Islamic Human Resource Management, Organizational Commitment and Employee Performance: A Case Study On Sharia Bank in South Sumatera
Islamic Human Resource Management, Organizational Commitment and Employee Performance: A Case Study On Sharia Bank in South Sumatera
Islamic Human Resource Management, Organizational Commitment and Employee Performance: A Case Study On Sharia Bank in South Sumatera
Marketing
ISSN: 2146-4405
ABSTRACT
The study was conducted in South Sumatra, Indonesia, where the percentage of sharia banking assets in South Sumatra is below the average assets
of national sharia banking. Research topics on the Islamic Human Resources Management (IHRM) are also very limited in Indonesia, especially in
South Sumatra. Most of the research on Islamic Management deals only with Islamic finance and accounting, Islamic marketing, Islamic leadership,
Islamic work ethics, gender and management in Islam. This study aims to determine the effect of IHRM on organizational commitment and employee
performance. The population in this study were 245 sharia bank employees in South Sumatera, Indonesia, where the respondents were selected 136 by
using Slovin formula and proportional stratified random sampling method. The instrument in measuring the variables in this study is the questionnaire
distributed to the respondents. The results showed that IHRM consisting of Islamic recruitment and selection variables, Islamic training and Islamic
compensation positive and significant impact to organizational commitment and employee performance.
Keywords: Islamic Human Resources Management, Organizational Commitment, Employee Performance, Sharia Bank
JEL Classifications: M12
1. INTRODUCTION sharia banking in South Sumatera is only 4.47% or below the assets
of sharia banking in Indonesia of 5.3% (OJK, 2017).
Indonesia is one of the countries with the largest Muslim population
in the world. However, based on data from the Financial Services One of the causes of non-optimal organizational performance
Authority of Indonesia (Otoritas Jasa Keuangan [OJK]), the total in Sharia banks in South Sumatra is due to the lack of optimal
assets of sharia banking in Indonesia only reached 5.3% in 2016 performance of human resources (HRs). HR has a very important
(OJK, 2017). Some countries like Saudi Arabia and Malaysia have role in the success of an organization, in which the performance
sharia banking assets that are much larger than Indonesia. Based on of HR affects the overall performance of the organization (Mathis
information from the Saudi Arabian Monetary Authority (SAMA), and Jackson, 2011). This is supported by research conducted by
the total assets of sharia banking in Saudi Arabia reached 51% in Ascarya and Yumanita (2008) entitled “comparing the efficiency
2016 (SAMA, 2017). Similarly, Malaysia, where the total assets of Sharia banks in Malaysia and Indonesia.” Those outcomes
of sharia banking in the country based on information from Bank demonstrated that one important factor making inefficiency in
Negara Malaysia (BNM) reached 27% (BNM, 2017). Sharia Bank in Indonesia is the low quality of HR.
One of the provinces in Indonesia that has Sharia banking assets Sharia banks conduct banking operations based on sharia
below the national average is South Sumatra. Based on Sharia principles, so it is logical to expect this organization to embed
Banking Statistics Report from OJK of 2016, the total assets of Islamic principles in the practice of HR management (HRM) and
This Journal is licensed under a Creative Commons Attribution 4.0 International License
their policies. Islamic HRM (IHRM) is based on Al-Quran and 2.2. Islamic Recruitment and Selection
Hadith of Prophet Muhammad PBUH (Rahman et al., 2011). Recruitment and selection are very important HRM practices.
Recruitment and selection are considered complex and complicated
The practice of IHRM is important but few discussed in the tasks within the organization (Ali, 2005). The Qur’an provides
literature (Hashim, 2009). Branine and Pollard (2010) suggested guidance in the process of recruitment and selection of prospective
that few studies discuss IHRM, so further study is needed. Rana employees, including ability, knowledge, specialization,
and Malik (2017) also revealed that only a few studies have raised experience, personal ability, potential, character, perseverance, and
the topic of IHRM. This is supported by research conducted by compliance with organizational rules and religious law (Salleh,
Khan (2015), where there is a lack of research on HRM in sharia 2012). Islamic guidelines cover five conditions that must be met
banking. According to Mellahi and Budhwar (2010), although in for selection: (1) Competence, (2) experience, (3) responsibility,
the last two decades there has been an increase in research interest (4) organizational fit, and (5) reputation (Ali, 2005). Islam
on Islamic management, but most research focuses only on Islamic emphasizes that prospective employees are selected based on merit
finance and accounting (Chong and Liu, 2009; Napier, 2009), and competence, not influenced by friendship, blood relations,
Islamic marketing (Haque et al., 2010; Hashim and Mizerski, kinship, age, wealth, race or political power (Alorfi, 2012).
2010), Islamic leadership (Ahmad, 2009; Weir, 2008), Islamic
work ethic (Ali and Al-Owaihan, 2008; Kumar and Rose, 2010), 2.3. Islamic Training
as well as gender and management in Islam (Metcalfe, 2006; Training and development in Islam include intellectual,
2007). Research on IHRM, so far, the number is still very limited moral, spiritual, physical development (Hashim, 2010), social,
(Tayeb, 1997). psychological (Khan, 2016), emotional (Husain and Ashraf, 1979)
and human growth. Some concepts of Islam are directly related to
This research is conducted on the basis of the research gap, which training and development. The first concept is Etqan, awareness
is still limited number of empirical research on IHRM conducted in self improvement, refers to efforts to improve themselves to
in sharia banking. Several previous studies on IHRM suggest that achieve better performance (Branine and Pollard, 2010). The
further research can be performed using more variables. Hashim’s second concept is Al Falah, the desire to achieve excellence and
research (2008) is limited to job satisfaction, organizational justice, perfection. Because of these values, the desire to excel in personal
and turnover intentions and suggested further research on the and professional matters becomes an ideal for Muslims. This
impact of IHRM on employee performance. Further research from implies that employees are required to always do better, improve
Hashim (2010) also suggested in conducting further research on the the quality of their contributions and work results by learning
impact of IHRM on employee performance. This is supported by new skills and knowledge (Siswanto, 2014). The third concept is
Rahman et al. (2013) who suggested that further research on IHRM Ihsan, where Islamic tradition shows that business and spiritual
can be undertaken on employee performance, job satisfaction, obligations must be balanced with one another (Ali, 2005).
and organizational commitment. Fesharaki and Sehhat (2017)
also examined the impact of IHRM on organizational justice and 2.4. Islamic Compensation
organizational commitment in Iran and suggested that further Azmi (2015) stated that compensation practice is very important
research on Islamic HRM can be possible on other variables that in HRM. Islam encourages employers to respect their employees
have not been studied. according to their qualifications, experience, knowledge, abilities
and the amount of work they do. According to Mansor and Ghani
The purpose of this study was to determine the influence of IHRM (2005), all employees should also be given benefits, bonuses,
on organizational commitment and employee performance, so it overtime wages, salary increases, leave and medical treatment
can be known whether it is useful to apply IHRM to sharia banks. without discrimination. All compensation payment requirements
Previous research on IHRM has largely focused on the objects must be clearly explained in the offer letter that employees must
of the Arab countries, Pakistan, Iran and Malaysia. The object consider before they accept the offer. Islam emphasizes that the
of research in Indonesia is still very limited and has never been compensation offered to employees must be reasonable and
conducted in South Sumatra. This research was conducted in an sufficient. Islam instructs that compensation should be established
effort to fill the research gap and become a value for the originality on the basis of mutual consent and deliberation (Ahmad, 1995;
of the research. This research is expected to provide insight for Ali, 2005; Khan et al., 2010).
practitioners in sharia organizations in managing HRs based on
IHRM and can be a reference for further research. 2.5. Organizational Commitment
Meyer and Allen (1997) classified the dimension of organizational
2. LITERATURE REVIEW commitment to the Organizational Commitment Scale into three
dimensions: affective commitment, normative commitment, and
2.1. Islamic HR Management (IHRM) sustainable commitment. Hashim (2010) has conducted research
IHRM practice can be applied to various sharia organizations, on the influence of IHRM on organizational commitment in Islamic
including sharia banking. IHRM is based is based on ethical values, organizations in Malaysia. The results of the study concluded
beliefs, and motivation (Khan, 2016). According to Azmi (2015) that IHRM had a positive and significant effect on organizational
and Fesharaki and Sehhat (2017) there are several dimensions of commitment of employees in Islamic organizations in Malaysia.
IHRM, namely Islamic recruitment and selection, Islamic training, The impact of IHRM on employee commitment research was
and Islamic compensation. also conducted by Fesharaki and Sehhat (2017) with an employee
analysis unit at sharia banks in Iran. The results revealed that respondents in this study. Distribution time and questionnaire
there was a positive and significant relationship between IHRM collection is 5 days. Instruments used to measure research variables
on employee commitment. are as follows:
1. Islamic HR Management (IHRM): The instrument used to
2.6. Employee Performance measure IHRM was a questionnaire developed by Hashim
According to Islamic principles, employee performance (2010) as many as 20 items of questions about HRM based on Al
assessment must be based on fairness, accountability, caring, and Quran and Hadith. Question items contain variables that describe
can be accounted for the specified criteria (Rahman et al., 2013). IHRM, namely Islamic recruitment and selection (IRS), Islamic
Poor design in the form of employee assessment, for example, training (IT), and Islamic compensation (IC). The questionnaire
subjective judgment which leads to unfair evaluations resulting was measured using five Likert scale points (1-5).
in unfair treatment of some employees, several cases of dismissal, 2. Organizational commitment (OC): The instrument for
and improper promotion (Sadeq, 1990). measuring organizational commitment was a questionnaire
developed by Meyer and Allen (1997) as many as 10 items
Dimensions to measure employee performance individually include of questions. Question items contain indicators of affective
quality, quantity, timeliness and effectiveness (Robbins, 2008). commitment, normative commitment, and ongoing
Some previous studies concluded that employee performance commitment. The questionnaire was measured using five
is directly influenced by recruitment and selection (Bako and Likert scale points (1-5).
Kolawole, 2016), training (Athar and Shah, 2015; Elnaga and Imran, 3. Employee performance (EP): The instrument used to measure
2013), and compensation (Hameed et al., 2014; Njoroge et al., 2015). employee performance was questionnaire developed based on
literature review from Robbins (2008) as many as 10 items
3. RESEARCH MODEL AND HYPOTHESIS of questions. Question items contain indicators of employee
performance, namely quality, quantity, timeliness, and
The research model is illustrated in Figure 1. effectiveness.
Based on the literature review, the hypotheses built from this 5. FINDINGS
research are:
1. Islamic recruitment and Selection had an influence on From the 136 questionnaires distributed, 128 questionnaires were
organizational commitment. returned by respondents. Table 1 illustrates the profile of the
2. Islamic training had an influence on organizational majority of respondents in this research.
commitment.
3. Islamic compensation had an influence on organizational Table 1 shows that most of the respondents’ gender is female
commitment. (52.7%) with age range of 26-30 years (35.3%). The education
4. Islamic recruitment and Selection had an influence on level of the majority of respondents is bachelor level (59.4%) with
employee performance. a working period of 6-10 years (33.9%).
5. Islamic training had an influence on employee performance.
6. Islamic compensation had an influence on employee The instrument is said to be valid and reliable if it meets the
performance. requirements for validity and reliability tests. Instrument validity
test is performed by comparing Pearson Correlation values with
4. METHODOLOGY r values obtained from r table. With the number of respondents
as many as 128 people, for two-way test with a significance
The population in this study were employees of sharia banks in level of 5%, obtained r table value of 0.1736. The instrument is
South Sumatra Province, Indonesia, as many as 245 employees. By said to be valid if the item of each question on the questionnaire
using the Slovin formula, obtained the number of samples as many has a Pearson Correlation value > r value of the table. Table 2
as 136 employees. Sampling technique using proportional stratified illustrates the results of the instrument validity test used in this
random sampling method. A sample of 136 employees became study.
` Islamic Training
Employee Performance
Islamic Compensation
Table 1: Respondent profile Data normality test was analyzed using Kolmogorov-Smirnov
Type of demography Profile Percentage Test. The data is said to be normally distributed if the value of
Gender Woman 52.7 Asymp. Sig. (2-tailed) is >0.05. Table 4 illustrate the results of the
Age range 26‑30 years old 35.3 Kolmogorov-Smirnov test of the built-in research model.
Education level Bachelor 59.4
Working period 6‑10 years 33.9 Table 4 show the normality test results for the influence of IHRM
on organizational commitment and impact of IHRM on employee
Table 2: Results of the instrument validity test performance. The result of Asymp value. Sig. (2-tailed) in both
tables are 0.558 and 0.507, respectively, where the value is
Question Pearson r table Remarks
items correlation value
>0.05. This means that all data in this research model is normally
IRS 1‑7 0.298‑0.470 0.1736 Valid distributed.
ITR 1‑6 0.364‑0.449 0.1736 Valid
ICO 1‑7 0.240‑0.466 0.1736 Valid After the data was confirmed to be normally distributed,
OC 1‑10 0.281‑0.323 0.1736 Valid then multiple regression test was conducted to determine the
EP 1‑10 0.270‑0.325 0.1736 Valid relationship between independent variables and dependent.
Tables 5 and 6 illustrate the results of regression tests on the
Table 3: Results of instrument reliability test impact of IHRM on organizational commitment and employee
Variable Croanbach’s alpha Remarks performance.
IRS 0.691 Reliable
ITR 0.724 Reliable 6. DISCUSSION AND CONCLUSION
ICO 0.680 Reliable
OC 0.711 Reliable
EP 0.747 Reliable The research results support the hypotheses that have been
formulated. The first hypothesis group stated that IHRM had an
influence on organizational commitment. Based on the results
Table 4: Kolmogorov‑Smirnov test results on the research of the research, all IHRM variables of Islamic recruitment and
model selection, Islamic training, and Islamic compensation had positive
Research model Asymp. Sig. (2‑tailed) Remarks and significant effect on organizational commitment. Islamic
IHRM on OC 0.558 Normal recruitment and selection variable had the greatest influence on
IHRM on EP 0.507 Normal organizational commitment with a Beta value of 0.368, followed
by Islamic training variable and Islamic compensation variable
Table 5: Results of regression test on the impact of IHRM with Beta values of 0.357 and 0.233 respectively. The significance
on organizational commitment level of all IHRM variables is below 0.05 which indicates a
Model Unstandardized coefficients Sig. significant influence on organizational commitment. The results
B Standard error of this study support the results of previous research conducted
1 by Hashim (2010) and Fesharaki and Sehhat (2017).
(Constant) 15.991 3.959 0.000
IRS 0.368 0.083 0.000 The second hypothesis group formulated that IHRM had an
ITR 0.357 0.091 0.000 influence on employee performance. The results showed that all
ICO 0.233 0.084 0.006 variables IHRM namely Islamic recruitment and selection, Islamic
training, and Islamic compensation had a positive and significant
Table 6: Results of regression test on the impact of IHRM effect on employee performance. Islamic recruitment and selection
on employee performance variable had the most influence on employee performance with a
Model Unstandardized coefficients Sig. Beta value of 0.515, while the Beta value of Islamic training and
B Standard error Islamic compensation variables are 0.339 and 0.225 respectively.
1 The regression results also reveal that the significance level of all
Constant 12.240 3.631 0.001 IHRM variables is below 0.05 which indicates a significant effect
IRS 0.515 0.076 0.000 on employee performance. Some previous studies concluded that
ITR 0.339 0.083 0.000 employee performance is directly influenced by HRM which
ICO 0.225 0.077 0.004 consists of recruitment and selection (Bako and Kolawole, 2016),
training (Athar and Shah, 2015; Elnaga and Imran, 2013), and
Table 2 shows that all question items on the instrument are valid. compensation (Hameed et al., 2014; Njoroge et al., 2015).
Furthermore, reliability test was conducted to test whether the
instrument used is reliable. The instrument is said to be reliable This study concludes that all hypotheses that have been formulated
if the Cronbach’s alpha value of each questionnaire item is >0.6. are acceptable. IHRM which consists of Islamic recruitment and
Table 3 illustrates the results of the reliability test conducted. selection, Islamic training, and Islamic compensation variables
had a positive and significant effect on organizational commitment
Table 3 shows that all the instruments used to measure the variables and employee performance at Sharia Banks in South Sumatera
in this study are reliable. The study continued with normality test. Province.
This research is expected to be a reference for other researchers turnover intention (TOI). The Journal of International Management
interested in IHRM variables. This study has limits on the Studies, 3(2), 148-159.
number of sharia organizations that are the units of analysis and Hashim, J. (2009), Islamic revival in human resource management
respondents. Further research is expected to involve more areas practices among selected Islamic organizations in Malaysia.
of Islamic organizations such as Islamic insurance organizations International Journal of Islamic and Middle Eastern Finance and
Management, 2, 251-267.
and other sharia organizations, as well as increasing the number
Hashim, J. (2010), Human resource management practices on
of other variables such as organizational justice, trust, and others. organizational commitment: The Islamic perspective. Personnel
Review, 39(6), 785-799.
REFERENCES Hashim, N.M., Mizerski, D. (2010), Exploring muslim consumers’
information sources for fatwa rulings on products and behavior.
Ahmad, K. (2009), Leadership and work motivation from the cross- Journal of Islamic Marketing, 1(1), 37-50.
cultural perspective. International Journal of Commerce and Husain, S.S., Ashraf, S.A. (1979), Crisis in Muslim Education. London:
Management, 19(1), 72-84. Hodder and Stoughton.
Ahmad, M. (1995), Business Ethics in Islam. Islamabad: The International Khan, B., Farooq, A., Hussain, Z. (2010), Human resource management: An
Institute of Islamic Thought. Islamic perspective. Asia-Pacific Journal of Business Administration,
Ali, A. (2005), Islamic Perspectives on Management and Organization. 2(1),17-34.
Cheltenham, Northampton, MA: Edward Elgar. Khan, S. (2016), Islamic perspective of human resource management:
Ali, A., Al-Owaihan, A. (2008), Islamic work ethic: A critical review. Some salient features. The Dialogue, 11(1), 83-106.
Cross-Cultural Management: An International Journal, 15(1), 5-19. Khan, T.N. (2015), Closing the gaps of human resource in Islamic banks :
Alorfi, S. (2012), Human resource management from an Islamic Literature review analysis. International Journal of Business and
perspective. Journal of Islamic and Human Advanced Research, Social Science, 6(5), 168-181.
12(2), 86-92. Kumar, N., Rose, R.C. (2010), Examining the link between Islamic
Ascarya, A., Yumanita, D. (2008), Comparing the efficiency Islamic work ethic and innovation capability. Journal of Management
banks in Malaysia dan Indonesia. Buletin Ekonomi and Moneter Development, 29(1), 79-93.
Bank Indonesia, 11(2), 1-10. Luthans, F. (2006), Perilaku Organisasi. 10th ed. Yogyakarta: Andi offset.
Athar, R., Shah, F.M. (2015), Impact of training on employee performance Mahesar, H.A., Chaudhry, N.A., Ansari, M.A., Nisar, Q.A. (2016), Do
(banking sector karachi). IOSR Journal of Business and Management, Islamic HRM practices influence employee outcomes : Mediating
17(11), 2319-2328. role of employee engagement. International Research Journal of Art
Azmi, A.I. (2015), Islamic human resource practices and organizational and Humanities, 2(1), 85-101.
performance. Journal of Islamic Accounting and Business Research, Makhamara, F.H., Waiganjo, E.W., Kwasira, J. (2016), Influence of
6(1), 2-18. strategic recruitment and selection on employee performance in the
Bako, A.Y.A., Kolawole, O.O. (2016), Effect of recruitment and selection health sector in Kenya. The Strategic Journal of Business and Change
on employee performance in hospitality. International Journal of Management, 3(3), 348-361.
Humanity and Social Sciences, 3(5), 43-61. Mansor, J., Ghani, M.N. (2005), Wage and labor in Islam: An alternative
Bank Negara Malaysia. (2017), Financial Stability and Payment System perspective. Jurnal Islamiyyat, 9(2), 45-52.
Report 2016. Kualalumpur: BNM. Mathis, R.L., Jackson, H. (2011), Human Resource Management. Jakarta:
Branine, M., Pollard, D. (2010), Human resource management with Salemba Empat.
Islamic management principles. Personnel Review, 39(6), 712-727. Mellahi, K., Budhwar, P.S. (2010), Introduction: Islam and human
Chong, B.S., Liu, M.H. (2010), Islamic banking: Interest-free or interest- resource management. Personnel Review, 39(6), 685-691.
based? Pacific-Basin Finance Journal, 17(1), 125-144. Metcalfe, B.D. (2006), Exploring cultural dimensions of gender and
Dewa, N., Zakaria, S. (2012), Training and development of human capital management in the Middle East. Thunderbird International Business
in the Islamic banking industry. Journal of Islamic Economics, Review, 48(1), 93-108.
Banking, and Finance, 8(1), 95-108. Metcalfe, B.D. (2007), Gender and HRM in the Middle East. International
Elnaga, A., Imran, A. (2013), The effect of training on employee Journal of Human Resource Management, 18(1), 54-75.
performance. European Journal of Business and Management, 5(4), Meyer, J.P., Allen, N.J. (1997), Commitment in the Workplace. Theory,
137-147. Research, and Application. California: Sage Publications Inc.
Fesharaki, F., Sehhat, S. (2017), Islamic human resource management Napier, C. (2009), Defining Islamic accounting: Current issues, past roots.
(iHRM) enhancing organizational justice and employees’ Accounting History, 14(2), 121-144.
commitment: A case of a Qard Al-Hasan bank in Iran. Journal of Njoroge, S.W., Kwasira, J., Wambui, N.S., Kwasira, J. (2015), Influence
Islamic Marketing, 9, 204-218. of compensation and reward on performance of employees at nakuru
Gait, A., Worthington, A. (2008), An empirical survey of an individual county government. IOSR Journal of Business and Management
consumer, business firm and financial institution attitudes towards Ver, 17(11), 231-248.
Islamic methods of finance. International Journal of Social Otoritas Jasa Keuangan. (2017), Laporan Statistik Perbankan Syariah
Economics, 35(11), 783-808. Otoritas Jasa Keuangan Periode Desember 2016. Jakarta: Otoritas
Hameed, A., Ramzan, M., Hafiz, M., Zubair, M.K., Ali, G., Arslan, Jasa Keuangan.
M. (2014), Impact of compensation on employee performance. Rahman, N.M.N., Alias, M.A., Shahid, S., Hamid, M.A., Alam, S.S.
International Journal of Business and Social Science, 5(2), 302-309. (2013), The relationship between Islamic human resources
Haque, A., Ahmed, K., Jahan, S.I. (2010), Shariah observation: The management (IHRM) practices and trust: An empirical study. Journal
advertising practices of bank Muamalat in Malaysia. Journal of of Industrial Engineering and Management, 6(4), 1105-1123.
Islamic Marketing, 1(1), 70-77. Rahman, N.M.N., Shahid, S., Alam, S.S. (2011), Relationship between
Hashim, J. (2008), The quran-based human resource management (HRM) Islamic HRM practices and employee commitment: An empirical
and its effects on organisational justice (OJ), job satisfaction (JS) and study of Islamic banks in Bangladesh. Journal of Applied Sciences
Research, 7(8), 1269-1278. Saudi Arabian Monetary Authority. (2017), Fifty-Third Annual Report.
Rana, M.H., Malik, M.S. (2017), Impact of human resource (HR) practices Riyadh: Saudi Arabian Monetary Authority.
on organizational performance. International Journal of Islamic and Siswanto. (2014). Improving competitiveness of Islamic banking human
Middle Eastern Finance and Management, 10(2), 186-207. resources through implementation of Quran-based HRM practices.
Robbins, S.P. (2008), Organizational Behavior. 13th ed. New Jersey:
European Journal of Business and Social Sciences, 3(3), 1-13.
Pearson Prentice Hall.
Tayeb, M. (1997), Islamic revival in Asia and human resource
Sadeq, A.H.M. (1990), Economic Development in Islam. Kuala Lumpur:
Pelanduk. management. Employee Relations, 19(4), 52-64.
Salleh, M.J. (2012), Islamic Principles of Administration: Implications on Weir, D. (2008), Islamic perspectives on management and organization.
Practices in the Organization. Malaysia: Unpublished Manuscript, International Journal of Islamic and Middle Eastern Finance and
International Islamic University. Management, 1(1), 64-78.