Do HRM practices impact employee satisfaction, commitmentor retention? : (empirical studies of Sri Lankan public sector banks)

Abstract

This study attempted to examine the impact of Human Resource Management practices on Human Resource Management outcomes in Sri Lankan public sector banks. Research on Human Resource Management practices and their outcomes such as employee satisfaction, commitment, and retention have rarely been conducted in banking industry in Sri Lanka. Data were collected on employees’ perceptions about Human Resource Management practices and their outcomes through structured questionnaire. Sample consisted of 209 employees who are working in different departments of branches in two PSB in Sri Lanka. Multiple Regression, Cronbach alpha, Pearson correlation coefficient and descriptive statistics were used for various analyzes of this study. The findings of the research revealed that Human Resource Management practices are significant predictors of employee satisfaction, commitment and retention. The results of this study revealed that bundles of HRM practices are positively related to better employee satisfaction with adjusted R2 of 0.623 and a F-value 58.242 (p<0.001) .Compensation and social benefits had the strongest effect on employee satisfaction with a standardized beta of 0.655. This study found that bundles of HRM practices are also positively related to better employee commitment and compensation & social benefits (t = 5.546; p = 0.000), recruitment & selection (t = 4.158; p = 0.000), and training & development practices (t = 3.100; p = 0.002) emerged as the significant variables in explaining the variance in employee commitment. Compensation & social benefits, performance appraisal, and training & development were found to be explanatory factors having significant effect on employee retention of Sri Lankan public sector banks. Compensation and social benefits had the strongest significant effect on employee retention (t = 3.269; p = 0.001) with a standardized beta of 0.231. It is of interest to note that compensation and social benefits practice had the strongest effect on determining the employee satisfaction, commitment and retention of PSB in Sri Lanka. Findings of this study show that providing training for employees is positively related to higher employee satisfaction, employee commitment and higher employee retention. Results of regression analysis supported the hypotheses that performance evaluation is positively related to higher employee satisfaction, commitment and retention of public sector banks in Sri Lanka. Findings of this study do not support the hypotheses that grievances handling system of PSB in Sri Lanka is positively related to higher employee satisfaction, commitment and retention