Human resource management practices and its impact on organizational performance in development banks: The emerging market case

Abstract

The study examined the influence of human resource management (HRM) practices on the performance of development banks (DBs) in Nepal. It applied a descriptive and causal-comparative approach to establish a relationship between independent and dependent variables. It covered ten out of Nepal’s 17 ‘B’ class banks, examining 390 individuals from February to June 2023. Using regression analysis, the results highlighted that performance appraisal (PA) had the greatest impact (β = 0.347, p = 0.50), followed by compensation practices (CPs) (β = 0.279, p = 0.50), recruitment and selection (RS) (β = 0.145, p = 0.50), and training and development (TD) (β = 0.131, p = 0.50) on the organizational performance (OP) of DBs in Nepal. The study reinforces the findings of Osemeke (2012) which emphasized the positive correlation between RS methods and OP and advocates the crucial role of TD in shaping various dimensions of organizational success. The study contributes to social exchange theory (SET) and confirms Shore et al. (1995) results that HRM practices as investments affect employee self-perception in organizations. The study’s findings offer practical suggestions for banks aiming to improve performance by proactively adapting HRM practices to meet changing challenges and opportunities.