  creates  cut  throat  competition  and  increase  uncertain
environment for organizations. Struggle for flexibility is essential for firms to face more
ambiguous and rapidly altering atmosphere. In this era of global village, business world
has to deal with intense competition from around the world. Where, a firm’s human
resource is one of the sources of competitive advantage (Becker & Huselid, 1998).
Present  management  distinguished  the  satisfaction  of  customer  as  the  main  item  in
business  and  directs  towards  enhancing  management  relationships  to  achieve  firm’s
success. There is a significant difference between the present business settings from the
past, where competition plays an exceptional role (Gilaninia & et al, 2011).
Firms  should  provide  immense  focus  on  customer  orientation  and  strengthen
relationship  with  the  vendors  in  order  to  survive  in  today’s  economic  competition.
(Abbasi,  Torkamani,  2010).  The  satisfaction  of customers  is  the  focal  point of  all
marketing  and  management  related practices  (Gilaninia  &  et  al,  2011).  Leading
supervisors acknowledge  that  through  customer  satisfaction  overall  objectives  of  the
firms  can  be  achieved  (Seyedi,  Moosavi,  Heidari,  2009).  Due  to  globalization
customer’s demanding quality and  speedy  services  have pressurized  firms, so that they
are unable to administer all functions alone (Heidari Gharehbagh, 2009).
The function of  HRM  for  the successful and  valuable execution  of  marketing related
strategies has been extremely highlighted in marketing research and so many evidences
have  been  found  in  literature  review  of  customer  satisfaction.  Wernerfelt  (1984)
emphasized that for the successful implementation of all kinds of strategies and policies
need  the  ownership  of such resources  that  are  precious,  exceptional  and  hard  to
duplicate.  Undoubtedly  it  includes  the  requirement  of  HRM  practices  so  that  the
valuable  marketing strategies particularly  strategies  for satisfaction of  customer can  be
implemented in organizations.
With intense rivalry and opposition in the 1990s and formation of global markets, it has
become  very  difficult  job  for  the  organizations  to deliver  products and  services to  the
desired destination at  the accurate  time  along  with  lowest  cost.  Companies  started to
apprehend  that  enhancing  efficiencies  within  a  firm  is  not  enough,  but  their entire
supply chain such as their distributors, their suppliers even their customers should have
to  perform  efficiently  and  effectively  for  the  success  of  on  organization.  Hence,
effective  SCM  happens  to  be  a  potentially  important  way  of  achieving sustainable
competitive  advantage  and  enhancing profitability of  a  company  as  competition  has
extended from just being between firms to whole supply chain.

Literature Review
In  today’s  service  economy,  the  main  and  important facet  in  order  to  attain
organizational success is customer happiness. Present competitive business environment
lays  emphasis  to increase the focus on delivering  value  to  satisfy  the  customer.  The
spotlight of  most organization’s in today’s world falls upon providing better products
and  services  in  contrast  to  competitors.  Along  with  focus  on  customer  value,
organizational environment  is seen as being  intricate and uncertain (Christopher, 2000;
Goldman  et  al.,  1995).  In  a  service  industry,  the culture of  organizations  carries
potential  to  influence the satisfaction and  happiness  of  customer as  they are  having
directly contact and  interaction with them.  By  sustaining the difference between  the
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customer and company, workforce has the capabilities to improve core competency  by
influential  customer  buying  behavior  and  loyalty (Heskett,  Sasser,  &  Schlesinger,
1997).  Thus,  it  is  vital  to  figure  out  those  organizational  practices  that create the
positive service communications amongst customers and employees.

Human Resource Management Practices and Customer Satisfaction
In  organizations, there  are  also  so  many other  functional  areas apart  from  marketing
area such  as  Human  Resource  management  (HRM) which also focus on  the customer
satisfaction (CS). HRM also executes an extremely  important  role in  order  to achieve
CS,  in  different  business  sectors.  It has  stressed HRM  to  generate particular set of
strategies  to  generate  customer  satisfaction. However,  few  researches emphasize  on
assessing the HRM strategies for the satisfaction of customer and calculate their role for
CS in organizations
Some researchers acknowledged HRM  as one  of  the fundamentals of  firms  and  they
have claimed  in  their  findings  that  today’s  organizations   can  accomplish  CS  by
designing  essential  composition,  processes, showing  customer-oriented  values  and
creating customer- oriented employees (Deshpande,  Farley  and  Webster,  1993:,  Slater
and Narver, 1995). The outcome of these researches evidently declares HR as one of the
vital factor of a firm in order to achieve CS. However, the question is whether the entire
staff  in  the organization holds  equally  importance in CS.  Kelly  (1992) declared that
customers  create a  network  with only  those employees of  an  organization  with  whom
they  are  having  direct  interactions  and  communications. So  it  is  apparent from  the
above  statement that the employees’ behavior that has direct communication with the
customer is of greatly important in this regard.
Some  factors  were  identified  by  researchers  concerning  with HR of an organization
linked  to  CS.  Rosemary  (2002)  identified  several HR  determinants  for  Customer
satisfaction like regular investment  in employee training, staff security,  high  relative
compensation and performance evaluation and management system.
Compensation act as a foundation within these HR strategies. It is reported by American
quality  foundation  (1992)  that  growing number  of  firms  in Japan,  U.S., Canada and
Germany have incorporated CS model in their top management compensation structure.
The implication of compensation on CS has been raised by a few researchers (Phillips et
al.,  1990:  Mercer,  1992).  The discussion point  is how compensation  system  brings
implication on customer satisfaction. Argued by Hauser et al. (1994), focus of customer
oriented compensation is always on the employee’s hard work ranging from short term
to long term sales, developing high concerns for the satisfaction of customer.
Employee motivation is another important dimension in order to accomplish satisfaction
of customers. Deming (1986) acknowledged that it is firm’s responsibility to formulate
an  incentive  system which  directs to standardization among the firms and employees’
objectives, so firm can  take  so  many  benefits when  employees are acing in  their  own
optimum  interest.  The  motivation  of  employees  should  result  in  their  focus  on
performance as well as customer satisfaction. In an effort to attain customer satisfaction,
training and development possess great value  for  a  firm. So  in order to achieve higher
customer  oriented  behavior  unique consideration has  been given  here  to  modify  the
attitudes and values of employees. It was argued by Siguaw, Brown and Widing (1994)
that  a  considerable  facet  of  implementing  customer  oriented  strategies  is  workforce
motivation  specially  the  sales  staff adopt  preferred  track  in their  selling  efforts.  The
customer oriented attitude prompt that kind of behavior in the employees which is loved
by customers to a large degree creating satisfaction of customer (Badovick and Beatty,
1987).
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Employee  empowerment  is  yet  another  important factor which also aids  in  improving
customer  satisfaction.  Basically, it  is  the  process  of  permitting  employees  to  exercise
control over job- related circumstances and decisions by delegating authority and power
(Conger  and  Kanungo,  1998). Numerous  advantages  of  employee  empowerment  were
revealed  by Bowen and Lawler (1992) for  instance quicker reaction to customer issues
and demands,  more-satisfied  employees,  excited  and  affectionate  customer  dealings,
and  pioneering  ideas. Moreover,  empowered  workforce displays  customer  oriented
performance  as  they  turn  into  adoptive and  flexible in  the face  of  shifting customer
demands (Scott  and  Bruce,  1994).  Hence,  based  on  this  discussion  there  is negligible
doubt  that  empowered employees’  may  perform  their  tasks  leading  to  customer
satisfaction rather than underpowered workforce in organization.
Another  important core  job  of  Human  Resource  Management  is  workforce  evaluation,
which  is  concerned  with  workforce  behavior;  hence  grasp  implication  on  the
satisfaction of customer (Hartline et al., 2000). Many researchers evaluated the  impact
of  behavior-based  employee  evaluations,  and  pointed  out  many  positive  aspects
associated  with  workforce  like  employee  competence  (Cravens  Et  al.1993),  job
satisfaction,  (Oliver  and  Anderson,  1994),  confidence  (Gist  and  Mitchell,  1992) and
adoptability (Scott and Bruce, 1994). Additionally, as discussed by Berry Zeithmal, and
Paraguayan (1988) behavior-based evaluations encourage employees’ performance that
is consistent with expectation of customer leading to the satisfaction of customer.
Organizational socialization is one more perspective to achieve customer satisfaction. It
is  the  method  through  which employee  can  achieve  the  social  knowledge  and
organizational  skills essential  to  assume  an  organizational  role  (Van,  Maanen  and
Schein,  1979)  This  will  surely  help  out  to  improve  knowledge  and  skills  of  the
workforce,  leading  to  developed social  dealings  amongst  internal  and  external
organizational members. Apparently generating,  sustaining  and  effectively  managing
the  committed  workforce  socialization,  particularly  customer  facilitators  can  bring
about customer satisfaction.
Hiltrop  (1996)  supports  the  view  that  HR  practices  plays  a  significant  role  in  altering
the employees’ behavior required to implement the competitive strategies. It is evident
from  literature  that  the  modification of employees’  behavior  and  attitude  directs to
satisfaction of customer of firms particularly in service organizations.

Human Resource Management Practices and Effective Supply Chain Management
Practices
Less  research  has  assessed  the  connection  between  HRM  and  SCM  performance
concluding that  development  of  SCM come  from  the  integration  of  manufacturing
process and  marketing  process.  It emphasized  performance  measurement  of  SCM
largely  on  problems  such  as  resource  efficiency,  cost reduction,  and  customer  service.
The  aspect  of  enhancing  internal  HR  so  as  to  boost  SCM  practices  is still likely  to  be
studied in a proper way. Although, past researches into the best interest of firms leading
have  declared  that  these  efforts  might  likely  aid  firms  in  optimizing  its  SCM
performance.
In association  with  the  Council  of  Logistics  Management,  Ernst  & Whinney  (1987)
affirmed  that  logistics  excellence  can  be  achieved  by effective human  resource. It is
noted  that those  organizations  which  are ‘excellent’ organizations  in  context  of  SCM
possess  a  strong emphasis  on training  and  re-training of  the  workforce. The  authors
stated that there is a direct relationship between environmental change rate and need for
workforce training and retraining. Human resource developments and training are taken
as  a  strategic necessity in  best  firms. As  declared  by  this  paper,  change  is becoming  a
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routine,  and therefore, via  training best  organizations  can  stay  competitive,  plan  for
future opportunities, and to enhance the payback phase rate for changes.
The emphasis on  human resource development considered as ‘bestin- class’ in context
of  SCM  performance  was  restated by  a  different  study conducted by Michigan  State
University (Bowersox et al., 1989). This paper evaluated a large number of firms so as
to  verify  the  specific  competencies  resulting  in  superior  logistics  act.  This paper
reinforced that human resource development directly impacts the success of SCM trends
and  practices.  These core competencies integrated the  innovative  workforce  ability  to
be  flexible  in  skill  sets  and  roles,  augment their  productivity,  redeployment  and
boundary-spanning duties.
Later,  Ernst  &  Young  (1992)  stated the  human  resource  development  as an  important
factor  in  the  advancement  of  a  “total  quality  organization,”  by  placing  stress  on
participation  of  employees, their education,  and training. Particularly,  human  resource
development  in  successful  organizations  is  chief  concern  in  attaining  the  famous
Malcolm Baldrige National Quality Honor.
Lastly, researchers  from some  institutions  like Pennsylvania  State  University  aimed to
discover  themes  that  expectedly  affect  future  logistics  performance  (Novack  et  al.,
1995). Employees’ would be anticipated to exhibit efficacy in their work and extremely
flexibility to  a competitive  and organizational environment. As  the supply  chains has
been emerged with rising numbers of firms and growing complexities, workforce would
be  in  need to use the  scientific  administration  tools  and have  to  interact effectively
across  a  variety  of  organizational  functions  and units. This is  visible from  the above
discussion that an organization’s capability to surpass in such environment will require
a strong organizational commitment from HRM.

Effective Supply Chain Management Practices and Customer Satisfaction
Satisfying clients absolutely and the globe will beat a path to your door is an attractive
proposition.  However,  the  pathway has  gaps  that  split  suppliers  and  customers.  A.T.
Kearney  highlighted  how  top  firms  emphasize  on  logistics  excellence, interconnect all
stakeholders in the supply chain, and formulate total customer satisfaction into a reality.
Customers demand  superior  service  and  top  quality  products  modified  as  per  their
needs.  Suppliers  are  expected  to  deliver  the  essentials  perfectly  to  the  customers,  and
then  identify “something  extra” that  aids  in  cost cutting  or  increasing  revenues.  Sadly,
many  firms  meet  the  requirements  of “average” customer  by setting  their  logistics
processes. To  compete, these  companies will  need to  redesign  their  logistics  processes
to be much more flexible.
The mandate  for  suppliers  is  clear:  Primarily,  product  design  should  be  accurate.
Secondly, the product performance should be in accordance with “fit and finish” for the
price the customer expects. Thirdly, proper and consistent service is required to present
appropriate  product  to  the  appropriate  customer  at  the  appropriate  time  for  the
appropriate price.
Management,  today,  acknowledged satisfaction  of  customer as  the  foremost  point  in
industry  and  indicate  that  improving  management  relationships  would  result  in
company’s  success.  The  present  organizational  environment  is opposite  from  the
environment earlier, incorporating greater competition than the past (Gilaninia  & et al,
2011). Modern  structural  reforms,  aggressive  competition and  exchange  practices
introduces effective  interactions pattern  between  suppliers  and  buyers  for  long-term
relationships (Seyedi, Moosavi, Heidari, 2009).
Many  different  activities that  were executed out  by  firms them  own  self  are  now
performed by  the  supply  chain. Conversely,  in SCM controlling  and  coordinating  all
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these  practices  is  a  key  issue. Supply  chain  management is  a  phenomenon providing
rapid and consistent service with reduced cost and high quality to customers (Maboodi,
Javanshir, Rashidi, Valipour, 2010).
Today,  rapid advancements  force  firms  to  overcome  the  competitors  by  grabbing
attention  that  influences  the  growth  of  organization  (Shekari,  Akhondi,  Fatollahi,
Sayadmanesh,  2006) Thus,  new  attitudes  and  approaches  about  SCM  have been
established.  Normally,  the  SC  comprise of  at  least  two  organizations,  which  are
different  yet  related  to  one  another  by  means  of  information  and  financial  flows
(Maboodi,  Javanshir,  Rashidi,  Valipour,  2010).    Consequently,  SCM  definition  and
examination  of the  relationships  linking  suppliers  and  satisfaction  of  customer  was
evaluated.  For growth  and  survival  in  modern  economy,  providing  significance  to
customer orientation and creation of strong relationship with the customer  is  very  vital
(Abbasi,  Torkamani,  2010).  Customers  are  the  focus  of  every  marketing  activity
(Gilaninia&  et  al,  2011).  Senior  managers  acknowledge  the  fact  that  customer
satisfaction  is  the  outcome  when  they  succeed  in  achieving  organizational  goals
(Seyedi, Moosavi, Heidari, 2009). In this global competitive  village, different products
must be offered as per customer’s request. It has become difficult for the management to
monitor everything alone as consumer’s demand for excellent quality and rapid services
puts firms under high pressure (Heidari Gharehbagh, 2009).
The major issue of today’s firms is to comprehend the relationship between the four
groups  in  the  supply  chain  management  and  to optimize  it. These groups  comprise  of:
vendors,  producers,  distributors  and  customers.  In  order  to  deal  with  the  relationship
between each group  is perhaps  important  yet tough, as they  produce remarkable effect
in each phase of SC and its level of task. Numerous organizations supply chain suffers
because  of  lack  of  communication  of  behaviors  and  expectations  that  arise  amongst
groups  in  chain  (Dehmorde,  Shahraki,  Lakzaie,  2010).  Additionally,  managing
relationships  effectively  is  essential  in  supply  chain  to  ensure effective coordination
between  suppliers  and  customers,  incorporated  by  means  of  observing  partnership
values,  communication,  information  and  conversation,  to  enjoy  the  benefits.  There
should  have  to  be  mutual  trust  and  same  goals  between  Suppliers  and  customers
(Rajabzadeh, Khadivar, Kazemi, 2007).
Different  methods  have  been  employed  by  organizations  to  evaluate  and  amend  their
strategies and established customer satisfaction as the survival key. For efficient supply
chain  management,  customer  and  supplier  should  intermingle,  share  and  communicate
information  with  each  other.  This  speedy  communication  and  sharing  of  information
allows  them  to  establish  an  effective  supply  chain,  which  can  enhance the  customer
satisfaction, directly or indirectly (Shekari, Akhoondi, Fathollahi, Sayadmanesh, 2006).

Hypothesized Model of HRM Practices, Effective SCM Practices,  and  Customer
Satisfaction
As the mediating model (see in Appendix B, Figure No: 1), suggests that, effective HR
management practices can affect customer satisfaction via two different processes. The
first  process  in  Figure  No:  1  explains  the  direct  positive  relationship  between  the HR
management practices and customer satisfaction that  is revealed when effective supply
chain  management practices are held constant. This direct positive relationship  implies
that effective  HR  management  practices  in  an  organization  can  contribute  to  overall
customer  satisfaction.  On  the  other  hand,  the  second  process  in  Figure  2  yields  again
positive  but  indirect  association  between HR  management  practices  and customer
satisfaction,  mediated  by  effective  supply  chain  management  practices,  which  is
revealed when SCM is  varied. This relationship explains that if any organization  has a
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competitive  advantage  over  other  competitors  in  the  industry  based  on  the  HR
management  practices,  which  in  turn  can  enable  the  organization  to  produce  high
productive  results  through  ensuring  effectiveness  of  SCM practices.  Afterwards the
resulted effective SCM practices will again  help out the managers to meet the ultimate
goal of  the  same  organization, which  is  the  customer  satisfaction.  So  in  this  causal
model  the  indirect  association  between  the  three  variables  (HR  management  Practices,
Effective Supply Chain Management Practices and Customer satisfaction) provides the
two  different  indirect  connections: HR  management  practices are positively  associated
with effective SCM practices and that SCM practices has a positive effect on customer
satisfaction.  These  two  hypothesized  effects  are  shown  by  the  solid  lines  in  the
mediated model.

Hypotheses
H1:  High  performance of  HR work  practices is positively  associated  with  customer
satisfaction.
H2: Effective supply chain management practices mediate the relationship between HR
management practices and customer satisfaction.
H3: When effective supply chain management practices are held constant, there is also a
direct positive effect of HR management practices on customer satisfaction.

Research Methods
Data and Measures
In order to check the explained hypotheses the sample that has been selected consist of
six  big fast  moving  consumer  goods  companies  located  in  Karachi  (such  as  Uniliver,
P&G, National Foods, Shan Foods, LU, English Biscuit Manufacturer).The sample size
of the present study taken out from the above mentioned different companies consists of
220 cases (total  employees  were  660  as  in  each  case  there  were  three  respondents
belonging  from  three  different  departments  and  their  distribution  is  as: 220  from  HR
departments,  220  from  SCM  departments,  and  220  from  customer  representative
departments as a whole).
Convenience  sampling  technique  from non-probability  sampling  method  has  been
implemented and survey method was used to gather information from the employees for
this  study. The  questionnaires  included  items  HR  practices,  effectiveness  of  supply
chain  management  and  customer  satisfaction  of  an  organization.  The  data  from
completed questionnaires has been transferred to SPSS for further analysis.
HR  Practices. The measure  of HRM  practices  was measured  with  36 items  scale,
which  was  developed  by  Singh  (2004)  and  Qureshi  M  Tahir  (2006).  Participants
responded to each item of scale by using a five-point likert scale [1 (strongly disagree),
2  (disagree),  3  (neutral),  4  (agree),  5  (strongly  agree)]. Samples  of  items  included
“Appraisal  system  in  our  organization  is growth  and  development  oriented.” and “Our
organization  conducts  extensive  training  programs  for  its  employees in  all  aspects  of
quality”. As the scale was consists on too many questions, so based on the requirements
of this study; the same scale has been modified in to 7 items scale.
Effective SCM  Practices. The effectiveness  of SCM measure  was  examined  with 25
items  scale,  which  was  adopted  from  Zhang.  Basically  the  scale  was  based  on  5
different  dimensions  which  were  (1)  Level  of  Information  Quality (2)  Level  of
Information Sharing (3) Customer Relationship (4) Postponement (5) Strategic Supplier
Partnership. Participants  responded  to  each  item  of  scale  by  using  a  five-point  likert
scale [1  (strongly  disagree),  2  (disagree),  3  (neutral),  4  (agree),  5  (strongly  agree)].
Examples  of  items  included “Our  trading  partners  keep  us  fully informed about  issues
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that  affect  our business.”And “We  consider  quality  as  our  number  one  criterion  in
selecting suppliers”. As the scale was  consists on too many questions, so  based on the
requirements of this study; the same scale has been modified in to 8 items scale.
Customer  Satisfaction. Customer  Satisfaction  was  assessed  by  already  developed  5
items  scale,  which  was  based  on  Zhang  et  al.  (2002b;  2002a;  2003;  2005;  2006).
Participants  responded  to  each  item  of  scale  by  using  a  five-point  likert  scale  [1
(strongly disagree), 2 (disagree), 3 (neutral), 4 (agree), 5 (strongly agree)]. Examples of
items  included “We  have  high  customer  retention  rate  (customers  keep  doing  business
with  us)”  and “Customers  perceive  their  money’s  worth  when  the  purchase  our
products”.

Analysis Procedure
In order to examine the mediating effect of effective supply chain management between
HR  practices and customer  satisfaction of  an  organization, SEM technique  has  been
implemented. In order to check the research hypothesis, DeVellis (2003) & Long (1983)
suggested  that two-step examination  process should  have  to  be implemented in. This
two  step  process based  on  first examining the  measurement model of  the dimensions
that  has  been used  in  the research  study and  then  creates  the  relationship  between
endogenous and exogenous variables. There are different indices such as RMSEA, CFI,
TLI and CMIN/DF, which have been used to test the competency of the structural path
and measurement models. Cut off Criteria  for above  Fit Indexes are: (RMSEA = < .06
to  .08  with  confidence  interval,  CFI = ≥ .95 for acceptance, TLI = ≥ .95,  CMIN/DF =
less than 3).

Results
Descriptive Statistics
In this section (see in Appendix A, Table No: 1), correlations between all constructs and
descriptive  statistics for all  variables used  in the research study has  been reported. The
Cronbach alphas for all dimensions demonstrate good levels of consistency, being 0.723
for HR management practices, 0.916 for supply chain management practices and 0.832
for customer  satisfaction. The correlations  between  HR  management  practices, supply
chain management practices and customer satisfaction are all in a positive direction, as
forecasted in the research hypotheses no: 1, 2 & 3 and significant as well.

Testing the Measurement Model (CFA)
SEM software has been used to perform CFA (Confirmatory factor Analysis), based on
data from 220 respondents. Maximum likelihood estimation has been chosen because it
was  assumed  that data  were normally distributed.  There  wasn’t  found  any  missing
values but 15  multivariate outliers  has been  identified and deleted from the data set by
using Mahalanobis Distance Measuring Method. So the final sample size was 205. The
theoretical  model of CFA  is presented, (see in  Appendix B, Figure No: 2).Three-factor
hypothesized model  to  be  confirmed  in  the  measurement  portion  of  the  model. The
CFAs results  at  the  first  attempt  were  fairly supporting the theoretical measurement
models  posed  overall.  In  the  three-factor  model, the  cutoff  values  of  CMIN/DF,  CFI,
TLI  and  RMESHA  were  satisfactory, indicating an excellent fit between the  observed
data and the model  (CMIN/DF = 1.549, RMSEA = 0.052, CFI = 0.951, TLI = 0.944),
(see the results of  Model No: 1  in Appendix  A, Table No: 2). But after examining the
values of standardized and unstandarized regression weights, there are two insignificant
items (HR_1, HR_2)  in  the  construct  of “HRM  Practices” which  should  have  to  be
omitted from the data set. After omitting these two items from data set, the CFA model
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145
has become more significant comparatively (CMIN/DF = 1.360, RMSEA = 0.042, CFI
= 0.973, TLI = 0.969), (see the results of  Model  No: 2 in Appendix  A, Table No: 2 &
Table No: 3 and see the final theoretical model of CFA in Appendix B, Figure No: 3).

Testing Alternative Measurement Models (CFA)
Although  it can  be concluded that the  hypothesized  model showed an  excellent fitness
on  the  data  practically, but it  was recommended by  good  researchers that different
alternative  models should have  to be  measured when  implementing SEM, as  good
fitting  models  can  still  suffer  from  misspecification.  So,  hypothesized  three  factor
model has been compared with two other different models.
First, it  was  compared with  a  null  model where no  variables  are associated with  each
other or it can say that all items are treating as independent variables. The results of this
evaluation describe  that the  three-factor  model  is  better  and  fit  the  data  very  well
comparatively,  (see  the  results  of  null  factor  model  in Appendix  A,  Table  No:  4).
Second,  three-factor  model was  compared with  a  single-factor  model,  in which  all  20
items  stand  for a  single  latent  construct. So  when  the  comparison  has  been  made
between the  three-factor model and the single factor model, the Δχ
2
(539.1  (38), p <
.001), it has been confirmed that three factor model is the superior one, (see the results
of single factor model in Appendix A, Table No: 4).
Even though other potential alternative models  could  be evaluated but the article of P.
M.  Bentler  and  Douglas  G.  Bonett  has logically supported only  above  explained two
models. Thus the various permutations of two-, three-, and four-factor models have not
been  compared  with  the  hypothesized  three-factor  model. As it’s  very  easy  for  any
researcher  to  create  different  models  in  order to  compare  with  his  hypothesized model
but it  is  relatively possible that  the  consequences  obtain from  this  comparison  will  be
just because of chance. Thus, formulating and creating models which are not supported
by  theory or  background  are  neither  justifiable  nor  acceptable (Marsh,  Hau,  and  Wen,
2004).

Validity and Reliability
It  is  extremely  essential  to build reliability as  well  as discriminate and convergent
validity, when performing a CFA. It has been recommended by many good researchers
that moving  on  to test  a structural model  will  be a  waste  of  time,  if constructs do  not
reveal  sufficient  reliability and  validity. In  order to  build reliability and  validity,  some
measures and  their  thresholds have  been explained  by  researchers that  are  very
essential:  Composite  Reliability  (CR),  Reliability:  CR  >  0.7,  Average  Variance
Extracted  (AVE), Convergent Validity:  CR  >  (AVE),  AVE  >  0.5, Maximum  Shared
Squared  Variance  (MSV),  and  Average  Shared  Squared  Variance  (ASV) Discriminant
Validity: MSV < AVE, ASV < AVE, (see in Appendix A, Table No: 5).
Based  on  above  defined  thresholds,  it  can  be  concluded  that  all  three  constructs  are
having composite reliability as their values of CR is greater than 0.7 (HRM Practices =
0.835, Effective  SCM  Practices  =  0.917, Customer  Satisfaction  =  0.838).On  the  other
hand  all  three  constructs  are  also  meeting  the  threshold  criteria  of  establishing
convergent validity: CR >AVE > 0.5 and discriminate validities: AVE > MSV & ASV
(HRM Practices = 0.835 > 0.508 >0.5, Effective SCM Practices = 0.917 > 0.580 > 0.5,
Customer  Satisfaction  =  0.838 > 0.510  >  0.5), (HRM  Practices  =  0.513  >  0.309  &
0.251, Effective  SCM  Practices  =  0.561  >  0.309  &  0.290, Customer  Satisfaction  =
0.573 > 0.270 & 0.232).

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Testing and controlling for the Effects of Common Method bias
One of  the  most  comprehensively  used technique  that  has been implemented by many
researchers in order to deal the problem of common method variance, is to be known as
Harman’s one-factor  (or  single-factor).  Conventionally,  researchers implementing this
technique by loading all  of  the variables available in  their  research  study into  an EFA
and use the  un rotated factor  solution  to  come  to  a  decision about that  how  many
constructs are essential to measure for  the  variance available in  the  variables.  If a
substantial  quantity  of  common  method  variance  exists  there  are  two  essential
assumptions or  possibilities of  this  technique: (a)  factor  analysis will  produce a  single
construct which will account for more than 50% alone or (b) one common construct will
hold for the maximum variation between the constructs.
The result of Harman’s single-factor test demonstrated that the variables in this research
did  not  load  onto  a  single  factor  and  on the  other  hand  when I  forced  them  to  load on
one  factor, that general  factor accounted for only  37.44% of the  covariance among the
measures. Based  on  results  obtained  from Harman’s one-factor method (or  single-factor), it can   concluded that there is no as such threat of common method variance in
my data set.

Testing a Mediated Model
Full  structural  equation modeling  (SEM)  has  been implemented,  in  order  to test  for
Hypothesis  1,  2  &3 (the  mediated  model), as  it  has  been  already  explained  in  analysis
procedure. The hypothesized model examined the relationship between HRM Practices,
effective SCM practices and customer satisfaction. The analysis results showed good to
satisfactory  fit  results  (CFI  =. 0.973;  TLI  =0.969;  CMIN/DF  =  1.360;  RMSEA  =
0.042).Three different steps has been measured in this study as explained by Baron and
Kenny  (1986)  and  Kelloway  (1998),: in  step  no:  1,  total  effect  of  HRM  Practices  on
customer satisfaction  has  been checked,  in step no: 2 indirect effect of HRM Practices
on Customer satisfaction through effective SCM practices  has been assessed and in the
last step, only direct relationships between HRM Practices and customer satisfaction has
been  examined,  while  controlling  the  impact  of  effective  SCM  practices  which  is  a
mediator.
As from the bootstrap results (see the results of total effects in Appendix A, Table No:
6), it  is  clearly  shown  that  there  was  strong and positive association between HRM
Practices and customer satisfaction (b = 0.471, P < 0.05) and this positive relationship
implied that all  those businesses which are concerned for  higher prosperity through
enhancing customer  satisfaction  must pay attention on HR  management activities such
as Training,  Selection,  Compensation  employee  participation and  thus  H1  has  been
accepted.
Now as concern to findings regarding effective SCM practices that whether it mediates
the  positive  relationship  between HRM  Practices and CS or  not, bootstrap  results  of
indirect  effect (see  the  results  of  indirect  effects  in Appendix  A,  Table  No:  6  and  see
mediating final hypothesized model in Appendix B, Figure No: 4), were showing strong
evidences  that effective  SCM  practices mediated  the  positive  relationship  between
HRM Practices and customer satisfaction (b = 0.238, P < 0.05). Thus H2 of this  study
has also been  accepted and  it  indicates that mediation  between the HRM Practices and
customer  satisfaction through  effective  SCM  practices  has  been  established.  This
relationship  explained  that  if  any  organization  has  a  competitive  advantage  over  other
competitors  in  the  industry  based  on  the  HR  management  activities,  which  in  turn  can
enable  the  organization  to  produce  high  productive  results  through  ensuring
effectiveness  of  SCM  activities.  Afterwards  the  resulted  effective  SCM activities  will
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147
again  help  out  the  managers  to  enhance  the  customer  satisfaction  of  the  same
organization, so the overall efficiency and effectiveness of an organization will increase.
While  the  mediator  effect  of effective  SCM  practices has  been  controlled,  the direct
relationship  between HRM  Practices and customer  satisfaction  was  significant  as  well
(b  =  0.233,  P  <  0.05),  which  indicated  that when effective  SCM  practices is  held
constant, there  is also direct positive effect of HRM Practices on customer satisfaction
and thus H3 of this study has been accepted. This analysis suggests that the relationship
between  HRM  Practices  and  customer  satisfaction is partially  mediated  by effective
SCM practices.

Conclusion
The  analysis  carried  out was based  on  empirical  data  gathered.  It shows  that  effective
HRM activities not only can establish an effective SCM practices but can also enhance
the ultimate goal of an organization which  is all about achieving customer satisfaction.
The  goal  of  this  present  paper  was  to  discuss  the  concept  of HRM  practices in  the
context of customer satisfaction and this relationship is also mediated by effective SCM
practices  of  an  organization.  HRM  has extremely  important affect  on  the  functionality
of other departments of a firm. So based on the above discussion, it can be conclude that
Human  Resource  Management  can contribute  significantly in  order  to  accomplish
effective  SCM process  of  an organization  which again can  help in attaining  customer
satisfaction.
Human  Resource  strategies  formulate  a  noteworthy  impact  on  the  satisfaction  of
customer.  Successful  implementation  of  HR  strategies  namely  Empowerment,
Customer oriented value system, Performance based reward system and Behavior Based
employee evaluation can augment performance and behavior  in workforce, resulting  in
satisfaction  of  customer;  on  the  other  hand,  the  HR  strategies  such  as  Work  group
socialization,  Employee  welfare  and  the  understanding  of  the  HRM  practices  in  the
organization can add to the prolong growth  in the  management by  increasing customer
satisfaction. The most important findings of the research is that the association between
these  two  variables  (HRM  practices  and  customer  satisfaction)  is  not  just  because  of
their direct relationship but there can be many other factors, which are playing their role
as a mediator and one of those variables which has been highlighted and proved in this
study is SCM practices.
This  article  provided  a  past  review  and  assessment  of  HR  and  SC  descriptions,
conception  and CS components  that  enhance  product  quality,  competitiveness,  lower
costs, services provided, and consequently increasing profitability as an essential in the
economic field. Analysis of data gathered confirmed the research hypotheses, exhibiting
significant  relationship  among  HRM  activities,  SCM  activities  and  customer
satisfaction.
This  paper  presents  proof  for  the  hypothesis  that  HR  practices  affect  SCM  practices
leading to high  indication of customer satisfaction. Outcomes direct towards a positive
relationship  among  Human  Resource  practices  and  satisfaction  of  customer.
Significantly,  the  impact  of  HR  practices  on  satisfaction  of  customer  seems  to  be
arbitrated  by  effective  Supply  Chain  Management  practices.  Proof of  the  effect  of
mediation  proposes  that  Human  Resource  process  positively  play  a  part  in  enhancing
the  satisfaction  of  customer  through  effective  practices  related  with  SCM  in  an
organization.
Based on the above discussion  it can  be concluded over here that organizations should
capitalize profits by acknowledging that effective SCM is an outcome of employees’
performance  and  other  stakeholders  leading  to  ultimate  customer  satisfaction.
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148
Therefore,  HRM  strategies  may  be  employed  to  push  supply chain  management  to
generate  strong  cross-functional  relationships  and to  create  high  satisfaction  amongst
customers.

Managerial implications of the research
It is anticipated that finding of this paper will be very useful and practical for even both
academicians  and  practitioners.  Not  only  it  would  broaden  the  extent  of  study  at  the
academic  level, but  may  help active  managers to comprehend the significance and role
of human resource in gaining SCM effectiveness which in turn help out the managers to
gain customer satisfaction which is ultimate and vital goal of every organization.
This research study has numerous implications for the supervisors and leaders working
in  the FMCG sector  of  Pakistan  that  they  can  achieve their customer  satisfaction by
investing  on  their HRM  and  SCM  practices. In today’s business scenario two things
have become very evident, the first being the replication of technology and systems and
the second being the interdependence between functional areas.
Because  of  the  easy  replicability  of  any  technology  and  system  it  has  become  very
tough to compete in the market. If an organization wants to make its mark in the market
it  has  to  come  up  with  certain  systems  which  cannot  be  replicated  easily  by  the
competitors  and  here  comes  the area  of  HR,  any  system  where  the  main  focus  is on
people  cannot  be  replicated  easily.  Thus,  the  present  research  draws  the  focus  of  the
practicing managers on an area that can be tapped to boost up the operational outcomes
of  the  HR  and  on  this  basis  of  the  evidences  there  is  a  big  contribution  of  same  HR
practices  in  attaining  high  levels  of  SC  incorporation,  in  turn  that  effective  SCM
practices will again help out the organization in order to secure sustainable competitive
advantage  through  obtaining  the  customer  satisfaction.  With  the  increased
interdependence  between  functions  it becomes  essential  for  organizations  to  bring  in
certain  HR  practices  which  help  the people  of  the  organization  to  deal  with  such
interdependence.
The  study  results  are  also  expected  to  help  the  managers  to  identify  various  HR
practices which need to be focused on to improve SC integration and hence attaining the
higher customer satisfaction, which is the ultimate goal of every organization.

Limitations of the Study
There  are  numerous limitations  associated  with  this research study that  need  to  be
discussed and reported as well:
The degree of non-response & non probability sampling. In this research study, non
probability  sampling  technique  has  been  implemented  and  which  is  always  counted  as
the weakest  form of sampling technique.  Kerlinger and Lee (2000) suggested avoiding
it  or  using  it  with  extreme  circumstance only  if  there  is  no other  way  of  getting  a
sample.  One  of  the  dangers  of  this  kind  of  sampling  is  the  non-response  bias. This
sampling has  to  do  with  a  theory  that  those  who  respond  to  surveys might answer
questions  differently  than  those who  do  not  respond  to  surveys. On  the  other  side the
degree  of non-response  could  also  not  ascertain  because  it  was  not  became  possible
explicitly to ask team leaders, the number of members on their each group. The possible
bias is uneasy to examine and eradicate due to the non-response of some team members
(Srivastava, Bartol, & Locke, 2006).

Limited  scope  of  culture  and  environment. As  the  instrument  of  this  research  study
was tested based on sample of six different big organizations and all those organizations
were  belonging  from  same  FMCG  industry,  operating  at  international  level  and  much
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149
pretty  bigger  in  their  sizes.  Prominent  variations  have  been  observed  between  the
cultures  and  environments  of  those  firms  which  are bigger  in  sizes  comparatively  and
operating at national and  international  both  levels (Rainey, 2003). On the other side as
the  study  has  been conducted  only  in  one  sector  and  there  is  a  need in  future to  do
similar  study  in  other  sectors as  well so  it may be  attractive  to contrast and  assess
variations between  industries.  Therefore  this  instrument  and  results  obtained  here
cannot be automatically supposed to applicable to every type of organizations belonging
from different kinds of industries.

Small  sample  size. A  further  limitation  of  this  research  study  is comparatively less
respondents, regardless of an adequate minimum respondent’s number (200). Although
the  measurements and structural  models showed  fit to the data very well,  but a sample
of small size is predicted to be short of generalizability and statistical power, in spite of
obtaining significant and  substantial  outcomes (Myors,  2006). Moreover,  associated to
this, as this research study was only carried out, based on the sample taken out from just
one  particular  industry  so  again  cautiousness  is  required  so  that  conclusions  can  be
generalized to a limit.

Recommendations for Future Research
Despite  the  contributions,  this  study  does  leave  scope  for  further  improvement. There
are  number  of  recommendations  that  can  be  considered  and  implemented  for  future
research:
1.  Sample  selection  from  the  targeted  population  should  be  distributed  more
evenlyrather  than  focusing  on  one  particular  and  specific  area  or  industry  and  should
focus on using a larger sample to increase generalizability of the findings.
2.  In  this  research  paper  as  convenience  sampling  technique  from  non  probability
sampling  method  has been  implemented  and  this  technique  is  suggested  by  most  of
researchers  as  a weakest  form  of  sampling.  Future  researchers  can  select  the  more
appropriate  technique  from  probability  sampling  technique,  implementing  on  different
sizes of organizations and those organizations should belonging from different kinds of
industries so that the dangers of the non-response bias can be decreased and thus result
will be more even convincing and representative.
3.  Other  variables  can  be  looked  upon  as  a  mediator  in  order  to  increase  our  more
understanding  regarding  the  association  between  HRM  Practices  and  satisfaction  of
Customer.  For  example,  future  research  can  be  done  to  check  the  association  between
HRM   Practices  and  Customer  Satisfaction  which  can be  mediated  by  following
different variables:
  Employee performance
  Employee motivation
  Employee loyalty
  Employee turnover ratio

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Global Business and Management Research: An International Journal
Vol. 5, Nos. 2 & 3 (2013)

153
Appendix A
Table 1: Means, Standard Deviations and Correlations among variable
No  Variables   M  SD  1  2  3  4  5  6  7  8
1  HR_1  3.91  .963  –

To cite this article:
Kumari, K., Usmani, S., & Husain, J. (2013). HR Management Practices and Customer
Satisfaction:  The  Mediating  Effect  of  Effective  Supply  Chain  Management  Practices.
Global Business  and Management Research: An International Journal, 5(2 &  3),
137-160.

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permission.

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