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Linkage of HRM Practices with Firm

Performance
(A Study of Banking Sector of Pakistan)

Dr. Komal Khalid Bhatti1


PhD. (HRM)
Lecturer
COMSATS Institute of Information Technology
Wah Cantt
Email: komalkhalidbhatti@gmail.com

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Author is a PhD. Scholar in the field of HRM in Mohammad Ali Jinnah University and has submitted her
dissertation for foreign evaluation. Her teaching experience consists of 4 years both as permanent and visiting bases
in several universities. Currently she is working in COMSATS Institute of Information Technology, Wah Cantt.
There are 10 international research publications all on HEC recognized journals on her record.

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ABSTRACT

Purpose The purpose of this paper is to examine the linkage existing between HR practices
(Training and Development, Compensation Management, Performance management and
employee participation) and firm performance within the banking sector of Pakistan. A focal
concern of this study is to explore the extent of influence of each HR practice on firm
performance.

Design/methodology/approach The population of the study belongs to the banking sector


(including public and private) of Pakistan. Analysis of this study is based upon the data, which is
collected from the first line employees of this sector. First line employees were selected for the
sample study because these employees are closer to the customers externally and middle &lower
level employees internally. For the purpose of testing the four hypotheses derived from the
theoretical implications self-administered questionnaire was designed and were distributed
among the sample selected.

Findings The conclusions are based on an analysis of questionnaires completed by 51 private


and public banks in Pakistan. One result shows that banks in Pakistan are adopting competitive
and modern HRM practices in order to align with competitive business strategy for future
success. Second this study shows that those banks which are adopting more modernized HR
practices (Training and Development, Compensation management, Performance Management
and Employee participation) are on a competitive edge over their business rivals because their
work force in much more trained and well versed with new upcoming challenges and
opportunities in this sector of Pakistan.

Originality/value There have been very few previous studies on how Human resource
management practices like training and development, compensation management , performance
management and employee participation works within the banking sector of Pakistan and how
effective utilization of these Human Resource practices results in terms of higher profit
generation for the firms.

Keywords Training and Development, Compensation Management, Performance Management,


Employee Participation, Firm Performance.

Paper type Research paper

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1. INTRODUCTION

Since last decade Pakistans economy is following a progressive approach. For them national
economies are no more relatively isolated, but to a certain extent they are becoming a part of an
interdependent global economic system and human resource management along with all of its
developed aspects is receiving rapid acknowledgements.

Research shows that emerging global economy provides opportunities as well as poses
threats, towards the firm and its performance, which had not been dealt by the managers before.
As a result of it Human Resource Management has become a critical issue for the ultimate
success of all firms. The success of any firm depends upon the criteria that how well its
managers manage the available workforce and how effectively they get the maximum
performance out of them. It is usually perceived that Human Resource not only helps firms in
developing and implementing the firms strategy but also help firms to achieve its objectives
effectively and to survive in this challenging world of business. Presently, it seems quite
impossible for any firm to achieve its objectives effectively and efficiently without using or
implementing the best human resource management practices and procedures.

During last ten years firms working in Pakistan and around the globe are facing many
internal and external environmental changes, due to which the customer expectations has risen to
a great extent which in turn increases the quality of the product and services marketed by the
firm and companies and it opens new challenges for both firms and for the individuals working
in those firms. (Pervaiz Musharaf, 2006).

Firms from this highly challenging, advanced and modern era must have to struggle hard
for being in the market and to acquire their proper share or to achieve their goals efficiently
because of the shifting worlds strategies, e.g. changes in technology, quality of products and rate
of products produced in a year, extensive local and international competition, demographic
changes, deregulation and a more service demanding customers. These are the few determinants
and factors which change the overall cultures and environments of firms and can increase the
level of competition among them irrespective of their nature or scope of the business which
means it affects both firms which are working for profit and not for profit (Welfare and NGOs).

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1.1 Study Objectives

1. To examine and analyze the challenges which firms are currently facing in relation with
their performance keeping in view the employees satisfaction with the firms HR
practices in Pakistan.
2. To carry out a comparative study of the ways and the dimensions in which human
resource management challenges are dealt with among businesses in relation to the firm
effectiveness, measures of productivity, service quality and profitability. These
measurements were chosen because they would lead to a thorough yet general
examination of firm performance.
3. This analysis will help us to conduct a comparative study with in the firms in Pakistan
since the cultures and practices among these firms looks like to be common.
2. LITERATURE REVIEW

The world and firms high level management now realizes the importance of Human Resource
Management practices in the firm due to the aggressive firms environment. If we talk more
explicitly they interlink Human Resource with Productivity (Ichniowski et al., 1997; Fox et al.,
1999), good and effective customer relationship which produces Happy Customers rather than
Satisfied Customers (Fox et al., 1999), reason behind the increase in Profitability and
employees loyalty with firms and their overall survival within that intense competition (Fox et
al., 1999, Delery and Doty, 1996; Welbourne and Andrews, 1996). For acquiring such
relationship firms management has not only to face the upcoming issues regarding human
resource management but also have to deal with them in order for optimum survival in such way
so that they can easily implement their newly designed strategies and the (Human Resource)
employees of the firm can easily espouse those changes and in effective manner.

2.1 Training and Development

Training and development of human capital will be one of the main challenges for Human
Resource Managers in next few years because as the environmental factor changes the firms are
adopting and developing strategies according to the international standards so that they can
secure their survival and move in the long run. On the other hand the training and development
of human capital becomes the integral part for operating in an ever more interconnected world
(Schuler, 2000).

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A study conducted by Russell, Terborg & Powers (1985) also concluded that training and
development is positively related with firm performance. Pfeffer (1998a) is his research study
also brings forward a concept of training and development as a vital tool for firms revenue
generation by human resource because it is not only generating and enhancing skills but also due
to the reason that it develop positive and professional aptitude in employees. In contrast to the
above mentioned studies a study conducted by Nikandrou et al. (2008) discovers no direct
relationship between training and development and firm performance.

According to Beardwell and Holden (1997) the importance of training and development
within the firms has unbelievably increased in recent few years all around the world specially in
the under developed countries like Pakistan, India, Bangladesh and other countries of the region
because of the relative competition in the global economy and due to the Human Resource
Management practices being implemented in the successful economies of the world like Japan,
Germany, Korea, china, England, United States of America and Sweden, where firms invest in
their employees and that investment in employee development is considerable.

According to Ashton and Felstead (1995, p. 245), companies should prefer to invest on
their existing employees in respect of training and development rather than buying in suitably
qualified and experienced workers, this will create loyalty for the firm among the employees and
increase their output for the firm, at the same time by adopting this technique the firm can save
its resources.

2.2 Employee Participation

Employee participation in the firms was very first studied by Coch and French (1949) and is
believed as pioneers of studying this HR practice. They constructed a rationale with efficiency
and productivity, considering that there is a direct relationship between employee participation in
decision making with employees work related outcomes like employee productivity,
commitment and job satisfaction.

Studies conducted by (Wagner 1994; Pfeffer 1994 and Verma 1995) show a significant
and positive association between employee participation, employee performance, his job
satisfaction and his overall performance. Furthermore Blinder (1990) in his study describes that
practices like profit sharing programs, employee consultation and empowerment enhances
employee effectiveness.

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2.3 Performance Management

According to the study of Kuldeep Singh (2004) performance management is one of the most
important HRM practice through which firms can monitor and develop the desired employee
attitude and behavior by using the evaluation techniques. The information gathered through
performance appraisal system can then be used in the selection of training tools and develop
employees with the desired behaviors and attitudes. However, the effectiveness of skilled
employees will be limited unless they are motivated to perform their jobs.

Wan D. et al. (2002) also concluded a positive association between performance


management and firms performance.

2.4 Compensation Management

Various research studies conducted to explore the relationship between employee


compensation management and firm performance find out that there is a significant and
positive influence of compensation related practices on firm performance. Moreover Bonus
systems are to motivate employees to work towards the companys objectives. (Pfeffer 1994,
Arthur, 1994, MacDuffie 1995, Huselid 1995, Delery and Doty 1996, Sels L. et al. 2003). A
research study by Shaw et al. (1998) also concluded that offering high wages can reduce
employees voluntary turnover.

2.5 Firm Performance

A research Study Organizational Capability: Competing from the inside/out conducted by


Ulrich and Lake (1990) gave a resource based view of Human resource management as a firm
support by saying that HRM can provide a strong base of competitive advantage to the firm and
can be a valuable and sustainable competitive advantage. Recently Jerald G. Fishman CEO of
Analog Devices a leading semi-conductor producing firm having more than 1000 products under
its name commented that the rate at which employees learn may well become the only
sustainable competitive advantage in the future. Products, services and even processes can be
copied, but if you are learning more rapidly than your competitors than you can get ahead and
stay ahead.

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Several other research studies conducted by Wright & McMahan (1992), Hamel & Prahalad
(1994), Pfeffer (1994), Snell et al. (1996), Delaney & Huselid (1996) also concluded that human
resource management practices can influence employees attitudes, behaviors, working patterns,
motivation level, abilities and knowledge which can directly influence firm performance.

3. RESEARCH METHODOLOGY

The purpose of this research study is to determine the human resource management challenges
and their impacts towards the firms performance in Pakistan, by which the firm have to deal
within the next few years. Further, they aim to identify the ways these challenges are dealt with
today, in the form of human resource (HR) management practices, in relation to firm
Productivity, Service Quality and Profitability. The firms under investigation belong to the
banking sector (including public and private) of Pakistan. This sector was selected because of the
reason that banking sector is one of those sectors that shows progressive changes with respect to
human resource management in the last few decades.

3.1 Population

Analysis of this study is based upon the data, which is collected from the first line employees of
commercial banking sector. First line employees were selected for the sample study because
these employees are closer to the customers externally and middle &lower level employees
internally.

3.2 Response Rate

Out of the 254 questionnaires sent out to different banks at Islamabad, Lahore and Karachi
(Business Cities of Pakistan) in the months of March and April 2011, 215 were returned, a
successful response rate of 84.6%. List of bank is attached as Annex B.

Based upon the literature review following are the hypothesis to be tested.

3.3 Hypothesis

More specifically the hypotheses of this research study are:

H1= Training and Development have a positive effect on the firm performance.

H2= Employee participation has a positive effect on the firm performance

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H3= Performance Management has a positive effect on the firm performance

H4= Compensation Management has a positive effect on the firm performance

3.4 Theoretical Frame Work

These are the determinants, which affect the firm performance with respect of Human Resource
Management.

Figure # 1: Research Model

Satisfaction with HR
Practices Firm Performance

Training & Development Productivity


Performance Management Service
Compensation Management Quality
Employee Participation Profitability

The following equations are used in order to evaluate the results regarding linkage of HR
Practices with firm performance and satisfaction with these practices as a moderating variable
regarding the upshot of association between Business and HRM strategy and its impact on firm
performance.

Y1 = + X1 +

Y1= + X +

Y1= + 3 X3 +

Y1= + 4 X4 +

Y= Firm Performance.

= constant.

1 = coefficient of training and development.

2 = coefficient of Employee Participation

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3 = coefficient of Performance Management

4 = coefficient of Compensation Management

X1 =Training and Development

X2 = Employee Participation

X3 = Performance Management

X4 = Compensation Management

= other variable.

3.5 Explanation of Variables

3.5.1 Performance Management

It is measured by a 5 item scale, evaluating the degree to which the employee performance is
measured on the quantifiable results using the data from performance evaluation. The main
points from the questionnaire are as follows:

1. Measurement of employee performance on quantifiable results.

2. Performance based feedback and counseling

3. Growth and development oriented evaluation system.

4. Influence of performance management on the individual and team behavior

5. Trust on performance appraisal system.

6. Objectives clarity of performance management system.

7. The usage of evaluation data for decisions making like training or


compensation.

3.5.2 Compensation Management

It was measured through a scale of 5. For analyzing compensation management of the firm
following 5 items were considered.

1. Linkage of compensation with employee performance


2. Comparison of salary and benefits with the market.

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3. Linkage of compensation with employees competence or ability.
4. The compensation for all employees is directly linked to his/her performance.
5. Profit sharing as a tool to reward higher performance.

3.5.3 Employee Participation

It was measured through a scale of 5. For analyzing forms and extent of employee
participation within the firm following 3 items were considered in questionnaire:

1. Leverage of employees to make decisions related to cost and quality matters.


2. Participation in their own task related decisions.
3. Consultation in task improvement.

3.5.4 Training and Development

It was measured through a scale of 5. Training and Development within the firm was measured
on following 09 dimensions:

1. Extensiveness of Training and Development programs.


2. Rate of Training and Development activities each year
3. Formal TNA (Training need assessment) mechanism.
4. Realistic identification of training needs
5. Formal training evaluation mechanism.
6. The cost and benefit analysis of training.
7. Relationship of training and Development with employee retention.
8. Relationship of training and Development with employee performance.
9. Relationship of training and Development with firm productivity.

3.5.5 Firm Performance

It was measured through a scale of 5. For analyzing firm performance data was collected by
comparing performance over the last three years considering the aspects of product or service
quality, new product development, ability to attract and retain employees and employee -
management relationship.

3.6 Data Collection

Data collection is based on two steps:

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1. First of all we made a group and conduct interviews over this above discussed topic
employees of different banks.

2. To find out general opinion of the employees that why different banks achieve their goals
more effectively. In the second step we collect the data from banks with the help of the
questionnaire attached as Annex A.

This type of study presents a number of data collection tests. Data were collected with
Questionnaire through mail and survey to the first line management in each bank. Questionnaire
was made on a scale ranging Strongly Disagree 1, Disagree 2, Indifference 3, Agree 4 and
Strongly Agree 5. The sample survey was concerned with Human Resource Management
practices and firm performance. The number of Questions retained was determined by using
(Kuldeep Singh, 2004).

3.7 Reliability Test

To determine the internal reliability of the questionnaire Cronbachs alpha was calculated. For
this research study separate as well as combined reliability estimates were calculated. The
combined value of Cronbachs alpha was ( = .82), which exist within the acceptable reliability
range.

4. DATA ANALYSIS
For data analysis we used descriptive statistics, correlation analysis and regression analysis.

4.1 Descriptive Statistics

Descriptive statistics is a branch of statistics that denotes any of the many techniques used to
summarize a set of data. We want to choose a statistic that shows how different units seem
similar.

Table No 1: Descriptive Statistics


E. P. C.
T &D Parti Mgt Mgt F. Per.
Mean 3.92 3.73 4.21 4.14 4.01
Standard Deviation 0.53 0.31 0.56 0.45 0.61
Sample Variance 0.35 0.22 0.29 0.22 0.26
Range 1.94 1.31 2.03 2.41 2.32
Count 215.0 215.0 215.0 215.0 215.0

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Standard deviation is a measure of variability but also describes the balance point for
the data distribution. Interpretation of smaller value is that most of the data set are closer to
the mean, whereas a larger standard deviation value reflect that the data sets are widely
scattered widely from the mean. Table # 1 is showing standard deviation and means values of
different variables. For T&D (Mean = 3.92, S.D = .53), for Employee participation (Mean =
3.73, S.D = .31), for performance management (Mean = 4.21, S.D = .56), for compensation
management (Mean = 4.14, S.D = .45), and for firm performance (Mean = 4.01, S.D = .61.
All these values of mean and standard deviation are representing that respondents are
agreeing with the options for all the questions asked from respondents and variation between
the statements is very low.

4.2 Pearson Correlation Coefficient

Pearson correlation coefficient is a measure of the correlation of two variables X and Y measured
on the same object or organism, that is, a measure of the tendency of the variables to increase or
decrease together. Pearson coefficient applies when the relationship is linear.

Table No 2: Pearson Correlation Analysis

T&D E. Par P. Mgt C. Mgt F. Per


T&D 1.00
E. Par 0.44* 1.00
**
P. Mgt 0.59 0.42* 1.00
* **
C. Mgt -0.22 0.34 0.64** 1.00
F. Per 0.34* 0.53** 0.43** 0.61** 1.00
**
Significant at 0.01, * Significant at 0.05
The results of the Pearson correlation in table 2 show that training and development is
strongly related with performance management (0.59) indicating that training and development
has a positive, direct and significant influence on performance management. The relationship
between training & development and compensation management (-0.22) is slightly weaker,
negative and significant.

Results of Pearson correlation indicate that relationship between employee participation


and training and development (0.44), performance management (0.42) and compensation
management (0.34), all are positive and significant, revealing that employee participation has a

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positive influence on training & development, performance management and compensation
management.

The strongest value of correlation within table # 2 exist for performance management and
compensation management (0.64) it is due to the reason that mostly outcomes performance
management practices (merit pay , pay for performance) include compensation raises.
Relationship between firm performance and performance management is also significantly
positive and moderately strong (0.43) revealing the Pakistani firms phycology that the
employees performance is evaluated on quantifiable basis. The performance management
system in these firms can be of development oriented if firms provide performance based
feedback and counseling to their employees that will result in satisfaction and trust of the
employees on performance management system and eventually will increase firms
performance.

Results of correlation between compensation management and firm performance is one


of the strongest relationship that exist between HR practices and firm performance (0.61)
indicating that employee satisfaction with compensation management practices would have a
strong and positive influence on firm performance.

4.3 Linear Regression Analysis

Regression analysis models the relationship between one or more response variables. Simple
linear regression is a linear regression in which there is only one covariate (predictor variable). It
is used in situations to evaluate the linear relationship between two variables. In another way it is
used to develop an equation by which we can predict or estimate a dependent variable given an
independent variable.

The results of regression analysis shows among all the selected HR practices
compensation management practices influence most the firm performance (0.61) in a positive
direction. That also reveals if firms offer highly competitive compensation to their employees,
employees are satisfied with the compensation schemes and there is a distributive justice within
the firm then it eventually will result in increasing the firm performance.

Training and development has the least influence on firm performance (0.10) this might be
because of its impact on employee turnover rates. During the study it was observed that in those

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firms where investment in employee training and development is been made, employee turnover
rate is high, which results in comparatively lower firm performance.

Results of regression analysis show that employee participation practices (direct, indirect
and financial participation) also have a moderate influence on firm performance (0.32). This
moderate influence is due to the reason that by involving employees within the decision making
processes and by giving a financial stake within the firm profitability will enhance employees
satisfaction level and his sense of loyalty with the firm which will result in enhancing firm
performance.

Results of regression concluded that influence of employee performance management


practices on firm performance is (0.46), which indicates that if there is procedural transparency
regarding the performance evaluation practices and employees of the firm are satisfied with the
performance evaluation procedures then it will result in enhancing the firm performance.

Table # 3 indicates that training and development, employee participation, performance


management and compensation management captures the 75% variation in firm performance the
rest of 25% variations is linked with other variables like market performance of the firm, career
planning programs, leadership style of the supervisor, employee communication, recruitment
strategies and product quality e.t.c. It also indicated that our research model is significant as
value of F is (23.18) and its significance is (0.0002).

Table No 3: Regression Summary


Variables Coefficients
Intercept 0.23
Training and Development 0.10
Employee Participation 0.32
Performance Management 0.46
Compensation Management 0.61
2
R 0.79
Adjusted R2 0.75
F Value 23.18
Significance of F 0.0002

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5. IMPLICATIONS FOR MANAGEMENT

Results of data analysis and literature review provide us evidences to support the idea that
HRM practices (Training and Development, Compensation management, Performance
Management and Employee participation) can affect a firms performance. Those firms that
have an interest in increasing their firms performance in terms of higher profitability and
better quality product or services must first select proper HR practice that could influence the
employee morale and secondly implement these practices by keeping in mind the concepts of
procedural transparency and distributive justice.

For the purpose of enhancing the firms productivity firms should arrange such
training and development programs that help these employees to enhance not only their
individual productivity but in turn could influence firms performance. Research study also
provide us a confirmation that those firms that invest in developing desired attitudes,
behaviors and skills, results in increased firm performance

In order to design and implement better decisions within the firm, employees should
be involved in decision making, because it will not only make the implementation process
more comfortable for the firm but also help management to resolve those issues which only
employees can solve (as they are closer to the problem as compared with the management).

Results of the study reveal that those firms which effectively utilize these HR
practices (Training and Development, Compensation management, Performance Management
and Employee participation) on a larger scale results in generating higher profits.

6. CONCLUSION

In this research study HRM practices (Training and Development, Compensation management,
Performance Management and Employee participation) are discussed in reference to their
relationship with the firms performance. This study is more banking sector oriented as research
is only confined to commercial banks. The study results provide a strong support for the
existence of positive relationship between HRM practices and firm performance. The study in
addition to earlier research efforts also provide a new dimension in the field of research in
management by opening a discussion on the importance of HRM practices in firm performance
in Pakistani cultural context. Statistically significant results of correlation and regression analysis

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reflects that HRM practices (Training and Development, Compensation management,
Performance Management and Employee participation) are positive contributors in enhancing
firm performance.

The purpose of this paper was to examine how HR involvement is in the long-run
performance of a corporation and is the management accomplishing industrial calm and profit
while following improved human resource practices. The conclusions are based on an analysis of
questionnaires completed by 51 private and public banks in Pakistan. One result shows that
banks in Pakistan are adopting competitive and modern HRM practices in order to align with
competitive business strategy for future success. Second this study shows that those banks which
are adopting more modernized HR practices (Training and Development, Compensation
management, Performance Management and Employee participation) are on a competitive edge
over their business rivals because their work force in much more trained and well versed with
new upcoming challenges and opportunities in this sector of Pakistan.

7. LIMITATION

Few limitations of the research study are as follows:

1. The study has ignored to discuss the determining factors essential to the adoption of
various HRM strategies and reason was limitations of time and space.

2. Although the sample size is representative for commercial banking sector but for the
generalization of the study result the sample size is not sufficient enough to give a
reflection of the firms functioning in Pakistan in relation with variables like training and
development, compensation management, performance management, employee
participation and firm performance.

3. Questionnaire was constructed in English language; use of a foreign language could have
affected the responses.

4. The data obtained from the firms regarding the research variables (Training and
development, compensation management, performance management, employee
participation and firm performance) is in the form of perceptual measures. Usually for
more consistent output the objective measures are more desirable.

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5. For this study only four HRM practices (Training and development, compensation
management, performance management, employee participation) have been used. While
practices like career management, recruitment and selection, job analysis, orientation,
have been ignored.

8. DIRECTIONS FOR FUTURE RESEARCH

This study reflects the influence of performance management, training and development,
compensation management and employee participation on firm performance; but still does
not show anything regarding the implication tools of these practices. Directions for future
research are as follows:

1. For the establishment of cause and effect relation between the variables (performance
management, training and development, compensation management, employee
participation and firm performance) longitudinal studies could be conducted.

2. Further sectors and firms can be included in the study to make sample representative and
increase the external validity.

3. Future research should seek for other HRM practices and their job related outcomes like
motivation, employee commitment (affective, normative and continuous), employee
productivity and job satisfaction.

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31. Welbourne and Andrews, (1996), Predicting performance of initial public offerings:
Should human resource management be in the equation?, Academy of Management
Journal, Vol. 39, No. 4, pp. 8911101

19
32. Wright, P.M. & G.C. McMahan, (1992), Theoretical perspectives for strategic human
resource management, Journal of Management, Vol. 18, No. 2, pp. 295-320.

20
Annex A
Survey Instrument
Dear Sir/ Madam,
It is to highlight that I am a faculty member at COMSATS Institute of Information Technology, Wah
Cantt. A research study is being conducted by us on the Linkage of HRM Practices on the firm
performance. For this research purpose limited number of companies has been selected by our
research panel and we feel delighted to inform you that your distinguished firm is one of them.
While you fill up this questionnaire, please ensure that you are consulting the under-mentioned point
scale of 1 5 to respond to every question. It will help you to select the most realistic option to
select.
1- Strongly 5- Strongly
Disagree 2 3 4 Agree
Here, we would like to ensure you, that the information/feedback provided by you will be kept
confidential and will only be utilized for the study/research purpose. A return envelope with an
affixed stamp is also attached along with this letter to avoid delay in this research work.
We highly hope that you would post back this questionnaire within 2-3 days (maximum) of the
receiving of this letter to us. It will enable us to complete our research work within the allocated
time.
Lastly it is to request you that in our country, there is a very little research work being carried on in
the area of Human Resource Management at this level. Your cooperation in this regard will open the
doors of research and development in the field of Human Resource Management & without your
cooperation it is simply impossible. I shall feel highly obliged if you kindly cooperate with us to the
maximum degree of responsiveness in order to make this research a very successful one. .
Thank you and Best regards,

21
FEEDBACK FORM
Training & Development (T&D)
1 Our firm conducts extensive (T&D) programs for Employees -1- -2- -3- -4- -5-
2 Employees at each job normally go through T&D programs every -1- -2- -3- -4- -5-
year
3 Training needs are identified through a formal performance -1- -2- -3- -4- -5-
appraisal mechanism
4 There are formal training programs to teach new employees the -1- -2- -3- -4- -5-
skills they needed
5 Trainings need identified are realistic, useful and based on the firm-1- -2- -3- -4- -5-
strategy
6 There are formal training evaluation methods to assess the -1- -2- -3- -4- -5-
effectiveness of the training
7 The firm has a system for calculating the cost and benefit of -1- -2- -3- -4- -5-
training
8 T&D has helped reduce employee turnover in our firm -1- -2- -3- -4- -5-
9 T&D has resulted in higher employee performance in our firm -1- -2- -3- -4- -5-
10 T&D has resulted in higher productivity and financial returns for -1- -2- -3- -4- -5-
the firm
Compensation Management
11 Job performance is an important factor in determining the incentive-1- -2- -3- -4- -5-
compensation of employees.
12 In our firm, salary and other benefits are comparable to the market.-1- -2- -3- -4- -5-
13 In our firm, compensation is decided on the basis of -1- -2- -3- -4- -5-
competence or ability of the employee
14 The compensation for all employees is directly linked to his/her -1- -2- -3- -4- -5-
performance.
15 In our firm, profit sharing is used as a mechanism to reward higher-1- -2- -3- -4- -5-
performance.
Employee Participation

16 Employees in this firm are allowed to make decisions related -1- -2- -3- -4- -5-
to cost and quality matters.
17 Employees in this firm are asked by their superiors to -1- -2- -3- -4- -5-
participate in operations related decisions.
18 Employees are provided opportunity to suggest improvements in -1- -2- -3- -4- -5-
the
way things are done here.
Performance Management
19 Performance of the employees is measured on the basis of objective
-1- -2- -3- -4- -5-
quantifiable results.

22
20 Appraisal system in our firm is growth and development oriented. -1- -2- -3- -4- -5-
21 Employees are provided performance based feedback and -1- -2- -3- -4- -5-
counseling.
22 Employees have faith in the performance appraisal system -1- -2- -3- -4- -5-
23 Appraisal system has a strong influence on individual and team -1- -2- -3- -4- -5-
Behavior
24 The appraisal data is used for making decisions like job rotation, -1- -2- -3- -4- -5-
training and compensation
25 The objectives of the appraisal system are clear to all employees. -1- -2- -3- -4- -5-
Firm Performance -1- -2- -3- -4-
26 How would you compare your firms performance over the past three years in comparison to the
other firms in same industry, in relation to;
I Quality of products or services. -1- -2- -3- -4- -5-
II Development of new products or services. -1- -2- -3- -4- -5-
III Ability to attract employees. -1- -2- -3- -4- -5-
IV Ability to retain employees. -1- -2- -3- -4- -5-
V Satisfaction of customers or clients. -1- -2- -3- -4- -5-
VI Relations between management and employees. -1- -2- -3- -4- -5-

Thank you for your cooperation

23
Annex B
List of Commercial Banks
1. Allied Bank Limited
2. Askari Bank Limited
3. Atlas Bank Limited
4. Bank Al-Falah Limited
5. Bank AL-Habib Limited
6. Bank Islami Pak Limited
7. Bank Of Khyber
8. Bank Of Punjab
9. Faysal Bank XD
10. Habib Bank Limited
11. KASB Bank Limited.
12. MCB Bank
13. Meezan Bank Limited
14. Mybank Limited
15. National Bank
16. NIB Bank
17. Standard Chartered Bank
18. Soneri Bank Limited
19. United Bank
20. Habib Metro Bank
21. J.S.Bank
22. Royal Bank
23. Silk Bank
24. Summit Bank

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