Human Resource Management Practices and
Human Resource Management Practices and
Human Resource Management Practices and
Prakash Shrestha*
Ph.D., Lecturer, Nepal Commerce Campus, Tribhuvan University, Nepal
*Corresponding Author
ABSTRACT
This paper focuses on the evaluation of the relationship between human resource
management (HRM) practices and the commitment of employees. A descriptive research
design is adopted. A questionnaire survey is conducted in the banking industry of Nepal.
The results indicate that the general status of each HRM domain is more than average
but not considered too high. This study found an interesting fact in such a situation that
employee commitment levels tend to be good or even better despite normal HRM
practices. All aspects of HRM practices, such as compensation/pay, training and
development, job description, employee participation and performance appraisal, show
a clear positive association with all aspects of employee commitment, including
affective commitment, continuance commitment and normative commitment, which
means that if companies have competitive compensation policies, a well-written job
description and participatory management strategy as well as an efficient performance
appraisal method, the level of employee commitment would be high. Similarly, if the
companies invest in training and development activities, employees are strongly
committed to organizations. Therefore, it is highly important to formulate and apply
effective HRM practices that spread positive vibes to all types of employees in an
organization to achieve company objectives.
Key words: HRM practices, Commitment, Employee, Banking industry, Status.
Cite this Article: Dilip Parajuli and Prakash Shrestha, Human Resource Management
Practices and Employee Commitment in Banking Industry, International Journal of
Management (IJM), 12(1), 2021, pp. 767-776.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=12&IType=1
1. INTRODUCTION
Employees are now generally recognized as creating a valuable source of competitive
advantage for businesses (Barney, 1991, Pfeffer, 1994). As a consequence, an organization
must follow human resource management (HRM) practices that make the best use of its
employees. The trend has led to increased interest in the effect of HRM on employee
commitment, and a positive association between so-called high-performance work practices has
been found in several studies (Huselid, 1995). Besides, the assumption that businesses that
match their HRM practices with their market strategy can produce superior results is
empirically confirmed (Becker & Gerhart, 1996; Becker & Huselid, 1998; Dyer & Reeves,
1995; and Guest, 1997).
HRM covers all management decisions and activities that directly influence the people who
work for the company or human resources. In every organization, its success is highly
dependent on its human capital. All managers must be concerned with any degree activities that
could be, personnel retention, training, and development adjustment, management of change,
etc. when it comes to handling people (Cascio, 2002). Several studies have stated that
organizational, employee performance and commitment are positively related to HRM practices
(e.g. Guest, 2002; Harley, 2002; Gould-Williams, 2003; Park et al., 2003; Wright, Garden, &
Moynihan, 2003; Tessema & Soeters, 2006; Shahnawaz & Juyal, 2006). These studies have
been oriented and guided towards developing countries. The business modern world only
succeeds and continues through competitive advantages. The liberal economic policy of the
world provided great scope for business expansion only through competitive strength. To get
benefits from a growing market, it is important to put the right people in the right position.
Innovative HRM practices are expected to be adopted to attract, maintain, and add shareholder
value. This study will address major research issues in this respect. The research aims to test
the relationship between HRM practices and employee commitment.
that have a relatively direct effect on an individual's financial earnings and social status can be
considered the main determinants of employee commitment. This is the reason why these
practices are chosen for this study.
5.1 Compensation/Pay
An adequate amount of compensation or pay is highly required for employees to be engaged in
an organization and do a better performance. Delaney and Huselid (1996) reported that
compensation or pay has a positive impact on perceived organizational performance. It is
believed that performance-related pay affects employee attitudes positively that ultimately
enhances their commitment towards organizational activities. In business organizations,
compensation is decided based on the competency of the employees; the compensation for all
employees is directly linked to their commitment.
provide the opportunity to improve skills in future performance by improving weaknesses. For
performance appraisal the following variables are taken into account: performance of the
employees is measured based on objective quantifiable results, appraisal system in our
organization is growing and development-oriented, employees are provided performance-based
feedback and counseling, employees have faith in the performance appraisal system, appraisal
system has a strong influence on individual and team behavior, and the appraisal data is used
for making decisions like job rotation, training, and compensation.
6. RESEARCH FRAMEWORK
Based on the above discussion following research framework has been developed for this study:
HRM Practices
Compensation/Pay
Performance Appraisal
7. RESEARCH METHODOLOGY
7.1 Research Design
For the study, the descriptive and empirical research design is adopted to evaluate the
relationship between HRM practices and employee commitment in the Nepalese banking
industry.
For compensation/pay, the mean is 3.15 with an S.D. of 0.61. The mean for training and
development is 3.01 with an S.D. of 0.69. The mean for a job description is 3.20 with an S.D.
of 0.52. For employee participation, the mean is 3.09 with an S.D. of 0.38. Finally, the mean
for performance appraisal is 3.12 with an S.D. of 0.46. These results indicate that the mean
values of each HRM domain are more than average but not considered too high. There is,
therefore, no extensive use of HRM practices in Nepal's banking industry.
training and development (β = 0.140, p<0.05) with continuance commitment. A similar result
was found normative commitment. The results reveal that normative commitment is positively
related to compensation/pay (β = 0.032, p<0.01), job description (β = 0.041, p<0.05), employee
participation (β = 0.059, p<0.05) and performance appraisal (β = 0.209, p<0.05). Likewise, a
positive relationship is found for training and development (β = -0.126, p<0.05) with normative
commitment.
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