Corporate Governance across Ethics, Culture & Citizenship;
What to give and what to expect?
The Effects of HRM Practices on Organizational Performance in
Lebanese banks
Ali H. Halawi
Lebanese International University
Wael S. Zaraket
Prince Mohammad Bin Fahd University
Focus points

HRM and HRM practices

HRM system

Mediating variables

HRM practices and Ethical behavior

HRM practices and Performance
The effects of HRM practices on organizational performance in Lebanese banks
HRM and HRM practices

Essential factors in creating competitive advantage

Resource based view (Barney 1991)
Four people/employee features (Wright & McMahan
1992):
1.
2.
3.
4.
Individual performance
Exceptional skills
Un-copied human capital investment
Un-replaceable Human resources
The effects of HRM practices on organizational performance in Lebanese banks
HRM theories

3 types of theories - Guest (1997):
1)
Strategic Theories
2)
Descriptive Theories
3)
Normative Theories

3 types of theories - Boselie et al. (2005):
1)
Contingency Theory
2)
Resource-based view
3)
AMO theory (Ability, Motivation, Opportunity)
The effects of HRM practices on organizational performance in Lebanese banks
Models of HRM

Harvard Model (focuses on employee commitment, resulting
that employees have be consistent, capable and cost effective)

Michigan Model (emphasizes on hard HRM—meaning, people
have to be managed like any other resources: acquired cheaply, used
economically, developed and abused fully)

Guest Model (operates on the conviction that a set of
incorporated HRM practices will lead to superior individual and
organizational performance)

Warwick Model (identifies the influence of personnel on HR
strategy content and emphasizes recognizing the inner
(organizational) and external (environmental) context)
The effects of HRM practices on organizational performance in Lebanese banks
Variables affecting the relationship between
HR and Organizational performance
1. HRM Practices
2. Organizational Citizenship Behaviors( OCBs)
3. Job Satisfaction
4. Employee Engagement
5. Employee Motivation
6. HR Flexibility
7. Employee Attrition
8. Employee Retention
9. Employee Performance
The effects of HRM practices on organizational performance in Lebanese banks
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).
Employee Participation
Compensation & Benefits Management & Reward System
Career Planning System,
Training & Development
Employee Empowerment
The effects of HRM practices on organizational performance in Lebanese banks
Mediating variables
• Organizational Citizenship Behavior
• Job Satisfaction
• Employee Engagement
• Employee Motivation
• HR Flexibility
The effects of HRM practices on organizational performance in Lebanese banks
Organizational Performance (Dependent
Variable)
• Employee Attrition
• Employee Retention
• Employee Performance
The effects of HRM practices on organizational performance in Lebanese banks
HRM Practices and ethical behavior
• When organizations invest in an employees through training
and education, the employee becomes ethically rather than
contractually related to the organization.
• Normative type of organizational commitment:
The sense that people should stay with their current employers
may result from personal work philosophies or more general
codes of right and wrong developed over the course of their
lives.
Build a sense of obligation-based commitment among employees
The effects of HRM practices on organizational performance in Lebanese banks
Hypotheses
H1.
H2.
H3.
H4.
H5.
H6.
H7.
H8.
H9.
H10.
H11.
H12.
H13.
H14.
H15.
HRM practices affect employee attrition.
HRM practices affect employee retention.
HRM practices affect employee performance.
HRM practices affect organizational citizenship behaviors.
HRM practices affect job satisfaction.
HRM practices affect employee engagement.
HRM practices affect employee motivation.
HRM practices affect HR flexibility.
Organizational citizenship behaviors affect employee attrition.
Organizational citizenship behaviors affect employee retention.
Organizational citizenship behaviors affect employee performance.
Job satisfaction affects employee attrition.
Job satisfaction affects employee retention.
Job satisfaction affects employee performance.
Employee engagement affects employee attrition.
The effects of HRM practices on organizational performance in Lebanese banks
Hypotheses (Cont’d)
H16.
H17.
H18.
H19.
H20.
H21.
H22.
H23.
Employee engagement affects employee retention.
Employee engagement affects employee performance.
Employee motivation affects employee attrition.
Employee motivation affects employee retention.
Employee motivation affects employee performance.
HR flexibility affects employee attrition.
HR flexibility affects employee retention.
HR flexibility affects employee performance.
The effects of HRM practices on organizational performance in Lebanese banks
Research Framework
Inputs
Employee
Skills and
Motivation
Processes
Practices related to strategic
planning, selection and
recruiting processes, promotion
& reward processes, employee
training and development
programs, employee
performance & review processes
Output
Job
Performance
Output
Financial
Performance
Reaching intended outcomes, return on
assets, market-to-book ratios, percent
growth, quality control measures,
perceived organizational performance
and perceived market value
The effects of HRM practices on organizational performance in Lebanese banks
Scope of the study
This study focuses on the impact of HRM
practices on Organizational performance in
the Lebanese banking sector. Research was
conducted on various banks from the Alfa
list of top ten Lebanese banks
The effects of HRM practices on organizational performance in Lebanese banks
Profile of Respondents
Variable
Frequency
Percentage
Male
140
62.5
Female
84
37.5
21-30
37
16.5
31-40
115
51.3
41-50
67
29.9
51 and above
5
2.2
Line Manager
173
77.23
HR Leader
33
14.70
Top Management
18
8.00
Gender
Age
Position / Title**
Note: Position/Title** Top Management: CEO, Managing Director, General Manager: HR Leader: HR
Director, Sr. HR Manager, HR Manager, HR Leader; Line Manager: Any Line Manager in
manufacturing, such as Manufacturing Manager, Production Manager, Quality Manager and others.
The effects of HRM practices on organizational performance in Lebanese banks
Results
H1.
H2.
H3.
H4.
H5.
H6.
H7.
H8.
H9.
H10.
H11.
H12.
H13.
H14.
H15.
HRM practices affect employee attrition. (Not supported)
HRM practices affect employee retention. (Supported)
HRM practices affect employee performance. (Not supported)
HRM practices affect organizational citizenship behaviors. (Supported)
HRM practices affect job satisfaction. (Supported)
HRM practices affect employee engagement. (Supported)
HRM practices affect employee motivation. (Supported)
HRM practices affect HR flexibility. (Supported)
OCBs affect employee attrition. (Not supported)
OCBs affect employee retention. (Not supported)
OCBs affect employee performance. (Not supported)
Job satisfaction affects employee attrition. (Supported)
Job satisfaction affects employee retention. (Not supported)
Job satisfaction affects employee performance. (Not supported)
Employee engagement affects employee attrition. (Supported)
The effects of HRM practices on organizational performance in Lebanese banks
Results (Cont’d)
H16.
H17.
H18.
H19.
H20.
H21.
H22.
H23.
Employee engagement affects employee retention. (Supported)
Employee engagement affects employee performance. (Supported)
Employee motivation affects employee attrition. (Supported)
Employee motivation affects employee retention. (Supported)
Employee motivation affects employee performance. (Not supported)
HR flexibility affects employee attrition. (Supported)
HR flexibility affects employee retention. (Not supported)
HR flexibility affects employee performance. (Not supported)
The effects of HRM practices on organizational performance in Lebanese banks
Additional results
Results from the test found new associations between variables that have
significant influences:
• Employee Motivation has a direct, positive impact on Job Satisfaction,
Employee Engagement, and HR Flexibility.
• Employee Engagement has a direct, positive impact on OCBs.
• Employee Performance has a direct, significant, and positive impact on
Employee Retention; and has a direct, significant and negative impact on
Employee Attrition.
• Employee Attrition has a direct, significant and negative impact on
Employee Retention.
The effects of HRM practices on organizational performance in Lebanese banks
Structure Model
The effects of HRM practices on organizational performance in Lebanese banks
Limitations
• The study was conducted in Lebanon 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, crosssectorial 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.
The effects of HRM practices on organizational performance in Lebanese banks
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.
The effects of HRM practices on organizational performance in Lebanese banks
Thank you
Questions?