T.C.

DOGUS UNIVERSITY
INSTITUTE OF GRADUATE STUDIES
MASTERS BUSINESS ADMINISTRATION

THE EFFECT OF HRM APPLICATIONS ON ORGANIZATIONAL COMMITMENT:

AN APPLICATION IN THE BANKING SECTOR OF ISTANBUL, TURKEY

MASTER’S THESIS

ZANË GASHİ

20172001001

SUPERVISOR

ASST. PROF. MEHMET EMIN YILDIZ

İSTANBUL, 2021
 CHAPTER 1
INTRODUCTION
Introduction
International commerce setting is gradually turning into challenging owing to the
influence of many groundbreaking dynamics namely increase in number of services, high-tech
innovations & deregulation. Therefore, in order to go for enhanced business strategies,
organizations are constantly determined to taking advantage of opportunities for business,
achieving competitive edge & nullifying the influence of environmental risks.

Human capital investment by firm in this complex business setting is one of the crucial
bases for sustaining competitive edge. As evident in the literature, to achieve competitive edge in
active business setting, organizations considers HR as the utmost vital asset (Benjamin & David,
2012,).

Conversely, handling them is a perplexing chore & can only be attained via productive
applications which is imitated by well-planned HRM structure inside the business (Tiwari &
Sexena, 2012,).

Organizations are discovering it hard to perform at most favorable level because of fast
altering business setting & harsh worldwide competition. Commitment of employees is
nowadays deliberated as an expected course for potent performance of workforce & businesses
(Armstrong, 2014).

Chief concern confronted by numerous managers in businesses is producing commitment

of employees & it has been observed as a vital component in determining behavior of employee
in firms, which similarly inclines to differ on type of firm (Swindling & Miler, 2002).

Employee commitment can improve the performance of an organization but some time it
is not delivering the benefit in many cases like when organization not given them the incentives
and involve them in their jobs (Iqbal et al., 2013). Employees sense security & their level of
commitment surges in time if they are provided with suitable opportunities & aids by
organizations (Ahmed et al., 2015).

Commitment is considered worldwide reaction to a business & satisfaction of job is more

of a reaction to particular business or numerous aspects of conditions of job. Satisfaction of job
is an approach in the direction of on-the-job surroundings, which is the outcome of employee’s
organizational commitment (Bhatti & Qureshi, 2007).

Two clear current organizational matters confronted by managers comprise of prompting

the workforce commitment & retention of staff. Preceding researches on paramount practices in
HRM divided in classifying a potent combination of applications that may well enhance
employee’s commitment to organization & objective to continue in firm (Chew & Chan, 2008).

Problem Statement
Contemporary researches contend that tactically motivated & reliable HRM practices for
instance recruitment, training & performance appraisals considerably add to retaining long term
employee commitment. Hence, researchers are profoundly fascinated in exploring those
applications which are reliably associated with goals of firm to preserve a solid manpower
(Lamba & Choudhary, 2013).

According to Porter (1968), commitment involves willingness of employees to exert

higher efforts on behalf of the organization, a strong desire to stay in the organization, and accept
major goals and values of the organization. Employee commitment of stronger level towards
firm steer to reduced probability to leave, satisfaction of higher level & enhanced output at job
via sturdier employee-organization connection.

The aim of the study is to analytically examine HRM practices in banks with special
focus on how employee commitment is influenced by training, compensation, performance
evaluation, & promotions.
Research Objectives:
1. Critically examine HRM practices prevailing in the Banking Sector of Turkey.
2. Analytically assess how employee commitment (affective, normative & continuance) is
influenced by training, compensation, performance evaluation, and promotions in Banking
Sector of Turkey.

Research Question:
Q: What role does HRM practices play on the employee commitment to organization?

Significance of Research:
This research analyzes the variety of HRM practices, and their consequences in terms of
worker’s obligation to firm in banks of Turkey. There have been few studies done to investigate
the consequences of HRM practices on employee commitment but this one is unique as it
examines the banking sector of Turkey. Achieving greater understanding of the HRM practices
and adopting the appropriate one will enable the organization to better achieve their objective in
maintaining organizational harmony and good unity through employee commitment. A mix of
four HRM practices have been recognized in current research which are described appropriate &
vital for preserving employee commitment to their banks. Training, Compensation, Performance
Evaluation and Promotion are the four HR practices. In case of banking sector, these four
practices highly influence the employee commitment to their firms.
 CHAPTER 2
LITERATURE REVIEW AND HYPOTHESES
Human Resource Management (HRM)
Although preceding work have described greater than before significance of HRM, still
there appears to be an extensive research & application gap in HR, which might be an outcome
of dissimilarity in concern or owing to the disintegrated identity of domain of the HRM
(Deadrick & Gibson, 2007).

Armstrong (2009) describes that HRM is “a tactical, cohesive & clear method to the
occupation, growth & security of the individuals employed in firms”. Its purpose is to attaining
organizational accomplishment via a competent supervision of people working in a firm. Fey et
al (2009) states that human capital is a crucial involvement & be able to aid as the most vital
basis of competitive edge for a firm. Hence, ideal deployment of HR can aid in accomplishing
organizational objectives. Field of HRM comprises application & managerial choices that have a
straight influence on the personnel of the firm & therefore could be deliberated as a classification
of applications that offers workforce with proficiency, info, & keenness to be included in policy-
making, which when utilized as an essential role for strategy of business can aid in employing
proficient personnel to guarantee lasting competitive edge (Luque et al., 2012,). Numerous
scholars have stressed that it is the whole system of HRM that works as a likely cause of success,
not just one particular practice.

Models of Human Resource Management

The advancement of comprehensive notion of HRM was decided in 1980’s via the
growth of “Michigan Model” which is commonly known as “Matching Model” (Armstrong,
2009) presented by Devanna et al in 1984 and is founded on the theory of hard HRM that
associates management of labor force to strategy of organization.
 Figure 1: Matching Model

Idea of Michigan Model revolves on workforce authority bearing in mind that employees
needs be employed at least possible cost & completely utlized to accomplish preferred level of
accomplishment (Tiwari & Saxena (2012). Conversely, as Khan (2011) indicated, the
disapproval pointed by preceding scholars show the rigidity of rigorous HR dogmas makes it
challenging for firms to implement modifications & modernize system according to altering
stipulations of business setting. This restriction paved way to the advancement of a more
complete model presented in 1984 by Beer et al that emphasized the necessity to cultivate
strategies that are long-term to handle personnel while seeing labor as a likely strength as
opposed to an liability (Agyeppong, Fugar & Tuuli, 2010).

Figure 2: Harvard Model

Presentation of Harvard Model in concept entirely moved the emphasis of handling

workforce via Hard HR structure to a far lenient method. Khan (2011) stated, Harvard Model
enables workforce commitment for enhanced understanding of objectives. Inconsistent to
Michigan Model, this model is founded on notion of empathy to boost workforce commitment &
efficiency (Gill, 2007). As Gill (2007) described, a lenient method to HRM structure aids in
evading dispute in organizational relationship, supporting that firm & worker objectives are
fittingly aligned. Additionally, it inspires guidelines founded on empathy that stimulate dedicated
labor force. Similar point was reinforced by Agyepong, Fugar & Tuuli (2010), describing that
Harvard Model incorporates procedures that inspire flexibility & empathy. Harvard Model
emphasizes on guidelines that impact other functions of firms & is controlled by investors &
situational elements. Although Harvard Model has many advantages, it has certain gaps that may
perhaps limit the relevance of this framework in dissimilar firm surroundings. As Brunetto,
Wharton & Shaclock (2011) stated, Harvard Model is best appropriate for public sector
businesses in evaluating the influence of procedures of HRM on workforce effect.

Figure 3: Guest Model

Guest Model (1997), too, contemplates combined HRM applications to aid in achieving
employee & firm performance by utilizing numerous HR approaches like innovation &
differentiation with a intention to attain numerous results like enhanced superiority & cost
reduction (Tiwari & Saxena, 2012).
 Figure 4: Warwick Model

Dissimilar to Harvard Model, the structure of Warwick framework replicates European

customs & style of management founded on 5 interconnected actions that aid in evaluating the
effect of external influences affixed to firm’s internal operations (Agyepong, Fugar & Tuuli,
2010). Even with the progress of numerous HR frameworks in theory, the real-world effects of
these frameworks are indistinct in preceding researches. As per literature, emerging countries
call for broader exploration on the relevance & adequacy of this kind of models as they vary in
firm surroundings owing to geographical & societal influences.
Employees Organizational Commitment
 Skills, commitment & involvement of employees significantly determines the success of
an organization. For any organization, their greatest asset is competent workforce. In spite of
abundance of studies on the association amid practices of HR & workforce outcomes, the
theoretical field on practices of HR needs additional modification owing to limitations in the
preceding researches. As Boon et al, (2011) mentioned, organization objectives & employee
goals & skills can be aligned by employing efficient HR practices. Conversely, dissimilarities in
HR applications may come from dissimilarities in perception of workforce by contrast from
dissimilarities in HR policies in application (Boon et al, 2011). As a result, it is the opinion of
personnel concerning HR applications that might give way to constructive workforce
productivity & eventually bring in enhanced output of firm. On the other hand, widely held
researches have stressed on exploring HRM application that are realistically applied by contrast
from centering on weighing HRM application with regard to opinion of employees. Techniques
for measurement utilized in several studies are likewise somewhat debatable as there is no
universal consensus on a consistent method to measure applications of HR. As Fey et al (2009)
recognized, institutional & cultural dissimilarities makes management practices differ by country
settings. As Gianque, Biget & Verone (2013) assumed, subject to the core goals of handling
personnel, HRM practices types are classified as “High-Performance HRM Practices”. The
scholar explains that these practices are founded on fixed structure of HR & consequently
intends at attaining firm productivity via decrease in cost of employees. High-performance HRM
practices aims at accomplishing complete success via high level involvement, commitment &
satisfaction of employees. Selection staffing, training, equitable compensation, appraisal
developments & development techniques are HR practices included in latter strategy. (Gianque,
Biget & Verone, 2013). High Performance HRM systems are most probable to yield improved
efficiency & monetary performance in the organizations according to various research studies.
Conversely, absence of agreement in preceding researches makes it problematic for the
corporations to choose appropriate mixture of practices. (Boon et al, 2011).

Organizational Commitment Classification

As per Porter (1968), commitment involves willingness of employees to exert higher
efforts on behalf of the organization, a strong desire to stay in the organization, and accept major
goals and values of the organization. Kanter (1968) regarded commitment as the inclination of
social actors to contribute vigor & faithfulness to the firm. Mowday, Porter, & Steers (1982)
categorized commitment into two types, attitudinal & behavioral. Attitudinal commitment
denotes to a person’s empathy with the company objectives & inclination to toil in the direction
of them. In behavioral commitment, individuals are regarded as dedicated to specific firm
behaviors by contrast to an entity. (O’ Reilly & Chatman, 1986) categorized commitment into 3
types; compliance, identification, & internalization. (Morrow, 1983) acknowledged that
commitment to organization can be theorized & assessed in more than 25 techniques. (Meyer &
Allen, 1991) acknowledged 3 common issues that described numerous methods to theory of
commitment to organization; i.e., organizational affective affection, supposed expenses related
with exiting the organization & an ethical responsibility to persist with organization. As per
(Meyer & Allen, 1997), individuals with affective commitment wants to carry out activities;
individuals with continuance commitment need to take part in activities with the aim of avoiding
expense of exiting the organization & individuals with normative commitment take part in
activities because they should. As (Meyer & Allen, 1997) described, performance parameters &
3 forms of commitment has different association. In most of the researches, performance
parameters were found to be positively related to AC. Conversely, performance parameters were
found to be negative or unrelated to CC. Also, performance parameters were found to be only
modestly related NC in majority of the researches. (Meyer & Allen, 1997). Keeping in view the
above observation, the current study emphases on the progress of affective commitment as this
method of commitment has the greatest effect on preferred results of organization.

Organizational Commitment Approaches

“Three component model of commitment” (Meyer & Allen, 1997) discuss organizational
commitment in great detail. According to model, three distinct types of organizational
commitment are found.

Affective approach
The eagerness of employees to remain in an organization is known as Affective
Commitment (AC). If employee wants to stay in the organization, it is because employee is
affectively committed. They usually recognize the objectives of organization, sense that
organization is fit for them & are fulfilled with their job. AC individuals feel appreciated, works
as representatives for their firms & are usually great assets for organizations (Meyer & Allen,
1997).

Continuance approach
The need employees feel to remain in an organization is known as Continuance
Commitment (CC). For the CC employees, their need to remain in an organization is the basic
purpose for their commitment. Likely motives for wanting to remain in organizations differ, but
remittance & absence of job alternatives are the related main reasons. (Meyer & Allen, 1997).

Normative approach
Employees feeling that they should remain in an organization is known as Normative
Commitment (NC). Employees that are NC sense that there would be disastrous consequences
if they leave their organization & have a feeling of remorse about the likelihood of exiting
organization. (Meyer & Allen, 1997).

Employees Organizational Commitment & Training

Training (T) is commonly interpreted as a collection of actions or processes
implemented by a firm to nurture learning capabilities & expertise of individuals (Saraswathi,
2010). T courses might be an expensive outlay on workforce & as a result many firms are
hesitant in directing regular T courses. Conversely, profits accumulated to workforce T might be
superior to expenses sustained by firms. Numerous scholars have strived to enlighten the
influence T&D has on employee’s commitment towards organization (Ehrhardt et al, 2011). As
(Lamba & Chouudhary, 2013) described, the focal goal of employee’s T is to reduce
performance gap amid competencies of employees & job characteristics to accomplish that job at
top. (Owoyemi et al, 2011) has shown encouraging influences T has on the employee’s
commitment towards organization, consistent with the conclusions of (Lamba & Chouudhary.
2013). As a result, in order to sustain committed workforce in organization, T must be reflected
as a major area in growth actions (Owoyemi et al, 2011). Hence, businesses should be keen to
finance more in T courses to guarantee output via employees that are committed. As establish in
research, T likewise aids in emerging equally technical & non-technical abilities of workforce.
Assessment on perception of employees on T courses is one of the aspects that have
acknowledged increasing attention. (Ehrhardt et al, 2011) observed the association amid
workers’ view of T courses & their firm commitment. Results of research recommend that
growth actions like T courses add to commitment of employee towards organization. (Newman,
Thanacoody & Hui, 2011) established an affirmative effect of perceived training availability &
sustenance from administration on employees AC employed with international corporations in
China. (Jahanzeb et al, 2013) conducted study in private firms in Saudi Arabia which established
an affirmative vital effect of availability of T courses & support from supervisor for T on
employee’s commitment towards organization.

Employees Organizational Commitment & Performance Evaluation

One of the important HR applications directed by administration of the business is
Performance Evaluation (PE) which is utilized to classify job growth opportunities, perks,
promotions, & employees’ decision regarding pay raise (Shrivastava & Purang, 2011). PE are
carried out to observe the personnel performance at job to advance their efficiency which
contributes a major part in cultivating employee’s commitment (Sial et al, 2011). (Ansari, 2011)
explains that a rational & an operational evaluation structure significantly influence commitment
of employees towards their organization as it works as a foundation for promotional decisions,
perks & remuneration. (Kuvaas, 2006) conducted a research and found that motivation is directly
influenced by satisfaction from PE, commitment & intent of personnel to carry on employed
with the firm. Conclusions likewise portray an affirmative influence of performance appraisal on
employee’s AC. Conversely, research missed to induce implications concerning absence of
numerous PE issues. PE which are founded on impartial & reasonable rating methods can sway
attitude & commitment of employee to a great degree. (Tan & Lau, 2012) explains that the
selection of method for PE is likewise vital as it has an undeviating influence on fairness
perception, satisfaction & commitment of employees towards their firm.

Employees Organizational Commitment & Compensation

Compensation (C) given to personnel is the fundamental HR application that contribute
a substantial part in augmenting satisfaction of workforce, inspiration & their firm commitment.
Nature of C for employee can be both monetary & non-monetary. (Lamba & Choudhary, 2013)
sorts nature of C as major or supplemental. As per scholars, major C encompasses of permanent
payment acquired by personnel as opposed to supplemental C which is production centered &
may perhaps differ rendering to the goals attained at job. As (Ansari, 2011) mentioned,
“Remuneration structure contains C which offers the personnel with physical payments matching
with their services in the arrangement of wage or stipends”. (Sial et al, 2011) explains that the C
structure in firm should be founded on impartial & reasonable application to preserve a
workforce that is committed. Positive relationship has been found amid C & commitment of
employees in empirical studies. As (Sial et al, 2011) reported, C application should be
deliberated as a basis of inspiration & sufficient C considerably augments workforce
commitment. Conversely, not every business have enough money to afford ample C to their
personnel consistently as the aptitude to sustain sufficient remuneration procedures is vastly
reliant on financial situation of the business. Subsequently, corporations have hard time in
providing consistent C to their personnel particularly in financial recessions.

Employees Organizational Commitment & Promotion

Promotions (P) contributes a vital part in the workforce career development. Based on
merit & seniority, P applications might differ noticeably in dissimilar organizations. In recent
years, research has been focused & gave great significance on evaluating the association amid
commitment of workforce & P. Conversely, studies completed in preceding work is not enough
to give a strong implication regarding the nature of P application that adds to the greatest in
firming up connection amid workforce & organization. Several firms run through promotional
events on the foundation of merit as opposed to seniority whereas most firms considers both as a
P principle. (Lamba & Chaudhary, 2013) outlines P as a “progression of personnel to a greater
role bearing bigger responsibilities, status of higher level & improved income”. Employee
commitment has been described positively influenced by P practices in several studies (Sial,
2011; Naimatullah, 2011). Conversely, as per new studies, unbiased appraisal structure of P that
considerably influence commitment of employee towards their job. Findings of (Wan, Sulaiman
& Oman, 2012) from research advocate that unmerited methods implemented in P assessments
have an unpleasant influence on job performance, satisfaction & employee’s commitment. So,
procedural integrity is vital for holding committed personnel to achieve competitive edge.
Hypotheses Development
Human Resource applications emphasized in this model of research are in tune with prior
empirical & theoretical work in field of HRM. T in preceding papers is interpreted as firm action
that is essentially intended at getting better efficiency & boosting aptitude of personnel. T
offered to personnel to nurture their expertise with high-tech requirements of vibrant setting is
tremendously important for enhanced performance of banks. (Newman, Thanacoody & Hui,
2011) established training as an instrument to advance workforce’s organizational AC. As a
consequence, the employee’s level of commitment towards their firm is directly related to level
of T given to employees (Owoyemi et al, 2011). In addition to raise in pay, both social &
monetary remunerations are included in C. As per work in specific papers, salaries of workforce
makes up the direct C while other social & fringe remunerations makes up the indirect C. As
(Zaitouni, 2011), recounted that employee’s AC is positively influenced by fair rewards therefore
personnel who are C properly are more dedicated & expected to remain employed with the firm.
PE is one more vital causal element of personnel’s commitment towards organization in banking
division of Pakistan (Lamba & Choudhary, 2013). Preceding researches have likewise stated that
fairness in decision structure of P considerably influences firm commitment & satisfaction of
workforce (Wan, Sulaiman & Omar, 2012). As per (Gul, Akbar & Jan, 2012), P schemes in the
banking division should be cautiously planned as it influences dedication of personnel to a
greater degree.

The subsequent hypotheses are established in this thesis to measure the association amid
practices of HR & employees commitment towards organization.

Hypothesis 1: Effect of HRM practices on employees’ AC.

H1a: T positively influences employees’ AC.
H1b: C positively influences employees’ AC.
H1c: PE positively influences employees’ AC.
H1d: P positively influences employees’ AC.

Hypothesis 2: Effect of HRM practices on employees’ CC.

H2a: T positively influences employees’ CC.
H2b: C positively influences employees’ CC.
H2c: PE positively influences employees’ CC.
H2d: P positively influences employees’ CC.

Hypothesis 3: Effect of HRM practices on employees’ NC.

H3a: T positively influences employees’ NC.
H3b: C positively influences employees’ NC.
H3c: PE positively influences employees’ NC.
H3d: P positively influences employees’ NC.
 CHAPTER 3
RESEARCH METHODOLOGY

Research Philosophy
Positivist philosophy is the research philosophy of this research which comprises of
inductive approaches. For the collection of data for research, quantitative technique was utilized.
Survey was conducted by utilizing vastly structured questionnaires. As underlined in the
literature, theoretical significance of practices related to HRM established the proposed model of
this research. For keeping commitment of personnel towards their banks in Istanbul, 4 HRM
applications are acknowledged in this research that are recounted applicable & vital, namely; T,
C, PE & P. The commitment of employees towards their organization is highly influenced by
these four practices. Particularly in the banking sector, these four practices greatly impact the
commitment of workforce. As, literature likewise states different consequences of numerous HR
application with nature of commitment of firm, and so the impact of practices of HR is judged on
3 dissimilar forms of commitment towards firm, i.e. AC, CC & NC.

Sample
Sampling technique employed in this thesis to find respondents was non-probability
convenience sampling. Overall population of study involved the lower & middle level managers
in employment in banking sector of Istanbul, Turkey. Conversely, the employed population
involved the lower & middle level managers in employment with numerous bank branches of
Isbank. Although 200 was the sample size that was proposed, merely 150 sample responses were
obtained owing to lack of time & covid-19 restrictions. A self-administered survey was
conducted.

Questionnaire Design
For the collection of data for research, 34 structured questionnaires were designed.
Founded on the model of this research, questionnaire were distributed into 3 parts.
Questionnaires were made utilizing preceding research work to make certain impartiality.
Demographic variables made up the section one. Section two was intended to check personnel’s
opinion about practices of HRM that enclosed queries on T, C, PE & P practices in banking
sector. Section three was broke down into 3 categories of commitment that involved queries on
AC, CC & NC. Items in section two & three were assessed by using five-point Likert scales for
which “strongly agree” is represented by 5 while “strongly disagree” is represented by 1

Proposed Model
To test the hypothetical relationships of the proposed model, SPSS Stats v26 was
employed. The independent variables in proposed model were HR practices and dependent
variables were AC, CC & NC.

Figure 5 illustrates the proposed model.

Figure 5 Proposed model

Statistical Analysis
Statistical analysis tools utilized included frequency analysis, descriptive analysis,
reliability analysis, correlation analysis and multi- regression analysis.