HRM Practices and Organizational Performance in Nepalese Commercial Banks

Abstract

This study investigates the effect of some basic Human Resource Management (HRM) practices on organizational performance of the commercial banks in Nepal operating in Chitwan. Grounded in Human Capital Theory and Resource-Based View, the AMO framework and Goal Setting Theory, the research examines if integrated HR practices improve institutional effectiveness in the context of regulated banking environment. A quantitative, cross-sectional design was adopted, and data were obtained from 205 employees from six commercial banks. A structured questionnaire was used to measure recruitment and selection, training and development, performance appraisal, compensation and reward and organizational performance on a five-point Likert scale. Data analysis was performed by descriptive statistics, Pearson correlation, and multiple linear regression with the help of statistical software (SPSS). The variance in organizational performance was explained by the regression model by 58% and the model was statistically significant with F value 68.940, p < 0.001. Training and development (p = 0.001), performance appraisal (p = 0.006) and compensation and reward (p = 0.000) had significant positive impact on organizational performance and recruitment and selection (p = 0.075) was not statistically significant. Compensation and reward came out top. The results show that post-recruitment developmental and motivational HR practices have a larger impact on organizational performance than do hiring practices alone. Integrated Human Resource Systems for aligning employee ability, motivation, and accountability are the key to sustainable competitiveness for the regulated banking sector in Nepal.