Whether HR programs affect performance of consumer banks in Pakistan

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This research is characterized as an exploratory research because this will help to get an insight about the problem i.e. whether HR programs affect the performance of consumer banks in Pakistan. This paper explores this situation by collecting primary data and reading published research articles to get useful insights about the problem. This research can also be categorized as business research because it will help the banking industry to choose the most effective HR techniques to get maximum results in a cost-effective way.

3.2 Research Technique:

The information for this research is collected through questionnaires from the sample of the working population. All the questions in the questionnaire are designed with the help of published literature and each variable included in the research is backed up by a theory and has a theoretical justification.

3.3 Data Type & Research Period:

The data for the research is collected majorly from primary sources but secondary sources are also important for the research because it has helped the research to be backed up by some theoretical justification. The primary data source for the research is questionnaire. All the questions are carefully designed to avoid any error and only structured questions have been included to quantify the data accurately. The secondary data sources for the research primarily include the published research articles. Secondary data has been collected for literature review, to extract research variables from them and to understand the methodology used by those articles to gauge the extracted variables. Secondary data has also been used to design the questionnaire.

The time period used for this research is cross sectional time period in which various segments of the population has been sampled at a single point in time. The total time allocated for this research is eight months. First four months are used for literature review, theoretical framework and hypothesis development. While remaining four months are used for formal research i.e. research methodology, data collection, data analysis and conclusion.

3.4 Methodology

In order to obtain information regarding the HR programs being implemented and their desire effect on the banks performance, data would be collected through both secondary and primary research. Questionnaires and telephone interviews with senior executives will be the most important tools in gathering primary data. In order to collect data for employee performance contributing to banking performance, day-to-day work life and efficiency and online databases would be helpful. Furthermore, printed materials including banks annual financial statements, public documents from state bank of Pakistan, financial articles and magazines with the help of library references and review of different papers and online journals on banking industry conducted for previous researches or studies would help in gathering related information and data.

3.5 Details of population

Population or the target population is defined as any complete or theoretically specified aggregation of study elements. It is usually the ideal population to which research results are to be generalized. In my study the population for my research would be all the consumer banks in Pakistan including the private banks, the public sector bank and the foreign banks. For the purpose of conducting a simplified research I have excluded from my research the "Development Financial Institutions" "Islamic banks", "Specialized banks", "Micro Finance Banks and Institutions" and the remaining public sector and foreign banks in Pakistan.

Samba Bank Limited

JS Bank Limited

Allied Bank Limited

KASB Bank Limited

Summit Bank Limited

MCB Bank Limited

Askari Bank Limited

Atlas bank Limited

NIB bank Limited

Bank Alfalah Limited

Silk Bank Limited

Bank Al Habib Limited

Soneri Bank Limited

Standard chartered bank (Pakistan)Limited

Faysal Bank Limited

United Bank Limited

Habib Bank Limited

Habib Metropolitan Bank Limited

National Bank of Pakistan

Citibank

HSBC (Pakistan)

3.6 Sample / sampling frame

The sample for my research study would include only the Private Banks operating in Lahore (Pakistan) employing HRM practices therefore excluding National Bank of Pakistan which comes under the Public Sector Banking category along with the two foreign banks I have mentioned as Citibank and HSBC Pakistan. The primary reason for targeting the private banks only is because they alone form a single industry in our country and can be directly comparable. Secondly all of these banks would follow a particular set of rules and regulations under a somewhat similar governance structure and lastly all these private banks would form a common private organization in Pakistan therefore making my sample for my research consistent throughout with the sample elements somewhat similar in nature. The banks that narrow down in my sample for my study are as follows

Standard Chartered Bank-Pakistan

JS Bank

HBL

UBL

MCB

Faysal Bank

Bank Alfalah

Askari Bank

Allied Bank

Samba Bank

Atlas Bank

Habib Metropolitan Bank Limited

3.7 Sampling procedure

The procedure I would be employing for my research study would incorporate non probability sampling technique of convenience sampling. This technique will be used to make my research process faster by obtaining a large number of completed questionnaires quickly and economically from the banks identified in my sample following the approach of "take them wherever you find them." Sample size for my study is going to be 12 private consumer banks located in Lahore Pakistan employing HR programs out of the 21 total located all over the country.

3.8 Data collection procedure

Pursuing the conventions of social sciences, I will be circulating questionnaires for my primary data collection. My questionnaire would be designed on a five points likert scale option, 5 for strongly agree, 4 for agree, 3 for neutral, 2 for disagree and 1 for strongly disagree. For data collection I will be dropping by questionnaires at the desire sample of banks amounting to 12 banks within the Lahore division. Frequent reminders would be given to the human resource managers through email and telephone calls during these 10 - 15 days. My questionnaires would answer questions with respect to the life of the bank, the total number of employees in the HR department and their education, the HRM practices of the respective bank and the experience of the HR manager with its bank and an insight of operating in the private banking industry with the degree of job satisfaction with respect to salaries bonuses and promotions and other fringe benefits and how has the bank evolved after the introduction and implementation of these HR practices.

3.9 Sample size consideration:

The chosen sample size for the research is sixty people. Questionnaires will be filled by sixty employees and managers currently employed in the consumer banks, belonging to working population areas and are exposed to the HR practices and environment. Sample size is limited to 60 customers because of time and resource constraints.

3.10 Choice of Sampling Technique:

Non-probability sampling technique has been used for this research. Under non-probability sampling techniques, convenience sampling has been used. Convenience sampling help to save time, it is less expensive and is convenient for the researcher. Research has made sure that the selected sample is a true representative of the characteristics of the entire population.

3.11 Statistical Software:

Statgraphics has been used as statistical software for this research. Multiple regression has been run on the dependent and independent variables to see the relationships between the variables. Data is then analyzed based on the result provided by the statgraphics.

Chapter 4: Analysis of Data

4.1 Regression:

Multiple Regression Analysis

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Dependent variable: dependent

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Standard T

Parameter Estimate Error Statistic P-Value

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CONSTANT 0.0822122 0.307091 0.267713 0.7900

Compensation 0.0859077 0.116052 0.740251 0.4626

Employee Training 0.066426 0.1346 -0.493506 0.6238

Flexible hours 0.419996 0.122744 3.42172 0.0012

Promotion 0.319363 0.114974 -2.7777 0.0077

Reorganization 0.244353 0.0697722 3.50216 0.0010

Reposition -0.0514683 0.138062 -0.372792 0.7109

Rewards 0.171094 0.0868853 1.9692 0.0545

Retrenchment -0.235613 0.129056 -1.82566 0.0739

Skill enhancement 0.736205 0.144298 5.10197 0.0000

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4.1.1 Regression Equation

Consumer Banks = 0.0822122 + 0.0859077*compensation - 0.066426*employee training +

0.419996*flexible hours - 0.319363*promotion + 0.244353*reorganization -

0.0514683*reposition + 0.171094*rewards - 0.235613*retrenchment +

0.736205*skill enhancement

4.1.2 Parametric Tests of Significance

R-squared = 85.4418 percent

R-squared (adjusted for d.f.) = 82.8213 percent

Standard Error of Est. = 0.402533

Mean absolute error = 0.306787

Durbin-Watson statistic = 1.50681

The R-Squared statistic indicates that the model as fitted explains 85.4418% of the variability in dependent. The adjusted R-squared statistic, which is more suitable for comparing models with different numbers of independent variables, is 82.8213%. The standard error of the estimate shows the standard deviation of the residuals to be 0.402533. This value can be used to construct prediction limits for new observations by selecting the Reports option from the text menu. The mean absolute error (MAE) of 0.306787 is the average value of the residuals. The Durbin-Watson (DW) statistic tests the residuals to determine if there is any significant correlation based on the order in which they occur in your data file. Since the DW value is greater than 1.4, there is probably not any serious autocorrelation in the residuals. In determining whether the model can be simplified, the highest P-value on the independent variables is 0.7109, belonging to reposition. Since the P-value is greater or equal to 0.10, that term is not statistically significant at the 90% or higher confidence level. Consequently consideration should be made to remove repositioning strategies from the model.

4.1.3 Result

Retrenchment Practices

Null Hypothesis H0 : Retrenchment Practices do not have an effect on performance of banks

Alternate Hypothesis H1: Retrenchment practices have an effect on the performance of banks

Standard T

Parameter Estimate Error Statistic P-Value

Retrenchment -0.235613 0.129056 -1.82566 0.0739

Since P-value of retrenchment is less than 0.1 in the ANOVA table at 99% confidence level so we will reject null hypothesis and conclude that there is a statistically significant relation between retrenchment practices and performance of consumer banks

Reorganization Strategies

Null Hypothesis Ho: Reorganizing does not have a strong impact on organization performance

Alternate Hypothesis H1: Reorganizing impacts performance

Standard T

Parameter Estimate Error Statistic P-Value

Reorganzation 0.244353 0.0697722 3.50216 0.0010

Since P-value of reorganization strategies is less than 0.1 in the ANOVA table at 99% confidence level so we will reject null hypothesis and conclude that there is a statistically significant relation between reorganization practices and performance of consumer banks

Repositioning Strategies

Null Hypothesis Ho: Repositioning of organization structure does not affect the performance

Alternate Hypothesis H1:Repositioning of organization structure affects organization performance

Standard T

Parameter Estimate Error Statistic P-Value

Repositioning Strategies -0.0514683 0.138062 -0.372792 0.7109

Since P-value of repositioning strategies is greater than 0.1 in the ANOVA table at 99% confidence level so we will not reject the null hypothesis and conclude that there is a no relation between repositioning practices and performance of consumer banks

Extensive Employee Training

Null Hypothesis H0: Extensive Employee Training does not affect the performance of organization

Alternate Hypothesis H1:Employee Training affects the organizations performance

Standard T

Parameter Estimate Error Statistic P-Value

Extensive Employee Training -0.066426 0.1346 -0.493506 0.6238

Since P-value of extensive employee training is greater than 0.1 in the ANOVA table at 99% confidence level so we will not reject the null hypothesis and conclude that there is a no relation between employee training and performance of consumer banks

Skill Enhancement

Null Hypothesis H0: Skill Enhancement programs does not affect the performance of organization

Alternate Hypothesis: Skill Enhancement Programs affect the organizations performance

Standard T

Parameter Estimate Error Statistic P-Value

Skill Enhancement 0.736205 0.144298 5.10197 0.0000

Since P-value skill enhancement is less than 0.1 in the ANOVA table at 100% confidence level we can conclude that we will reject our null hypothesis and conclude that there is a strong relation between employee skill enhancement and performance of consumer banks

Flexible Hours

Null Hypothesis H0: Flexible hours do not have any impact on the employees of an organization's performance

Alternate Hypothesis H1:Flexible Hours have an impact on employee performance in organization

Standard T

Parameter Estimate Error Statistic P-Value

Flexible Hours 0.419996 0.122744 3.42172 0.0012

Since P-value of flexible hours is less than 0.1 in the ANOVA table at 99% confidence level so we will reject null hypothesis and conclude that there is a statistically significant relation between flexible hours and performance of consumer banks

Rewards:

Null Hypothesis H0: Rewards do not affect the motivation level of employees

Alternate Hypothesis H1:Rewards affect the motivation level of employees

Standard T

Parameter Estimate Error Statistic P-Value

Rewards 0.171094 0.0868853 1.9692 0.0545

Since P-value of rewards is less than 0.1 in the ANOVA table at 99% confidence level so we will reject null hypothesis and conclude that there is a statistically significant relation between employee rewards and performance of consumer banks

Compensation and Benefits

Null Hypothesis H0: Compensation and benefits do not affect employees performance

Alternate Hypothesis H1: Compensations affect employees performance

Standard T

Parameter Estimate Error Statistic P-Value

Compensation and Benefits 0.0859077 0.116052 0.740251 0.4626

Since P-value of compensation and benefits is greater than 0.1 in the ANOVA table at 99% confidence level so we will reject the null hypothesis and conclude that there is a no relation between compensation and benefits and the performance of consumer banks

Promotions

Null Hypothesis H0: Promotions do not affect the organizations performance

Alternate Hypothesis H1:Promotions affect the employees performance in organization

Standard T

Parameter Estimate Error Statistic P-Value

Promotions -0.319363 0.114974 -2.7777 0.0077

Since P-value of promotions is lesser than 0.1 in the ANOVA table at 99% confidence level so we will not reject the null hypothesis and conclude that there is a relation between promotions and the performance of consumer banks.

Chapter 5: Conclusion

5.1 Limitations of the Study:

The limitations of study have been experienced throughout the survey. Some of the limitations are as follows:

Lack of individual time allocation

With 6 subjects already for our last semester, i couldn't devote all my quality time to my thesis hence causing the few loop holes and the lack of professionalism in my paper

Time constraint

The delay in returning the questionnaires back was a huge hurdle delaying in my analysis and evaluation of my research study

A couple of banks misplaced the questionnaires provided to them

Causing my analysis to further getting delayed and resulting in circulating them all over again.

Lastly some of the respondents failed to disclose their monthly income

5.2 Conclusion:

Through the research it has been concluded that:

Retrenchment does influence performance of consumer banks

Repositioning of organization structure does not influence performance of consumer banks

Reorganization of banking structure has a strong impact on consumer banks performance

Extensive employee training has no impact on performance of consumer banks

Skill enhancement programs do not affect the performance of consumer banks

Flexible hours play a huge rule in better performance of consumer banks

Rewards affect the performance of consumer banks

Compensation and benefits do not have any impact on consumer banks of Pakistan

Promotions affect the performance of consumer banks in Pakistan

While concluding this research it can be said that out of the nine variables studied in this research, six of them do influence the performance of consumer banks. Consumer Banks can pursue any of these Human Resource strategies keeping their target goals and objectives in mind to use the HR tools more effectively.

5.3 Direction for further research

The research done can be used for further research in this field. In Pakistan there is a lack of research especially in banking sector. This research may be used by a lot of employees, managers, customers and stakeholders to figure out that which types of HR techniques are most effective in affecting the performance of consumer banks. Through this a lot of banks can target the main techniques that really do affect the organizational performance. This will also help other students of marketing and human resource management to gain knowledge from the research work done. This research will also open doors for future research in this field because there are not many researches for this field done in the Pakistan. This will also help other students of marketing to gain knowledge from the research work done.

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