Human resources management practices and organisational performance in the Nepalese development banks: Insights from structural equation modelling

Abstract

Purpose: Effective human resource management (HRM) practices are essential factors that provide organizations with a competitive edge and contribute to their overall performance. This study examines the impact of HRM practices, including recruitment and selection (RS), training and development (TD), compensation policies (CPs), and performance appraisal (PA), on the organizational performance (OP) of the Nepalese development banks (DBs). Design/methodology/approach: The study followed a causal-comparative research approach. It employed a structured questionnaire to gather the necessary data from 257 working representatives of the ten selected Nepalese DBs. Confirmatory factor analysis (CFA) and structural equation modeling (SEM) were used to examine the association between the variables and validate the study hypotheses. Findings: The HRM practices exhibit a significant and positive association with OP (β = 0.910; p < 0.05), indicating their influence on achieving organisational success. Such findings offer a pragmatic perspective for achieving HRM excellence and organisational effectiveness in the Nepalese DBs. Research constraints/implications: Analysis of cross-sectional data from development banks cannot be extrapolated to other sectors. This study emphasises the importance of compensation, performance measurement, hiring and selection, development, and training in improving OP, confirming and expanding prior findings. These insights may benefit policymakers, HR managers, and executives in enhancing HR operations by improving employee performance and business productivity.Originality/value: This study's unique contribution is its examination of HRM dynamics and their direct impact on OP, notably in the Nepalese DBs. The DBs may optimise their HR, enhancing OP and a long-lasting competitive advantage.