Do HRM Practices Influence Perceived Financial Performance? A Case of Banks in Pakistan

Abstract

Recently ubiquity in Human Resource Management (HRM) literature has been found and much more focus is directed towards exploring HRM practices and their effect on perceived financial performance of a firm. This study is an endeavor to contribute in the Pakistan context literature of HRM vis-à-vis Financial Performance paradigm. It was aimed at finding the relationship pattern of HRM practices over its contribution in firm’s performance. A questionnaire was deployed to ascertain the extent of relationship among the two and financial services sector was chosen to fill the questionnaire. Partial Least Squares Structural Equation Modeling (PLS-SEM) was employed for analysis to understand the structural dimensions of exogenous and endogenous constructs. Out of the six HRM practices, only two came out to be significantly impacting the perceived financial performance of firms. Compensation Policy and Decentralization results were found to be affecting the perception of employees towards the financial growth of the firms.