The Effect of Human Resource Practices on Employee Performance
The Mediating Role of Job Satisfaction in Nepalese Commercial Banks
Keywords:
Employee performance, human resources management, HR practices, job satisfactionAbstract
Purpose: This study examines the effects of human resource (HR) practices on employee performance and investigates the mediating role of job satisfaction among employees in Nepalese commercial banks.
Design/methodology/approach: A quantitative cross-sectional design was employed. Data were collected through a structured questionnaire from 340 employees of Nepalese commercial banks and analysed using Structural Equation Modelling (SEM) in AMOS 26.
Findings: The results indicate that performance appraisal and compensation have significant positive effects on employee performance, while recruitment and selection and training and development show no significant impact. Job satisfaction partially mediates the relationship between performance appraisal, compensation, and employee performance.
Implications: The findings suggest that organisations should prioritise fair appraisal systems and competitive compensation while aligning recruitment and training practices with organisational goals.
Originality/value: This study contributes to HRM literature by providing context-specific empirical evidence from Nepal’s banking sector and highlighting the mediating role of job satisfaction.
JEL Classification: J24, J28, M12, M54
References
Abdulrahman, A., & Mshelia, A. G. (2022). Impact of training and development on employee performance: A case study of Ramat polytechnic, Maiduguri and federal polytechnic, Damaturu. International Journal of Advanced Academic and Educational Research, 13(6), 66-82.
Alhassan, A., & Alhassan, I. (2025). Optimising recruitment and selection practices for enhanced employee performance: Insights from the University for Development Studies, Ghana. Voice of the Publisher, 11(1), 191–222. https://doi.org/10.4236/vp.2025.111015
Ali, S., Shahzad, F., Hussain, I., Yongjian, P., Khan, M. M., & Iqbal, Z. (2022). The outcomes of organizational cronyism: A social exchange theory perspective. Frontiers in Psychology, 13, 805262.
Al-Mzary, M. M. M., Al-rifai, A. D., & Al-Momany, M. O. E. (2015). Training and its impact on the performance of employees at Jordanian Universities from the perspective of employees: The Case of Yarmouk University. Journal of Education and Practice, 6(32), 128-140.
Anastasiou, S., & Garametsi, V. (2021). Perceived leadership style and job satisfaction of teachers in public and private schools. International Journal of Management in Education, 15(1), 58-77. https://doi.org/10.1504/ijmie.2021.111817
Aprilia, S. (2023). Career planning and development process of Islamic human resources: A case study at Bank BSi KCP Medan Muchtar Basri. 4(1).
Arif, M., Syaifani, P. E., Siswadi, Y., & Jufrizen, J. (2019). Effect of compensation and discipline on employee performance. Proceeding UII-ICABE, 263-276. Retrieved from https://journal.uii.ac.id/icabe/article/view/14723
Armstrong, M. (2006). A handbook of human resource management practices (10th ed.). Cambridge University Press, United Kingdom
Armstrong, M., & Taylor, S. (2020). Armstrong's Handbook of Human Resource Management Practice (15th ed.). Kogan Page.
Arthur, J. B. 1992. The link between business strategy and industrial relations systems in American steel mini mills. Industrial and Labor Relations Review, 45: 488-506.
Arthur, J. B. 1994. Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37: 670-687.
Basnet, N. (2025). Job autonomy and innovative work behavior in Nepalese service industry: Mediating role of creative self-efficacy. Journal of Innovation in Academia, 4(2), 82-106. https://doi.org/10.32674/pf54jz89
Becker, B. E., & Huselid, M. A. (1998). High-performance work systems and firm performance: A synthesis of research and managerial implications. Research in Personnel and Human Resources Management, 16, 53-101.
Bhandari, D. R., & Subedi, D. P. (2024). Human resource management practices and job satisfaction: Evidence from private hospitals of Kathmandu Valley. Journal of Emerging Management Studies, 1(2), 185-198. https://doi.org/10.3126/jems.v1i2.71526
Boon, C., Den Hartog, D. N., Boselie, P., & Paauwe, J. (2019). The relationship between perceptions of HR practices and employee outcomes: Examining the mediating role of job satisfaction. Human Resource Management Journal, 29(3), 329-345.
Bowra, Z., Sharif B., Saeed A., & Niazi M. (2012) Impact of human resource practices on employee perceived performance in banking sector of Pakistan. African Business Journal, 6(1), 323-332. https://doi.org/10.5897/ajbm11.2312
Chalutz-Ben Gal, H. (2023). Person–skill fit: Why a new form of employee fit is required. Academy of Management Perspectives, 37(2), 117-137.
Dalimunthe, R. F., Mulya, H. A., Pasaribu, A., & Andreas, D. T. (2024).
The effect of training and development on performance: A literature review.
Neraca: Jurnal Ekonomi, Manajemen dan Akuntansi, 2(6), 498–504.
https://doi.org/10.51823/eel.v14i4.2117
Dangol, P. (2021). Role of performance appraisal system and its impact on employees' motivation. Quantitative Economics and Management Studies, 2(1), 13–20. https://doi.org/10.35877/454ri.qems119
Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 125(6), 627-668. https://doi.org/10.1037/0033-2909.125.6.627
Dessler, G. (2020). Fundamentals of human resource management. Pearson.
Gautam, D. K., & Davis, A. J. (2007). Integration and devolvement of human resource practices in Nepal. Employee Relations, 29(6), 711-726. https://doi.org/10.1108/01425450710826168
Gautam, T. P., & Raj, S. (2018). Human resource planning, selection and training practices of Nepalese pharmaceutical companies of Nepal. Human resource management (henceforth HRM), 1(1).Hadiati, E., Junaidah, J., Nurjanah, S., & Salsabilla, N. R. (2025). The role of recruitment and selection in improving employee performance: Literature review. Pendas: Jurnal Ilmiah Pendidikan Dasar, 10(2). https://doi.org/10.23969/jp.v10i02.23995
Hafeez, U., & Akbar, W. (2015). Impact of training on employee performance (Evidence from pharmaceutical companies in Karachi, Pakistan). Business Management and strategy, 6(1), 49-64. https://doi.org/10.5296/bms.v6i1.7804
Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied Psychology, 87(2), 268–279. https://doi.org/10.1037/0021-9010.87.2.268
Hassan, Z. (2022). Employee retention through effective human resource management practices in Maldives: Mediation effects of compensation and rewards system. Journal of Entrepreneurship, Management and Innovation, 18(2), 137-174.
Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3), 635-672. https://doi.org/10.2307/256741
Jaiswal, R. (2023). Impact of human resource management practices on employee performance in Nepalese commercial banks. Perspectives In Nepalese Management, 429.
Judge, T. A., Thoresen, C. J., Bono, J. E., & Patton, G. K. (2001). The job satisfaction-job performance relationship: A qualitative and quantitative review. Psychological Bulletin, 127(3), 376-407. https://doi.org/10.1037/0033-2909.127.3.376
Karatepe, O. M., & Olugbade, O. O. (2020). HR practices and employee job performance in the insurance industry: The mediating role of job satisfaction. Journal of Hospitality and Tourism Management, 43, 120-132.
Karki, D., Bhattarai, G., & Dahal, R. K. (2023). Human resource management practices and performances in Nepalese financial institutions. Quest Journal of Management and Social Sciences, 5(2), 316-330. https://doi.org/10.3126/qjmss.v5i2.60930
Katabalo, C. V., & Mwita, K. (2024). The role of compensation on job satisfaction, employee performance and organisational performance. Science Mundi, 4(1), 137–148. https://doi.org/10.51867/scimundi.4.1.12
Kepha, O., Mukulu, E., & Waititu, G. A. (2014). The influence of recruitment and selection on the performance of employees in research institutes in Kenya. International Journal of Science and Research, 3(5), 132-138.
Khan, M. A., Md Yusoff, R., Hussain, A., & Binti Ismail, F. (2019). The mediating effect of job satisfaction on the relationship of HR practices and employee job performance: Empirical evidence from higher education sector. International Journal of Organizational Leadership, 8, 78-94. https://doi.org/10.33844/ijol.2019.60392
Kurniawan, H., & Desiana, P. M. (2024). Human resource management practices and job performance under investigation: Mediating role of sob satisfaction and employee value proposition. Journal of Theoretical and Applied Management (Jurnal Manajemen Teori Dan Terapan), 17(2), 299–315. https://doi.org/10.20473/jmtt.v17i2.53161
Locke, E. A. (1976). The nature and causes of job satisfaction. In M. D. Dunnette (Ed.), Handbook of Industrial and Organizational Psychology (pp. 1297-1349). Rand McNally.
Lubis, N. W. (2022). Resource based view (RBV) in improving company strategic capacity. Research Horizon, 2(6), 587-596.
Lyu, B., Su, W., Qi, Q., & Xiao, F. (2023). The influence of performance appraisal justice on employee job performance: A dual path model. SAGE Open, 13(3). https://doi.org/10.1177/21582440231194513
Malhotra, N. K., & Dash, S. (2022). Marketing research: An applied orientation (7th ed.).
Mathis, H. & Jackson, H. (2010) Human Resource Management 14th Edition. Singapore: Thomson Asia Pte Ltd.Manurung, G. S., et al. (2024). The influence of financial compensation and non-financial compensation on employee performance. https://doi.org/10.56495/hs.v4i3.766
Mira, M., Choong, Y., & Thim, C. (2019). The effect of HRM practices and employees’ job satisfaction on employee performance. Management Science Letters, 9(6), 771-786. https://doi.org/10.5267/j.msl.2019.3.011
Nguyen, D. T., Ha, V. D., & Dang, T. T. N. (2020). The impact of human resource management activities on compatibility and work results. Journal of Asian Finance, Economics, and Business, 7(9), 621–629. https://doi.org/10.13106/jafeb.2020. vol7.no9.621
Noe, R. A. (2017). Employee training and development (7th ed.). McGraw-Hill Education.
Parawansah, R., Sopiah, S., & Syihabudhin, S. (2025) Training environment, and employee performance: Systematic literature review.Journal of Management: Small and Medium Enterprises, 18(3), 1807–1817.
https://doi.org/10.35508/jom.v18i3.15923
Ployhart, R. E., & Schneider, B. (2012). The role of recruitment in organizational performance. In K. Kraiger, J. K. Ford, & E. Salas (Eds.), Designing and assessing training programs (pp. 165-200).
Pradhan, G. M. (2019). Impact of human resource management practices on organizational performance (a case of Nepal). The Batuk, 5(2), 14-31.
Pradhan, R. K., & Jena, L. K. (2017). Employee performance at the workplace: A conceptual model and empirical validation. Business Perspectives and Research, 5(1), 69-85. https://doi.org/10.1177/2278533716671630
Quader, M. (2024). Exploring human resource management practices and employee satisfaction in Bangladesh's private banking sector. Journal of Policy Options, 7(1), 36-45.
Quresh, T. M., Akbar, A., Khan, M. A., Sheikh, R. A., & Hijazi, S. T. (2010). Do human resource management practices have an impact on financial performance of banks? African Journal of Business Management, 4(7), 1281–1288.
Ramli, A. H. (2019). Compensation, job satisfaction and employee performance in health services. Business and Entrepreneurial Review, 18(2), 177-186. https://doi.org/10.25105/ber.v18i2.5335
Shahzad, K., Bashir, S., & Ramay, M. (2008). Impact of HR practices on perceived performance of university teachers in Pakistan. International review of business research papers, 4(2), 302–315.
Shrestha, A. (2024). Impact of human resource practices on employee performance in nepalese banking service sector (Doctoral dissertation).
Shrestha, P., & Bhandari, S. (2024). Empowerment, job involvement, and socio-demographic characteristics: The case of part-time faculty members. Interdisciplinary Journal of Innovation in Nepalese Academia, 3(1), 149-162. https://doi.org/10.3126/idjina.v3i1.70298
Solihah, R., Intan, A. J. M., & Hodijah, C. (2023). The recruitment, selection, and motivation: Driving employee performance AKPAR NHI Bandung. Jurnal Informatika Ekonomi Bisnis, 737-743. https://doi.org/10.37034/infeb.v5i3.636
Suhail, A., van de Voorde, K., Steen, T., & Meeusen, C. (2025). Exploring the links between human resource practices, employee outcomes and performance at the individual and team levels. Asia Pacific Management Review, 30(4), 100399. https://doi.org/10.1016/j.apmrv.2025.100399
Taneja, S., Srivastava, R., & Ravichandran, N. (2024). Employees’ fairness perception towards performance appraisal system: Antecedents and consequences. Review of Managerial Science, 18(8), 2163-2196.
Tipis, E. S., & Njoroge, J. (2019). Effects of training and development on performance in regional development authorities in Kenya: Case of Ewasongiro South Development Authority in Narok County, Kenya. International Academic Journal of Law and Society, 1(2), 281-289. http://www.iajournals.org/articles/iajls_v1_i2_281_289.pdf
Tsui, A. S., Egan, T. D., & O'Reilly, C. A. (1992). Being different: Relational demography and organizational attachment. Administrative Science Quarterly, 549–579.
Wadud, H. (2022). Assessing human resource management strategies and their influence on job satisfaction in private banks. Journal of Policy Options, 5(1), 15-21.
Wanjala, M. W., & Kimutai, G. (2015). Influence of performance appraisal on employee performance in commercial banks in Trans Nzoia County–Kenya. International Journal of Academic Research in Business and Social Sciences, 5(8), 332-343. https://doi.org/10.6007/ijarbss/v5-i8/1788
