Full Length Research Paper

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

Tahir Masood Quresh¹*, Ayisha Akbar², Mohammad Aslam Khan³, Rauf A. Sheikh¹ and Syed Tahir Hijazi⁵

1Faculty of Management Studies, University of Central Punjab Lahore, Pakistan.

2Faculty of Social Sciences, Mohammad Ali Jinnah University, Islamabad, Pakistan.

3HITECH University, Taxila, Pakistan.

4Faculty of Management Sciences, International Islamic University,  Islamabad,  Pakistan.

5 University of Central Punjab Lahore, Pakistan.

*Corresponding author. E-mail: tahirmasood2002@hotmail.com.

Tel: +92 345 50 9 0550.

Accepted 1 June, 2010

 Abstract

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.