International Review of Management and Marketing

Vol. 2, No. 1, 2012, pp.52-58

ISSN: 2146-4405
www.econjournals.com

Human Resource Management Practices and Employees’ Satisfaction

Towards Private Banking Sector in Bangladesh

Md. Tofael Hossain Majumder

Department of Accounting and Information Systems,
Comilla University, Comilla, Bangladesh.
Phone: +8801816436176. Email: tofael_cou@yahoo.com

ABSTRACT: Dramatic advances of Information and Communication Technology (ICT), changing

mix and personal values of the workforce, emergence of the knowledge economy and increasing
global competition have created enormous challenges on organizations. To cope with the challenges
efficiently, human resource has been considered as one of the most important factors in today’s hyper-
competitive market place. The focus of this study is to gain an insight into the current HRM practices
and its impact on employee’s satisfaction on the private banking sector in Bangladesh. For conducting
this research, 100 bank employees are selected from the chosen banks and out of this 88 employees
responses properly, the response rate is 88 percent. The questionnaire consists of different questions
on nine HRM dimensions such as recruitment and selection systems, compensation package, job
security, career growth, training and development, management style, job design and responsibilities,
reward and motivation and working environment. The questionnaire was developed by using a five
point Likert scale. In this study, some statistical measures such as Z-test, mean and proportion analysis
is used to examine employee’s satisfaction. The study reveals that all HRM dimensions exercised in
the private banking sector of Bangladesh does not satisfied to the employees equally. Most of the
employees are dissatisfied with compensation package followed by reward and motivation, career
growth, training and development, management style, and job design and responsibilities. So, these
HRM dimensions quality should be improved for the betterment of the bank’s success.

Keywords: Human Resource Management; Employees Satisfaction; Private Bank; Z-test.

JEL Classifications: M10; M12; M19

1. INTRODUCTION
Dramatic advances of Information and Communication Technology (ICT), changing mix and
personal values of the workforce, emergence of the knowledge economy and increasing global
competition have created enormous challenges on organizations. To cope with the challenges
efficiently, human resource has been considered as one of the most important factors in today’s hyper-
competitive market place. In the context of a developing economy like Bangladesh, where the need for
formation of capital is pressing, where developments in the field of industrial and bank management
are dynamic, and where financial crises accompanying pangs of economic growth are frequent, the
challenges posed by HRM are great importance; and, as a sequel, exploring the possibilities of the
application of HRM becomes a very relevant field of enquiry and research. Beerdwell et. al. (1984)
defined HRM as a strategic approach to the management of human resources that involves all
management decisions and actions that affect the relationship between the organization and
employees. Beardwell et al., (2004) regard HRM as the philosophy, policies, procedures, and practices
related to the management of people within an organization. Senyucel’s (2009) sees HRM as a
combination of people-centered management practices that recognizes employees as assets and geared
to creating and maintaining skilful and committed workforce for achieving organizational goals. HRM
is a distinctive approach to employment management which seeks to achieve competitive advantage
through the strategic development of a highly committed and capable workforce using an integrated

Electronic copy available at: https://ssrn.com/abstract=2952646

Human Resource Management (HRM) Practices and Employees’ Satisfaction towards Private 53
Banking Sector in Bangladesh

array of cultural, structural and personnel techniques (Storey, 2001). Human resource measurement is
about valuing the contribution people make to the success of an organization, and the term ‘human
capital’ describes the contribution made by human skills and knowledge to the production of goods
and services (Becker, 1993). From these definitions, it is clear that efficient HRM practices are
inevitable factor in determining the growth and prospects of any organization. Human resource is the
most precious asset and delicate factor of production. In this global competitive world, it is necessary
to retain skilled workers in the organization by efficient HRM practices. Every organization operates
its activities with the support of human resource which includes top level managers, executives,
supervisors and other employees. The overall performance of any organization depends upon the
extent to which human resource is effectively utilized. Highlighting the importance of people in
organization, Khera (1999) opined that today when most business houses are obsessed with Total
Quality Management (TQM) in order to stay ahead of competition, very few organizations realize that
their most precious assets are their employees. Due to lack of efficient HRM practices reduces
employee’s satisfaction towards their organization and ultimately that affects their commitment to the
organization.

2. OBJECTIVES OF THE STUDY

The objectives of the study are to measure employees’ satisfaction on the HRM practices of
private banking sector in Bangladesh. To that end, the specific objectives are:
 To provide an overview and analysis of HRM practices;
 To focus the dimensions of HRM practices;
 To propose a test for measuring employee’s satisfaction by HRM practices;
 To examine weak points of HRM practices which affects employees’ satisfaction;
 To provide some suggestions for improving HRM practices and employee’s satisfaction.

3. LITERATURE REVIEW
Human resource management (HRM) is considered a critical organizational resource that
helps an organization sustain its effectiveness. It is one important area that influences a number of
employees' attitudes and behavior such as intent to leave, levels of job satisfaction, and organizational
commitment (Lee & Heard, 2000). Pfeffer (1998) suggested that soft or high commitment human
resource management practices are those that generate trust in employees and these practices include
giving employees empowerment and involvement in decision making; extensive communication about
functioning and performance of the employees service; designing training for skills and personal
development of employees; selective hiring; team-working where idea are pooled and creative
solutions are encouraged; rewards system that commensurate with effort; reduction of status between
the management and staff and all workers are valued regardless of their role. According to Macky &
Boxall (2007), the scientific literature assumes a causal link flowing from HRM practices to
organizational performance via the responses of employees. Organizations that do not pay equitably
compared to others may lose their employee’s because of the non-competitive compensation package
(Adams, 1965). According to Lawler (2005), society has entered a new era in the relationship between
organizations and their employees. In this new era, people are the primary source for a company’s
competitive advantage and organizational prosperity and survival depends on how employees are
treated. The ‘human’ aspect of HRM is concerned with the relationship between employer and
employee and it associated with the human relations movement and the concept of high commitment
work practices developed by (Walton, 1985).
The best Human Resource practices areas are recruitment and selection, socialization, job
design, training, communication/participation, career development, performance management,
employee reward and job security (Huselid, 1995). It is plausible that when employees judge the
organization to be fair and supportive in their treatment particularly with regards to the availability and
frequency of promotional opportunities, adequacy of pay and good supervision, positive feelings of
well being will be created, which is likely to stimulate that to reciprocate by increasing their loyalty to
the organization and reducing turnover (Nasurdin et. al., 2001). The motivation and opportunity
focused bundles of Human Resource practices positively related to affective commitment and
negatively related to turnover (Gardner et. al., 2007). Wayne et. al. (1997) suggested that HRM
practices that signaled the organization's intentions to invest in employees (such as developmental

Electronic copy available at: https://ssrn.com/abstract=2952646

International Review of Management and Marketing, Vol. 2, No.1, 2012, pp.52-58 54

experiences and training) produced higher levels of affective organizational commitment. HR

practices such as pay, benefits and training are negatively related to turnover because they motivate
employees and "lock" them to their jobs (Lazear, 1986; Madrian, 1994; Gruber & Madrian, 1994).
Shaw et al. (1998) indicate that involuntary turnover is affected by staffing practices (recruitment and
selection process) and employee monitoring (performance appraisal). DeCenzo and Robbins (1996)
opine that employee training has become increasingly important as job have become more
sophisticated and influenced by technological changes. Bernardin and Russel (1993) opine that over
the years, training has become increasingly popular as HR tool for improving employee and
managerial performance in organization. Buck and Watson’s (2002) indicated nine important HRM
practices such as decentralization, Compensation, Participation, training, development, employment
security, social interactions, management style, communications, and performance appraisal.
According to Klaus et al. (2003), through better job assignment or work design, employees may
display greater commitment, leading to better job performance.
On the basis of the above literature review, the study consider the following dimensions of
HRM practices have impacts on employees’ satisfaction towards organization such as recruitment and
selection systems, compensation package, job security, career growth, training and development,
management style, job design and responsibilities, reward and motivation, and working environment.

4. METHODOLOGY OF THE STUDY

This paper is based on both primary and secondary data. Primary data were collected through
a structured questionnaire which was administered personally to the bank employees. Convenient
sample technique has been used to interview the employees. The target population of this study was
employees in Dhaka city who are serving as a banker of different private banks. Among various banks,
this study only considered 20 private commercial banks. For conducting this research, 100 bank
employees are selected from the chosen banks and out of this 88 employees responses properly, the
response rate is 88 percent. The questionnaire consists of different questions on nine HRM dimensions
such as recruitment and selection systems, compensation package, job security, career growth, training
and development, management style, job design and responsibilities, reward and motivation and
working environment. The questionnaire was developed by using a five point Likert scale, whereas 1
= dissatisfied, 2 = some how satisfied, 3 = satisfied, 4 = moderately satisfied, 5 = highly satisfied. But
some secondary data have been used in the study. The secondary data used in the study have been
collected from related journals, books, newspapers and internet, etc. In this study, some statistical
measures such as Z-test, mean and proportion analysis is used to examine employee’s satisfaction.

5. HYPOTHESES DEVELOPMENT
On the basis of the various factors affecting on HRM practices, the following hypotheses are
developed for the study:-
H1: Employees’ are satisfied on “Recruitment and selection systems”.
H2: Employees’ are satisfied on “Compensation package”.
H3: Employees’ are satisfied on “Job security”.
H4: Employees’ are satisfied on “Career growth”.
H5: Employees’ are satisfied on “Training and development”.
H6: Employees’ are satisfied on “Management style”.
H7: Employees’ are satisfied on “Job design and responsibilities”.
H8: Employees’ are satisfied on “Reward and motivation”.
H9: Employees’ are satisfied on “Working environment”.
Human Resource Management (HRM) Practices and Employees’ Satisfaction towards Private 55
Banking Sector in Bangladesh

6. ANALYSIS AND FINDINGS

6.1 H1: Employees’ are satisfied on “Recruitment and selection systems”:
It is assumed from the hypothesis that employees are satisfied on the current recruitment and selection
systems of their bank i.e. the recruitment system is fair and appropriate for the appointment to the job.
Table 1 shows that at 0.05 level of significance (two tailed test), table value (1.96) is greater than
calculated value (Z = 0.55). So, the null hypothesis is accepted and hence, we conclude that employees
are satisfied on recruitment and selection systems of their bank.

Table 1. Computation of Z value

Employees Satisfaction N Mean Standard Standard Z Value Mean
Dimensions Deviation Error (Calculated Rank
value)
Recruitment and Selection 88 3.06 0.99 0.11 0.55 01
Systems
Compensation Package 88 2.03 0.99 0.11 8.82 09
Job Security 88 3.03 1.17 0.12 0.25 02
Career Growth 88 2.13 0.98 0.10 8.7 07
Training and Development 88 2.30 1.03 0.11 6.36 06
Management Style 88 2.49 1.03 0.11 4.64 05
Job Design and 88 2.54 1.00 0.11 4.18 04
Responsibilities
Reward and Motivation 88 2.10 1.03 0.11 8.18 08
Working Environment 88 3.02 1.13 0.12 0.17 03

6.2 H2: Employees’ are satisfied on “Compensation package”:

This hypothesis indicates that employees are satisfied with present salary, increment allocation method
and other compensation packages. Table 1 shows that at 0.05 level of significance (two tailed test),
table value (1.96) is less than calculated value (Z =8.82). So, the null hypothesis is rejected and hence,
we conclude that employees are not satisfied on compensation package of their bank.

6.3 H3: Employees’ are satisfied on “Job security”.

It is assumed from this hypothesis that employees are satisfied with security to their job. Table 1
shows that at 0.05 level of significance (two tailed test), table value (1.96) is greater than calculated
value (Z =0.25). So, the null hypothesis is accepted and hence, we conclude that employees are
satisfied on job security of their bank.

6.4 H4: Employees’ are satisfied on “Career growth”.

This hypothesis indicates that employees are enjoy enough space for his/her career growth.Table 1
shows that at 0.05 level of significance (two tailed test), table value (1.96) is less than calculated value
(Z =8.7). So, the null hypothesis is rejected and hence, we conclude that employees are not satisfied on
career growth of their bank.

6.5 H5: Employees’ are satisfied on “Training and development”.

This hypothesis indicates that training and development program are available in the bank and
employees are satisfied on that program. Table 1 shows that at 0.05 level of significance (two tailed
test), table value (1.96) is less than calculated value (Z =6.36). So, the null hypothesis is rejected and
hence, we conclude that employees are not satisfied on training and development of their bank.

6.6 H6: Employees’ are satisfied on “Management style”.

This hypothesis indicates that management style is very flexible for employees and they involved with
the managerial decision making. Table 1 shows that at 0.05 level of significance (two tailed test), table
value (1.96) is less than calculated value (Z =4.64). So, the null hypothesis is rejected and hence, we
conclude that employees are not satisfied on management style of their bank.
International Review of Management and Marketing, Vol. 2, No.1, 2012, pp.52-58 56

6.7 H7: Employees’ are satisfied on “Job design and responsibilities”.

The hypothesis indicates that job is properly designed and employees are easily performed their task.
Employees receive fair treatment, recognition and overall quality supervision from boss. Table 1
shows that at 0.05 level of significance (two tailed test), table value (1.96) is less than calculated value
(Z =4.18). So, the null hypothesis is rejected and hence, we conclude that employees are not satisfied
on job design and responsibilities of their bank.

6.8 H8: Employees’ are satisfied on “Reward and motivation”.

The hypothesis indicates that various financial and non-financial reward and motivation system is
present in their bank, employees are satisfied on that system. Table 1 shows that at 0.05 level of
significance (two tailed test), table value (1.96) is less than calculated value (Z =8.18). So, the null
hypothesis is rejected and hence, we conclude that employees are not satisfied on reward and
motivation of their bank.

6.9 H9: Employees’ are satisfied on “Working environment”.

This hypothesis indicates that the physical working environment is very conducive for satisfaction at
large. Table 1 shows that at 0.05 level of significance (two tailed test), table value (1.96) is greater
than calculated value (Z =0.17). So, the null hypothesis is accepted and hence, we conclude that
employees are satisfied on working environment of their bank.
From the above hypotheses testing it shows that employees are satisfied on some dimensions
of HRM practices such as recruitment and selection systems (mean rank-01), job security (mean rank-
02) and working environment (mean rank-03).The hypotheses test also shows that employees are not
satisfied on some dimensions such as job design and responsibilities (mean rank-04), management
style (mean rank-05), training and development (mean rank-06), career growth (mean rank-07), reward
and motivation (mean rank-08) and compensation package (mean rank-09).Therefore, it is clear that
all dimensions are not equally satisfied to employees. It is also very clear from the Table 2 which
dimensions highly satisfied or dissatisfied to employees.

Table 2. Percentage of employees on different levels of Satisfaction of HRM dimensions

RSS1 CP2 JS3 CG4 TD5 MS6 JDR7 RM8 WE9
1 = Dissatisfied 7.95 32.95 9.09 30.68 22.73 13.64 11.36 31.82 9.09
2 = Some how 17.05 40.91 19.32 37.5 42.05 45.45 43.18 38.64 22.73
Satisfied
3 = Satisfied 43.18 19.32 39.77 22.73 22.73 25 29.55 20.45 36.36
4 = Moderately 25 3.41 22.73 6.82 7.95 10.23 11.36 5.68 20.45
Satisfied
5 = Highly 6.82 3.41 9.09 2.27 4.55 5.68 4.55 3.41 11.36
Satisfied
Totals 100 100 100 100 100 100 100 100 100

RSS1 = Recruitment and Selection Systems

CP2 = Compensation Package

JS3= Job Security

CG4= Career Growth

TD5= Training and Development

MS6= Management Style

JDR7= Job Design and Responsibilities

Human Resource Management (HRM) Practices and Employees’ Satisfaction towards Private 57
Banking Sector in Bangladesh

RM8= Reward and Motivation

WE9= Working Environment

Table 2 shows percentage of employees on different levels of Satisfaction of HRM
dimensions. The table indicates that the highest 43.18 per cent employees are satisfied on recruitment
and selection systems followed by 39.77 per cent on job security, 36.36 per cent on working
environment, 29.55 per cent on job design and responsibilities, 25 per cent on management style,
22.73 per cent on career growth as well as training and development, 20.45 per cent on reward and
motivation and the lowest 19.32 per cent on compensation package. Table 2 also shows that the
highest 11.36 per cent employees are highly satisfied on working environment and the lowest 2.27
percent on career growth. The study also indicates that the highest 32.95 per cent of employees are
dissatisfied on compensation package followed by 31.82 percent on reward and motivation, 30.68
percent on career growth, 22.73 per cent on training and development, 13.64 per cent on management
style, 11.36 percent on job design and responsibilities, 9.09 per cent on job security as well as working
environment and the lowest 7.95 per cent on recruitment and selection systems. Therefore, the analysis
shows that employees are not fully satisfied on any HRM dimensions of their bank. So, the HRM
dimensions quality should be improved for the betterment of the bank’s success.

7. CONCLUSION AND RECOMMENDATIONS

The study disclosed the relationship between employees’ satisfaction and various dimensions
of HRM practices. In this study, we considered nine major factors which represented most of the
human resources management practices followed by different private banks. The study reveals that all
HRM dimensions exercised in the private banking sector of Bangladesh does not satisfied to the
employees equally. Most of the employees are dissatisfied with compensation package followed by
reward and motivation, career growth, training and development, management style, and job design
and responsibilities. It is obvious that HRM practices in the private banking sector of Bangladesh has
not been fully developed and there is the urgent need to employ the services of HR professionals,
consultants and researchers to help shape and develop new directional focus that will ensure an
efficient and effective human resource practices. We suggest the following recommendations for doing
perfect HRM practices in the private banking sector of Bangladesh:
Bank should give various financial and non-financial benefits to employees according to their
performance. This will make them more devoted to the work and their satisfaction will be definitely
high.
 Bangladeshi’s economy allows the importation of new technologies to enhance HRM, but
training is still a bit slow, thus employment of expatriates to handle such is still encouraged.
 The cooperation and coordination between management and employee should be developed
because it is crucial for effective and efficient functioning of an organization.
 Attractive compensation package should be given to the employees.
 Management should make a clear cut career advancement path.
Finally, this paper suggest that bank should review existing pay practices so as to offer fair pay,
provide challenging and meaningful work tasks, and foster positive co-worker relationships in order to
create a good working environment.

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