The HR practices impact on performance of Islamic Banks of Pakistan.

Evidence from Bankislami and Meezan Bank

Ali Tariq
Superior University
Azeem Ahmad Asif
Superior University
 Focus points

▪ Human Resources Management Practices

▪ Human Resources Management Practices which Effect on

Islamic Banks Performance

▪ HRM system

▪ Depending Variables and Independent Variables

▪ HRM practices and Performance

 INTRODUCTION
To secure growth and viability, any organization will want to achieve their
targeted goals and results. To increase and improve organizational result
there are many ways and the management of the Islamic Bank’s human
resources is the one possibility for the greater performance. Competitive
advantage can be gain with increased faith and discipline in the human
resource of the organization. According to Barney (1991) unlike other
resources the competitive advantage can be gain with the people employed
in the organization and they are hard for the competitors to imitate and can
also be rare resource. Organization has increasingly acknowledge that the
Human resource management is complete and complex task and need
special skills to handle the task, so they have created their own departments
for it. . In addition, it has now been added in the strategic planning of the
organization to add significant value to the organization.
 Significance

• Previous studies has been conducted on the manufacturing sector mostly

measuring the relationship amidst the HRM and achievements and attainments
of the organization.

• The study was extended to Islamic Banking of Pakistan Having taken the
longitudinal dataset from the branches and head office of the two major banks of
Islamic Banking Industry of Pakistan Bank Islami ltd. and Meezan Bank ltd..

• Wilson (2000) revealed that the growth and prosperity of Islamic banks has been
an attraction for the both Muslim and non-Muslims as well, and also is one of the
biggest employer for the fresh graduates.
 Research Questions
• Impact of HRM practices on Employee motivation and
Performance of Islamic Banks?
• Does recruitment practices performs and important part in
Employee motivation and Performance of Islamic Banks?
• Do incentive practices performs and important role in
Employee motivation and Performance of Islamic Banks?
• Does training programs performs and important part
Employee motivation and Performance of Islamic Bank.
 HRM Practices (Independent Variables)
A set of distinct yet interrelated activities, functions and processes aimed at attracting, developing
and maintaining an Organization’s human resources (Lado & Wilson, 1994).
1. Training & Development
2. Performance appraisal
3. Employee Security
4. Career Planning
5. Employee Participation
6. Pay & Compensation
7. Job Satisfaction
8. Recruitment and Selection
9. Organizational Commitment
 Dependent Variable

Organizational Performance

1. Financial Outcome
2. Organization's Growth
3. Employees Retention
 Research Framework

Output
Job
Inputs Processes Performance

Employee Practices related to strategic

Skills and planning, selection and
Motivation recruiting processes, promotion
& reward processes, employee
training and development
programs, employee
performance & review processes
Output
Financial
Performance
Reaching intended outcomes, percent
growth, quality control measures,
perceived organizational performance
and perceived market value
 Methodology

• This study focuses on the impact of HRM practices on Organizational performance in the Islamic
banking sector of Pakistan. Research was conducted on various banks from the top two Islamic
banks of Pakistan (Meezan Bank ltd. and Bank Islami Pakistan ltd.)
• This study took a quantitative research design.
• The data is analyzed by using statistical procedures
• Positivism approach is used as th it was limited to survey data collection in objective way.
• Deductive approach is used as the questionnaire was adopted from Nancy Quansh 2013 paper.
• This kind of previously collected information is not case specific but it can be relevant to the
studied problem (NANCY QUANSAH 2013).
 Sampling
• Data would be used to make inferences or generalization is the managers and non-
managerial employees of Meezan Bank and Bank Islami.

• The estimated population size of this study had 150 people.

• Judgmental or purposive and convenience sampling techniques were used for

selected respondents.

• People are chosen for the researcher’s data collection exercise whose opinions are
relevant to the study.

• Out of the sample size of 150, forty (40) were top management staff of managers
and supervisors, and the remainder of 110 respondents were a combination of non-
managerial members constituting middle and lower level employees.
 Profile of Respondents
Variable Frequency Percentage
Gender
Male 111 74
Female 39 26
Age
20-30 49 32.7
31-40 54 36
41-50 30 20
51 and 60 14 9.3
61 and above 3 2
Education
Mphil 6 4
Masters 47 31.3
Graduation 93 62
Intermediate 4 2.7
Placement
Operations 58 38.7
Sales 70 46.7
Back Office 15 10
Head Office 7 4.7
Model summary
Model R R Square Adjusted R Square Std. Error of the
Estimate
.993a .986 .985 1.001
1

Reliability Satistics

Cronbach's Alpha N of Items

.827 78
 Correlations
Com pens at TrainingAn Em ployeeP MotivationJ Organis atio
Perform anc Recruitm en ionAndRew dDevelopm Em ploym e Perform anc articipation CareerPlan obSatis facti nalCom m it LabourProd
e tSelection ard ent ntSecurity eApprais al Voice ning on m ent uctivity
Perform anc Pears on 1 -.093 .072 -.048 -.117 .048 -.079 .069 .591 ** .852 ** .867 **
e Correlation
Sig. (2- .256 .384 .564 .153 .558 .337 .399 .000 .000 .000
tailed)
N 150 150 150 150 150 150 150 150 150 150 150
Recruitm en Pears on -.093 1 .108 .056 .030 .032 -.047 .108 -.081 -.094 -.072
tSelection Correlation
Sig. (2- .256 .187 .499 .718 .698 .567 .189 .324 .255 .382
tailed)
N 150 150 150 150 150 150 150 150 150 150 150
Com pens at Pears on **
.072 .108 1 .222 .020 .106 -.118 .066 -.024 .073 .053
ionAndRew Correlation
Sig. (2- .384 .187 .006 .804 .198 .152 .425 .768 .373 .520
ard tailed)
N 150 150 150 150 150 150 150 150 150 150 150
TrainingAn Pears on ** *
-.048 .056 .222 1 .077 .172 -.129 -.051 -.046 -.063 .004
dDevelopm Correlation
Sig. (2- .564 .499 .006 .348 .035 .115 .536 .580 .446 .961
ent tailed)
N 150 150 150 150 150 150 150 150 150 150 150
Em ploym e Pears on *
-.117 .030 .020 .077 1 -.082 -.151 .187 -.059 -.116 -.120
ntSecurity Correlation
Sig. (2- .153 .718 .804 .348 .317 .066 .022 .475 .158 .142
tailed)
N 150 150 150 150 150 150 150 150 150 150 150
Perform anc Pears on *
.048 .032 .106 .172 -.082 1 .054 -.151 .050 .023 .082
eApprais al Correlation
Sig. (2- .558 .698 .198 .035 .317 .514 .066 .547 .779 .318
tailed)
N 150 150 150 150 150 150 150 150 150 150 150
Em ployeeP Pears on -.079 -.047 -.118 -.129 -.151 .054 1 -.126 -.044 -.102 -.017
articipation Correlation
Sig. (2- .337 .567 .152 .115 .066 .514 .125 .592 .213 .837
Voice tailed)
N 150 150 150 150 150 150 150 150 150 150 150
CareerPlan Pears on .069 .108 .066 -.051 .187 * -.151 -.126 1 .004 .033 .094
ning Correlation
Sig. (2- .399 .189 .425 .536 .022 .066 .125 .965 .686 .252
tailed)
N 150 150 150 150 150 150 150 150 150 150 150
MotivationJ Pears on ** ** **
.591 -.081 -.024 -.046 -.059 .050 -.044 .004 1 .542 .470
obSatis facti Correlation
Sig. (2- .000 .324 .768 .580 .475 .547 .592 .965 .000 .000
on tailed)
N 150 150 150 150 150 150 150 150 150 150 150
** **
Organis atio Pears on .852 -.094 .073 -.063 -.116 .023 -.102 .033 .542 1 .501 **
nalCom m it Correlation
Sig. (2- .000 .255 .373 .446 .158 .779 .213 .686 .000 .000
m ent tailed)
N 150 150 150 150 150 150 150 150 150 150 150
LabourProd Pears on .867 ** -.072 .053 .004 -.120 .082 -.017 .094 .470 ** .501 ** 1
uctivity Correlation
Sig. (2- .000 .382 .520 .961 .142 .318 .837 .252 .000 .000
tailed)
N 150 150 150 150 150 150 150 150 150 150 150
**. Correlation is s ignificant at the 0.01 level (2-tailed).
*. Correlation is s ignificant at the 0.05 level (2-tailed).
 ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 9569.503 10 956.950 954.499 .000b

Residual 139.357 139 1.003

Total 9708.860 149

a. Dependent Variable: Performance
b. Predictors: (Constant), LabourProductivity, TrainingAndDevelopment, RecruitmentSelection,
EmployeeParticipationVoice, EmploymentSecurity, PerformanceAppraisal,
CompensationAndReward, CareerPlanning, MotivationJobSatisfaction,
OrganisationalCommitment
 Limitations
• The study was conducted in Islamic Banks of Pakistan and was limited to
one sector. And so, the conclusions are only representative of that context.
Those who intend to do further research on the topic should include other
sectors, particularly insurance companies and financial institutions in
general. Doing this will reinforce studies on HRM practices by adding
varied, cross-sectorial contexts.

• This study focuses on HRM practices in general; future studies could

examine each individual HRM practice, such as compensation and benefits
management and reward systems, to determine the extent of their effects on
Organizational performance. Finally, it would be beneficial to research
industries other than banking, such as service, hospitality and airline.
 Conclusion
• This study has clarified the direct positive relationships
between variables.

• It has discovered additional relationships that could help as

points for future studies

• The results confirm HRM practices, demonstrating that they

are paramount to long-term sustainable growth and success in
organizations.
Thanks!
Any questions?
You can find me at
▪ alitariq878@gmail.com
▪ azeem8336@gmail.com

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