IMPACT OF HR PRACTICES ON ORGANIZATIONAL PERFORMANCE: MODERATING ROLE OF ISLAMIC PRINCIPLES

Abstract

Purpose The objective of the study is to analyze the role of human resource practices on organizational performance with the moderating effect of Islamic principle application in the Islamic banks of Karachi, Pakistan. Methodology & Design 242 sample responses were collected from the employees of Islamic banks of Karachi, Pakistan using convenience sampling technique while PLS-SEM has been employed for data analysis using SmartPLS version 3.2.8. Findings Results showed that employee involvement, performance appraisal system, and selection and recruitment have significantly positive relationship with organizational performance; whereby, compensation, and training and development have no relationship with organizational performance. Furthermore, performance appraisal system may improve its relationship with organizational performance due to the moderating effect of application of Islamic principles. Selection and recruitment and training and development may have reduced their effectiveness on organizational performance due to the moderating effect of Islamic principles’ application. However, the relationship of employee involvement and compensation with organizational performance may not be moderated by the application of Islamic principles. Limitations The data of study has been collected through convenience sampling technique as knowledge about the other techniques is limited. The study only focuses on the banks situated in Karachi. Recommendations Managers of Islamic banks have to provide great focus on the training and development side of the organization. This is so because, when a company provides relevant training to the employees, only then they would be able to perform their job in a proper way and as per the expectations from the management.