Effects of Strategic Human Resource Management on Organizational Performance: Mediating Role of Human Resource Capabilities: A Study on Awash Bank

Abstract

The purpose of this study was to examine the effect of strategic human resources management (SHRM) practices on organizational performance mediated by Human Resource Capabilities in Awash Bank. The study adopted a mixed approach. The target population of this research was 600 employees out of which 240 employees were taken as a sample using simple random & stratified sampling. In ordered to achieve the above objectives, primary data were collected through questionnaire and interview. The gathered data where analyzed using descriptive and inferential statistics. Pearson Correlation and regression analysis were conducted to determine the relationship and the effect of two variables by using SPSS. Finding revealed that Strategic Human Resource Management practices (Training and Development, Recruitment & Selection, Performance Management & Compensation) affect organizational performance positively. This positive relationship indicates that the Strategic Human Resource Management Practices directly influencing the effectiveness of the Bank and through Human Resource Capabilities indirectly. Thus, the study recommend that, management of the Bank should give attention for the implementation a set of HRM strategies to gain strategic organizational outcomes in terms of effectiveness, efficiency, relevance and financial viability There is a need to develop proactive talent acquisition strategy and modern performance management system to support a high performance culture and ensure the proactive use of performance appraisal outcomes as a tool to determine developmental. Training needs, the performance of employees should be measured on the basis of objective quantifiable results, Training needs assessment could be carried out before any training programs began and effectiveness of training should be done after. Finally the study recommends the bank should recognize the contribution of Human Resource capabilities to organizational success.