Corporate Governance across Ethics, Culture & Citizenship; What to give and what to expect? The Effects of HRM Practices on Organizational Performance in Lebanese banks Ali H. Halawi Lebanese International University Wael S. Zaraket Prince Mohammad Bin Fahd University

The effects of HRM practices on organizational performance in Lebanese banks Focus points HRM and HRM practices HRM system Mediating variables HRM practices and Ethical behavior HRM practices and Performance

The effects of HRM practices on organizational performance in Lebanese banks HRM and HRM practices Essential factors in creating competitive advantage Resource based view (Barney 1991) Four people/employee features (Wright & McMahan 1992): 1. Individual performance 2. Exceptional skills 3. Un-copied human capital investment 4. Un-replaceable Human resources

The effects of HRM practices on organizational performance in Lebanese banks HRM theories 3 types of theories - Guest (1997): 1) Strategic Theories 2) Descriptive Theories 3) Normative Theories 3 types of theories - Boselie et al. (2005): 1) Contingency Theory 2) Resource-based view 3) AMO theory (Ability, Motivation, Opportunity)

The effects of HRM practices on organizational performance in Lebanese banks Models of HRM Harvard Model (focuses on employee commitment, resulting that employees have be consistent, capable and cost effective) Michigan Model (emphasizes on hard HRM—meaning, people have to be managed like any other resources: acquired cheaply, used economically, developed and abused fully) Guest Model ( operates on the conviction that a set of incorporated HRM practices will lead to superior individual and organizational performance ) Warwick Model ( identifies the influence of personnel on HR strategy content and emphasizes recognizing the inner (organizational) and external (environmental) context )

The effects of HRM practices on organizational performance in Lebanese banks Variables affecting the relationship between HR and Organizational performance 1.HRM Practices 2.Organizational Citizenship Behaviors( OCBs) 3.Job Satisfaction 4.Employee Engagement 5.Employee Motivation 6.HR Flexibility 7.Employee Attrition 8.Employee Retention 9.Employee Performance

The effects of HRM practices on organizational performance in Lebanese banks HRM Practices (Independent Variables) A set of distinct yet interrelated activities, functions and processes aimed at attracting, developing and maintaining an Organization’s human resources (Lado & Wilson, 1994). Employee Participation Compensation & Benefits Management & Reward System Career Planning System, Training & Development Employee Empowerment

The effects of HRM practices on organizational performance in Lebanese banks Mediating variables Organizational Citizenship Behavior Job Satisfaction Employee Engagement Employee Motivation HR Flexibility

The effects of HRM practices on organizational performance in Lebanese banks Organizational Performance (Dependent Variable) Employee Attrition Employee Retention Employee Performance

The effects of HRM practices on organizational performance in Lebanese banks HRM Practices and ethical behavior When organizations invest in an employees through training and education, the employee becomes ethically rather than contractually related to the organization. Normative type of organizational commitment: The sense that people should stay with their current employers may result from personal work philosophies or more general codes of right and wrong developed over the course of their lives. Build a sense of obligation-based commitment among employees

The effects of HRM practices on organizational performance in Lebanese banks Hypotheses H1.HRM practices affect employee attrition. H2.HRM practices affect employee retention. H3.HRM practices affect employee performance. H4.HRM practices affect organizational citizenship behaviors. H5.HRM practices affect job satisfaction. H6.HRM practices affect employee engagement. H7.HRM practices affect employee motivation. H8.HRM practices affect HR flexibility. H9.Organizational citizenship behaviors affect employee attrition. H10.Organizational citizenship behaviors affect employee retention. H11.Organizational citizenship behaviors affect employee performance. H12.Job satisfaction affects employee attrition. H13.Job satisfaction affects employee retention. H14.Job satisfaction affects employee performance. H15.Employee engagement affects employee attrition.

The effects of HRM practices on organizational performance in Lebanese banks Hypotheses (Cont’d) H16.Employee engagement affects employee retention. H17.Employee engagement affects employee performance. H18.Employee motivation affects employee attrition. H19.Employee motivation affects employee retention. H20.Employee motivation affects employee performance. H21.HR flexibility affects employee attrition. H22.HR flexibility affects employee retention. H23.HR flexibility affects employee performance.

The effects of HRM practices on organizational performance in Lebanese banks Research Framework Inputs Processes Output Financial Performance Employee Skills and Motivation Practices related to strategic planning, selection and recruiting processes, promotion & reward processes, employee training and development programs, employee performance & review processes Reaching intended outcomes, return on assets, market-to-book ratios, percent growth, quality control measures, perceived organizational performance and perceived market value Output Job Performance

The effects of HRM practices on organizational performance in Lebanese banks Scope of the study This study focuses on the impact of HRM practices on Organizational performance in the Lebanese banking sector. Research was conducted on various banks from the Alfa list of top ten Lebanese banks

The effects of HRM practices on organizational performance in Lebanese banks Profile of Respondents VariableFrequencyPercentage Gender Male Female Age and above52.2 Position / Title** Line Manager HR Leader Top Management Note: Position/Title** Top Management: CEO, Managing Director, General Manager: HR Leader: HR Director, Sr. HR Manager, HR Manager, HR Leader; Line Manager: Any Line Manager in manufacturing, such as Manufacturing Manager, Production Manager, Quality Manager and others.

The effects of HRM practices on organizational performance in Lebanese banks Results H1.HRM practices affect employee attrition. (Not supported) H2.HRM practices affect employee retention. (Supported) H3.HRM practices affect employee performance. (Not supported) H4.HRM practices affect organizational citizenship behaviors. (Supported) H5.HRM practices affect job satisfaction. (Supported) H6.HRM practices affect employee engagement. (Supported) H7.HRM practices affect employee motivation. (Supported) H8.HRM practices affect HR flexibility. (Supported) H9.OCBs affect employee attrition. (Not supported) H10. OCBs affect employee retention. (Not supported) H11. OCBs affect employee performance. (Not supported) H12.Job satisfaction affects employee attrition. (Supported) H13.Job satisfaction affects employee retention. (Not supported) H14.Job satisfaction affects employee performance. (Not supported) H15.Employee engagement affects employee attrition. (Supported)

The effects of HRM practices on organizational performance in Lebanese banks Results (Cont’d) H16.Employee engagement affects employee retention. (Supported) H17.Employee engagement affects employee performance. (Supported) H18.Employee motivation affects employee attrition. (Supported) H19.Employee motivation affects employee retention. (Supported) H20.Employee motivation affects employee performance. (Not supported) H21.HR flexibility affects employee attrition. (Supported) H22.HR flexibility affects employee retention. (Not supported) H23.HR flexibility affects employee performance. (Not supported)

The effects of HRM practices on organizational performance in Lebanese banks Additional results Results from the test found new associations between variables that have significant influences: Employee Motivation has a direct, positive impact on Job Satisfaction, Employee Engagement, and HR Flexibility. Employee Engagement has a direct, positive impact on OCBs. Employee Performance has a direct, significant, and positive impact on Employee Retention; and has a direct, significant and negative impact on Employee Attrition. Employee Attrition has a direct, significant and negative impact on Employee Retention.

The effects of HRM practices on organizational performance in Lebanese banks Structure Model

The effects of HRM practices on organizational performance in Lebanese banks Limitations The study was conducted in Lebanon and was limited to one sector. And so, the conclusions are only representative of that context. Those who intend to do further research on the topic should include other sectors, particularly insurance companies and financial institutions in general. Doing this will reinforce studies on HRM practices by adding varied, cross- sectorial contexts. This study focuses on HRM practices in general; future studies could examine each individual HRM practice, such as compensation and benefits management and reward systems, to determine the extent of their effects on Organizational performance. Finally, it would be beneficial to research industries other than banking, such as service, hospitality and airline.

The effects of HRM practices on organizational performance in Lebanese banks Conclusion This study has clarified the direct positive relationships between variables. It has discovered additional relationships that could help as points for future studies The results confirm HRM practices, demonstrating that they are paramount to long-term sustainable growth and success in organizations.

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