ADDIS ABABA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMIC

SCHOOL OF COMMERCE

THE EFFECT OF HUMAN RESOURCE MANAGEMENT

PRACTICE ON ORGANIZATIONAL PERFORMANCE: IN
THE CASE OF COMMERCIAL BANK OF ETHIOPIA

A Thesis submitted to the Office of Graduate Studies as Partial

Fulfillment of the Requirement for Masters of Arts Degree in
Human Resource Management
By:
Bisrat Mesfin

Advisor:
Abeba Beyene(PHD)
June 2019
Addis Ababa
Ethiopia

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 Addis Ababa University
School of Commerce Graduates Studies Program
Department of Human Resource Management

THE EFFECT OF HUMAN RESOURCE MANAGEMENT

PRACTICE ON ORGANIZATIONAL PERFORMANCE: IN THE

CASE OF COMMERCIAL BANK OF ETHIOPIA

By: Bisrat Mesfin

Approved by Board of Examiners

____________________________ ____________________________
Advisor Signature

____________________________ ___________________________
Internal Examiner Signature

____________________________ ___________________________
External Examiner Signature

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 Declaration
I, the undersigned, hereby declare that this thesis entitled “Effect of Human
Resource Management Practice on Organizational Performance: In the Case
of Commercial Bank of Ethiopia” is my original work and has not been
presented for any other program or university. I also assure that all sources
of materials used in undertaking this thesis have been duly acknowledged.

BISRAT MESFIN

______________ ______________

Signature Date

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 Statement of Certification

I certify that Bisrat Mesfin has carried out his own research work under my
guidance on the topic of “Effect of Human Resource Management Practice
on Organizational Performance: In the Case of Commercial Bank of
Ethiopia”
This work is done for submission as a partial fulfillment requirement for the
award of master’s degree in human resource management.

_______________________________

Advisor: Dr Abeba Beyene (PHD)

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 Acknowledgement

Above all I would like to thank the almighty God for his endless mercy and
hope he gave for me to stay alive and do this work and help in every aspect
of my life. Without his help I would not have been here.
I would like to forward my deepest gratitude to my advisor Dr Abeba
Beyene who has provided me with valuable guidance and direction to do
this research.
I would also like to thank the employees’ and branch managers of those
sample fifteen branches and who forwarded their valuable ideas to make this
paper happen.
Lastly, I would like to thank my family for being there for me whenever I
need them and for their unconditional support and encouragement
throughout my education.

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 Abstract
Human Resource Management Practice in a broders sense, it covers the practices applied by
human resource management of any organization that directly influence the effort of
everyone in the organization for the success of organization. The current business
enviroment try to posses a unique resource which could bring competitive advantage to the
organization through implementing effective human resource management practice. The
main objective of this research was therefore, to study the effect of human resource
management practice on organizational performance. With the main independent variables
i.e. Human Resource Planning, Training and Development, Performance Management,
Compensation Management, Promotional Practice. To collect the necessary data for the
study, questionnaries were distributed, collected and analyzed from 213 respondents. The
analysis was done using IBM SPSS statstical software 20 and the findings shows that there
were a positive relationship between human resource management practice of Commercial
Bank of Ethiopia and its organizational performance except promotional practice has no
significant effect. The study result shows that the study organization currently has a weak
human resource management practice that directly affect organizational performance. The
study finaly recommended that the bank should revise its human resource management
practice for a competitive and advanced service and performance.

Key Words: Human Resource Management(HRM), Human Resource Management

practice(HRMP) , Human Resouce Planning(HRP) , Organizational
Performance,Commercial Bank of Ethiopia(CBE)

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 Table of Content
Declaration ................................................................................................... 2
Statment Of Certeficate ............................................................................... 3
Acknowledgment ......................................................................................... 4
Abstract ......................................................................................................... 5
List of Table ................................................................................................. 9
List of Figure.............................................................................................. 10
Acronyms ................................................................................................... 11
Chapter One .............................................................................................. 12
Introduction ................................................................................................ 12
1.1 Backgourd of the Study ...................................................................... 12
1.1.1 Background of Commecial Bank of Ethiopia.............................. 14
1.2 Statement of the Study ......................................................................... 16
1.3 Objective Of the Study ........................................................................ 19
1.3.1 General Objective ....................................................................... 19
1.3.2 Specific Objectives ..................................................................... 19
1.4 Research Questions .............................................................................. 20
1.5 Significance of the Study ..................................................................... 20
1.6 Scope of the Study ............................................................................... 20
1.6.1 Conceptual Scope ....................................................................... 20
1.6.2 Geographical Scope .................................................................... 21
1.6.3 Methodological Scope ................................................................ 21
1.7 Limitation of the Study ........................................................................ 21
1.8 Defenition of Terms ............................................................................. 22
1.9 Organization of the Research ............................................................... 23
Chapter Two ................................................................................................ 24
Litrature Review ........................................................................................... 24
2.1 Theoretical Litrature Review .................................................................. 24
2.1.1 The Concept of Human Resource Management......................... 24
2.1.2 Concept of Human Resource Management Practice ................ 25
2.1.2.1 Human Resource Planning ............................................... 26
2.1.2.2 Training and Development ................................................. 26
2.1.2.3 Performance Management .................................................. 28
2.1.2.4 Compensation Management .............................................. 29
2.1.2.5 Promotional Practice ............................................................ 30
2.1.3 Organizational Performance ...................................................... 31
2.1.3.1 Employee Satisfaction ....................................................... 31

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 2.1.3.2 Quality Service .................................................................... 31
2.1.3.3 Innovation ............................................................................ 31
2.2 Underpinning Theories of HRM ........................................................ 32
2.2.1 Organizational Commitement ................................................ 32
2.2.2 Motivation Theory ................................................................. 33
2.2.3. Human Capital Theory........................................................... 34
2.2.4 AMO Theory........................................................................... 35
2.2.5 Social Exchange THeory ...................................................... 35
2.3 Emperical Litrature Review.................................................................. 35
2.3.1 HRP and OP ................................................................................. 35
2.3.2 T&D and OP ................................................................................ 36
2.3.3 PM and OP ................................................................................... 36
2.3.4 Compensation Management and OP ........................................... 38
2.3.5 Promotional Practice and OP ....................................................... 39
2.3.6 Retationship between HRMP and OP ......................................... 39
Conceptual Framework........................................................................ 42
Chapter Three ............................................................................................. 43
Research Methodology ............................................................................... 43
3.1 Research Setting.................................................................................. 43
3.2 Research Approch ............................................................................... 43
3.3 Research Design.................................................................................. 43
3.4 Population and Sample ........................................................................ 44
3.4.1 Population Target ......................................................................... 44
3.4.2 Sample Size Determination ......................................................... 44
3.4.3 Sample Design ............................................................................. 45
3.4.4 Sampling Techniques ................................................................... 45
3.5 Data Type and Source .......................................................................... 46
3.5.1 Primery Data ................................................................................ 46
3.5.2 Secondary Data ............................................................................ 46
3.6 Data Instrumentation............................................................................ 46
3.7 Data Distribution and Collection Process ............................................ 47
3.8 Data Analysis Method ......................................................................... 47
3.9 Validity and Reliablity ......................................................................... 48
3.10 Ethical Consideration ......................................................................... 48
Chapter Four ............................................................................................... 49
Data Analysis and Presentation .................................................................. 49
4.1 Demographic Characterstics of the Respondents ............................... 49

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 4.2 Descriptive Analysis of Variables of the Study................................. 51
4.2.1 Human Resource Planning .......................................................... 51
4.2.2 Training and Development .......................................................... 53
4.2.3 Performance Management ........................................................... 55
4.2.4 Compensation Management ........................................................ 57
4.2.5 Promotional Practice .................................................................... 59
4.2.6 Organizational Performance ........................................................ 60
4.3 Correlation Analysis .......................................................................... 65
4.4 Regression Analysis ........................................................................... 68
4.4.1 Model Summery .......................................................................... 68
4.4.2 ANOVA table .............................................................................. 69
4.4.3 Coefficinet table .......................................................................... 69
4.5 Hyphotesis Testing ............................................................................. 70
Chapter Five ................................................................................................ 72
Summery, Conclusion and Recommendation ............................................ 72
5.1 Summery of the Study ......................................................................... 72
5.2 Conclusion ........................................................................................... 73
5.2.1 Conclusion on Human Resource Planning .................................. 73
5.2.2 Conclusion on Training and Development .................................. 73
5.2.3 Conclusion on Performance Management .................................. 74
5.2.4 Conclusion on Compensation Management ................................ 74
5.3 Recommendation ................................................................................. 75
Reference ...................................................................................................... 77
Annex ............................................................................................................ 81

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 List of Tables
No. Identification Page No.
Table 2.1 Relationship between HRMP 42
and OP
Table 3.1 Sample Size 45
Table 4.1 Demographical Respondent Data 49
Table 4.2 HRP variables Result 51
Table 4.3 T&D Variable Result 53
Table 4.4 PM Variable Result 56
Table 4.5 Compensation Management 57
Result
Table 4.6 Promotional Practice Result 59
Table 4.7 Quality Service Result 60
Table 4.8 Employee Satisfaction Result 64
Table 4.9 Innovation Result 66
Table 4.10 Mean,Standard deviation table 67
Table 4.11 Correlation 67
Table 4.12 Model Summery 68
Organizational Performance
Table 4.13 ANOVA of Organizational 69
Performnace
Table 4.14 Coefficinet table of 69
Organizational Performance
Table 4.15 Hypothesis Summerization 71

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 List of Figures

Figure2.1Maslow’s Heirarchy of Needs............................................................33

Figure 2.2 Conceptual Framework.....................................................................42

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 Acronyms

HRP - Human Resource Planning

TD- Training and Development

HR-Human Resource

HRMP- Human Resource Management Practicr

OP- Organizational Performance

CBE- Commercial Bank of Ethiopia

PM- Performance Management

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 CHAPTER ONE
INTRODUCTION

This chapter provides an overall introduction about the research study by discussing the

background of the study, statement of the problem, research objectives, and research questions,

scope of the study, limitation of the study, definition of terms and finaly organization of the

study.

The sub sections of the chapter are discussed in detail below.

1.1 Background of the Study

Organizations can develop sustained competitive advantage only by creating value in a

way that is rare and difficult for competitors to copy. Other organizational sources of

competitive advantage such as natural resources, technology, economies of scale, and so forth,

they can creat value but these sources are increasingly easy to imitate. If that is so, human

resource strategies may be an especially important source of sustained competitive advantage

(Armstrong, 2010).

In competitive and rapidly changing business world, organizations, especially in the

service sector need to ensure maximum utilization of their resources to their own advantage is

crucial for organizational survival. Studies have shown that organizations can create and

sustain competitive position through management of non-substitutable, rare, valuable, and

inimitable internal resources such as human capital (Jing et al. 2012). In addition to the above,

present business environment which has a very tight competition, the frustration level of

organization has increased day to day due to failure on human resource management practice

that directly and indirectly affect their organizational performance and many organizations are

also trying to implement the best human resource practice which help them to gain competitive

advantage on their market share.

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 Before some years ago HR functions was the preserve of “Personnel Managers‟ whose

responsibility were to recruit and select, appraise, promote and demote. These duties could be

performed by any manager, therefore never seemed necessary to employ an expert in the form

of a human resource manager let alone create a whole department dedicated to HRM. Little

attention was paid to human resource management issues and its impact on organizational

performance. The emphasis on traditions and socio-cultural issues injected an element of

subjectivity in “personnel manager” functions such as recruitment and selection, performance

appraisal, promotion, demotion, and compensation (Daud, 2006).

In Ethiopia, human resource management practices have not been issue for long time.

It becomes concern in recent times compared to the other side of the world. Especialy, in the

early 1990s’ after the derg regim down the economy policy changed in to free market and

organizations start to organize their own personnel management department to perform human

capital related processes.

Many researchers have been studied extensively to understand the effect of human

resource management on firms performance but the ones that have a significant effect on firm

performance are compensation & benefits management , training & development ,performance

management, human resource planning and effective promotional practices . These are

considered by organizations to be important human resource practices due to the following

reasons. Compensation & benefits management are needed in organizations for financial

income and well-being of their employees. Employees’ living status in society, satisfaction,

loyalty, and productivity are influenced by compensation. Employees also need to be provided

with training & development to develop their skills and perform to be better at what they are

doing. Training and development can lead to superior knowledge, skills, abilities, attitudes, and

behavior of employees, and enhancing excellent financial and non-financial performance of the

organizations. The quality of performance management of organization also help to identify

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how well the individuals in the organization are performing to contribute for the total

organizational performance and also it could be sources for promotion and generaly helps for

retaining quality employees and improve organization performance.( Sorasak Tangthong et al

2014).

Human Resources are the significant asset of any organization to acheive

organizational goals and many assets can be copied and manitaind by others easly but the skill

and competencies level held by employees can bring special advantage to any organization

which gives unique competitive advantage. Human resource management is all about policies

and practices of any organizations concerned with HR, i,e human resource planning,

recruitment and selection, succession planing program , reward management, training and

development, performance evaluation and promotional practices are some of HR

pactices(Dessler, 2007) . he also justified that companies now a day becoming more aware of

that employees could be the greatest strength of all and aligning different HR practices with

knowlegeable HR specialists could bring competitive advantage. (Dessler, 2007).

Therefore, by integrating and association HR practices and policies to the strategy of

organization and by maintaining good practice organization can win the market easely.

The banking industry of Ethiopia has tougher competition now than ever before.

There are almost 19 banks presently which 16 are private banks and 3 government owned

banks. They are using different strategy to win the trust of the market. They are fighting for

excellence in their service. To bring quality service, they should have a quality human resource

aplicability in their service. Customer is the main reason why the business is established and

customer preference of banks determine by the quality of service they received. Quality service

is determined by effective and efficient applicablity of HRM practices. Human resource

planning should be review and forcast the human resource need and fill the gap immediately

before it affects the service. Recruitment and selection process should find out the right

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candidate and select the best of them, when knowledge gap is there trainning and development

program should take palce so that the efficiency level of employee will increase and customer

perception about quality service will meet and also other HRM practices directly and indirectly

affect the level of service quality.

The intention of this study was to investgate the general HRM practice as well as their

effect on CBE’s performance with the aspect of quality service, employee satisfaction and

innovation and how those variables affected by the human resource management practices.

1.1.1 Background of Commercial Bank of Ethiopia

The Commercial Bank of Ethiopia is an organization that engaged in the banking

industry. The history of the Bank dates back to the establishment of the state bank of Ethiopia

in 1942. CBE was legally established as a share company in 1963. In 1974 CBE merged with

the privately owned Addis Abeba Bank. Since then it has been playing significant role in the

development of the country.

Commercial Bank of Ethiopia is Pioneer to introduce modern banking to the country. It

has more than 1250 branches stretched across the country. CBE plays a catalytic role in the

economic progress and development of the country. It is also the first bank in Ethiopia to

introduce ATM service for local users. It has strong correspondent relationship with more than

50 renowned foreign banks like Commerz bank A.G, royal bank of Canada, city bank, HSBC

bank and others.

CBE combines a wide capital base with more than 32,000 employees. CBE strongly

believes that wining the public confidence is the basis of success. It is the first to introduce

Western Union money transfer service in Ethiopia early in 1990s and currently working with

other 20 money transfer agents like Money Gram, Atlantic International, Xpress Money.

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 CBE has opened four branches in South Sudan and has been in the business since June

2009. It has also reliable and long standing relationships with many internationally acclaimed

banks throughout the world.

CBE’s envisions is to become a world class commercial bank by the year 2025, and

its mission indicates its commitment to best realize stakeholders needs through enhanced

financial intermediation globally and supporting national development priorities, by deploying

highly motivated, skilled and disciplined employees as well as state of the art technology.

Its values include integrity, customer satisfaction, employees satisfaction, learning

organization, teamwork and collaboration, public trust, value for money, decentralization, and

corporate citizenship. Its organizational culture focuses on collaborative, accountable, cost-

effective and innovative bank in Ethiopian banking industry.

To see its vision wear body and its mission to be achieve and to make sure the core

values to be changed in to reality as well as to exercise the best organizational culture and

perform well, developing an effective HRM practice is unnegotiable.

1.2 Statment of the Problem

Banks are profit seeker and to be profitable many researchers(Arthur:1994,

MacDuffie:1995 ,Guest and Hoque:1994) implicated that organizations should be given proper

consideration for the relationship between HRM practices they are using and the performance

they aquire.Many previous researches on effect of human resource management on

organizational performance shows that any organization who fails to perform HR practices by

aligning to the organization strategy and to organize well all HR activities, has been suffering

major bankrupcy and even they could not survive due to the reluctantenss to their human

resource, therefore, any organization should give detail consideration to its HR.

According to Daud(2006), “the importance of having a competitive human resource is

the same with the success of today’s organizations. CBE is one of the largest bank in Ethiopia

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with more than 33,000 employees. This large number of employee contributes significantly to

the performance of organization.

The Bank has the system in place to integrate HR practices to the performance of

organization according to the HR policy of the organization. However, there are many

complaints of employee about the aplicablity of HR practices. This is because most of the time

the company did not show care about employees, and even there is an observation that middle

level managers interpret the HR policies as they wish. Due to disatisfaction by HR practices

many employee leave the company every year. According to annual report of Commercial

Bank of Ethiopia,2015/2016,2016/2017,2017/2018 shows that in 2008E.C the turnover rate of

CBE was only around 4.04% which 88% of this employees leave due to disatisfaction of

promotional practices and salary. According to Kimberlee Leonard(2019), the average turnover

rate should not be greater than 3.5% but others agree up to 5% as a normal turnover rate but in

CBE In 2009E.C the turnover rate increased to 6.36% and in 2010E.C the turnover rate was

stabled at 6.21%. Turnover is a normal process for organizations but what makes here different

is many employees leave because of their disatisfaction. This level of disatisfaction presents to

the higher managers of the bank through employees satisfaction survey shows 56% of

employees disatisfaction level.(source:banks portal address). However, the management

replied again and again for this mess by traditional saying” if one leaves, others comes, the

market has bulk of unemployeed labour force”. This violates the HR policies and practice of

the organization.

In the case of commercial bank of Ethiopia the current Human Resource planning team

seems not working according to the plan of the bank which intended to meet being world class

bank by 2025. There are many complaints from branch managers and assistant managers due

to lack of human resources in branches. For instant branches like Bethel has a total 20

windows which are prepared to serve customer. However, only 11 are in function and even

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most of the time this windows also are not in function because of lack of human capital. Last

two years the request made by a branch has been found and reviwed, the request shows the

branch needs 12 additional employees and requested, but still not assigned even a single one.

Employees are forced to work extra time and burden which get them frustrated and being sick

due to high job burden. Again the secondary data of three branches has been reviewed and it

explain that at least 2 employees are sick with in a week and take a sick leave. There are many

branches shares the same difficulties like Bethel including Tesfa Dirijit, Atena Tera, Weyra

Sefer, Torhayloch are least of them. Due to this they can not satisfy customer needs and also

many burdens has been transfered to single employee due to there is no other person to share

their burden. It seems that the problem arises from the planning department which should fill

the gap of human capital when they needed and forcast the need for future jobs.

The other problem which the bank suffering now is that most employees are not

receiving enough training directly related to their work. CBE has training center which just

give trainings for the sake of meeting it’s training plan and due to employees are not taking

trainings when in need, the knowledge gap leads to customer disatisfaction and lose

organization performance. Many trainings are given after employees thought him/her self on

the job and it dose not present timely. For the sake of this paper random sample(pre-tested) of

60 employees has been asked to fill open end question about the training and 88.3% or 53 of

them approves that one employee may take several kind of training while others are not taking

even a single training. Senior staffs are taking an elementary trainings which has to be given

for juniors. This comes from reluctantness of the HR in providing and coordinating the

training(approved by result of this study) .

In addition, the current compensation system(reward management) of the Bank lags

from the industry and become the most controversial situation for the bank. According to

Addis Standard Economic Commentary by 2018, the avarage payments of private banks in

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Ethiopia is 140$ per month and the average salary of CBE is 106$ per month. Many employees

are leaving the bank due to unsatisfactory pay level of the bank and the turnover has been

increased in significant way. Labour union and the management could not reach at

understanding each other on this topic. Many employees become careless about their job and

disappointed on the bank by expecting non sense promise of salary rises for last two years

from the bank president.

The other problem which is revealed in CBE is that the performance evaluation system

of the bank is very jugmental. According to HR policy of the Bank, the promotional process

should follow the evaluation system to promote employees. When the evaluation gets

personnaly merited, some employees are favored to promote and others are demerited due to

jugemental evaluations. Many employees are dissatisfied with the evaluation system of the

bank so it needs to be studied what causes this problem.

Lastly, the promotional practice of the bank since many years back to present, comes

with many complaints of favorism due to religion, racisim, gender and other reasons. Many

employees presents to each district managers with their complaints about the HR department

promotioanl practice( i.e in West Addis Ababa District City branches there were 541

complaints on promotional practice of the district in 2010 E.C by confirmed data collected

from employee to re-assigning emplopyees with the new organizational structure which the

company is trying to implement). However, still seems that nothing is changing and employees

continues with their complaints, so it requires a proper considaration.

Such problems with the alignment of HRM practice with the strategic goal of the

organization in the long run may affect meeting the core value of the organization. In addition,

the competitive position of the Bank may be taken by competitors due to reluctantness to their

human capital which is a source of competitive advantage.

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 1.3 Objectives of the Study

1.3.1 General Objective

General objectives of this reserach is to identify the effect of HRM practice on

organizational performance. In the case of Commercial Bank of Ethiiopia.

1.3.2 Specific Objective

The specific objectives of the study were:

 To find out the perceived effect of HRP on organizational performance of CBE.

 To find out the perceived effect of HRD on organizational performance of CBE.

 To find out the perceived effect of Performance Management on organizational

performance of CBE.

 To find out the perceived effect of Compensation Management on organizational

performance of CBE.

 To find out the perceived effect of Promotional Practices on organizational

performance of CBE.

1.4 Resarch Questions

 What is the effect of Human Resource planning practice on organizational

performance?

 What is the relationship between training and development with organizational

performance?

 To what extent performance evaluation related to organizational performance?

 What is the relationship between Reward management and organizational

performance?

 What is the promotional practices that have been take place and their influence

over organizational performance?

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 1.5 Significance Of the Study

The findings of the study, if applied, are believed to benefit the Bank by identifying the

gaps in the implementation of the human resource practices and their perceived effect on

organizational performance. It will also have significance to employees by identifying the

areas in which they will be dissatisfied and communicating it to the Bank authorities.

Lastly, this research may provide additional output for the reserach world and it will

provide the way for further reserach.

1.6 Scope of the Study

1.6.1 Conceptual Scope

HRM practices covers all human resource management strategical roles that may bring

effectiveness and efficiency to the organization. Trying to adress all in one is almost

impossible. Therefore, conceptualy this reserach focus only five HR practices that are believed

to be most influencial on CBE’s performance(HRP, training and development, Performance

Management, Compensation, and Promotional practices).

1.6.2 Geographical Scope

Commercial Bank of Ethiopia is the largest bank in Ethiopia by having more than 1200

branches and it covers almost all over the country. And due to time and cost shortage the study

had take place only on branches found in Addis Ababa, even Addis Ababa branches divided by

four districts and this research focus had been branches found in West Addis Ababa District.

The reason behind was that many branches and large number of employees are found in West

Addis District than others. The study were take a sample of 15 branches geographicaly located

in West Addis Ababa District namely, Alembank ,Atena Tera, Ayer Tena, Bethel, Coca

Mazoriya, Eyesus Gedam ,Good Sheepeared, 18 Mazoriya, Reppi, Sefereselam, Tesfa

Dirijit,Torhayloch,Tropical, Weyra, and Zenebwork.

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 1.6.3 Methodological Scope

The reserach design was follow quantitative and qualitative approch and used a

descriptive way of statstical explanation using statistical datas and used correlation to show

relationships among dependent and independent variables as well used regression to show the

significance level.

1.7 Limitation Of The Study

Because of conceptualy limited to only five human resource management practices, we

can not conclude that those fives are the only determinants of organizational performance and

we can not see the magnitude of other HRM practices effect on organizational performance.

Addition to the above, the study geographical scope is too limited and this limitation

affected the real representativness of the total population. Addis Ababa branches exprience

may not be shared what outlet branches exprienced.

Finaly, the methodology selected may require a proportionate consideration because of

statstical data may be interprated wrongly and totaly changed the result.

However, the above problems are the case, the study tried to overcome by providing

best representativness of population by better sampling method. Also by working detail on the

practice on hand, the study tried to make sure other HRM practices are also covered. Also by

being effective user of time and cost, trie to avoid miss interpretation of datas and avoid

collection of wrong data.

1.8 Definition of Terms

Human Resources Management - Human resource management (HRM) is

concerned with all aspects of how people are employed and managed in organizations. It

covers the activities of strategic HRM, human capital management, knowledge management,

corporate social responsibility, organization development, resourcing (workforce planning,

recruitment and selection and talent management), learning and development, performance and

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reward management, employee relations, employee well-being and the provision of employee

services. (Armstrong,2014).

Organization Performance-compromises the actual output or results of an

organization as measured against its intended outputs(Armstrong, 2014).

HRP- is a core process of human resource management that is shaped by the

organizational strategy and ensures the right number of people with the right skills, in the right

place at the right time to deliver short- and long-term organizational objectives(CIPD,2010)

Training- is a process of learning a sequence of programmed behavior or give people

an awareness of rules and procedure to guied their behavior and help them how to apply their

knowledge on the the job. It tiries to improve the existing level of skills, knowledge and

attitudes of employee(Becker, B E and Huselid, M A,2006).

Development-is a process of providing employee with the abilities the organizations

will need in the future( CIPD,2010).

Performance evaluation- Performance Appraisal is the specific and formal evaluation

of an employee based on documented feedback conducted to determine the degree to which the

employee is performing his or her job effectively(CIPD,2010).

Reward Management( compensation)- defined as the processes of deciding how

people should be rewarded and of ensuring that reward policies and practices are

implemented(Armstrong,2010).

Promotional practices- movement of employee from with in or external to higher

position and the way how to do it(Armstrong,2010).

1.9 Organization of the Research

The reserach paper had been organized in five chapters.

Chapter one dealt with the introductory part which includes background of the study by

trying to see previous studies and also the background of the company which this paper is

23
made. Then by stating the problem why intended to do this paper directly go to the objective of

the study. The objective has been organized as a general objective and specific objectives.

After set out the objective it tries to topout the quetsions this research rely on. after finishing

quetsion then everything has some benefit of doing otherwise it is worthless, so it continues by

identifying the significance of the study and set out what is the scope covered in this paper and

what was expected to limit the strech is organized in limitation of the study. Finaly chapter

one is ended by terms definition to give detail understand what opreational words mean.

Chapter two dealt with litratures reviewed from different authors and chapter three

dealt with the methodology used through out the research and chapter four dealt with what

findings were there after finishing the reserach(analyzing) and brifly discussed the outcome of

the reserach and chapter five dealt with the summery of findings,conclusion and

recommendation part of this final paper.

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 CHAPTER TWO

LITRATURE REVIEW

This chapter presents the theoretical and empirical literature review from reputable

sources. It also presents the hypotheses and the conceptual framework of the study.

2.1 Theoretical Literature Review

2.1.1 The Concepts of Human Resource Management

Human Resource Management (HRM) is a process of bringing people and

organizations together so that the goals of each are met. It is part of the management process

which is concerned with the management of human resources in an organization. It tries to

secure the best from people by winning their wholehearted cooperation. In short, it may be

defined as the art of procuring, developing and maintaining competent workforce to achieve

the goals of an organization in an effective and efficient manner (Mahapatro, 2010).

Human resource management (HRM) is a comprehensive and coherent approach to the

employment and development of people. HRM can be regarded as a philosophy about how

people should be managed, which is underpinned by a number of theories relating to the

behavior of people and organizations. It is concerned with the contribution it can make to

improving organizational effectiveness through people but it is, or should be, equally

concerned with the ethical dimension – how people should be treated in accordance with a set

of moral values. HRM involves the application of policies and practices in the fields of

organization design and development, employee resourcing, learning and development,

performance and reward and the provision of services that enhance the well-being of

employees. These are based on human resource (HR) strategies that are integrated with one

another and aligned to the business strategy (M. Armstrong, 2014).

25
 Without having an efficinet workforce organizations lose their ability to compete, both

locally and internationally, eventually leading to poor organizational performance and thus

ending up with striving for their survival or fading out of the market due to that(G. Dessler,

2000).

According to Becker, and Huselid (2006), human resource management is a process

which perform interconnected activities,role processes and other aspects that are aimed to

attracting, maintaining, and even developing the organizations HR activities such as

planning,recruitment and selection,training,performance management, benefit and rewards,

compensation, and career development.

According to Armstrong, (2014), the general goal of HRM is to support the

organization in achieving its objectives by developing and implementing human resource (HR)

strategies that are integrated with the business strategy(strategic HRM), contribute to the

development of a high-performance culture, ensure that the organization has the talented,

skilled and engaged people it needs, create a positive employment relationship between

management and employees and a climate of mutual trust and encourage the application of an

ethical approach to people management..

2.1.2 Concepts of Human Resource Management Practice

Human Resource Management Practices are the main source to make sure that

utilization of employees skills and knowledge to acheive organization goals and a means of

influencing employees atitude and behaviour towards intended vision. It is a way of creating

motivation, commitment, maintaining quality employees and facilitating smooth run of the

business(Stavrou-Costea, 2005)

Human Resource Management Practice is a modern way of improve organizations on

core matters such as staff commitment, competency and flexibility, which in turn leads to

improved performance (Chew and Chan, 2008).

26
 Chao and Lee (2007) HRM practices on business performance such as training and

development, teamwork, compensation, HR planning, performance appraisal, and employee

security help improve firms’ business performance including employee’s productivity, product

quality and firm’s flexibility.

Therefore, this research would like to see the relationship between HRM practices

namely human resource planning , training and development , performance management,

compensation management, promotional practices on organizational performance.

2.1.2.1 Human Resource Planning

According to Mensah,(2012) cited in, Yewynshet Desalegn(2017), human hesource

hlanning is a very crucial element in organization which creats awarness about what course of

action to be taken in recruiting and retaining employees. Organization can determine the right

supply of talents at the right time with the right skill for better performance in global market.

Human resource planning plays a great role in forcasting and filling human capital

needs when it is necessary and failing to perform a planning with the right skill and knowledge

of employees at the right time will distrupt the business environment (Wright et.al, 2004).

Specialy, in banking industry the service depends on the availablity of enough work force with

the right skill and knowledge to serve customer. If fail to do so, the burden shared on

individual will be high and that creat burden on employees which may leads to customer

disatisfaction.

Therefore, HRP is a process of vewing the current HR and that estimate the need for

the future through scintific forcasting and fillig the skill gap. Maintaining accurate data about

current employees and skills aquire by employees and making good judgment about what

should be done to bring the right people that feets with the job, needs a careful planning and a

better forcasting.

27
 2.1.2.2 Training and Development

Training and development is defined as the process of ensuring that the organization

has the knowledgeable, skilled and engaged workforce it needs. It involves facilitating the

acquisition by individuals and teams of knowledge and skills through experience, learning

events and programmes provided by the organization, guidance and coaching provided by line

managers and others, and self-directed learning activities carried out by individuals

(Mahapatro,2010).

Training, development and skills are key aspects at the levels of the firm and the

national economy training offers the hope of increased competitiveness through raising skill

levels, productivity and value added. The main thrust of Training and Development is to

provide an environment in which people are encouraged to learn and develop. Although it is

business-led, its strategies have to take into account the needs of individual employees. The

importance of increasing employability outside as well as within the organization is also a

concern (Armstrong, 2006).

Employee who posses the right skill for the job and develop it through training on

different way affects organization performance. Researchers argues that a better training that

fits to current job and making sure employees are also provided for future job will increase the

confidence level of employee and due to that employees become motivated to exert their effort

so that the organization become successful. Training and development practices have shown to

increase employee motivation and to have a tremendous impact on performance (Jiang et al.,

2012).

Training and development safeguards productivity of organization supporting it, by

preparing employees for future jobs and insulating firms from skills shortages. When jobs can

be filled internally, firms are less dependent on the outside labour market and do not risk

appropriate recruits not being available (Tom Redman & Adrian Wikinson,2006).

28
 Training

The fundamental aim of training is to help the organization to meet its organizational

objectives by increasing the value of its major resource, namely, its employees (Stredwik,

2005). Formal training is just one of the possibilites for organizations to enhance the personnel

performance level and also important roles covered by organizational socialization(Redman &

Winkson,2006).

Specialy in very volatile and dynamic economic nature, which gives many

opportunities for customer to go somewhere who serve them better, it is unquetsionalbe that

the skill and knowledge of employee helps organization to keep customer satisfied and keep

the organization in good performance.

According to Sterdwick (2005), in time of limited human resource, they may deprive

themselves for single individual employee and this can hinder the productivity on short term

and destablize the organization. Therefore, organizations should focus at this time on cost

reduction strategies and focus on in house or on the job training that other methods. He

continune arguing that aim of training that are to develop the competences of employees and

improve their performance, to help people grow within the organization in order that, as far as

possible, its future needs for human resources can be met from within the organization, to

reduce the learning time for employees starting in new jobs on appointment, transfer or

promotion, and ensure that they become fully competent as quickly and economically as

possible.

Developement

In the intense competetion of this century, many organizations realized that in order to

stay competitive they should have to improve their employees and enhance their career

development(Boudreaux,2001)

29
 According to Chartered Institute of Personnel and Development(2004), appreciates

organization to set up regulatory system on employees development to encourage employees

for continious larning throughout their careers. This helps employees and organization to

remain up to date, are aware of the power of development and contributes towards high

standard of performance.

If organization does not try to give a chance for the employees to upgrade themselves

for future positional vacant positions and if employees did not expect tomorrow will be a good

day with current company, then they may fail to perform well and that may lead to loose the

performance of the organization (Author,2018).

2.1.2.3 Performance Management

The main objective of businesses who used man power is to utilize the human

resources in a most optimal manner so that the target can be achived very effectivly and

efficiently .The benefit of performance measurment is that it could generate utmost efforts of

its employee and by strategizing it also be a usefull measurment of organization performance

as well as it can be used as a source for rewards and other HR practices.(Bondarouk and Ruel,

2008)

Armstrong (2006) defines it as “ A strategic and integrated approach to increasing the

effectiveness of organization by impoving the performance of the people who works in them

and by developing the capabilities of teams and individual contributers”

The establishment of clear,targeted and aligned goals, which can be tracked and

adjusted as the busienss evolves, is at the core of any successful performance management

process.(iCoachingFirst,2019)

2.1.2.4 Compensation Management

Compensation management is concerned with the strategies, policies and processes

required to ensure that the value of people and the contribution they make to achieving

30
organizational, departmental and team goals is recognized and rewarded. It is about the design,

implementation and maintenance of reward systems (interrelated reward processes, practices

and procedures) that aim to satisfy the needs of both the organization and its stakeholders and

to operate fairly, equitably and consistently (Armstrong, 2010).

According to expectancy theory employees are expecting equal compensation with the

effort they are giving and also expected to receive rewards for what they contribute.The

concept of internal and external fairness of reward are highly valued by organizations and its

employee, not only employee expect higher payment or better benefit, but also they seek

autonomy, personal growth, work life balance and others as a package of reward.

According to Patel and Cardon (2010) compensation is vital for contemporary

organization as it contributes to attract and retain high skilled workers with superior salaries

and it encourages a desired stakeholder behavior regarding recognition and legitimact.

Addition to the above to Patel & Cardon(2010) said having the right compensation and

reward system related to the market in same business will motivate employees and maintaining

internal fairness is also the case. Not only finacial compensation has impact on the success of

any organization but also the non-finacial part of total compensation has undeniable influence

on the perception of employees about their organization and that directly affect the

performance of organization.

2.1.2.5 Promotional practices

Accroding to Armstrong (2005), motivation at work place takes two facts, these are

intrinsic and extrinsic and the extrinsic part includes reward such as promotions, pay

raises ,recognitions...etc. therefore, promotion can be served as a motivational factors used by

HR as a best practice to retain qualified employees and also it is the best way to attract

employees because of it’s better HR practice of the organization.

31
 As Dessler(2008) people look forward to promotion basically because it brings about

pay raises ,added responsibilities and at times job satisfaction. But from the view of the

employers, it can be a way of rewarding exceptional performance, and also could be a way of

filling vacant positions in the company with employees who are loyal and well tested.

Bohlander Snell(2004) said that promotions involves change of assignment to that of a

higher level in the organization. The new position will provide employees with an increase in

pay and status and demand more skills and carries more responsibilities.

Providing promotional practices to employees often serves as a major incentives for

superior performance and promotion also be a significant way to recognize superior previous

performances of employees, therefore it is extremly important that promotion be fair, based on

merit and unatained by favorisim (Bohlander Snell2004). Sometimes promotional practices of

some organizations are very bias in nature because of many reasons. One of this reasons are

being favorism based on relativness, racisim, relegion and other many reasons, therefore

organizations should work to avoid unfair HR promotional practices to retain qualified and

very important employees which actualy the organization incures many costs to develop and

train that employee and with carelessness of HR many employees leave the company to join

the opponent since they provide better position which may deserve them,so any organization

should give enough consideration for their promotional practices in policies also in practice.

2.1.3 Organization Performance

There are many ways to measure organizational performance. The performance

indicator of organization depends on the objectives which the company intended to achieve

such as profitablity,Societal good(good reputation), Security of employment for the firm's

personnel, Providing a satisfying return on investment , Innovativeness in processes and

products, Customer satisfaction, Employee Satisfaction, Growth of market share,

32
Environmental contributions (positive, as well as negative), Technological leading edge and

Commitment.

2.1.3.1 Employee Satisfaction

For an employee to perform effectively in organization , job satisfaction is one of the

vital points. It is important for both the worker and the organization. Job satisfaction brings

about a sense of fulfillment and security to the employee. Due to these facts, the commitment

level of employee will be increased, absenteeism will reduce and the turnover rate will

decrease (Yucel, (2012).

When employees are satisfied with their jobs, the workforce will be more committed

and this will reduce the cost of recruitment and training. An individual’s general attitude

towards his or her job is known as job satisfaction (Syed and Yan, 2012).

2.1.3.2 Quality Service(Error Free )

Quality service as a performance indicator it refers to workload targets met on

time,accuracy of work, effectivness at processing enquiries, annotating records accurately,

work planned effectively and customers kept well informed and well served(Stredwick,2005).

2.1.3.3 Innovation

Innovation is a process of introducing new processes and procedures that organizations

believe will increase organizational effectiveness. It is a way of new ldeas,devices and

methods.(Armstrong,2014).

2.2 Underpinning Theories of HRM

Human Resource Management orginaly had strong theoretical base. Theories that has

relationship with this research presented as follow,

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 2.2.1 Organizational Commitment Theory

Shortly organizational commitment theory says that employees respond best and most

creatively way not when they are tightly controlled by management, placed in narrowly

defined jobs and treated as an unwelcome necessity, but, instead, when they are given broader

responsibilities, encouraged to contribute and helped to take satisfaction in their work. It

should come as no surprise that eliciting commitment and providing the environment in which

it can flourish pays tangible dividends for the individual and for the company (Walton, 1985).

As Little and Little (2006), organizational commitment is an outcome of the attitudes

of job satisfaction and organizational Citizenship (Socialization). A basic tenet of social

exchange theory is that relationships evolve over time in to trusting, loyal and mutual

commitments as long as the parties abide by certain ‘rules’ of exchange usually involve

reciprocity or repayment rules such that the actions of one party lead to a response or actions

by the other party.Addition to the above Little and Litttle(2006), delightfully explain

Organizational Commitment as employee’s sense of attachment and loyality to the working

organization with which the employee is associated and it defined in terms of an employee’s

attitudes and intentions. Employees are said to be commited to the organization when their

goals are congrunt with those of organizations, when they are willing to exert effort on behalf

of the organization and when they desire to maintain their connection with the organization.

Therefore, a better human resource management can bring employee satisfaction and

satisfied employees has organizational commitment according to this theory.

2.2.2 Motivation Theory

Motivation theory explains the factors that affect goal-directed behavior and therefore

influences the approaches used in HRM to enhance engagement (the situation in which people

are committed to their work and the organization and are motivated to achieve high levels of

performance).

34
 Motivation theories can be divided into three main groups: Instrumentality, Needs

(sometimes known as Content) and Cognitive theories.

Instrumentality theories: emerged in the early 1900s and are based on the assumption

that work has no outcomes other than economic ones. Employees, motivated only by money,

need to be put in a situation where they have no choice but to work hard and efficiently. To

achieve this in practice, work was grouped into large factory units, maximum specialization

was achieved through the limitation of the number of tasks an employee had to do and work

was deliberately made repetitive with as limited amount of training time as possible. Set out by

Taylor in1911and the difficulties arising from this theory is that it does not take in to account

the personal and social needs of employees or the rising level of intelligence and expectations.

Needs theories: emphasize that unsatisfied needs create tension and disequilibrium

which leads to individuals striving to achieve a goal. Maslow (1954) developed a Hierarchy of

Needs from lower order basic needs (food and shelter) to higher order needs (social needs, self-

esteem and self actualization). The higher order needs become motivators when the lower

order needs have been met.

Self
actualisation
Esteem

Social needs

Safety needs

Physiological needs

Figure 2.1 Maslow’s Hierarchy of Needs ,1954

Cognitive theories: assumes that individuals think their way through the situation and

work out how they can benefit from particular courses of action. The leading cognitive theory

35
is Expectancy theory expounded by Vroom (1964). Here, motivation is the product of three

variables:

Instrumentality: which is the degree of an employee’s self-belief in their ability to

achieve a goal.

Expectancy: which is the degree to which they believe that, having achieved a goal; it

will lead to a secondary action, namely a reward.

Valency: which is the value they put on that reward.

Generaly, motivation theory suggested that there should be a pusher for employees to

be satisfied, to deliver quality service. Whether it is economical, promotional or due attention,

motivation can be a source of good performance and a better human resource management

practice could enhance its employees motivation for good.

2.2.3 Human Capital Theory

Human capital theory is concerned with how people in an organization contribute their

knowledge, skills and abilities to enhancing organizational capability and the significance of

that contribution. It refers to the aggregate stock of competencies, knowledge, social, and

personal attributes embodied in the ability to creat intrinsic and measurable economic value.

Human Capital Theory views humans and individuals as economic units acting as their own

economy.

According to human capital theory (Becker,1964) the more investment an individual

makes in themselves, the greater their lifetime returns, through increased earnings, fewer (and

shorter) periods of unemployment and access to more interesting work. Gray S. Becker and

Jacobs Mincer argues that, other things being equal, personal incomes vary according to the

amount of investment in human capital. This means the education and training undertaken by

individuals or groups of workers influence their income.

36
 If employee beleives the training and development they have been received changed

them for good and that will bring additional income, then employees could be a source of good

performance.

2.2.4 AMO Theory

The AMO formula as set out by Boxall and Purcell (2003) states that performance is a

function of Ability + Motivation + Opportunity to Participate. HRM practices therefore impact

on individual performance if they encourage discretionary effort, develop skills and provide

people with the opportunity to perform. The formula provides the basis for developing HR

systems that attend to employees’interests, namely their skill requirements, motivations and the

quality of their job.

Therefore, giving a developmental chance and good training will change employee for

a better ability and that ability will bring motivation for using the opportunity given to them.

Having a good HRM practice will use employees for a better organizational performance.

2.2.5 Social Exchange Theory

It is developed by sociologist George Homans and explain it that employees will

reciprocate their contribution to the organization if they perceive that the organization has

treated them well. People weigh the potential benefits and risks of social relationships. When

the risk outweigh the rewards, people intended to terminate their agreement and vis versa.

Therefore, employees are intended to work hard to give what they have when they

receive equal amount of treatment, rewards, recognitions by a means of good HRM practices.

2.3 Emperical Litrature Review

2.3.1 Human Resource Planning and Organizational Performance

Previous reseraches on effects of human resource planning on organizational

performance varies in their level of magnitudes. However, most of them are concluded that

there are a positive relationship.

37
 According to Afzal et al.(2013) carried out a reserach on relationship between HRMP

and OP connected empericaly and hypotesised the hypotesis as HRP has significant effect on

organization performance using indicators such as commitment,control to HR practices. The

result shows that those organizations commited to apply best HRP performs higher than those

organizations with full of negligiencies on HRP and this had significant impact on

organizational performance. In other word, if HRP increases human capital’s discretionary

effrot, then that effort will increase productivity.

Any organization who has suitable HRP enhances its organizational effectiveness and

leads to incresead output by identifying, forcasting, and filling , solving and retaining man

power with the required skill,knowledge, talent, and capabilities and helping them to behave in

a manner that organizations’ objectives can be acheived.(Luu et al,2008).

Luu et al(2008) argues that HR planning today is a very important task of any

contemporary organization’s HR department. HRP mainly involves the identification of skills

and competencies within the organization, the filling of identified competencies gaps, and

facilitation of movments of employees with in organization and it should be done with careful

revision of HR policies and strategies to bring best man to the job to support organization

success.

This study also expected that there will a postive relationship between human resource

planning and organizational performance standing from those previous researchs.

H.O1 : Human Resource Planning has a positive effect on Organizational Performance.

2.3.2. T&D and Organizational Performance

Training and Development is a way which directed the skill and knowledge of

employees towards organization obective. The findings of many study has shown that giving

adequate training to employees is positively related to employee satisfaction, commitment,

retention and organizational performance in general.Organizations with superior training

38
programs are likely to have lower staff turnover than organizations that neglect staff

development. Employees will work for the benefit of the organization if they feel that the

training and development embarked upon is also going to be of benefit to them (Gonchkar,

2012).

Other reseracher like(Conti G., 2005, Ballot et al 2006) examine the effect of training

programs on organizational performance and the result were statsticaly significant and

benefited both employees and organization.

To compete in today's business world the organizations need to invest in the

development of their human resources to continuously update the skills, knowledge and work

practice of employees. Researches give considerable amount of favor for investment in training

programs of employees increase the firm performance. The training& development is basically

refers to a process to improve the current and future skills, knowledge of workers.

(Abdulkerim,2012).

On the other hand, some reserachers(E. Smith,2002, WJ wiehagan,2006, SW.

Shimidt,2004) improves employee training has a positive effect on the output of any

organization. Through efficient training programs would not only help to achieve the

organization's goals by adding the satisfaction and better output of employees, it would also

helps to equip employees with knowledge and expertise that are necessary to perform that

specific job. (Barrett. & O'Connell, 2001).

Therefore, Training programs are useful for the success of any organizational strategy

and help to compete with changes in the near future. The competitive advantage of companies

is the good quality of their human resources in the highly competitive environment.

Training and Developmet is a way of aquring the requred skills, knowledges , behavior

and attitudes of employees that help employees to exert effort for error free service, to be

39
motivated and give their full commitment which directly affect the performance of

organization.(Armstrong,2006).

H.O 2 : T&D has a positive effect on OP

2.3.3 Performance Management and Organizational Performance

Performance Management helps organization to make sure how well job is done and if
variation is there, it helps to take corrective action. It is going to be impossible to manage an
organization without having adequate information on how well its employees are performing.
Decisions will still be carried out on performance whether an organization has a formal way of
doing that or not and many of this outcomes will be full of errors (Danlami et al,2012).
Research done by Ugonna(2013), in the banks of North Cypres shows that
performnance managment has impact on organizational performance by providing information
about employees for decision makers. The formal way of performance provides vital
informations and that information could be a source for decision making as well as
communication with individuals and bases for reward management. Helps to escalate
employees effort towards organizational effectivness.
The study will expect to found a moderate level of relationship between performance
management and HR practices.
H.O 3: Performance Management has a positive effect on organizational performance.
2.3.4 Compensation Management and Organizational Performance
Compensation refers to all forms of financial returns and tangible benefits that
employee receives as part of the employment relationship (Bernadin, 2007).
According to S. Bhattacharya and P. Mukherjee, (2009) stuied on reward effects on
employees engagment and the result were reward system plays a vital role in employee
engagement, which depends on staff feeling that they are fairly rewarded for their skills,
knowledge and contribution determine the willingness of employees to exert their effort
towards organizational effectiveness.
Study also made by Sorasak Tangthong, Jirasek Trimetsoontorn, and Nutthawut
Rojniruntikul(2014) shows that compensation system has a direct and indirect impact on
employees retention which affects organizational performance. If employee feels they are
compensated accordingly with the effort they exibited then the satisfaction level increase and
help to maintain increadible performance. Compensation also helps organization to attract and

40
retain qualified and specialists to the company and magnifying the success of organization by
adopting and taping out the unique source of competition.
Research done by(MMN, Kabir,2011, Pantik,2012) on compensation management, the

effect on organization is depend on organization type but for all it can be a source of

motivation. The significance is relative but has a positive effect on organizational performance.

Therefore, reward is about finacial and non-finacial compensation to employees, it

influences the effort of employee towards their company success. However, the effect may be

not only direct but it may also affect indirectly.

H.O 4: Compensation has a positive effect on Organizational Performance

2.3.5 Promotional Practices and Organizational Performance

Promotion is the motivated factor which affects the commitment and motivation of

employees. Employees seeks a better place based on merits like seniority, exprience,

educational level and performance they have been shown. It would determine the expectation

of employee for a better performance (Bohlander Snell, 2004).

R.Sayeed,(2013) Studies on effect of human resource management prtactices on

organizational performance result shows that if employees feel that there is no a better

tomorrow with the current company, the intention of leaving will increase and will creat

unstable working environment. Specialy, in the service sector, employees seek position for a

better social status as well as pay raises.

Base on the above studies and actual practices of many organization as well as

practitioners concluded that organizations who applied best promotional practice with in

organization will creat belonging to employee and increase the motivation and commitment.

High motivation will leads to a good behavioral outcomes which determine the effectivness of

organizations.

H.O 5: Promotion has a negative effect Organizational Perfrormance.

41
 2.3.6 Relationship Between Human Resource Management Practice

and Organizational performance

Previous researches on HRM shows that there are strong and positive relationship

between the HR practices and organizational performances.(Seaman, Upton, and

Carlson,2006). They were take a sample of 168 family-owned fast growth small and medium

enterpises was used to empirically examine the consequences of human resource practices on

their business performance. The result suggested that training and development, use of

performance management and competitive compensation system were highly related with

organizational performance.

Previous research conducted by Horgan & Mohalu,( 2006) some HR practices are

linked with good employee performance and resulting the increase in organizational

performance. However,the HR practices will have influence on organizational performance

when only employees contributing to organizational output.

Syed & Yan (2012) has done their own research on four HRM practices showed that

training and development, team work, HR planning, and performance appraisal have positive

and significant influence on business performance.

The body of research examining the relationship between HR practices and

organization performance has grown exponentially over the past few years. Such links between

HR practices and organizational performance has become one of the main areas, some would

say the main area of study, in the field of human resource management (Guest 1997).

Studies of relationship between human resource management practices and

performance of organization specialy in banking industy has been taken place by many

reseracher previously and most of them tries to implicate that the more HR practices

effectively and efficiently implimented the probability of organization performance is more

likely to be increased.( Rasheed et al ,2013).

42
 According to Guest(1997), if the right people is in place at the right time with the right

skill and knowledge and also if employee has the right motivation and commitment the success

of organizations performance is high.

When appropriate HRM practices in place it taps the motivation and commitments of

employees and it simply show the linkage between HRM practice and performance.

“Innovative human resource practices are likely to contribute to improved economic

performance only when three conditions are met: when employees possess knowledge and

skills that managers lack; when employees are motivated to apply this skill and knowledge

through discretionary effort; and when the firm’s business or production strategy can only be

achieved when employees contribute such discretionary effort. I will argue that all three

conditions must be met for HR practices to contribute to performance.” (MacDuffe,1995) and

this arguments shows us that the better trainning and development of organization and a

motivational factors to apply this skill directly related to organizational performance and

handling this through effective HR practices will benefit organizations.

According to expectancy theory which is more concerned about motivation tries to

show the linkage between HRM practices and performance. Forexample, high investment in

training will improve the skill of employee and it motivate employee and help employee to get

performance related pay and which intiate employees to perform well and meet organizational

expectancy.

According to Guest showed in his research HRM strategies such as innovation , focus

of quality and cost reduction determine what kinds of HRM practices should be followed and

the HRM practices which followed by organization has it’s own HRM outcomes likes

commitment, quality and flexiblity which again leads to behavioural outcome of

motivation,cooperation, involvement, and organizational citizenship which finaly becomes the

outcomes for organizational performance of high productivity, quality and innovation or

43
 absentisim, labour turnover, conflict, customer complaints which directly affect organizations

Return on Investment(ROI) and profit.According to Guest linking between HRMP and OP

showed in the following table,

David E. Gust Model of HRM practice

HRM Strategy HRM practices HRM outcomes Behaviour Performance Financial

outcomes outcomes outcomes

Differentiation Selection Commitment Effort/Motivat High: Profit

(Innovation) ion Productivity
HRP Innovation
Quality
Training Quality Coopertation
Low:Absence ROI
Focus Appraisal Involvement Employee-
(Quality) Flexibility Disatisfaction
Rewad Organizationa Turnover
Job design l Citizenship
Involvement Conflict
Cost-reduction Statuse and
Security
Table 2.1 David E.Gust 1997,

From the above table we can understand that a good HRM practice leads to a good HRM

outcomes which influence on behavior and the specific behaviour exibited transfers to

organizational performance. The conceptual frame work of the study will be driven from this

Guest linkage of HRMP with OP as follow,

Fig 2.2 Conceptual framework Source: David E.Guest (1997) Dependent Variable
Human Resource Planning
H1+
Organizational
Training and Development
H2+ Performance
 Quality Service
H3+
 Innovation
Performance Management
H4+  Employee
H5+ Satisfaction
Compensation Management

Promotional Practices

44
 CHAPTER THREE

RESEARCH METHODOLOGY

This chapter covered the methodologies which had been in use through out the

research includes research design, target population, tools and techniques of data collection,

and how discussed the data(data analysis).

3.1 Research Setting

This research has been take place at Commercial Bank of Ethiopia Branches found

in West Addis Ababa Distrcit selected 15 branches namely, Alembank ,Atena Tera, Ayer

Tena, Bethel, Coca Mazoriya, Eyesus Gedam ,Good Sheepeared, 18 Mazoriya, Reppi,

Sefereselam, Tesfa Dirijit,Torhayloch,Tropical, Weyra, and Zenebwork.

3.2 Research Approch

There are two types of data collection techniques which are qualitative and

quantitative. The qualitative one helps in illustrating open-ended, pre-determined or

evolving questions which is not numeric data. The quantitative one helps in determining

closed-ended, pre-determined questions, observational or instrumented numeric data and

helps in statistical analysis/interpretation. The last one is mixed of both called mixed data

collection technique.

Therefore, the reserach used the quantitative research approch to correlated the

dependant and independant variables on statstical manner by using SPSS statistical

methods .

3.3 Research Design

There are three types of research designs. The first one is Exploratory research

design which helps to familiarize with basic facts, to develop new theories and generate

new ideas. The second one is that Explanatory which helps to explain why things happen

45
by basing exploratory and descriptive researches to look for causal relations. According to

Descriptive research design which decripe situations based on presented data and helps to

catigorized or classify data. The major purpose of descriptive research is description of the

state of affairs as it exists at present.

This reserach were followed the explanatory research style because it adds

knowledge on the topics and explanatory research design identified the the cause and effect

of data collected from employees in the form of questionnary and simply help to present

those data and clarify the situation on the ground. C.r. kotari (2004)

3.4 Population and Sample

3.4.1 Target Population

Currently CBE has more than 33,000 employees working allover the country in

different branches and and giving consideration of participating those all employees are

almost impossible and the research is focused only branches found in West Addis Ababa

city branches.

In West Addis Ababa District City branches, there are 67 branches and they have

employeed 1631 employees and the total population of this study were those employees

which in number 1631.

3.4.2 Sample Size Determination

The sample size of the study had to be a good representative of the total population

of the research and it is done with a proper care. Considering the fact that time, cost and

manageablity of the study is need to be limited and also by considering represtativness of

the population, the research were used a part of probablity sampling which are stratified

random sampling method had been employeed. According to Kothari, 2004, stratified

sampling results in more reliable and detailed information and enables to get more

46
representative samples and the sample size will be determined by statical formula which is

formulated by Taro Yamane’s Statistical Formula and illustrated as follows:

n= N

1+N(e2)

Where n = sample size

N = population of the study

e= % level of significance or margin of tolerable error. The researcher will

consider 5% level of significance or margin of tolerable error and the confidential level

is 95%. By computing the sample size of the population using the above formula, the

sample size to be included to the study will be employees

n=1631/1+1631(0.05^2)

n=321.22 that means the sample size were 321 employees and distributed all but

returned 213 and also to reach all 67 branches was difficult. Therefore, based on theirs

employee mix and easy access number of branches were minimized to 15 .

3.4.3 Sampling Design

The sample design should represent the population of the study and the sample are

designed using Taro Yamanes’ statstical formula for sampling and those samples were

distributed by equal chance for ever respondant(randomly). It is because of that the study is

intended to see the effect of HRM practices on organizationa performance it concerns all

employees equaliy. Therefore, the sample were distributed for 15 branches employee by

probability means.

3.4.4 Sampling Techniques

The study was followed stratified random sampling techniques which categorized

branches based on their number of employees and calculated the sample number from each

branches accordingly. The sample presents as follow in the following table,

47
 No. Name of Sample Br CurrentEmployees Sample Size
Branches Population
1 Alem Bank 36 36/427*100=8.4%*321=27
2 Atena Tera 32 32/427*100=7.5%*321=25
3 Ayer Tena 42 42/427*100=9.8%*321=32
4 Bethel 29 29/427*100=6.7%*321=22
5 Coca Mazoriya 23 23/427*100=5.4%*321=17
6 Eyesus Gedam 19 19/427*100=4.4%*321=14
7 Good Sheepheard 27 27/427*100=6.3%*321=20
8 18 Mazoriya 22 22/427*100=5.1%*321=17
9 Reppi 31 31/427*100=7.3%*321=23
10 Sefereselam 31 31/427*100=7.3%*321=23
11 Torhayloch 26 26/427*100=6.1%*321=20
12 Tropical 29 29/427*100=6.8%*321=22
13 Tesfa Dirijit 34 34/427*100=7.9%*321=25
14 Weyra 23 23/427*100=5.4%*321=17
15 Zenebework 23 23/427*100=5.4%*321=17
Total 427 321
Table 3.1 sample size of each branch Source: branches’ employee file

3.5 Data Types and Sources

According to William, et al., (2010), there are two types of data, primary and secondary.

The primary data are those which are gathered for the first time and a fresh and thus collected

for the case at hand (Kothari, 2004). Secondary data is defined as Data that have been

previously collected for some purpose other than the one at hand. For the purpose of this study

in order to obtain relevant information both primary and secondary data was used.

3.5.1 Primary Data

For the sake of finding the real effect of human resource management practice on

CBE’s performance, collection of quality primery data is unnegotiable and mandatory.

Therefore, the primery data were collected through well structured quetsionnaries.

Questionnary is prepared in a way adressed all important points to measure the reserach

questions and covered all parts as well as it was clear or use direct way which not initiate

participants for hestitation.

48
 3.5.2 Secondary Data

Commercial Bank of Ethiopia is the largest bank in the country, therefore, they

used internal webs like cbe portal which simply provides internal informantion about the

organization and also recent researches of the bank in different topics and it is available for

ease accessablity.

Also the bank uses official websites and use television program and different

magazins as well as annual reports and communication reports and those secondary ways

of data collection have been implemented to make sure the fullness of the study.

3.6. Data Instrumentation

Data were collected from both primary and secondary sources. For primary source:

Self administered questionnaires were prepared for the respondents. The questionnaire

adapted from previous similar studies and modified based on the research questions. It

incorporates both closed and open ended type of questions and comprises three parts: the

first part includes demographic characteristics. The second part was questionnaries about

HRM practices (HRP, T&D, Performance Management, Compensation Management and

Promotional Practice). Under HRM practices, there were total of 31 questions with 5

subscales. All questions of HRMP are rated using a five-point Likert scale ranging from 1

to 5 with 5= Strongly Agree, 4 =Agree, 3= Neutral, 2= Disagree, 1=Strongly Disagree.

The third part contains organizational performance questions and there were 13 questions

under organizational performance and rate samly to the above. Pre-tests of questionnaires

were made one week before the actual data collection was proceed on 5% of the calculated

sample size who was not included in the sample. Secondary data has been collected from

the written documents found in the bank, available books, publications, research studies,

articles and websites are checked.

49
 3.7 Data Distribution and Collection Process

The questionnaries was distributed through the support of cooperative individuals

from sampling branches and by researcher, my self. The distributed questionnaries also

were collected by the support of those individuals.

3.8 Data Analysis Method

The research was used quantitative and qualitative method to analyse the data and

also explanatory way of analysis also combined with the statstics. Likert scale has been

applied for the questionnary parts.The data was collect by using both primary and

secondary data sources and has been summarized by using tables, frequency distributions

implemented to discribe the percentage of the respondents and percentages gave a

condensed picture of the data. Accordingly, the summarization of the data was analyzed

using Statistical package for social sciences (SPSS version 20) and the analization report

presented by model summery, ANOVA table, correlation table and Coeffienet of the

regression and the final report helps to arrive at a meaningful conclusion and come up with

valuable recommendations.

3.9 Validity & Reliability Issue

Kotari (2004) the questionnaire’s internal validity refers to its ability to measure

what we intend it to measure. In other words what we find with our questionnaire actually

represents the reality of what we are measuring. As stated the previously the study

instrument was per-tested before one week of actual distribution to ascertain that the

questions made sense to respondents and to identify the problem with the questionnaire that

might lead to biased answers. The reliablity has been checked for the actual questionnary

and the Cronbach’s Alpha was assured the materal is reliable for internal consistency.

50
 Table 3.2 Summary of Measures

No. Study Variables No. of Chronbach’s

Items Alpha
Results
1 Human Resource Planning 5 .914
2 Training and 9 .830
Development
3 Performance Management 6 .828
4 Compensation 7 .868
5 Promotional Practice 4 .633
6 Organizational 13 .886
Performance

3.10 Ethical Consideration

Participants in the research was fully informed of the nature and the purpose of the

research and has been given proper assurance of their right to leave the quetsions which

discomfort them and also they were informed all the information they provided is kept

secretly and only be used for the purpose of this study.

51
 CHAPTER FOUR

Data Analysis and Presentation

This chapter deals with the analysis and presentation of the quantitative data

gathered from Commercial Bank of Ethiopia. Fifteen branches were selected for the

purpose of this study. The questionnaires composed close ended questions which are

summarized and presented quantitatively in tables using SPSS software (IBM SPSS

statstics 20 Version). The study used some secondary data from published and unpublished

documents of the bank. Questionnaires were distributed for 321 respondents, 97 of the

questionnaires were not returned and 11 were invalid due to incompletness of the

questionnaries. The response rate was 66.4% or 213 in number.

4.1 Demographics Characteristics of the Respondent

Variable Description Frequency Percent %
Sex Male 114 53.5
Female 99 46.5
Total 213 100
Age Under 25 34 16
Age 25-35 114 53.5
Age 36-45 35 16.4
Age 46 and above 30 14.1
Total 213 100
Educational Attainment Diploma 11 5.2
Degree 172 80.8
Masters 30 14.1

Others 0 0
Total 213 100
Tenure (exprience) 1-5 48 22.5
6-10 109 51.2
11-15 43 20.2
Above 15 13 6.1
Total 213 100
Position Clerical 168 78.9
Professional 5 2.3
Managerial 40 18.8
Total 213 100

Table 4.1 Demographical Respondents Variable Source: Study Demographic Result ,2019.

52
 As we can see from table 4.1, the first demographical part of the study was sex.

There were 114 male respondent which represent 53.5% of the respondants and 99 female

which cover 46.5% of the respondant. The majority of this study respondents were

represented by male and the composition was relatively balanced.

The second demographical part of the study was age and there were four groups of

age. The first group of age was classified on under 25 parts and it covered 34 person and 16%

of the total sample. The second age classification covers age between 25-35, represents by

114 (53.5%) of the respondants and the third age classification covers from 36-45 and there

were 35 respondants on this age level which means 16.4% of the respondants. The last age

classification was age above 46 and there were 30 peoples(14.1%). The majority of the

respondents fails under age classification between 25-35 and it shows that the majority are

young working force which seeks a better working human resource management practice.

Thirdly, the study had covered the educational attainment of the respondant and the

majority of the respondant were a Bachilor Degree holder in number there were 172

(80.8%). There were 11(5.2%) Diploma holders and the remaining 30(14%) were MA

holder. The majority resondent holds BA and the composition of the respondent shows that

all respondents are educated.

The fourth part of the demograhical variables were tenure or the exprience held by

employees. There were 48 (22.5%) employees who had exprience of 1-5 year. Also, 109

(51.2%) respondants had an exprience of 6-10 years. There were 43(20.2%) respondants

had an exprience between 11-15 years. 13(6.1%) of the respondants also had an exprience

of above 15 years. The majority has 6-10 years exprience. Therefore, we can conclude that

they are fairly understood their current human resource management practice and

responded from past to present accumulated exprience.

53
 The last part of the demographical variables were a position which only expressed

in three parts. Clerical which are maintaining and doing the routine work of the bank

represented with 168(78.9%) of the respondants, 40(18.8%) managerial position and

5(2.3%) of IT professional workers. Since the majority of the respondents were clerical

position employees, we can conclude that they simply can understood the daily human

resource managment practice that have been employeed.

4.2 Descriptive Analysis of Variables of the Study

This study was made to see human resource management practice effect on

organizational performance of Commercial Bank of Ethiopia and there were 213

participants responded using five point likert scale from the lowest strongly disgaree to the

highest strongly agree.

Note: 1, Strongly Disagree(SD), 2 Disagree(D), Neither Agree or Disagree(N),

Agree(A), Strongly Agree(SA)

4.2.1 Human Resource Planning Variable Result

No Items SD D N A SA
Human Resource Planning No. % No. % No. % No. % No. %
1 The need for human capital fills at 60 28.2 91 42.7 9 4.2 47 22.1 6 2.8
the right time
2 Human resource department is 68 31.9 88 41.3 7 3.3 36 16.9 14 6.6
palying good role to fill gaps
3 Human resource department of CBE 56 26.3 91 42.7 7 3.3 48 22.5 11 5.2
forcasts the right human needs before
human shortage becomes concern
4 Human Resource Department of CBE 63 29.6 83 39.0 5 2.3 48 22.5 14 6.6
fills human need with right skill
5 Human Resource needs for each 68 31.9 76 35.7 10 4.7 42 19.7 17 8.0
department(branch)revised periodicaly
Standard Deviation of HRP 1.0840 Maximum 5
Mean of HRP 2.3296 Minimum 1

Table 4.2 : Source: Own Survey, 2019.

54
 As we can see from the above table, 151(70.9%) of respondant disagree about the

needs for human capital fills at the right time, while 53(24.9%) agree that the need fills at

the right time. The remaining 9( 4.2%) were neutral. This indicate that the majority

precieved needs for human capital is not filled at the right time.

On the same page, 156(73.2%) of employee beleives that CBE human resource

planning department is not playing good role in facilitating multi dimensional support for

effective job. On the contrary, 50(23.5%) beleived that human resource planning

department is playing good role. 7(3.3%) of the respondant choose to stay neutral. From

the above data we can conclude that human resource management practice of the bank is

not playing good role in facilitating multi dimensional support for its employee and this

negligiency and lack of support affects organizational performance by reducing quality on

the service, and affects the satisfaction of employees .

Respondants were also asked their perception on question “human resource

department of CBE forcasts the right human needs before human capital shortage becomes

concern” and 147(69%) of the respondant replied that they did not agree right forcasting

has been tooke place before shortage become concern by the human resource planning

department, while 59(27.7%) supports the idea which the department forcasts before

human shortage become concern. Again here, the remaining 7(3.3%) stayed neutral. Not

having the right forcasting disrupt the service with the shortage of resources and affects the

service until the gap is filled. Therefore, based on the majority response human resource

management practice of forcasting for human need should strengthen and avoid the gap.

Also, respondants were asked whether they think human resource planning

department of CBE fills human needs with the right skill or not, 146(68.6%) were

responded they are totaly disagree ,while 62(29.1%) agreed for the department fills human

need with the right skill. 5(2.3%) still stayed neutral. According to above data, the bank

55
 human resource department lacks filling the human need with the right skill at the right

time with the right qualification.

The last question on human resource planning variable were intended to see about

human resource needs for each departement or branch revised perodicaly or not.

144(67.6%) respondents thinks there are no a perodical review for each branches and 59

(27.7%) agrees that there is a periodic revision. 10(4.7%) were neither agree or disagree.

The above data shows that departmental revision for human need is not adapted. Since

CBE is large, perodical revision of workforce is needed.

The mean of human resource management practice were 2.32 and it is more close to

disagree in five point Likret scale. It shows the disagreement level is very high in respect of

human resource planning activity of the organization.

When we generalize the above data, 147(70%) of the respondents were disagree on

five point likert scale and it implies that CBE human resource planning department lacks

good forcasting, filling right skill with right time, perodic revision for need and palying no

good role.

4.2.2 Training and Development Variable Result

No Items SD D N A SA
Training and Development No. % No. % No. % No. % No. %
1 CBE has a good training and 66 33.1 67 31.5 9 4.2 53 24.9 18 8.5
development practices
2 Training is given to employees at the 61 28.6 71 33.3 3 1.4 53 24.9 25 11.7
right time with the assesment of
needs
3 There are a training manuals that are 64 30.0 62 29.1 5 2.3 59 27.7 23 10.8
prepared to facilitate the training
4 Training is provided with specific 60 28.2 61 28.6 5 2.3 67 31.5 20 9.4
objective to attain
5 The success of the training 62 29.1 62 29.1 9 4.2 65 30.5 15 7.0
measured in comparision to the
objectives
6 The training provided by HRM 7 3.3 118 55.4 11 5.2 48 22.5 29 13.6

56
 department is implemented only to
meet their annual plan not to fill the
skill and knowledge gap
7 The training which is given to 53 24.9 82 38.5 12 5.6 57 26.8 9 4.2
employee has the capacity to solve
the employees skill and knowledge
gap
8 The training given by CBE improves 55 25.8 84 39.4 10 4.7 54 25.4 10 4.7
organizational Innovativeness
9 Employees are given a 71 33.3 74 34.7 9 4.2 43 20.2 16 7.5
developmental opportunities which
help them to prepare themselves for
future positional vacants
Standard Deviation of T& D .87096 Maximum 5
Mean of T & D 2.5837 Minimum 1

Table 4.3 Source (Researcher survey 2019)

The first question respondents were asked about training and development, CBE

has a good training and development practices and the majority 121(56.8%) responded that

they disagree and 71(33.4%) responded they agree with that CBE has a good training and

development practice, while, the remaining 9(4.2%) responded neutraly. This indicate that

the bank is not followed a good training and development practice which help to improve

organizational performance.

Respondents also asked to respond for training is given to employees at the right

time with the assesment of needs, 132(61.9%) responded they are disagree and 78(36.6%)

were agreed with what proposed and the remaining 3(1.4%) were neutral. This data shows

that the training is not timely presented to employee and the undelivered training results in

bad performance.

Concerning about training manual availablity to facilitate the training , 126(59.1%)

were rating they are disagree about the availablity of well designed training manual . on the

hand, 82(38.5%) agreed that there is a well design training manual that facilitate effective

training. 5 (2.3%) of the respondant were stayed neutral. According to the above data, not

having a well designed training manual disrupts a process of influencing employees effort

57
to targeted point. Therefore, there should be a well prepared guideline which shows where

to start and where should be reached so that the performance is increased.

Training is provided with specific objective to attain, presents to respondent to

reflect what they think and 121(56.8%) think most of the time the training given to

employee is objectless and 87(40.9%) reflects their thinking by agree. The remaining

5(2.3%) remain neutral. Since the majority replied that the objective and the training are

not match on the last response, 124(58.2%) of the respondants were responded disgaree

about the sucess of the training is measured with the comparision of its objective.

80(37.5%) of the respondant agree and 9(4.2%) remain neutral. It indicate that the training

given to employee were not attain the right objective which suppose to acheive.

The training provided by HRM department is implemented only to meet their

annual plan not to fill the skill and knowledge gap was the next issue rasied and the code

was reversed for the respondant ,since, the statment was negatively stated.. 125(58.7%)

respondents replied that they agree that the training takes place only to meet annual plan

and 77(36.1%) thinks they disagree it takes place to fill the skill gap. 11(5.2%) were

neutral. The data shows training is tookplace to meet annual plan. This not support the

vision and mission of the organization by providing employees with adequet skill and

knowledge which is required on the job.

Respondant replied for statment about the capacity of the training in solving skll

gap were disagreed by 135(63.4%) of the respondant who beleives the training has no

capacity to slove the skill and knowlede gap. Whereas, 66(31.0%) were agreed . 12(5.6%)

were neutral and also the majority beleives the training given to employee is not bring

innovativness to the organization,139(65.2%) were not agreed, while 64(30.1%) were

agreed it brings innovativness to the organization. 10(4.7%) were neutral. The last question

adressed over training and development was the developmental opportunities for

58
 employees is given or not which help them to improve themselves for future job and

145(68%) respondants were replied that they disagree there is no opportunity and

59(27.9%) agreed there are developmental opportunity. 9(4.2%) were neutral. The above

data indicate that the training given to employee does not have a capacity to solve problem.

When we generalized, the majority respondents were precived there is no good

training and development practice in CBE, almost an average of 130 respondents were

disagreed with the statment proposed about CBE’s training and development practice.

4.2.3 Performance Management variable

No Items SD D N A SA
Performance Management No % No. % No. % No. % No. %
.
1 Performance appraisal takes place 60 28.2 80 37.6 4 1.9 50 23.5 19 8.9
consistently through out the
organization
2 Performance measurment 55 25.8 72 33.8 10 4.7 60 28.2 16 7.5
mechanisims are clear
3 The measurement process are free 61 28.6 68 31.9 7 3.3 60 28.2 17 8.0
from bias
4 All employees has job description and 61 28.6 77 36.2 9 4.2 52 24.4 14 6.6
measured accordingly
5 In CBE, Performance management 41 19.2 91 42.7 8 3.8 61 28.6 12 5.6
conducted to make sure employees are
going according to the expectation of
the organization, not to judge hardly
6 After performance is measured 55 25.8 69 32.4 13 6.1 57 26.8 19 8.9
feedbacks are provided to employees
of CBE
Standard Deviation of PM .97306 Maximum 5
Mean of PM 2.5391 Minimum 1

Table 4.4 Source: Researcher survey 2019

Repondents were asked about the consistency of performance appraisal through out

the organization and 69(32.4%) respondent replied that they think performance appraisal

59
consistently take place through out the organization. Whereas, 140(65.8%) were replied

that they are not agreed (disagree). The remaining 4 or 1.9% remain neutral. The result

indicate that the majority thinks performance management is not consistently take place

throught the organization.

The second statement proposed under performance management were performance

measurment mechanisims are clear, and 76(35.7%) were agreed and 127(56.6%) disagreed.

10(4.7%) were neutral. We can say that the majority thinks there is no a clear measurement

mechanisim. Again respondants were asked to fill what they think about the measurment

process, is it free from bias or not 77(36.2%) responded they beleive that the measurment

process is free from any biases and 129(60.5%) responded disagree which means they

think the measurment process is open for bias. 7(3.3%) also were neutral.

From 213 respondants 66(31%) of them agree for the question all employees has

job description and measured accordingly and 138(64.8%) responded disagree which

indicate that the majority thinks there is no proper job description and 9(4.2%) were

neither agree or disagree. 73(34.7%) thinks CBE conducts performance appraisal only to

make sure employees are going according to organization expectation and 132(61.9%)

were disagree or responded they think the bank conduct performance appraisal to judge

them hardly. Lastly, 76(35.7%) agreed that they received a feedback after performance

appraisal and 124(58.3%) disagreed,whereas, 13(6.1%) were neither agree or disagree.

Generaly, the majority respondents were beleived that the performance management

practice is poor.

60
 4.2.4 Compensation Management Variable Result

No Items SD D N A SA
Compensation No. % No. % No. % No. % No. %
1 The compensation system of CBE is 63 29.6 71 33.3 4 1.9 62 29.1 13 6.1
perceived fair
2 Salary of the bank is fair related to 66 31.0 71 33.3 5 2.3 58 27.2 13 6.1
the industry
3 The benefits given to employees is 61 28.6 68 31.9 4 1.9 61 28.6 19 8.9
based on their performance
4 I am satisfied with the current salary 64 30.0 72 33.8 8 3.8 48 22.5 21 9.9
5 I am satisfied with the current 58 27.2 83 39.0 10 4.7 46 21.6 16 7.5
benefit package
6 The compensation system currently 51 23.9 75 35.2 10 4.7 60 28.2 17 8.0
implmented initiate employees to
strive for the success of their
organization and to achive great
performance
7 The benefit package is dsitributed 57 26.8 76 35.7 7 3.3 60 28.2 13 6.1
fairly
Standard Deviation of Compensation 1.00226 Maximum 5
Mean of Compensation 2.5057 Minimum 1

Table:4.5 Compensation Variable Source: Researcher Study,2019

The respondents leve of agreement for statement “The compensation system of

CBE is perceived fair” were 75(35.2%) responded agreed that the compensation precived

fair and 134(63.9%) were responded disagree. 4(1.9%) of the respondant were neutral.

For the statement “salary of the bank is fair related to the industry”, the agreement

level were 71(33.3%). The majority respondents replied they disagree, in number

137(64.3%). 5 or 2.3% were neutral. The result indicate that the salary precived unfair

related to the banking industry in the country. This indicate that significant amount of

respondents preceived the compensation system is fair. This is may be due to the industry

pays more than CBE’s current payment structure which has been revised lastly before six

years.

61
 “The benefit given to employee is based on their performance” statement responded

agreed by 80(37.5%) and disagree respondents were 129(60.4%) and the neutral

respondents were 4(1.9%). When the respondents analysis interprate, it gives a meaning of

large amount of respondents disagree with the performance attached with benefit. The

benefit package provided by the bank is not based on employees performance. If

employees effort is not considered as a source for increasing performance by attaching fair

level of acknowledgement(recognition) for their effort, the dissapointment is increased and

affect organization performance. This happned may be due to unorganized performance

management system which support the compensation system or failure in considering

performance as a source document for compensation.

There were 69(29.1%) resondants who satisfied with the current salary and

responded agreed , while 136(63.8%) of the respondant were unsatisfied with their current

salary and replied disagree with the proposed statement. 8(3.8%) were neutral. This shows

that the majority respondents are not satisfied with their current salary paid by the

organization.

62(29.1%) of the respondents agreed for statement “I am satisified with the current

benefit package” and 141(66.2%) were disagree with the current benefit package. The

remaining 10(4.7%) were neutral. The result indicates that the current benefit package also

precived unfair and the majority were unsatisfied.Employees personal satisfaction level

would affect the working sprit of the massives. personaly unsatisfied employee disturb the

environment because the collection is a sum of individuals.

For the statement” The compensation system currently implemented initiate

employees to strive for the success of their organization and to achive great performance”

77(36.2%) respondents agreed it helps to strive for success and 126(59.1%) were disagreed

about the statement. The remaining 10(4.7%) kept neutral. This indicate that the

62
 compensation system currently implemented does not initiate employee to strive for the

success of their organization. The above data indicate that employees are not initiated by

the compensation system. Employees who lost their initiation will disrupt the working

condition, deliver poor service, become carless and affect the performance.

Lastly, “The benefit package is dsitributed fairly” statement responded agreed by

73(34.3%) and disagree by 133(62.5%). 7(3.3%) were neutral. This indicate that the

benefit package lacks fairness. Maitaining internal fairness is a core for employees

satisfaction. Who has a feeling of less payment for equal level of job done, affects the

effrot of employees toward expected result.

The mean for compensation variable(2.5057) tells us that the majority shows their

disagreement with the current compensation system while other keep themselves neutral.

Generaly, the compensation variable indicate that the disagree part covers the

majority and it shows employees are not satisfied with the current compensation system of

the bank.

4.2.5 Promotional Practice Variable

No Items SD D N A SA
Promotion No. % No. % No. % No. % No. %
1 Human Resource Management of 67 31.5 70 32.9 5 2.3 56 26.3 15 7.0
CBE has a procedure for promotion
2 The promotional practice process is 72 33.8 64 30.0 4 1.9 56 26.3 17 8.0
free from any biases of religion,
ethnics, and relatedness favor and
fair only follow procedure
3 Promotional practices are attached 66 31.0 65 30.5 9 4.2 59 27.7 14 6.6
with fair level of performance
management and equal chance is
given to equal level of employees
4 The complaint level of employee is 10 4.7 45 21.1 6 2.8 48 22.5 104 48.8
high in promotion and affect
employees commitment and
organization performance
Standard Deviation of Promotion .93686 Maximum 5
Mean of Promotion 2.3697 Minimum 1
Table 4.6 Source: Researcher Survey,2019.

63
 As shown in the above table, 137(64.4%) respondents were disagree about

availablity of promotion procedure and 71(33.3%) agreed there is a procedure for

promotion but 5(2.3%) remain neutral. This shows that there is no procedure to promote

employee or if it is there, it is not implemented as expected. For the statment “The

promotional practice process is free from any biases of religion, ethnics, and relatedness

favor and fair only follow procedure” the majority 136(63.8%) disagree and 73(34.3%)

agreed on the statment. 4(1.9%) were neutral. It indicate that the majority respondents

think there is a biases of religion, etnics or relatedness favor in promotion and it disatisfied

employees.

Respondents also were asked about promotional practices are attached with fair

level of performance management and equal chance is given to equal level of employees,

131(61.5%) were disagreed and 73(34.3%) were agreed. 9(4.2%) were neutral. The above

analysis indicate that promotion is not attached with fair level of performance and

employee’s think they are not given equal chance in promotion even when they have equal

or more work exprience and educational level. Finaly, on promotion, raised statment was

“the complaint level of employee is high in promotion and affect employees commitment

and organization performance” here again since the statement negativley stated it has been

recoded by reversing the code on SPSS and the 152(71.3%) thinks the level of complaint is

high and responded agreed and 55(25.8%) thinks there is no complaint so they disagreed.

The remaining 6(2.8%) kept them selves neutral.

Generaly, the table shows that the majority has negative perception on CBE’s

promotional practice and they think it affects organizational commitment of employees and

organizational success.

64
 4.2.6 Descriptive Statstices of Organizational Performance Variables

No Items SD D N A SA
Quality Service No. % No. % No. % No. % No. %
1 you met the work target on time 60 28.2 81 38.0 4 1.9 55 25.8 13 6.1
2 The job done by employees maintain 71 33.3 68 31.9 4 1.9 58 27.2 12 5.6
work accuracy
3 The working process provides 61 28.6 78 36.6 3 1.4 62 29.1 9 4.2
support for quality service
4 The organization has right number of 60 28.2 65 30.5 3 1.4 74 34.7 11 5.2
employees at the right time with the
right skill to to deleiver quality
service
5 All materials are available which 71 33.3 66 31.0 4 1.9 65 30.5 7 3.3
helps to provide quality service
Employee Satisfaction
6 CBE values employees contribution 62 29.1 73 34.3 3 1.4 67 31.5 8 3.8
as well being of the bank
7 CBE does not ignore complaints from 66 31.0 71 33.3 4 1.9 63 29.6 9 4.2
employees
8 I am treated with genuine respect 64 30.0 70 32.9 2 0.9 62 29.1 15 7
9 The level of employees engagement 63 29.6 70 32.9 1 0.5 65 30.5 14 6.6
is high in CBE

10 Employees of CBE are satisfied with 71 33.3 68 31.9 2 0.9 62 29.1 10 4.7
their organizational environment
11 The total environment of CBE is 63 29.6 81 38.0 2 0.9 60 28.2 7 3.3
supportive and cooperative which
facilitate employees satisfaction

Innovation
12 CBE is a learning organization which 46 21.6 78 36.6 4 1.9 77 36.2 8 3.8
nurturing individual and group
learning to improve its internal and
external change
13 CBE has a system which involves 49 23.0 67 31.5 3 1.4 79 37.1 15 7.0
employees new ideas to improve
working methods
Standard Deviation of Promotion .87917 Maximum 5
Mean of Promotion 2.5284 Minimum 1
Table 4.7 Source: Researcher servey, 2019.

65
 As per data presented on the above table, 141(66.2%) were disagree with you met

the work target on time and 68(31.9%) agreed to the proposition. 4(1.9%) were neutral.

This data indicate that employees are not met their work target on time. Employee are

testified against themselves that they are not meeting expected working target. This is may

be becasue of high work load imposed on individuals due to shortage of manpower or less

satisfied employee regid his/her effort towards expected result.

The next statment proposed to respondent was the job done by employees maintain

work accuracy, 139(65.2%) disagreed with work done by employee maintain accuracy.

Whereas, 70(32.8%) were agreed and 4(1.9%) remain neutral. This indicate that the

accuracy level of employees job is lesser that expected and lacks work accuracy. This also

happen because of high work burden in serving customers.There is no one to share high

burden in processing large number of daily transaction and this requires speed. In trying

providing speedy service, many employees made many errors. This happens because of

shortage of man power.

“The working process provides support for quality service” was the third quality

service statement proposed to the respondents and 139(65.2%) were disagreed with the

working process provides support to perform the daily job. 71(33.3%) believes that the

system provides support to do daily business or for quality service and the remaining

3(1.4%) were neutral. It may be due to employees are not provided with adequate

materials to perform their daily job such as counting matchin, printer etc. which is

mandatory to serve customer.

In relation to wether the bank had the right number of employee with the right skill

at the right place to deliver quality service is concemed and 125(58.7%)respondents replied

disagree which indicate the majority thought there was no good HRP process that facilitate

quality service and 85(39.9%) agreed. 3(1.4%) respondents were neutral. According to the
66
respondent for the statement all materials are available which helps to provide quality

service, 137(64.3%) were disagreed which indicate they think there is a shortage of

material availablity to support service giving process and 72(33.8%) agreed and 4(1.9%)

were neutral.

Employee satisfaction used as one of dependant value that can be measured by

human resource management practice. As presented on the above table 135(63.4%)

disagreed that CBE values employees contribution as a well being of the bank and

75(35.3%) were agreed, yes the bank values our contribution. The neutral respondants were

3(1.4%). From 213 respondents, 137(64.3%) responded disagree for CBE does not ignor

complaints from employee and 72(33.8%) were agreed . the remaining 4(1.9%) were

neutral. The other idea raised “I am treated with geniune respect” and 134(62.9%) beleives

they were not treated well and 77(36.2) agreed yes I am treated well. This indicate the

majority preceived that they are not treated well. This is may be because there is no one

providing them with necessary developmental opportunity, or request for salary not

considered at all by top management without revision for last six years or it may be due to

lack of recognition which provides them with promotion or support employees to love their

job.

According to the data collected from respondents on statement “the level of

employees engagement is high in CBE”, 133(62.5%) were disagreed with the above

statement and 79(37.1%) were agreed ,while 1(0.5%) were neutral. This shows the large

amount of respondents thinks the engagement level is low due to employees low

satisfaction level.

139(65.2%) were disagreed or not satisfied with the current CBE’s organizational

environment and 72(33.8%) were satisfied and 2(0.9%) neutral. This indicate that the

majority repondents are not satisfied with the current organizational environment. Similarly,

67
 144(67.6%) were disagree about the supportivness and cooperativness of CBE’s current

total environment and 67(31.5%) were agreed and 2(0.9%) were neutral.

CBE is learning organization which nurturing individual and group learning to

improve its internal and external change or to adopt with the change was the statement

proposed to resondents on the final phase of the questionnary and 124(58.2%) were

disagreed and 85(40.0%) agreed and 4(1.9%) were neutral. This indicates that respondents

beleive CBE is not a learning organization which improvise it self with the change.. When

we see about CBE has a system which involves employees new ideas to improve working

methods, there were 116(54.5%)) disagreement and 94(44.1%) agreement as well as there

were 3 (1.4%) neutral. The variation here is not much significant but the majority still

beleives CBE does not have the system to include its employees new idea to improve

working methods. Summery of Statstical descriptive of mean, standard

deviation and interpretation

Descriptive Statistics

Items Mean Std. Deviation N

HRP 2.3296 1.08407 213

Training and Development 2.5837 .87096 213

Performance Management 2.5391 .97306 213

Compensation 2.5057 1.00226 213

Promotion 2.3697 .93686 213

Organizational Performance 2.5284 .87917 213

Table 4.8 Source: own survey SPSS result

68
 To describe the mean score of the participants, mean score measurement used by Pihie (2009)

was applied where mean score of <3.39 considered as low, mean score of 3.4-3.79 as moderate and

mean score of >3.8 as high.

The above data presents the relationship of dependent variables with the

independent one by calculating mean and standard deviation In a 5-point Likert scale the

possible score ranges from 1-5 and 3 become the hypothetical average score. A calculated

mean score less than 3, which is hypothetical average, can be considered as low mean score

whereas greater than 3 can be considered as high mean score.

The above table shows that the mean for human resource planning is 2.32 and as

presented on the likert 5 point scale 3 is the average value. Which is lower than the average

shows the disagreement(lowest) value and above average shows the the agreement level of

respondents. Also the maximum is 5 and minimum is 1. Even if the mean is low the

deviation from respondent to respondent has very large dispersement. As seen on the table

the standard deviation was 1.09 and it means there is a high dispersment between

respondents. Here, the mean is 2.32 and it means the respondent thinks they beleive

human resource planning department is not working to bring quality service, employee

satisfaction and innovation to the organization. Generaly, human resource planning

department is not working at satisfactory level of respondents to support organizational

performance.

Regarding training and development, it can be seen from the above table that

participants’ total mean score was 2.58. It can be seen that the calculated mean score (2.58)

is less than 3, therefore, in the current study participants’ perceived training and

development practice in CBE was low.

Regarding performance management, the calculated mean of the respondent’s was

2.53 and It indicate that the mean is less that the average 3, so repondents think that CBE

69
has a bad performance management practice which also affects organizational

performance of quality service, employee satisfaction and innovation.

About subject compensation, there were 2.50 mean score which indicate

respondents are unsatisfied with the current compensation system of the bank. Also the

above data presents that 2.36 of mean score were recorded for promotional practice and it

indicate that respondent preceived there is a bad promotional practice in CBE.

4.3 Correlation Analysis

Correlation analysis was used to examine the extent the independent variables

associates with the dependent variable. A correlation refers to a quantifiable relationship

between two variables, and the statistic that provides an index of that relationship is a

correlation coefficient r, which is a measure of relationship between two interval or ratio

variables. The correlation coefficient is scaled so that it is always between -1 and +1. When

r is close to 0 has a meaning of little relationship between the variables and the further

away from 0 r is, in either the positive or negative direction, the greater the relationship

between the two variables. If there is perfect linear relationship with positive slope between

the two variables, we have a correlation coefficient of 1; if there is positive correlation,

whenever one variable has a high (low) value, so does the other. If there is a perfect linear

relationship with negative slope between the two variables, we have a correlation

coefficient of -1; if there is negative correlation, whenever one variable has a high (low)

value; the other has a low (high) value. A correlation coefficient of 0 means that there is no

linear relationship between the variables (Valerie and McColl, 2005).

70
 Correlations
Human TD PM Compensati Promotion Organizatio
Resource on nal_Perform
Planning ance
Pearson
1
Correlation
Human Resource
Sig. (2-
Planning
tailed)
N 213
Pearson
.621** 1
Correlation
TD Sig. (2-
.000
tailed)
N 213 213
Pearson
.560** .678** 1
Correlation
PM Sig. (2-
.000 .000
tailed)
N 213 213 213
Pearson
.546** .609** .641** 1
Correlation
Compensation Sig. (2-
.000 .000 .000
tailed)
N 213 213 213 213
Pearson
.326** .386** .382** .487** 1
Correlation
Promotion Sig. (2-
.000 .000 .000 .000
tailed)
N 213 213 213 213 213
Pearson
.686** .752** .738** .672** .401** 1
Correlation
Organizational_Perfor
Sig. (2-
mance .000 .000 .000 .000 .000
tailed)
N 213 213 213 213 213 213
**. Correlation is significant at the 0.01 level (2-tailed).
Table 4.9 Source: Own Study,2019

As we can see from the above correlation table, Human Resource Planning,

Training and Developement, Performance Management, Compensation and Promotional

practice has a significat correlation with Organizational Performance. Organizational

71
Performance with human resource planning, Training and development, performance

management, compensation, promotional practices were r=.686, p<.001, r=.752, p<.001,

r=.738,p<.001, r=.672,p<.001,and r=.401, p<.001, respectively. Based on this data we can

interprate that the dependent variable organizational performance has straight or strong

positive correlation with HRP,TD,PM,Compensation and moderate correlation with

promotion.

When increase the efficiency on human resource planning, there will be also an

increase on organizational performance. Since the Pearson Correlation of HRP is close to 1

(.686), the relationship shows that there is a strong positive relationship which increase in

one also contribute on the increase of the other and vise versa.

Also, training and development has a positive significant relationship(.752 close to

1) with organizational performance. An increase on the quality of the training and

development also creats an increase on organizational performance.

The other independent variable performance management has a correlation of .738

which is very close to 1. It means that a good performance management practice

significantly affect the performance of management. They are on the straight line of

relationship. Increase on performance management also support increase on organizational

performance.

Compensation management has a correlation cofficient of .672 which is close to 1.

Therefore, the relationship is positive significant relationship and an increase on

compensation there will be an increase on the performance of the organization.

Finaly, promotion has a moderate positive relationship with organizational

performance with the cofficient of .401 which closes to 0 than 1.

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 4.4 Regression Analysis

Regression helps to predict the value of a variable based on the value of another

variable. It is a powerful statstical method that allows to examine the relationship between

two or more variables of interest. Regression analysis is a statistical method to deal with

the formulation of mathematical model depicting relationship amongst variables which can

be used for the purpose of prediction of the values of dependent variable, given the values

of the independent variable. (Kothari, 2004)

4.4.1 Regression Model Summary of Organizational Performance

Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
a
1 .849 .721 .714 .46988
a. Predictors: (Constant), Promotion, Human Resource Planning, PM,
Compensation, TD
Source: Own Study, 2019. Table : 4.10

As we can see from the above data table the R value represents the simple

correlation and it is ..849, which indicates a high degree of correlation. The R Square value

indicate how much of the total variation in the dependent variables, in this case

organizational performance, can be explained by the independent

variables(HRP,TD,PM,Compensation and Promotional Practice). Therefore, organizational

performance is explained by the independent variables at .721 or 72.1% and it mean

organizational performance is explained 72.1% by those human resource managment

practices and the remaining explained by other factors out of those independents.

4.4.2 ANOVA Table for Organizational Performance

ANOVA table reports how well the regression equation fits the data or predict the

dependent variable.

The below Anova table indicate that the regression model predicts the dependent

variable significantly. Here, P<0.0005, which is less than 0.05, and indicates that, overall,

73
 the regression model statistically significantly predicts the outcome variables and it is a

good fit for the data.

ANOVAa
Model Sum of df Mean Square F Sig.
Squares
Regression 118.160 5 23.632 107.035 .000b
1 Residual 45.703 207 .221
Total 163.863 212
a. Dependent Variable: Organizational_Performance
b. Predictors: (Constant), Promotion, Human Resource Planning, PM,
Compensation, TD

Table 4.14 Source: self Study

4.4.3 Coefficients Table for Organizational Performance

Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) .232 .114 2.038 .043
Human Resource
.198 .040 .244 4.959 .000
Planning
1 TD .303 .056 .301 5.374 .000
PM .258 .050 .286 5.196 .000
Compensation .145 .047 .165 3.074 .002
Promotion .014 .040 .015 .362 .718
a. Dependent Variable: Organizational_Performance

Table 4.15

The above table shows the extent to which each independent variables influence the

the other called dependent variable. The relative importance of independent variables in

contributing to the dependent variable is explained by the standardized beta coefficient.

The beta value is positive and it explains that a higher positive effect of human resource

management practices with higher organizational performance. From the independent

74
variables, Training and Development is more significant and statistically meaningful. This

can be interpreted as a certain improvement on training and development employee

satisfaction will increase by 30.3%. Result from the above table shows that the value for

Human Resource Planning is .198. This implies that a 1% increase in human resource

planning will affect employee satisfaction by 19.8%. Performance Management has a

value of .258 which implies that a 1% increase in performance management there will

be .258% increase in quality service. Compensation has a value of .148 and it indicate that

1% increase in compensation system effectivness the satisfaction of employee will increase

by 14.8% and lastly, promotion has no significance on employee satisfaction.

4.5 Hypothesis Testing

Hypothesis testing is based on standardized coefficients beta and P-value to test whether

the hypothesis is rejected or accepted

H.O 1: Human Resource Planning has a positive effect Organizational Performance

Ho: Human Resource Planning has no significant and positive effect on

organizational performance

Ha: Human Resource Planning has significant and positive effect on organizational

performance

H.O 2 : T&D has a positive effect on OP

Ho: Training and Development has no significant and positive effect on

organizational profitability.

Ha: Training and Development has significant and positive effect on organizational

profitability.

H.O 3: Performance Management has a positive effect on organizational performance.

Ho: Performance Management has no significant and positive effect on

organizational profitability.

75
 Ha: Performance Management has significant and positive effect on organizational

profitability.

H.O 4: Compensation has a positive effect on Organizational Performance

Ho: Compensation has no significant and positive effect on organizational

profitability.

Ha: Compensation has significant and positive effect on organizational

profitability.

H.O 5: Promotion has a negatively effect on Organizational Perfrormance.

Ho: Promotion has no significant and negative effect on organizational

profitability.

Ha: Promotion has significant and negative effect on organizational profitability.

Result Summery Table

Hypothesis Human Resource Management Practice Organizational Performance

H1 HRP β=.198
Sig=.000
Accepted
H2 Training and Development β=.303
Sig=.000
Accepted
H3 Performance Management β=.258
Sig=.000
Accepted
H4 Compensation β=.145
Sig=.002
Accepted
H5 Promotion β=.014
Sig=.718
Rejected
Table 4.21 Hypothesis Summerization Soure: Researcher Survey

76
 CHAPTER FIVE

SUMMERY, CONCLUSION AND RECOMENDATION

In Chapter four, data analysis and interpretation has been presented in professional manner.

In this chapter, major findings of the study are going to be summarized and the subsequent

conclusions are made. Based on the conclusion, recommendations are forwarded.

5.1 Summery of the Study

The study intended to see the effect of human resource management practice on

organizational performance and it takes place at Commercial Bank of Ethiopia, selected

fifteen branches and the study was planned and distributed 321 quetionnaries. There were

108 questionnaries which is not returned .

 On the demographical part approximatly closed number of female (99)and

male(114) participated and the majorit were under age group of 25-30 and exprience of

6-10 years.

 Regarding Human Resource Planning the majority 147(70%) of the respondent

were preceived that the organization does not have a good human resource planning

practice, the statstical significance also shows there were a positive relationship with

organizational performance. Since they have positive relation and the majority beleives

there is no good practice it affects organizational performance.

 Training and Development Practice were also another independent variable and

the majority(130 or 61%) were responded there were a bad training practice which

determine the quality of the service. The relationship on statstical method was positive

and significant and affect organizational performance.

 Performance Management also has a positive relationship with organizational

performance and the majority beleives there is no continious and free performance

management practice

77
  Compensation were the fourth independant variable which also the majority of

the respondents preceived that there is no good compensation system of human resource

management practice

 Promotional Practices also preceived by the majority of the respondents as a

bad practice on the organization. But insignificant to affect organizational performance

according to the statstical results.

5.2 Conclusion

At the begning, the study was made to see the real effect of human resource

practice on organizational performance, incase of Commercial Bank of Ethiopia. The

research was supported with previous evidences shows that there is a positive relationship

between two of them. Knowing the result and which independent variable has strong

significant effect on organizational performance was intended.

To identify the effect of human resource planning on organizational performance,

the researcher used five factors namely, human resource planning, training and

development, performance management, compensation and promotional practice which

was expected to have positive effet on our case.

5.2.1 Conclusion on Human Resource Planning

Human Resource Planning plays a great role for the success of any organization by

providing forcasts for human needs in advance and fill the vacant places with right number

of employee with the right qualification. Base on the responded data we can conclude that

CBE has a bad human resource planning practice which positively affect organization

performance. In CBE we can conclude that the need for human capital is not fill at the right

time, there is no good forcasting exprience before human shortage is become concern,

human need are not fill with right skill, there is no periodical revision for each branches

78
and generaly we conclude that human resource planning departement plays no good role.

Employees burden are not shared because of lack of human resource. One employee

required to do a bulky job by it self and it affects quality service and also affect employee

satisfaction.

5.2.2 Conclusion on Training and Development

Training and development helps organization to improve the skill and knowledge of

their employee. In CBE the training and development practice seems better but in

reality(survey report) the practice is contrary. Training is not given to employee at the right

time by assesing where it is neccesary. Even if the manual is there, no one used it as a

guideline . Training is provided only to meet annual plan given to the department not to

fill the skill and knowledge gap. The success of the training is not measured with the

objetive. Employee takes training after they provide them selves with the required skill but

not given when the gap is there. The training given by CBE has no capacity to solve

problems and it does not add any value to the innovativness of the organization. Employees

are not given a developmental opportunity by the bank. Generaly, the training and

development practice of the bank directly affect organizational performance

variables(quality service, employee satisfaction and innovation).

5.2.3 Conclusion on Performance Management

Based on the data collected from employee and hypothesis test, we can conclude

that performance appraisal is not take place consistently through out the organization. The

measurments are not even clear and the measurment process are not free from biases. Even

if, all employees have a job discription which stated on the paper, measurment process

dose not follow it. Performance measurment takes place to jugde employees and to find

fault not just to make sure the organization is going on the right track. After performance is

most of the time feedback is not forwarded to the employee.

79
 Generaly, performance management practice of the bank is bad according to the

data collected from those samples and the disatisfaction affects the quality of the service

and employee satisfaction of performance indicators.

5.2.4 Conclusion on Compensation System

According to the data analysis, the majority were disagreed about good

compensation practice have been expreinced in CBE. The compensation system is not

precived fair by the majority and also does not accepted fairness related to the industry.

The benefit given to employees are also not enough . the majority thinks his/her self are not

satisfied with the current salary and benefit of the bank. The compensation system is not

based on the performance and it is not initiate employees to highly engage in their work for

the sucess of their organization. Compensation affects employee satisfaction very

significantly and also affect quality service,which unsatisfied employee can be a source of

much discrepancy.

5.3 Recommendation

Based on the conclusion which is drived from the data human resource

management has a positive effect on organizational performance and to improve human

resource management practice the following recommendations has been forwarded;

 CBE should give a proper consideration and improve human resource planning

department. When shortage of human resource is there, the burden shared by individuals

will increase and disatisfy employees. Even, it could be a source of complaints from

customer due to waiting long time to be served. If all human resource gaps fill on the

time the quality of the service also will increase. Therefore, it is recommended that a

serious of consideration has to be given for human resource planning practice of the bank

 Even if CBE has a training center , the training given to employee should be

presented timely which can fill the gap of skill and knowledge. Unless it is done for

80
increasing organizational performance, it should not be given. So, who facilitate

trainings should take a proper assesment where did gaps shown, how it should be fill and

related to the gap trainings should be prepared. Developmental opportunities also should

be prepared to the employees. Helping employees to improve him/her self mean

directly the organization help to improve.

 Performance Management is essential for any organization to see where we

were and where we are now. A good designed performance management could be a

source for continious improvement on performance. Since, CBE is big and employeed

more than 33,000 employees, a proper performance management helps to facilitate a

good competency level on the market. Therefore, CBE should followup the performance

management process closely and avoid biases on the process. The measurment

mechanisms also should be clear and mesaured accordingly.

 Compensation system of the bank preceived unfair related to the industry and

the bank should make an review on the industry and should make adjustment if the

variance is crucial. The benefit packages also should be revised and make a proper

adjustment.

 Finaly, as we have discussed on promotional practice, it is a sensetive because

everyone wants to see him/her self in a better position for many reseons. According to

Maslow’s heirarchy of needs theory people seeks what they do not have. They are

always stretch to hold what they are unhold. Therefore, CBE should provide equal, fair,

free from biase promotion practice so that it could maintain employees satisfaction and

increase quality service.

81
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 Annex A:

Addis Ababa University School of Commerce

Post Graduate Studies

Masters of Human Resource Management

Questionnaire to be filled by employees of Commercial Bank of Ethiopia, West Addis Ababa

District selected 15 branches.

Dear Respondent,

I would like to thank you in advance for your willingness and cooperation in filling this

Questionnaire devoting your valuable time.

I assure you that the information you provide will be kept confidential and will only be utilized

for the study purpose. If you have any question or enquiry, please do not hesitate to contact me at

any time through the following address: e-mail bisratlemma1981@gmail.com Tel: +251913846060

Part One: Demographic Question

Please put a check (√ ) mark just inside the given box in front of each alternative.

1. Gender

1.Male 2.Female

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 2. Age

1. Under 25 years old 3. 36-45 years old

2. 25-35 years old 4. 46 and above years old

3. Educational Attainment

1. Diploma 3. Master’s Degree

2. Bachelor Degree 4. Other, please specify__________

4. For how long have you been employed in this company? (Tenure)

1. 1 -5 years 3. 11-15 years

2. 6 - 10 years 4. >15 years

5. Position in the Organization

1. Clerical 2. Professional 3. Managerial

Part Two: Human Resource Management Practices and organizational Performance

Questionnaire

Please put (√) mark against each question that indicate your level of agreement for each
question.

5= Strongly Agree, 4 =Agree, 3= Neutral, 2= Disagree, 1=Strongly Disagree

S Neither
N Agree
o. Items Strongly Nor Strongly
Disagree Disagree Disagree Agree Agree
1 2 3 4 5
1. Human Resource Planning

The1 need for human capital fills at the right time

Human
2 resource department is palying good role
to fill gaps
Human
3 resource department of CBE forcasts the
right human needs before human shortage
becomes concern

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 Human Resource Department of CBE fills
human need with right skill
Human Resource needs for each
department(branch) revised periodically
2. Trainning and Development

CBE
1 has a good training and development
practices
Training
2 is given to employees at the right time
with the assesment of needs
There
3 are a training manuals that are prepared to
facilitate the training
Training
4 is provided with specific objective to
attain
The success of the training measured in
comparision to the objectives
The5 training provided by HRM department is
implemented only to meet their annual plan not
to fill the skill and knowledge gap
The6 training which is given to employee has the
capacity to solve the employees skill and
knowledge gap
The training given by CBE improves
organizational Innovativeness
Employees
7 are given a developmental
opportunities which help them to prepare
themselves for future positional vacants
3. Performance Management ( appraisal)

Performance
1 appraisal takes place consistently
through out the organization
Performance
2 measurment mechanisims are clear
The measurement process are free from bias

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 All3employees has job description and measured
accordingly
In 4CBE, Performance management conducted to
make sure employees are going according to the
expectation of the organization, not to judge
hardly
After
5 performance is measured feedbacks are
provided to employees of CBE
4. Compensation (Reward Management)

The1 compensation system of CBE is perceived

fair
Salary
2 of the bank is fair related to the industry
The3 benefits given to employees is based on
their performance
I am
4 satisfied with the current salary
I am satisfied with the current benefit package
The5 compensation system currently implmented
initiate employees to strive for the success of
their organization and to achive great
performance
The6 benefit package is dsitributed fairly
5. Promotional Practices

Human
1 Resource Management of CBE has a
procedure for promotion
The2 promotional practice process is free from
any biases of religion, ethnics, and relatedness
favor and fair only follow procedure
Promotional
3 practices are attached with fair level
of performance management and equal chance is
given to equal level of employees

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 The4 complaint level of employee is high in
promotion and affect employees commitment
and organization performance
6. Organizational performance Items

1. Quality Service

you met the work target on time

The job done by employees maintain work
accuracy
The working process provides support for
quality service
The organization has right number of employees
at the right time with the right skill to to deleiver
quality service
All materials are available which helps to
provide quality service
2. Emplyee Satisfaction

CBE values employees contribution as well

being of the bank
CBE does not ignore complaints from employees
I am treated with genuine respect
The level of employees engagement is high in
CBE
Employees of CBE are satisfied with their
organizational environment
The total environment of CBE is supportive and
cooperative which facilitate employees
satisfaction
1
3. Innovation

CBE is a learning organization which nurturing

individual and group learning to improve its

91
internal and external change
CBE
2 has a system which involves employees
new ideas to improve working methods

If you have any additional points to raise,please write here ,

..................................................................................................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

Thanks for your cooperation

92