Do human resource management practices have an impact on financial performance of banks

Human resource management (HRM) practices are being increasingly considered as major contributory factors in financial performance of organizations. This research study effectively highlights the importance of HRM practices with impact on financial performance of banks (FPB) operating in Pakistan. The major objective of the study is to find out the relationship between ‘HRM Practices’ and the ‘Financial Performance of Banks’. As a sample, 46 scheduled banks were contacted, of which 38 responded. The HRM practices selected for the research study were selection, training, performance appraisal system, compensation system and employee participation. Empirical evidence was calculated through stepwise regression analysis, Pearson correlation and descriptive statistics to support theoretical models that link HRM practices with financial performance of banks. The study concluded that all tested variables have a positive relation and impact on financial performance of banks but the major contributory practices are selection, training, compensation and employee participation.   Key words: HRM practices, selection system, training, job description, performance appraisal system, compensation system, career planning system, employees participation, financial performance of the banks, planning, development, rewards.

[1]  Jon M. Werner,et al.  Human Resource Development , 2005 .

[2]  Mark A. Huselid.  The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance , 1995 .

[3]  Jeffrey B. Arthur,et al.  Effects of human resource systems on manufacturing performance and turnover , 1994 .

[4]  Tahir Masood Qureshi,et al.  Impact Of Employee Participation On Job Satisfaction, Employee Commitment And Employee Productivity , 2007 .

[5]  J. F. Byrnes,et al.  Costing Human Resources: The Financial Impact of Behavior in Organizations , 1984 .

[6]  John E. Hunter,et al.  Impact of valid selection procedures on work-force productivity. , 1979 .

[7]  Glenn M. McEvoy,et al.  Managing Human Assets , 1984 .

[8]  John E. Delery,et al.  Modes of theorizing in strategic human resource management: Tests of universalistic, contingency, and configurational performance predictions , 1996 .

[9]  Alberto Bayo-Moriones,et al.  Human Resource Management, Strategy and Operational Performance in the Spanish Manufacturing Industry , 2002 .

[10]  Rosemary L. Batt,et al.  Who Benefits from Teams? Comparing Workers, Supervisors, and Managers , 2004 .

[11]  Kuldeep Singh.  Impact of HR practices on perceived firm performance in India , 2004 .

[12]  Chin Huat Ong,et al.  Strategic Human Resource Management and Organizational Performance in Singapore , 2002 .

[13]  Eric Flamholtz,et al.  Growing pains : how to make the transition from an entrepreneurship to a professionally managed firm , 1986 .

[14]  J. Maes,et al.  How HRM affects corporate financial performance: Evidence from Belgian SMEs , 2002 .

[15]  Deepak K. Datta,et al.  HRM and Firm Productivity: Does Industry Matter? , 2003 .

[16]  S. Jackson,et al.  Determinants of Human Resource Management Priorities and Implications for Industrial Relations , 1989 .