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Impact of high performance work system on financial performance of banking sector in Pakistan.

Naseer S, Karim A, Naseer H, Aslam Z

Banks play a vital role in the economy of a country and stability of economy is in return impacted by the performance levels of the financial institutions specifically banks within the country. This study is intended to examine the financial performance of all commercial banks listed in Pakistan Stock Exchange. The prime focus for this study revolves around the impact of high performance work systems on determinants of financial performance. In order to investigate, twenty commercial banks were selected. Pilot study was conducted prior and forty questionnaires were distributed to check the results then data was collected in two stages. In first stage, questionnaires were provided to employees of banks and in second stage, data from all the banks was gathered and compiled from their annual reports available at their websites in conjunction with the availability and authenticity of the data obtained from State Bank of Pakistan and the time period was 2016-2017. 384 respondents filled the questionnaire out of 500 from all commercial banks and response rate was 76 percent. By application of Statistical Package for Social Sciences (SPSS), descriptive statistics, correlation among variables, one-way ANNOVA and multiple regression analysis were carried out on the compiled data and concluded on the impact of selected independent variables including recruitment and selection (R&S), training and development (T&D), reward system (RS) and performance management (PM) on financial performance determinants ROA and ROE of the banks. The results showed that all the variables were significantly correlated to each other and had positive correlations. The regression analysis showed that there was a significant relationship among the independent and dependent variables. High performance work systems not only influence the subjective performance but the positive effects can be noticed on employee’s productivity. The investigation in high performance work system lead makes employees valuable assets to the organization.