Human Resource Management Practices as Antecedents of Employee Competencies: Empirical Evidence from the Banking Industry

Abstract

Drawing upon the human capital theory, this article articulates the impact of different human resource management (HRM) practices on various dimensions of employee competence in the Indian context. The survey method was employed to collect data from 325 banking employees including managers and non-managers employed in the State Bank of India, the Bank of Baroda, the Housing Development Finance Corporation and the Industrial Credit and Investment Corporation of India. The self-competence, team competence and social competence are the dimensions of employee competencies and HRM practices include recruitment and selection, training and development, employee involvement and performance appraisal. The validity and reliability of the variables are evaluated through the confirmatory factor analysis and the hypotheses are tested using structural equation modelling. The study’s analysis revealed mixed results wherein a significant and positive impact was found between some HRM practices and employee competencies and an insignificant impact between other HRM practices and employee competencies. The study’s findings would serve as a guide to the management and policymakers of banks for developing and enhancing the desired employee competencies by investing in HRM practices, thereby better performance at the organization level. This research work enriches the existing literature on HRM and development by empirically validating the HRM-competence linkages in the Indian banking context, where studies of this nature are minimal.