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Introduction

Muslims in developing nations have faced the greatest challenge where globalisation becomes a threat that must be executed with development [1]. The rise of globalisation influences local employees to adopt Western management, and this issue increasingly results in inconsistency of aspects, religion and business practices [2]. Religion plays a big role in gaining competitiveness. The past studies clearly stated the contributions of religion towards organisational effectiveness. Khan et al. [3], Haslinda [4], Hashim [5] and Yeganeh et al. (2008) agree that human resource becomes a source of competitive advantage in organisations. The interference of religion in managing human resource can maintain competitive advantages, thus promoting a good relationship between the employer and the employee in an organisation.

For Muslim countries, Islamic principles must be maintained by the Quran and Sunnah to treat employees fairly and justly. According to Khan et al. [3], Islam and work have a good relationship. Islam considers work as an essential element of man’s success in his life and all people are equal in the sight of Allah; they differ only in their deeds. Islamic HRM means the implementation of human resource management activities with the guidance of the Qu’ran and Hadith. The key of Islamic prescriptions is the Al-Qur’an (Kamel Mellahi et al. 2010), and they said Islam and HRM are relevant to implement not just for organisations operating in major Islamic countries but also in countries where Muslims are a minority.

Islamic principles and HRM are significant. In their studies, Khan et al. [3] and Ab Rahman et al. (2009) found a positive relationship between Islamic principles and human resource management. However, the limited literatures in Islamic management have witnessed the increasing interest to explore its application. The gaps of understanding and applying the Islamic principles in managing human resource have caused the wide adoption of Western practices in daily business activities. Researchers have agreed, with the argument from Al-Husan et al. (2009) and Faten et al. (2009), that the importing of HRM from Western management practices has insufficient evidence to increase organisational performances. The lack of understanding and knowledge among Muslim employees regarding Islamic principles will lastly be difficult to change. Hashim [6] agrees that if these issues remained, Islamic organisations should start to institutionalise Islamic values and teachings.

Hashim [6], Branine et al. (2010), Budhwar et al. (2006) and Tayeb [7] agreed on the importance of managing human resource in Islamic management, but very limited empirical studies have examined this. Kamel Mellahi et al. (2010) recommended much more research is needed to gain understanding of the roles of Islam, especially related to HRM issues. In addition, limited studies on human resource management from Islamic practices provide a new potential research to government-linked companies (GLCs) to maintain excellent performance. Malaysia’s GLCs have faced challenges to enhance national competitiveness where human resource issues become critical problems in enhancing the productivity of the organisations.

Islamic HRM concerns justice and fairness (Abulhassan 2006). According to Junaidah (2008), managing human resource in Islamic approaches does influence organisational justices. Verse 85 of the Surah Al-Hijr (15) in the Quran states: “We created not the heavens, the earth and all between them, but for just ends”. Verses 38–39 in the Surah Ad-Dukhaan (44) state: “We created not the heavens, the earth and all between them, merely in (idle) sport. We created them not except for just ends, but most of them do not understand”. Organisational justice is very important and it represents the employee’s perception about fair treatment within organisations ([8]; Malik et al. 2011). According to Guest [9] and Purcell et al. [10], the employee’s outcome creates a significant relationship between human resource management and performance. Thus, HRM practices must be conducted fairly and in an unbiased manner, and justice must be considered as a main factor influencing human resource effectiveness. This paper discusses the level of HRM from Islamic perspectives and its relationship to organisational justice. This paper also discusses the interference of Islamic principles on HRM activities which include recruitment and selection, training and development, career development, performance management and rewards among GLCs in Malaysia.

Literature Review

Human resource management (HRM) is the process of managing employees to achieve the organisation’s objectives. It is a process of acquisition, development, motivation and maintenance of human resource. To achieve and sustain good performance, HRM activities should be implemented in an environment of employee’s involvement. In short, HRM is an important process to manage human capital for organisation effectiveness.

Managing human resource meets various challenges. Yeganeh et al. (2008) have identified challenges that shaped HR practices which include culture, legal system, technology, organisational structure and size. Katou et al. [11] found that the policies affecting sex discrimination, selection of employees, distributions of profits and job advancement may be influenced by religious factors. An Islamic principle affects the management in organisations. The significant findings from past researches have proved that the Islamic principle does influence organisational effectiveness. Zangoueinezhed et al. (2011), Ab Ghani Azmi (2010), Ali and Al-Kazemi [12], Hashim [5, 13] have witnessed the significant relationships.

Government-Linked Companies (GLCs) in Malaysia

Government-linked companies (GLCs) are key drivers of the Malaysian economy. GLCs are defined as companies that have a primarily commercial objective despite the Malaysian government holding a direct controlling stake. They exist in most Malaysian industries, including manufacturing, plantation, finance, trading, transportation, shipbuilding and services. In Malaysia, GLCs are defined as companies in which the government has to control the stake. GLCs have to assume greater roles in Malaysia’s economic development. Engaging in growth opportunities, GLCs have performed to create special advantages towards managing their employees which concerned recruitment and selection processes, effective compensation systems, extensive training and development activities, adequate job satisfaction and employment security all impact positively on the overall business and performance of a corporation.

HRM from an Islamic Perspective

In Malaysia’s National Vision, government-linked companies (GLCs) are expected to successfully drive the national economy as one of the growth engines to increase the profitability of their domestic operations. As a Muslim nation, Islamic principles serve Malaysia with significant contributions to increase performance and to replace with Western management. Islamic knowledge and principles required all Muslim employees to adhere to the Qur’an and Hadith. According to Abulhasan (2006), human services cannot be separated from the whole human being who, according to Islam, is the best creation. Muslim employees have to follow Islamic principles implemented in HRM activities. Past researchers have witnessed that HRM activities significantly regarded Islamic principles for organisations to exercise. Previous researches below have proven the importance of Islamic principles to be applied in HRM activities within organisations.

Titles of research

Significant findings

Human resource management based on the index of Islamic human development: the Holy Qur’an approach (Abouzar et al. 2011)

Human development from an Islamic approach has increased the satisfaction of human needs and facilitates to solve internal and external conflicts to reach spiritual perfection

Human resource management with Islamic management principles: a dialect for a reverse diffusion in management (Mohd Branine [14])

Understanding of Islamic principles will help Western management to develop a blend of Islamic management for more HRM issues

Human resource management practices on organizational commitment: the Islamic perspective (Hashim [5])

Islamic organisations in Malaysia frequently practise Islamic HRM. Organisational commitment highly and significantly correlated with Islamic approach

Islamic human resource practices and organizational performance: a preliminary finding of Islamic organizations in Malaysia (Ab Ghani Azmi [15])

The impacts of Islamic HRM on organisational performance are high. Islamic HRM practices are better than the conventional system, and organisations are suggested to implement these practices regardless of their objectives and industries

Influence of ethical belief, national culture and institutions on preferences for HRM in Oman (Katou et al. [11])

The ethical belief and aspects of national culture and national institutions have impacts on HRM practices

Introduction: Islam and human resource management (Kamel Mellahi and Budhwar 2010)

More research is needed to gain a deeper understanding on Islamic HRM and its implication to organisational performance

Islamic challenges to HR in modern organizations (Abbas J. Ali [2])

Islamic prescriptions view the interest of employees and employers. Islamic teaching is a vital and rich source for designing HR policies. Future research should provide a framework for HR issues in an Islamic context

Islamic HRM practices and employee commitment?: a test among employees of Islamic banks in Bangladesh (Ab Rahman et al. 2009)

Islamic knowledge and understanding should be adopted as a core principle in all organisations under Islamic syariah. The application of Islamic principles should be common to all basic HR functions

Human resource management: an Islamic perspective (Khan et al. 2010)

Islam teaches to treat employees equally regardless of their position and task. Significant contributions of HRM activities are fair treatment of employees and decisions made in an unbiased manner

Islamic revival in human resource management practices among selected Islamic organisations in Malaysia (Hashim 2009)

Muslim HR managers in Islamic organisations are obliged to understand and apply Islamic approach in managing their employees

The Qu’ran-based human resource management and its effects on organizational justice, job satisfaction and turnover intention (Hashim 2008)

Organisational justice, job satisfaction and turnover have correlated to Qur’an-based HRM. More attention should be given to selection, performance appraisal and compensation to raise the good perception of employees on justice

Integrating religious principles and human resource management activities (Joys 2001)

The responsibilities and rights of employees in HRM must be integrated with religion

Recruitment and Selection

Recruitment is the process of selecting the potential candidates for organisations to leverage competitive advantage. In Islam, choosing the right person effects trust and loyalty to organisations. If employees have been chosen based on favouritism and not due to their capabilities, they will tend to feel mistrust and disloyalty. Al-Quran has provided a very simple but yet very relevant criteria to be used for the selection of the best applicants. In surah Al-Qasas, verse 26, the prophet Moses who met Syu’aib, whose daughter said to him: “O my (dear) father! Engage him on wages truly the best of men for you to employ is the (man) is strong and trusty”. Al-Qur’an also refers to another set of criteria, that is, accountability and the required skills to handle a particular job. The verse in Surah Yusuf (12) states: “Set me over the store-houses of the land, I will indeed guard them, as one that knows”.

According to Hashim, J. (2008), to ensure that the right person is selected, an Islamic approach should be considered to choose the best characteristics of a candidate. These are trust (amanah) and responsibility, motivation, seeking knowledge and training and seeking excellence. For trust, a candidate must be trustful and responsible. Allah said “Every man is pledge for what which he hath earned”. For seeking someone excellent, Islam encourages a person working in a team to seek perfection and excellence. Allah in the verse of Al-Quran said “…if ye good for your own souls, and if ye do evil, it is for them (in like manner)” “and ye (mankind) perform no act, but We are wirness of you when ye are engaged therein”. The prophet Muhammad (SWT) said “Allah likes that when someone does anything, it must be done perfectly well”.

In Ab Ghani Azmi, I. (2010), selection and recruitment in Islamic principles were considerable. The Islamic selection and recruitment practices among Muslim organisations still under moderate. In a closed finding, Hashim, J. (2008) found a considerable mean of recruitment (4.914) and selection (5.237) in Islamic principles. It was clear to put more effort to adopt Islamic principles in recruiting and selecting employees. As underlined in Al-Quran and Hadith where choosing the right person to produce trust and loyalty and to avoid favouritism. This study has supported the findings of Hashim, J. (2008) to specify the characteristics of choosing candidates, which focus on trust (amanah) and responsibility, motivation, seeking knowledge and training and seeking excellence. On the other hand, HRM practitioners must concern on experience, competence, sincerity and other values. In Islam, discriminations and favouritisms must be avoided to ensure talent can be drawn from candidates of different backgrounds.

Training and Development

Training is a process of providing opportunity to an individual to acquire knowledge, develop skills and capabilities necessary to perform their job and to fulfil the organisation’s needs. In Islam, all employees are required to acquire Islamic knowledge and based on their profession to raise the quality. Professional skills will increase the employee’s productivity suitable for their salary. Seeking knowledge and pursuing education are greatly emphasised in Islam.

The verse in Qur’an states: “Those truly fear God among His servants who have knowledge”. The prophet Muhammad (SAW) also declared it compulsory for Muslims to acquire knowledge when he said “Seeking knowledge is a duty on every Muslim man and woman”. Training and development also need to raise the motivation among employees. Religious teaching can play a great spiritual motivational role. There are ample Islamic teachings that encourage Muslims to be productive. The verse in Surah Al-Baqarah (2) states: “And of them (also) is who saith: Our Lord! Give unto us in the world that which is good and in the hereafter that which is good and Guard us from the doom of fire”. Khalid Ahmad (2008) stresses the importance of training in building positive morale and maximising efficiency and productivity.

Nik Mutazim et al. (2011) found the highest influence of Islamic principles on training and development, this activity not fully implemented by most of the organisations in Malaysia. Compared to the findings from Hashim (2008), Ab Rahman et al. (2009) and Ab Ghani Azmi (2010), this activity shows lower mean. Researchers agreed with the recommendation from previous researchers to develop knowledge and pursue education through Islamic teachings. Previous studies have shown that the GLCs are not efficient in managing labour and capital productivities. The companies have to strategise the management and development of human capital, with the aim of increasing their knowledge and skills through trainings.

Career Development

According to Alhabshi et al. [16], career development is good where the organisation continues to make an investment to their employees. They added the development process leads to the employee’s career path. This process is formal through seminars, workshops and short and long courses. The combination of personal and organisational career development must be continued to achieve an ideal human development for excellent results. According to Hashim (2008), career development is a continuing process for employees to plan and create their future to help them achieve their goals. She added the purpose of career development is to develop the employee’s current performance, to take advantage of future job opportunities and to realise their employer’s goals for a dynamic and effective workforce. The success of career development is identified from the individual employee’s level, that is, assessing the individual’s abilities, interest and career goals; assessing the individual’s abilities and potentials by organisations; communicating career options and opportunity within organisations and career counselling.

Performance Management

Performance management is a process of ensuring that employees’ activities and outputs contribute to the organisation’s goals (Noe et al. 2009). In the research paper of Yeganeh et al. (2008), they found that little attention was paid to appraisal in Iranian public organisations and the top-down system was based on subjective judgment which concerned more on personal behaviour rather than on performance evaluation. Hashim (2008) said that measuring employee’s performance must consider justice and fairness, accountability and responsibility. According to her, HR managers need to be just and perceived as just by employees. Allah has mentioned in Surah An-Nahl (16:90): “Allah commands justice, the doing of good and liberty to kith and kin and He forbids all shameful deeds and injustice. He instructs you, that ye may receive admonition”. Abulhasan (2006) said that the sense of responsibility and accountability must be considered with Islamic teachings where work means to attain Allah’s pleasure. HR managers need to be accountable in response to his/her decision and action. In the verse of Surah Al-Zalzalah (35:7–8), Allah said, “Then shall everyone who has done an atom’s weight of good, see it. And anyone who has done an atom’s weight of evil, shall see it”.

Rewards

A reward is a desirable outcome resulting from a desirable behaviour, while punishment is the undesirable outcome that follows an unwanted behaviour. Hashim (2009) said that the purpose of compensation, whether direct or indirect, is to recognise the value of performance of employees and to establish the ways to motivate them. The reason for rewards is to recognise good performance to encourage employees to work hard. Allah said in the verse of Surah Al-Khaf (18:30), “We never waste the reward of anyone who did good”. The prophet Muhammad (SWT) said, “Whoever puts an effort and succeeds gets two newlands and whoever puts an effort and does not succeed gets one reward”. Ab Rahman et al. (2009) found a positive relationship between compensation and rewards on organisational outcomes. Reasonable, competitive and fair compensation system must be well developed to promote positive commitment. One of the aspects of fairness is the salary. In Islam, salary is not just on employee’s contributions but more importantly on his basic needs. Employers are required to pay his/her employees with sufficient wage. The prophet Muhammad (SAW) said, “It is most important for you to provide food and clothing to your assistants”.

Abulhasan (2006) said that the Islamic system requires a humanity (brotherhood) element in the fixation of compensation. He said organisations should arrange the compensation for its employees to meet their basic needs in a standard of living. He added compensation must be against the favouritism in pay and promotion to protect the employee’s rights and promote justice and fairness. The adoption of Western practices has influenced most of the reward activities in Muslim countries. From an Islamic perspective, a reward must be given based on good or poor performance. HR managers must recognise the good employees with promotion to improve morale and productivity.

Islamic Human Resource Management and Organisational Justice

Islam is against any practices of injustice and it has been clearly revealed by Allah. In verse 29, Surah Al-A’raf, Allah says, “Say: My Lord hath commended justice and that ye set your whole selves (to Him) at every time and place of prayer and call upon Him making your devotion sincere as in His sight: such as He created you in the beginning so shall you”. Justice is required to be established in Islam and universally applies in all fields of human resource activities in organisations. It is a person’s obligation to establish and uphold absolute justice as a part of taqwa (deed) and iman (faith). Organisational justice is the employee’s perception of fairness in an organisation. Greenberg [17] defined organisational justice as the employee’s perception on justice and equality in organisations. Greenberg and Baron (2003) found organisational justice consists of the employee’s perception towards distribution of outcome and perceived fairness. Procedural justice refers to the perception of employees on fairness of decision-making in an organisation. According to Nabatchi et al. (2007), procedural justice is important to project the best satisfaction of employees from the official decision-making policies. Interactional justice refers to interpersonal treatment received by an individual employee [18].

Hashim (2008) exploring on “Quran-based human resource management and its effects on organisational justice, job satisfaction and turnover intention” suggested an Islamic human resource management must be practised by all Muslim organisations. She said more attention should be given to human resource management practices such as selection, performance appraisal and competition which contribute to injustice perception of employees. Dzansi and Dzansi (2010) explored the organisational justice approach on human resource management practices found significant. Less transparency in political interferences will increase the employee’s perceptions on human resource management practices and directly improve their commitment. Murtaza et al. [8] and Ferndale et al. (2010) found promotions and increments of employees must be given to deserving employees without discrimination or bias. Distributive justice should be improved to allocate resources, performance rewards, pay and promotion.

Other research papers examined organisational justice and human resource management outcomes. Folger et al. (1998) suggest that justice must concentrate on the management of employee benefits, training and employee’s development. Casas (2007) revealed organisational justice perceptions on human resource management related to fair policies and procedures. The implementation of organisational justice will help organisations to select and train human resource professionals to enhance fairness. So as to build interactional justice, the roles of appraisers and appraisees must be separated. The appraisees must feel free to express their emotions and are encouraged to give inputs in an interview session. Correlations between interactional justice and supervisor supports will increase the employee’s satisfaction.

Conclusions

Limited research on Islamic HRM and its relationship to organisational justice drives the less motivated researchers to deeply explore on these two variables. The obligations of an employer to stress on Islamic principles must be applied to HRM functions. Communicating about Islamic principles on HRM practices to employees will increase its understanding, making it easy to practise. On the other hand, positive acceptance of Islamic principles will avoid unbiased and unethical exercises where justice meets in every single of task. Islamic teachings cannot be just an option among Muslim employees for performing tasks; it must be the main direction to get blessed by the Creator. Organisational justices will respond in a good way for improving the organisational behaviour as a whole. Distributional and procedural justice confirmed efficiency and the effectiveness of human resource productivity.

Islamic principles allow employees to conform to the good way to become successful in their lives. Islamic practices guide employees to perform greater and always meet the expectation of their employer. Exploring HRM and organisational justice, this study has confirmed the significant relationship in the findings of Dzansi and Dzansi (2010), Mohd Nasurdin et al. (2011) and Siti Zuraini et al. (2010). In Muslim organisations, HR managers need to ensure employees understand the concept and practices of Islamic management. Verbal and nonverbal communication helps employees to understand the Islamic principles and its application to HRM functions. Previous findings found the limitation of Islamic HRM due to a weak understanding of Islamic concepts and benefits. Communication requires cooperation from all parties to produce a great Islamic-based performance. HR practitioners are responsible for investigating the effectiveness of current practices of managing human resource and slowly changing with Islamic principles. The greatest challenge they will have to face is to change the existing management system to a system guided by Islamic principles. This can be solved through explaining the reasonable evidence proved by other organisations that have been practising HRM functions with Islamic principles.

The GLCs aim to realise their own organisational objectives such as making a profit, producing quality products and excellent services and becoming the largest organisations. Good productivity comes from the effectiveness and efficiency of employers in managing their human resource. Realising the importance of employees as valuable assets, they must be managed accordingly. Islam has clearly emphasised justice and truth as stated in the Quran. The foundation of Islamic justice was firmly established during the lifetime of the prophet Muhammad (SAW). The verse in Surah al-Nisa (5), Allah (SWT) ordains to the effects: “Allah doth command you to render back your trusts to those to whom they are due, and when ye judge between people that ye judge with justice”. The establishing of justice in organisations, employees successfully manage the good performance, equity and human brotherhood. For Muslim employees, it is an obligation to obey the rules and regulations stated in the Al-Quran and Sunnah.