ADMAS UNIVERSITY SCHOOL OF POSTGRADUATE

STUDIES DEPARTMENT OF BUSINESS ADMINISTRATION

THE ROLE OF HUMAN RESOURCES MANAGEMENT

PRACTICES AND EMPLOYEE JOB SATISFACTION IN
PREDICTING ORGANIZATIONAL COMMITMENT IN
AWASH BANK S.C.

BY

KALKIDAN ALEMESHET

JUN, 2015

ADDIS ABABA, ETHIOPIA

 ADMAS UNIVERSITY SCHOOL OF POSTGRADUATE
STUDIES DEPARTMENT OF BUSINESS ADMINISTRATION

THE ROLE OF HUMAN RESOURCES MANAGEMENT

PRACTICES AND EMPLOYEE JOB SATISFACTION IN
PREDICTING ORGANIZATIONAL COMMITMENT IN
AWASH BANK S.C.

A Thesis Submitted To Admas University the School Of

Postgraduate Studies in Partial Fulfilment for the Award of
Degree in Master of Business Administration (MBA)

BY

KALKIDAN ALEMESHET

ADVISOR:

GEBREKIDAN FESEHA (PHD)

JUN, 2015
ADDIS ABABA, ETHIOPIA
DECLARATION

I, Kalkidan Alemeshet, the under signed, declare that this thesis entitled: “The Role of Human
Resources Management Practices and Employee Job Satisfaction in Predicting
Organizational Commitment in Awash Bank S.C.” is my original work. I have undertaken the
research work independently with the guidance and support of the research supervisor. This
study has not been submitted for any degree or diploma program in this or any other
institutions and that all sources of materials used for the thesis has been duly acknowledged.

________________ ___________ _________________

Name of Student Signature Date

This is to certify that the thesis entitled: “Impact of Motivational Factor on Employee
Performance of Commercial Bank in Addis Ababa” submitted in partial fulfilment of the
requirements for the degree of Masters of Business Administration of the Postgraduate
Studies, Admas University and is a record of original research carried out by Kalkidan
Alemeshet, (ID 4361/21), under my supervision, and no part of the thesis has been submitted
for any other degree or diploma. The assistance and help received during the course of this
investigation have been duly acknowledged. Therefore, I recommend it to be accepted as
fulfilling the thesis requirements.

___________ ________________ _________________

Name of Advisor Signature Date

i
CERTIFICATE OF APPROVAL

This is to certify that the thesis prepared by Kalkidan Alemeshet, entitled “ The Role of Human
Resources Management Practices and Employee Job Satisfaction in Predicting
Organizational Commitment in Awash Bank S.C.” and submitted in partial fulfilment of the
requirements for the Degree of Masters of Arts in Project Management/MBA/MSc in
Accounting and Finance complies with the regulations of the University and meets the
accepted standards with respect to originality and quality.

Signature of Board of Examiner`s:

____________________________ _______________ _______________

External examiner Signature Date

____________________________ _______________ _______________

Internal examiner Signature Date

____________________________ _______________ _______________

Dean, SGS Signature Date

ii
ACKNOWLEDGEMENTS

My warmest gratitude and appreciation goes to my advisor Gebrekidan Feseha (PHD), for his
professional assistance, patience and understanding enabled for the completion of this thesis.
Thank you so much for your helpful reviews, comments and suggestions. Indeed without your
unreserved dedication, the successful completion of this study would have been difficult.

A sincere appreciation and special thanks go to the respondents for their kind assistance and
support throughout the data collection process of this research.

I would like to thank also Awash Bank for allowing me to conduct this research and for
providing assistance in contacting the customers.

Great appreciation is also extended to friends and family who always gave a great support
during this research.

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TABLE OF CONTENTS

ACKNOWLEDGEMENTS.......................................................................................................iii

TABLE OF CONTENTS...........................................................................................................iv

LIST OF FIGURES....................................................................................................................ix

LIST OF APPENDICES............................................................................................................ix

LIST OF TABLES.......................................................................................................................x

LIST OF ACRONYMS AND ABBREVIATIONS..................................................................xii

ABSTRACT.............................................................................................................................xiii

CHAPTER 1..............................................................................................................................14

INTRODUCATION..................................................................................................................14

1.1. Introduction.................................................................................................................14

1.2. Background of the study.............................................................................................14

1.3. Statement of the problem............................................................................................15

1.4. Objectives of the Study...............................................................................................16

1.4.1. General objective.................................................................................................16

1.4.2. Specific objectives...............................................................................................17

iv
 1.5. Research Questions.....................................................................................................17

1.6. Hypothesis of the study...........................................................................................18

1.7. Significance of the Study............................................................................................19

1.8. Scope of the Study......................................................................................................19

1.9. Limitations of the study..............................................................................................19

1.10. Organization of the Paper........................................................................................20

CHAPTER 2..............................................................................................................................21

LITERATURE REVIEW..........................................................................................................21

2.1. Introduction.....................................................................................................................21

2.2. Human Resource Management Practices........................................................................21

2.2.1. Compensation and Incentive....................................................................................22

2.2.2. Training and Development.......................................................................................23

2.2.3. Recruitment and Selection........................................................................................25

2.2.4. Communication and Information Sharing................................................................26

2.2.5. Job Security..............................................................................................................27

2.3. Job Satisfaction...............................................................................................................28

2.4. Organizational Commitment...........................................................................................29

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 2.4.1. Side-bet Theory of Organizational Commitment.....................................................29

2.4.2. The Predictors of OC................................................................................................30

2.5. HRM practices, job satisfaction and organizational commitment..................................35

2.6. Conceptual frame work...................................................................................................37

CHAPTER 3..............................................................................................................................38

RESEARCH DESIGN AND METHODOLOGY.....................................................................38

3.1. Introduction.....................................................................................................................38

3.2. Research Design..............................................................................................................38

3.3. Research Approach.........................................................................................................38

3.4. Sources of Data and Data Collection Method.................................................................39

3.4.1. Sources of data.........................................................................................................39

3.4.2. Data collection procedures.......................................................................................39

3.5. Population and Sample Size............................................................................................39

3.5.1. Sample size...............................................................................................................40

3.5.2. Sampling technique..................................................................................................40

3.6. Variable Measurement and Instrument...........................................................................41

3.7. Data Analysis and Presentation.......................................................................................42

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 3.7.1. Methods of data processing......................................................................................42

3.7.2. Methods of data analysis..........................................................................................42

3.8. Validity and Reliability Test...........................................................................................46

3.8.1. Validity.....................................................................................................................46

3.8.2. Reliability test...........................................................................................................46

3.9. Ethical Considerations....................................................................................................47

CHAPTER FOUR.....................................................................................................................48

DATA PRESENTATION, ANALYSIS AND DISCUSSION.................................................48

4.1. Introduction.....................................................................................................................48

4.2 Response rate of respondents...........................................................................................48

4.3. Demographic Characteristics of Respondents................................................................49

4.4 Descriptive Statistics of HRM Practice, Job Satisfaction and Organizational

Commitment...........................................................................................................................50

4.4.1 Human Resource Management Practices..................................................................51

4.4.2 Job Satisfaction and Organizational Commitment....................................................55

4.5. Results of Inferential Statistics.......................................................................................56

4.5.1. Result of Normality Test..........................................................................................56

4.6 Spear man correlation Coefficient...................................................................................57

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 4.7 Test Result of Ordinal Regression Model Assumptions..................................................59

4.8 Ordinal Regression Analysis............................................................................................62

4.9 Discussion of Results.......................................................................................................65

CHAPTER FIVE.......................................................................................................................75

CONCLUSIONS AND RECOMMENDATIONS....................................................................75

5.1 Introduction......................................................................................................................75

5.2 Conclusion.......................................................................................................................75

5.2 Recommendation.............................................................................................................77

5.3 Recommendation for Future Studies................................................................................79

REFERENCE............................................................................................................................81

APPENDICES...........................................................................................................................89

Appendix 1: Questionnaire....................................................................................................89

Appendix2: sampling system for Awash Bank North Addis District Branches....................94

Appendix3: Mean and St. Deviation of Dependent and Independent Variables...................95

viii
LIST OF FIGURES

Figure Page

Figure 1, Conceptual Framework.......................................................................................... 29

LIST OF APPENDICES

Appendix 1: questioner…………………………………………………………………..……89

Appendix2: sampling system for Awash Bank North Addis District Branches………………94

Appendix3: Mean and St. Deviation of Dependent and Independent Variables……………...95

ix
LIST OF TABLES

Table Page

Table 3.1 Summary of data analysis.........................................................................................44

Table 3.2 Summary of Reliability Test..................................................................................... 47

Table4.1: Distributions of the total Respondents...................................................................... 48

Table 4.2 Demographic characteristics of respondents............................................................ 49

Table 4.3: Descriptive Statistics of HRM Practice, Job Satisfaction and Organizational
Commitment ........................................................................................................................... 51

Table 4.4: Normality test result……………………………................................................... 56

Table 4.5 logged normality test result ..................................................................................... 57

Table 4.6: The results of Spear Man Correlation Coefficient................................................... 58

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Table 4.7 correlation between aggregate HRM practice and job satisfaction with employees
organizational commitment………………………………….................................................. 59

Table 4.8: Model fitting information…………………........................................................... 60

Table 4.9: The result of goodness of fit test…………………................................................ 61

Table 4.10: Pseudo R-Square……………………………....................................................... 61

Table 4.11: Result of test of parallel line………………….......................................................62

Table 4.12: Result of ordinal regression………………………………................................... 63

Table 4.13: Result of odd ratio ………………....................................................................... 64

Table 4.14 the relative effects of HRM practice and job satisfaction on employee’s
organizational commitment. .................................................................................................... 72

Table 4.15 the combined effects of HRM practice and job satisfaction when they are puts
together. ………………………………................................................................................... 72

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LIST OF ACRONYMS AND ABBREVIATIONS

HRM – human resource management

HRMP- human resource management practices

OC – organizational commitment

xii
ABSTRACT

The purpose of this study was to investigate the role of human resource management practices
and employee job satisfaction in predicting organizational commitment in Awash Bank S.C.
To achieve this, some specific objectives were set. For the sake of achieving the objectives of
the study both explanatory and descriptive research were used. The research was conducted
through mixed research approach that means both quantitative and qualitative research
approaches were used. Data for the study was collected through triangulation method of
qualitative and quantitative. A mixed of sampling techniques were used to select the targeted
population. Totally 300 employees (consensually) were sampled to participate in the study. In
all, a total number of 283 questionnaires out of the 300 representing a response rate of 94.3%
were used for the analysis. Primary and secondary data was used as a source for the data,
questionnaire and interview for the primary and review of litterateurs and documents for the
secondary data. Both descriptive and inferential analytical techniques were used. Statistical
Program of Social Science (SPSS) version 26 was used to generate data that was presented in
tables as was necessary. The regression result showed that the independent variables used in
the study explain 96.3% variability on employee’s organizational commitment. The study
results revealed that Human resource management practice correlated positively with

xiii
employee job satisfaction and organizational commitment. On the other hand, employee job
satisfaction was found to be positively correlated with organizational commitment. The two
independent variables made significant individual contributions to the prediction of
organizational commitment. Based up on the findings the researcher recommended the bank
needs to give emphasis to employee job satisfaction and Human resource management
practices in order to enhance employee commitment.

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CHAPTER 1

INTRODUCATION

1.1.Introduction

The first chapter discusses the introduction of the research which includes background of the
study, definition of term and concept, statement of the problem, research question, objective of
the study, significance of the study, scope of the study limitations of the study and on how the
paper organized.

1.2.Background of the study

In almost all organizations there is a report of its mission stating that people are the most
valuable resource. To achieve its goal survive and succeed any organization should have the
right personnel at the right place and at the right time (Oladipo, 2011). Banking organizations
as well as other types of business organizations depend largely on the quality and competence
of its employees. Therefore, organizations have to pay more attention to their human resources
because implementation of human resource practices supports maximizing employees’
competences in the organization (Saleem and Khurshid, 2014).

Human resource management practices are able to create organizations that are characterized
by intelligence, flexibility and competence compared to their rivals. These organizations apply
policies and practices of recruiting, selecting, training skilled employees. These employees in
their turn will direct their best efforts toward cooperation within the resource bundle of their
organization (Nancy, 2013). Additionally the success survival and competing power of the
organizations are tied to the commitment of their members. For the members to be committed
to their organization they be satisfied with their job, that is to say employees’ job satisfaction
is supposed to be a crucial prerequisite for their commitment to their organization. Human
resource management practices have a role to play in building a viable mutual relationship

14
between firms and their employees concerning shared trust and duties. This relationship
follows the “social exchange theory,” in which employees offer their services to the
organizations in exchange of perks and other benefits that they receive from the organizations
(Mehwish et al., 2019).

Therefore, it is assumed that the reduction of the cost of employee turnover, absenteeism, and
low productivity can occur when employees are satisfied as well as well committed to their
organization (Mizanur, Mohammad and Mohammad, 2013). Personnel’s achievements and
their working capability are perquisites of their sense of job satisfaction (Pas¸aoglu and Tonus,
2014). Thereby, for any organization (any bank, here) to attract new competent employees and
maintain those existing talented ones, consistent human resource management practices,
employee job satisfaction and organizational commitment should be considered and be among
its priorities (Khera, 2010; Mizanur et al., 2013).

In the banking sector of Ethiopia Awash International Bank S.C. (AIB) is one of the leading
actors in the industry. It was established by 486 founding shareholders on November 10, 1994
with a paid up capital of Birr 24.2 million. It was the first private commercial bank in Ethiopia
following the down fall of the military regime and the declaration of market oriented
economic policy. It started banking operation on February 13, 1995. By the end of June 2022,
the number of shareholders and its paid up capital increased to over 3200 and Birr 10.29
Billion respectively. It is a full-service bank in Ethiopia. According to its annual report, the
total number of branches as at end of June 2022 reached 725 and more than two million
customers. Its deposits exceeded (1.8 billion dollar) 42 billion birr.

The purpose of this study is to investigate the role of human resource management and
employee job satisfaction in predicting organizational commitment of employees in Awash
International Bank S.C.

15
 1.3.Statement of the problem

Organizations at the heart of which lie banks face challenges including complex developments
and technological trends among them are globalization deregulation. These fast changes
impose on them to manage their staff businesses effectively in job satisfaction, employee
performance and organizational commitment. It was found that when employees were satisfied
with their job, they were successfully committed to their organizations and contributed to their
effectiveness and ultimate survival (Mahmood, 2013).

As it claims by the bank’s annual report of 2022 the bank is the leading of all privet banks
within the country in all aspects. This is as a result of:

…. mainly attributed to the hard work and unwavering commitment of its staff who continue
to focus and engage in executing the Bank’s Strategy. The Bank continued to cement its
leadership positions in the industry mainly because of its staff commitment and assiduousness.

On the other hand, recently based on recorded turnover data of the bank and personal
observation of the researcher there is a significant number of turnover in Awash Bank. This
implies the employees in the banks are not committed enough to stay in one bank for a longer
period of time and the researcher believes HRM practice and job satisfaction can contribute in
tackling employees’ turnover by creating organizational commitment.

Based on this contradiction in order to find out the truth behind the “success” as claimed by
top management and also the role of HRM practice, employees’ job satisfaction, and
organizational commitment towards the success the researcher wants to conduct this study.

Although HRM practices have increasingly been studied in connection with different
organizational outcomes like employee job satisfaction, employee performance and employee
commitment (Rahman et al., 2013; Nadarajah et al., 2012; Choi and Lee, 2013), according to
the researcher knowledge there is no research on the role of HRM and employee job
satisfaction in predicting organizational commitment in the Ethiopian banking sector.

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 1.4.Objectives of the Study

1.4.1. General objective

The general objective of this study is to investigate the role of HRM practice and employee
job satisfaction in predicting organizational commitment of employees in Awash International
Bank S.C.

1.4.2. Specific objectives

The specific objective of the study is:

 To examine whether there is a relationships between and among HRM practice,

employee job satisfaction and organizational commitment of employees in Awash
Bank S.C.
 Determining the effects of compensation and incentives on organizational
commitment of employees in Awash Bank S.C.
 Determining the effects of training and development practice on organizational
commitment of employees in Awash Bank S.C.
 Determine the effect of selection and recruitment on organizational commitment of
employees in Awash Bank S.C.
 Determine the effect of job security on organizational commitment of employees in
Awash Bank S.C.
 Determine the effect of communication and information sharing on organizational
commitment of employees in Awash Bank S.C.
 Determine the combined effects of HRM practice and employee job satisfaction on
their organizational commitment in Awash Bank S.C.

1.5. Research Questions

This study poses the following questions:

17
 (1) Are there relationships between and among HRM practice, employee job satisfaction
and organizational commitment of employees in Awash International Bank S.C.?
(2) What is the effect of compensation and incentives as HRM practice on organizational
commitment of employees in Awash International Bank S.C.?
(3) What is the effect of training as HRM practice on organizational commitment of
employees in Awash International Bank S.C.?
(4) What is the effect of selection and recruitment as HRM practice on organizational
commitment of employees in Awash International Bank S.C.?
(5) What is the effect of job security as HRM practice on organizational commitment of
employees in Awash International Bank S.C.?
(6) What is the effect of communication and information sharing as HRM practice on
organizational commitment of employees in Awash International Bank S.C.?
(7) What is the effect off employee job satisfaction on organizational commitment in
Awash International Bank S.C.?
(8) What are the combined effects of HRM practice, employee job satisfaction on
organizational commitment in Awash International Bank S.C.?
(9) What is the relative contribution of HRM, employee job satisfaction to organizational
commitment in Awash International Bank S.C.?

1.6. Hypothesis of the study

H1: Compensation and incentives has a positive and statistically significant effect on
organizational commitment of employees

H2: Training and Development has a positive and statistically significant effect on
organizational commitment of employees

H3: Recruitment and selection have a positive and statistically significant effect on
organizational commitment of employees.

18
 H4. Communication and information sharing have a positive and statistically significant
effect on organizational commitment of employees

H5: Job security has a positive and statistically significant effect on organizational
commitment of employees

H6: Job satisfaction has a positive and statistically significant effect on organizational
commitment of employees.

H7: There are positive and statistically significant combined effects of HRM and employee
job satisfaction on organizational commitment.

1.7. Significance of the Study

The expected benefit of this research project is to make possible suggestions, which would be
believed to improve the present internal marketing situation prevailing in the banking sector in
Ethiopia by determining the effects of internal marketing on employees‟ organizational
commitment of Awash Bank. Therefore, this thesis helps to understand the role of HRM
practice and job satisfaction on organizational commitment of employees under the bank being
considered. It can also create awareness on importance of having a proper plan and actual
implementation of HRM practice.

1.8. Scope of the Study

The spatial and temporal coverage of this study will only limited to the role of HRM practice
and employee job satisfaction in predicting organizational commitment of North Addis
districts of Awash Bank employees’ in Addis Ababa. The sample of respondent comprised all
employees of the districts of the bank. For purpose of this study the variables of HRM practice
was used including Compensation and incentives, Training and development, Recruitment and
selection, Communication and information sharing, Job security and job satisfaction against
organizational commitment at selected district of the bank.

19
 1.9. Limitations of the study

The following are some limitations faced on the study.

 The thesis was conducted only in Awash Bank as a result the conclusion based on this
study may not entirely reflect situations other banks in Ethiopia.
 In Ethiopia, there is no adequate literature on the role of human resources management
practices and employee job satisfaction in predicting organizational commitment
concept.

1.10. Organization of the Paper

The study was composed of five chapters. The first chapter is introductory chapter which
includes the background, statement of the problem, scope, significance and limitations of the
study. The second chapter includes the analysis of relevant literature with both theoretical and
empirical concepts in the area as well as hypothesis along with the objectives. The third
chapter possesses the methodology used in the research activity. Data analysis and
interpretation of the research result will be discussed in chapter four. The final chapter covers
the discussion of results, conclusion and recommendation of the study.

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CHAPTER 2

LITERATURE REVIEW

2.1. Introduction

This section of the study covers the views of other authors on the subject of study. Among the
various themes covered include various human resource management practices such as
training and development, selection and recruitment, communication and information sharing,
job security practices and compensation and incentive packages. The section also covers
employee retention and its relationship with human resource management practices.

2.2. Human Resource Management Practices

HRM concept implies that employees are resources of the employer. HRM is blend of
policies, practices and systems that influence employees’ behavior, attitudes, and performance
(Khadka, 2009). Armstrong, (2009) defined HRM practice as a tactical and strategic way to
attain, develop, manage and motivate and gaining the commitment of the employees. HRM
practice is seen as the available talents and energies of people who are available to an
organization as potential contributors to the creation and realization of the organization‘s
mission, vision, strategy and goals (Schuler and Jackson, 2000).

21
Various scholars (Pfeffer, 2005) have identified that HRM can be source for competitive
advantage of a company and company performance is influenced by a set of effective HRM
practice. McMillan (1983) argued that the emerging importance of HRM practice tends to be
overlooked by many organizations as a tool to achieve a competitive advantage through
retention of key employees. Academicians (Guest, 2007) identified that HRM practice is the
backbone of an organization. Thus achieving an organizational accomplishment needs to be
facilitated by employment of sophisticated HRM infrastructure (Jyothi and Venkatesh, 2006)
and HRM practice needs to be strategically designed, installed and adopted to promote
desirable outcomes.

2.2.1. Compensation and Incentive

Performance-based compensation is the dominant HR practice that firms use to evaluate and
reward employees’ efforts (Collins and Clark, 2003). Evidently, performance-based
compensation has a positive effect upon employee and organizational performance (Brown et
al. 2003; Cardon and Stevens, 2004). Empirical studies on the relationship between
performancerelated pay and company performance have generally found a positive
relationship, but a growing body of empirical evidence suggests that it is not just pay level that
matters, but pay structure as well (Wimbush, 2005; Singh 2005). Firms that were eager to
achieve rapid-growth provided their employees financial incentives and stock options as part
of their compensation packages. In doing so, firms managed to elicit high levels of
performance from employees, provide employees the feeling that they have an ownership
interest in the firm, attract and retain high-quality employees, and shift a portion of a firm‘s
business risk to the employees. Delery and Doty (1996) identified performance-based
compensation as the single strongest predictor of firm performance. Both performance-based
compensation and merit-based promotion can be viewed as ingredients in organizational
incentive systems that encourage individual performance and retention. Cho et al. (2005)
suggested that incentive plans is effective in decreasing turnover rates. More over Banker et al.
(2001) conducted a longitudinal study of the effectiveness of incentive plans in the hotel
industry and found that incentive plans were related to higher revenues, increased profits, and

22
decreased cost. Paul and Anantharaman (2003) found that compensation and incentives
directly affect operational performance. To be effective, compensation practices and policies
must be aligned with organizational objectives. While performance-based compensation can
motivate employees, sometimes employees perceive it as a management mechanism to control
their behavior (Lawler and Rhode, 1976). Employee turnover can significantly slow revenue
growth, particularly in knowledge-intensive industries (Baron and Hannan, 2002). Given that
much of the tacit knowledge resides within employees, significant turnover poses a threat to
firm performance and its future growth potential. With high turnover rates, firm growth flees
away along with leaving managers who often become employers of rival firms or establish
themselves rival firms. A major and perhaps the most notable among organizational retention
initiatives is compensation and benefits. Numerous studies have addressed the impact of
employee compensation, rewards and recognition on turnover and retention (Becker and
Huselid, 1999). Becker and Huselid, (1999) found that highly competitive wage systems
promote employee commitment and thus results in the attraction and retention of a superior
workforce.

A recent study by Cho et al. (2006) investigated the relationship between the use of human
resource management practices and organizational performance. It found that companies
providing incentive plans to employees are more likely to experience lower turnover rates
among non-managerial employees.

Strong salary growth significantly reduces turnover for high performing employees (Trevor et
al., 1997). In organizations using performance-contingent reward systems, high-performing
individuals who were well compensated were less likely to quit than those with lower levels of
rewards and performance (Park et al., 1994). Researchers also have demonstrated a
relationship between indirect compensation, fringe benefits, and employee turnover (Bennett
et al., 1993).

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 2.2.2. Training and Development

In the present ever changing world, current knowledge is basically inadequate to meet up with
the dynamic and technical business world. It is therefore a major priority of organizations to
acquire skills in accordance with the changing technologies. For this reason most companies
take proactive measures for maintaining a reservoir of high technology staff, by continuous
training and retraining of their staff. Training according to Chew (2004), provides employees
with specific skills or correct deficiencies in their performance, while development is an effort
to provide employees with abilities the organization will need in the future.

Training and development may be related to firm performance in many ways. Firstly, training
programs increase the firm specificity of employee skills, which, in turn, increases employee
productivity and reduces job dissatisfaction that results in employee turnover (Huselid, 1995).
Secondly, training and developing internal personnel reduces the cost and risk of selecting,
hiring, and internalizing people from external labor markets, which again increases employee
productivity and reduces turnover. Training and development like job security requires a
certain degree of reciprocity: A company that systematically trains and develops its employees
develops their market value more favorably. This increases employees’ productivity,
commitment, and lowers turnover. Companies may also assist their employees in career
planning. In doing so, companies encourage employees to take more responsibility for their
own development, including the development of skills viewed as significant in the company
(Doyle, 1997). Barringer et al. (2005) compared rapid-growth and slow-growth firms and
found that rapid- growth firms depend heavily on the abilities and efforts of their employees to
maintain their growth-oriented strategies.

The fast-growth firms used training programs to achieve their objectives and emphasized
employee development to a significantly greater extent than their slow-growth counterparts.
Therefore, training and employee development practices are more common in rapid-growth
firms than slow growth ones. Miller (2006) examined the growth strategies in the retail sector
and suggested that modern retailers should place more emphasis on the policies and practices

24
that could contribute to staff retention, rather than on the immediacy of recruitment and
selection. Husiled (1995) found that the education and development of employees have a
significant effect both upon the personnel productivity and the sort-term and long-term
indicators of organizational performance. Ngo et al. (1998) investigated the effects of country
origins on HR practices of firms from the United States, Great Britain, Japan and Hong Kong
operating in Hong Kong. The study results showed that structural training and development
and retention-oriented compensation were related to various measures of firm performance.
Paul and Anantharaman (2003), in searching the links between human resource practices and
organizational performance, proposed that career development programs demonstrate a true
interest of the organization for the growth of its personnel, which, in turn, stimulates
commitment and devotion, which, subsequently, raises personnel productivity and
consequently economic output.

Becker and Huselid (1999) argue that the economic returns of extensive training are more
likely to be captured by the firm if employees are motivated to stay and contribute to the
firm‘s success fostered in part by selective hiring, competitive pay packages and team-
orientated work environments. Youndt et al. (1996) theorize that human resource practices
designed to develop talented and team-oriented workers improve employee productivity and
customer satisfaction.

2.2.3. Recruitment and Selection

This practice can ensure that the right people, with the desirable characteristics and
knowledge, are in the right place, so that they fit in the culture and the climate of the
organization. Moreover, pinpointing the rights employees would decrease the cost of
employees’ education and development. Huselid, (1995) examined HR practices of high
performance companies and found that attracting and selecting the right employees increase
the employee productivity, boost organizational performance, and contribute in reducing
turnover. According to Huselid (1995) and Becker and Huselid (1999), selective hiring

25
procedures are necessary to ensure effective retention of the most qualified employees while
lowering employee turnover in the long term.

Cho et al. (2006) theorize that the practice of pre-employment testing and the result of
candidates passing such skill-based tests can heighten new hires’ sense of organizational
commitment. However, their research also found that once employees are on-board and seek
upward mobility, promotions can actually increase turnover rates of non-managerial
employees if not practiced appropriately. For example, in instances in which inadequate
employee training and development exist, employees can become frustrated and stressed by
assuming greater responsibility for which they are ill equipped. Thus employer policies and
practices regarding employee promotions and work designs are among the top reasons why
people join, stay or leave an organization (Cafaro, 2001). Cohen and Pfeffer, (1998) argued
that hiring standards reflect not only organizations' skill requirements but also the preferences
of various groups for such standards and their ability to enforce these preferences. Collins and
Clark (2003) argued that the practice of selective hiring results at sales growth. Paul and
Anantharaman (2003) pointed out that an effective hiring process ensures the presence of
employees with the right qualifications, leading to production of quality products and
consequently in increase of economic performance. Cho et al. (2005) examined passing pre-
employment tests may give an applicant a stronger sense of belonging to the company,
resulting in higher degrees of commitment if employed. Cardon and Stevens (2004) pointed
out that for small companies recruiting is often problematic. This can be due to several reasons
such as limited financial and material resources and jobs with unclear boundaries
responsibilities, which decreases their potential to hire qualified candidates.

2.2.4. Communication and Information Sharing

Sharing of information may have a dual effect: Firstly, it conveys employees the right
meaning that the company trusts them. Secondly, in order to make informed decision,
employees should have access to critical information. Communicating performance data on a
routine basis throughout the year help employees to improve and develop. Employees most

26
probably want to be good at their jobs, but if they never receive any performance feedback,
they may perceive to have a satisfactory performance when in fact they do not (Chow et al.,
1999). Furthermore, information sharing fosters organizational transparency which in the other
way reduces turnover (Ahmad and Schroeder, 2003) and forges synergistic working
relationship among employees (Nonaka, 1994).

Information sharing is not a widespread HR practice as someone might have expected it to be.
Many companies are vulnerable to share critical information with their employees because in
this way employees become more powerful and companies may lose control of them (Pfeffer,
1998). Furthermore, information sharing always involves the danger of leaking important
information to competitors (Ronde, 2001). Burgess (2005) studied employee motivations for
knowledge transfer outside their work unit and found that employees who perceived greater
organizational rewards for sharing spent more hours sharing knowledge beyond their
immediate work group.

However, a significant percentage of employees perceived knowledge as a means of achieving

upward organizational mobility. Therefore, employees sought information more often than
shared it. Roberts (1995) studied how HR strategy affects profits in 3,000 businesses
throughout the world and found that sharing information was related with higher profitability.
However, Ichniowski and Shaw (1999) compared US and Japanese steel-making plants and
found that employee participation based solely on problem-solving teams or information
sharing did not produce large improvements in productivity. In a study of Fortune 1,000
largest service companies on high performance practices, Lawler et al. (1995) found
information sharing to correlate to firm performance but results are inconclusive.

2.2.5. Job Security

Job security creates a climate of confidence among employees which cultivates their
commitment on the company‘s workforce. Job security requires a certain degree of
reciprocity: firstly, a company must signal a clear message that jobs are secure; then,

27
employees believing that this is true, feel confident and commit themselves to expend extra
effort for the company‘s benefit; finally, a company that have learnt that job security
contributes to its performance, invests again in job security (Pfeffer, 1998). Probst, (2002) has
developed a conceptual model of the antecedents and consequences of job security.
Antecedents include worker characteristics, job characteristics, organizational change and job
technology change.

Consequences include psychological health, physical health, organizational withdrawal,

unionization activity, organizational commitment and job stress. Job involvement, cultural
values, and procedural justices moderate job security perceptions and attitudes. Buitendach
and Witte, (2005) assessed the relationship between job insecurity, job satisfaction and
affective organizational commitment of maintenance workers in a parastatal in Gauteng. Study
results revealed small but significant relationships between job insecurity and extrinsic job
satisfaction and job insecurity and affective organizational commitment. Job satisfaction was
also found to mediate the relationship between job insecurity and affective organizational
commitment. However, today‘s business environments are far from providing job security to
their employees. For example, in an analysis of involuntary job loss in France between 1982
and 2002, Givord and Maurin (2004) found evidence that technological changes contribute to
keeping the employees for shorter periods of time, thus increasing job insecurity.

When companies do provide job security, then empirical evidence suggests that it has a
positive effect on to firm performance. Following Pfeffer (1998), Ahmad and Schroeder
(2003) found that among others, job security impacts operational performance indirectly
through organizational commitment. Delery and Doty (1996) studied the US banking sector
and found some support for a positive relationship between employment security and firm
performance. In their study of 101 foreign firms operating in Russia, Fey et al. (2000) found
evidence that human resource practices indirectly improve organizational performance. The
results showed that not only, there was a direct positive relationship between job security and
performance for non-managers, but job security was the most important predictor of HR

28
outcomes for non-managerial employees. Results also suggested a direct positive relationship
between managerial promotions based on merit and firm performance.

2.3. Job Satisfaction

Job satisfaction is, in a general sense, considered as the positive impact that the worker's
experiences in the job environment have on him/her and the positive behaviors resulting from
these experiences (Currivan, 1999; Weiss, 2002). The traditional model of job satisfaction
focuses on one’s all feeling about his/her own profession. However, the thing what makes the
job satisfactory or unsatisfactory does not only depend on the quality of the job, but also the
expectations of the individuals about their job (Lu, While & Barriball, 2005). Participation in
the decision-making process, job autonomy, integration, job diversity, satisfaction with pay,
availability of incentive program, training, perceptions of equitable treatment, and quality of
supervision and formalization have been to lead to higher levels of job satisfaction (Lambert,
Hogan & Griffin, 2007).

Herzberg formulated the twofactor theory of job satisfaction, one refers to, ‟hygiene” factors
that are extrinsic to the job (company policy and administration, supervision, relationship with
supervisor, work conditions, salary, relationship with peers, personal life, relationship with
subordinates, status, security) and the other one is known as „‟motivators‟ that are intrinsic to
the job (growth, advancement, responsibility, work itself, recognition, achievement) (Güleryüz
et al., 2008). Therefore, employee’s job satisfaction has effect on organizational commitment
of the employees.

2.4. Organizational Commitment

Organizational commitment has been the subject of several critical reviews beginning from the
1980s. Ahmad & Oranye (2010) considered organizational commitment as an individual’s
emotional, rational and moral commitment to the goals and ideals of an organization that he or
she belongs to whatever maybe the source of this feeling of commitment. According to
Mowday (1979) conceptually organizational commitment can be characterized by strong

29
belief in and acceptance of the organization’s goals and values, willingness to exert
considerable effort on behalf of the organization and strong desire to maintain membership in
the organization. Similarly, Nongo and Ikyanyon (2012) summarized the three stated
characteristics of organizational commitment devised by Mowday. According to O’reilly
(1989) organizational commitment is typically individual’s psychological bond to the
organization including a sense of job involvement, loyalty and a belief in the values of the
organization. In addition, O’reilly explained the three processes or stages of commitment
which compliance, identification and internalization are. In the first stage, compliance, a
person accepts the influence of others mainly to obtain something from others, such as pay.
The second stage is identification in which the individual accepts influence in order to
maintain a satisfying, self-defining relationship. The final stage of commitment is
internalization in which the individual finds the values of the organization to be intrinsically
rewarding and congruent with personal values.

2.4.1. Side-bet Theory of Organizational Commitment

Meyer and Allen (1991) formulated the side-bet theory to further explain commitment as a
psychological state that has three components consists of affective commitment, normative
commitment and continuance commitment.

Affective commitment refers to the employees’ emotional attachment to, identification with
and involvement in the organization. According to Meyer and Allen (1991) an employee who
has a strong Affective commitment to an organization stays with the organization because he
or she needs to continue working in the organization. Affective Commitment involves three
aspects such as the formation of an emotional attachment to an organization, identification
with and the desire to maintain organizational membership (Beck and Wilson, 2000).

Continuance commitment is the second component which refers to awareness of the cost
associated with leaving the organization. Employees with a strong continuance organizational
commitment know that leaving the organization may be harmful to them fiscally due to the

30
lack of employment option and a loss of savings. In continuance commitment, the employees
consider the disadvantages of leaving the organization and avoid quitting (Meyer and Allen,
1997).

Normative commitment refers to the employees feeling of obligation to remain with the
organization. According to Schneider (2003), normative organizational commitment is the
ethical Obligation the employee develops after the organization has spent on him or her.

According to (Meyer and Allen, 1997) Antecedents of each types of commitment could be
summarized as follows: Affective Commitment is antecedents fall generally into the following
four categories: personal characteristics, structural characteristics, job related characteristics
and work experience. Continuance commitment includes anything that increases perceived
costs can be considered antecedents. The most frequently studied antecedents have been side-
bets or investments and the availability of alternatives. Normative commitment develops when
an organization provides the employees with rewards in advance such as paying college
tuition or incurs significant costs in providing employment that includes costs associated with
job training.

2.4.2. The Predictors of OC

Social exchange theory (e.g. Blau, 1964), which attempts to explain the social
interdependence created in the workplace, explains how employees form an attachment to an
organization. According to the theory, in any social interaction, multiple inherent factors
predetermine how individuals react in given social constructs (e.g. Blau, 1964; Markovits,
Boer, & van Dick, 2014; Wiener, 1982). These factors include intrinsic personal
characteristics of the employee based on age, gender, or length of service as well as
opportunities for achievement, creativity, and personal advancement. There are also extrinsic
factors that relate to the employee’s work role and job experience: remuneration, management
policies, physical conditions, and job security (Cooper-Hakim & Viswesvaran, 2005;
Markovits et al., 2014; Spector, 1997).

31
Broadly defined, social exchange theory attempts to explain underlying relationships that
determine the exchange of reciprocal social services, which may range from simple to
complex processes (Blau, 1964). It is these relationships that are at the heart of the
psychological processes, such as attachment, whether it is to a person, an organization, or an
idea (Blau, 1964; Miao, Newman, Schwarz, & Xu, 2014). Attachment leads to positive work
attributes, such as organizational commitment, which contribute to employees’ personal
growth as both workers and as individuals (e.g. Miao et al., 2014).

OC can be the foundation of self-realization for the individual and may have an impact on
other job-related outcomes, such as turnover, absenteeism, job effort, job role, and
performance (e.g. Jung & Yoon, 2012; Ghazzawi, 2008; Tuna et al., 2011). The job role that is
ill defined or ambiguous may weaken commitment to the organization, and promotional
opportunities could also enhance or diminish organizational commitment depending on the
individual’s perception of their importance (Jung & Yoon, 2015). In addition, other job factors
that have an impact on commitment are the levels of responsibility and autonomy (Jung &
Yoon, 2012). Cartwright and Holmes (2006) reported that, when an employee felt the work
had meaning, in conjunction with higher levels of responsibility and autonomy connected with
a given job, a higher level of commitment was expressed by the person who filled it.
Accordingly, the following are key predictors of OC:

(1) Personal characteristics of employees.

The primary important factor for commitment is linked to employees’ role in the organization,
placing emphasis on employees’ perception of experience, time, and effort put into the
organization, mixed with the accumulation of benefits gained from their investment (Irshad &
Naz, 2011).

The employees’ personality also plays a role in their organizational commitment (Irshad &
Naz, 2011). Irshad and Naz (2011) define personality as the unique, internal, and external
aspects of a person’s character that influences behavior in different situations. The

32
measurement of emotional, motivational, interpersonal, and attitudinal characteristics as
distinguished from abilities are attributes that are peculiar to an individual based on age,
gender, education, or experience.

OC is also affected by the employee’s personal characteristics, such as age and gender, as well
as by years of service (Meyer & Allen, 1997). Mowday (1999) and Meyer and Herscovitch
(2001) found that there are distinct behavioral differences (e.g., organizational loyalty and
compliance, sportsmanship, self-development, and civic virtue) for employees with different
commitment.

Demographics that include age are most often studied, as this is considered a key indicator in
the work of Meyer and Allen. Studies related to generational variance and workrelated values
include those of Gursoy, Chi, and Karadag (2013) and Gursoy, Maier, and Chi (2008) both
concluded that the age of the worker influences how attached he or she became to various
aspects of the workplace. Studies indicate that there are age-related variations in the need for
recognition, status in the workplace, and idealism in the work (Rousseau & Greller, 1994;
Singh & Gupta, 2015).

(2) Employee role-related and work experience factors.

According to Allen and Meyer (1990), there are specific aspects to the employee role that
contributed to affective commitment. These included peer cohesion (the bond between
employees), personal importance (the importance to the organization an employee was made
to feel), feedback (reviews regarding employee work performances was provided), and overall
interaction with peers and supervisors. The emotional, or affective, attachment an employee
feels toward an organization, including the way in which they identify with, are involved with,
and enjoy membership within that organization, has been the most popular approach in studies
of OC (Buchanan, 1974; Kanter, 1968; Mowday et al., 1979). In addition to that, the work
experience antecedents, specifically those experiences which most fulfil the psychological

33
needs of employees to feel comfortable in an organization, have provided the strongest
evidence as antecedents of affective commitment (Allen & Meyer, 1990).

Stallworth (2004) studied the benefit of conceptualizing organizational commitment using a

multidimensional view in the realm of accounting as well as examining the varied range of
antecedent variables related to each of the three dimensions of organizational commitment.
Stallworth (2004) revealed that AC is generally higher when there is equity in the assignment
of overtime, frequency of socializing with superiors, status with peers, likelihood of
promotion, and when a role model or mentor also displays AC to the organization. Other work
relationships, such as teams or groups, could also have an effect on organizational
commitment (Wasti & Can, 2008). Organizational members can demonstrate commitment
when they are able to find value through work relationships (Mathieu & Zajac, 1990).
Individuals in an organization are more likely to commit to the organization, when work
relationships are formed that reflects interdependent and mutual respect (Mathieu & Zajac,
1990).

According to Sisodia and Das (2013), an individual’s role or job is of paramount importance
in increasing OC due to the following factors:

 Skill variety: the extent to which the job requires multiple high-level skills
 Task identity: the degree to which a person is in charge of completing an identifiable
piece of work from start to finish
 Task significance: a person’s job substantially affects other people’s work, health, or
wellbeing
 Feedback: the degree to which people learn how effective they are at work
 Autonomy: the degree of individual choice involved in a job.

The organization is a workplace environment built upon working relationships; one of the
most significant relationships is the supervisory relationship (Sisodia & Das, 2013). According
to Abreu et al. (2013), a member of the leadership team in the organization could affect OC

34
either positively or negatively. A positive supervisory relationship depends on how work-
related practices, such as performance management, are being implemented in the
organization (Miao et al., 2014). When individuals believe the supervisory relationship to be
fair and consistent in its practices, then higher levels of commitment are shown (Kasemsap,
2013).

An individual’s working environment and experiences related to the work environment are
additional factors when considering OC (Kasemsap, 2013). One of the common working
environmental conditions that may have a positive impact on OC is partial ownership,
including either monetary return or enhanced investiture in the company (Kasemsap, 2013;
Meyer & Allen, 1997). Ownership could create in employees a sense of importance; they
would feel part of the decision-making process (Wasti & Can, 2008). This is true regardless of
the employee’s level in the company; for example, Al-Qatawneh (2014) found that employees
who participate in budget decision making, hold higher levels of organizational commitment.
Another factor within the work environment that may affect OC is work practices in
recruitment and selection, performance appraisal, promotions, and management style (Meyer
& Allen, 1997).

Other studies have found that an organizational culture that includes shared values,
particularly in organizational decision making, is essential for establishing employee
behaviors (e.g. Heskett, 2011; Messner, 2013). Heskett (2011), suggested that corporate
culture, or the way we do things, is often a greater determinant of commitment than other
predictors of behavior. Thus, organizational policy that encourages employee involvement
could help to satisfy an employee’s desire for empowerment and demand for a commitment to
organizational goals.

Meyer and Allen (1997) contended that understanding the pattern of relationships among work
context, intrinsic motivation, job characteristics, and their corresponding affective reactions is
important because new policies and procedures are constantly being added to organizations in
an attempt to try to influence or enhance organizational-level commitment. Skill variety,

35
supervisory satisfaction, job satisfaction, and feedback have strong links to intrinsic
motivation for employees, which, in turn, create organizational commitment (Meyer & Allen,
1997).

2.5. HRM practices, job satisfaction and organizational commitment

The success of different organizations, public or private, such as banks, depend largely on the
performance of their human resources (Uma et al., 2017), which emphasize employees’ skills
(Ong and Koh, 2018; Ong et al., 2019). Human resource management (HRM) practices can be
regarded as a set of internally coherent and consistent practices aimed at reinforcing and
promoting employee competence, motivation as well as commitment (Elrehail et al., 2019).
They also manage human talents and skills to achieve the organization’s goals (Ana et al.,
2019).

HRM practices are likely to create work conditions and environment where employees
become highly committed to the organization (have positive attitude) and do their best to
accomplish the organization’s goals. Organizational commitment can be considered the
employees’ willing to be committed to help the organization in achieving its goals.

Organizational commitment involves the employees’ levels of identification, involvement and

loyalty (Devananda and Onahring, 2019). HRM practices have a significant and positive effect
on employee job performance (Faiza et al., 2019).

HRM practices are considered to be a method of encouraging employees’ satisfaction with

their jobs (Mohammed et al., 2019). Job satisfaction can be defined as an individual’s
affective orientation toward work roles that he/she is presently occupying, and it is linked to
that individual’s behavior in the workplace (Devananda and Onahring, 2019). HRM practices
are intended to improve employees’ attitudes (commitment) and subsequently their
performance (Cai et al., 2019).

36
Employee commitment and satisfaction affect organization greatly (Elrehailet al., 2019).
Moreover, Ana et al. (2019) verified a positive, strong relationship between HRM practices
and employee satisfaction. Effective HRM practices can increase employee satisfaction and
commitment on the one hand, and organizational performance on the other hand (Cai et al.,
2019). Employees’ commitment is regarded as a bond or link to the organization (Mizan, et
al., 2013). If employees are neither committed to organizational commitment nor satisfied
with their job, then the rates of absenteeism and turnover will be high (Murat et al., 2014). To
ensure employees’ commitment, organizations should adopt and utilize incentives and
motivate them to boost up their commitment (Mehwish et al., 2019).

Alima Aktar and Faizuniah Pangil (2018) examined the mediating role of organizational
commitment (OC) on the relationship between HRM practices and employee engagement
among banking employees. Their results revealed that HRM practices were the significant
predictors of employee engagement. The results also identified organizational commitment as
a partial mediator on HRM practices and employee engagement relationship.

One can expect an interactional cycle between and among HRM practices, job satisfaction and
organizational commitment, where HR policies and practices are likely to raise the level of job
satisfaction among employees, which in turn helps these employees to be more committed
their organization (Prakash, 2017). They are positively related with affective and normative
commitment (Ambreen, 2011). Employees’ commitment to their organization can be
monitoring through appropriate attitudes and behaviors, including job satisfaction, affective
commitment and retention intention (Mohammad et al., 2018). Abdirahman (2015) found a
positive relationship between HRM practices and organizational commitment. HRM practices
affect the outcomes of any organization, as they are likely to shape worker behaviors and
attitudes (Norhasnina et al., 2018).

Some researchers (Abubakar et al., 2017a, b; Albrecht et al., 2015; Ukil, 2016) revealed that
HRM practices could lead to employee satisfaction and engagement. Muratet al. (2014) found
that there were positive relationships between HRM practices (recruitment and selection,

37
training and development, compensation and benefits, performance appraisals), job
satisfaction and organizational commitment. In the same line, Mizan et al. (2013) found that
there were positive relationships among specific human resource practices, job satisfaction and
organizational commitment in the banking sector of Bangladesh.

2.6. Conceptual frame work

Independent variables Dependent variable

HRM practice

Compensation and
Incentives

Training and Organizational

Development commitment

Recruitment and
Selection

Communication
and Info. Sharing

Job satisfaction

Fieger 1: conceptual frame work

38
Source: developed by the researcher based on literature review, 2023

CHAPTER 3

RESEARCH DESIGN AND METHODOLOGY

3.1. Introduction

This chapter describes the methodology that has used for the study. The main issues discussed
here are research design, research population, sample and sampling technique, source of data
and data collection methods, and method of data analysis.

3.2. Research Design

Research design is a general plan for the collection and analysis of data (Robert & Richard,
2008). It is the blueprint for satisfying research objectives and answering research questions
(John, 2007). It assures that the research is pertinent to the problem and that it uses economical
procedures.

The research design for this study was both descriptive and explanatory research design in
order to describe the role of HRM practice and employee job satisfaction in predicting
organizational commitment. The reason behind using descriptive study design is that the
researcher had no control the variables rather than only report what is happened in the area
where the research is conducted. According to Kothari (1990), the major purpose of
descriptive research is to describe the state of affairs as it exists at present. This study used
descriptive analysis that describes the impact of motivational packages on employee
performance. Descriptive research design will employed for detail description of the findings
displayed in tables. This study also will use explanatory research design, to explain
understand, predict and control the cause and effect relationships between variables.

39
 3.3. Research Approach

Both qualitative and quantitative research approach was used to conduct this particular study.
Research tools are the methods of data collection (e.g. questionnaire, observation, document
analysis).The research tools that were used for the study are questionnaires and interviews.

3.4. Sources of Data and Data Collection Method

3.4.1. Sources of data

The study was depending on primary data that was collected from the staff and some
secondary data. The primary data was collected from the field survey using questionnaires and
interview schedules. The interviewee includes branch managers and customer service
managers in each of the branches. The questionnaires was comprised both close-ended and
open ended questions. The secondary data was sourced from different journals and annual
reports of the bank.

3.4.2. Data collection procedures

The primary data was collected through self-administered questionnaires. For primary data
collection a questionnaire would have two sections such as demographic questionnaire and
basic survey (assessment of the role of human resources management practices and employee
job satisfaction in predicting organizational commitment) questionnaire was distributed to the
target respondents. The questionnaire comprises both close ended and open-ended questions.
Closed ended questions which was prepared by using a five-point Likert scale response scale
which includes strongly agree (5), agree (4), uncertain (3), disagree (2) and strongly disagree
(1) for respondents. The open-ended questionnaire might be provided to get the opinion of
respondents that cannot be described in closed ended questionnaires.

40
Mainly the survey was conducted by distributing questionnaires to predetermined respondents
of Awash Bank North Addis districts of Addis Ababa. To collect the data from respondents,
the questionnaire was prepared in English.

3.5. Population and Sample Size

Awash Bank has a total of 725 branches with 13regional office across the country as of March
2023. Because of the bank activity, geographical area, time and finance limitation, the
researcher assumes that using Addis Ababa city branches of the bank was favorable for the
study. In Addis Ababa city there are 319 branches of Awash Bank within four district offices
of the city (i.e. -North Addis District, South Addis District, West Addis District and East
Addis District within 76, 82, 77, and 84 branches respectively). Still in order to overcome time
and finance limitation the researcher select North Addis District for the purpose of this study.
There for the target population for this study was those 76 branches of the bank within North
Addis District, of the city branches.

3.5.1. Sample size

A sample size of 19 which constituted around 25% of the total population was selected
proportionally. This percentage is chosen because; the ideal sample size of 5-25% of a
population is considered acceptable for most research purposes as it provides the ability to
generalize for a population (Cresswell, 2003; Sekaran, 2003). For the purpose of this study
totally 304 respondents (employees of the sample branches) are involved in the study.

3.5.2. Sampling technique

North Addis Ababa District (NAAD) is selected by a lottery method (SRS) in NAAD there are
totally 76 Branches. In this research to find representative sample size (i.e. 19 branches) of the
study population of Awash Bank on the North Addis Ababa District of Addis Ababa the
researcher was used systematic sampling system. This system was implemented by selecting a
random starting point and then picking every n th element in succession from the sampling

41
frame. The sampling interval “n” is determined by dividing the population size by the sample
size. Such technique is used if and only if the sample size is divided. i.e.:

n = p/s; where

p = study population

s = sample size of the population

n= interval. From this therefore: n = p/s =76/19= 4. So the starting point was between 1
and 4 for the NAAD branches and was taken every 4 th element. This is done by using of
simple random sampling technique. (See appendix 2).

3.6. Variable Measurement and Instrument

Multiple linear regression analysis will be used to study the effect of the independent variable
on the dependent variable. In this study, the dependent variable organizational commitment of
employees and independent variable is HRM practices and employees’ job satisfaction. The
basic objective of using the regression equation in this study will to make the researcher more
effective at describing, understanding, predicting and controlling the stated variables.

Independent Variables

 HRM practice
 Compensation and Incentives = X1
 Training and Development = X2
 Recruitment and Selection = X3
 Communication and Info. Sharing = X4
 Job security = X5
 Job satisfaction = X6

Dependent Variables

42
  Organizational Commitment of Employees (Y)

Regress effects of organizational commitment on the selected dimensions of HRM practice

and job satisfaction: The equation of multiple linear regression formula expression is
presented as:

Y= β0 + β1(X1) + β2(X2) + β3(X3) + β4(X4) + β5(X5) + β6(X6) + E.

Where: β is the intercept term – it gives the mean or average effect of Y of all the variables
excluded from the equation, although its mechanical interpretation is the average value of Y
when the stated independent variables are set equal to zero.

Y - Dependent variable - organizational commitment of employees

X1, X2, X3, X4, X5, and X6 are the explanatory variables (the regressors)

β1, β2, β3, β4, β5 and β6 refers to the coefficient of their respective independent variables which
measures the change in the mean value of Y, per unit change in their respective independent
variables.

3.7. Data Analysis and Presentation

3.7.1. Methods of data processing

Method of data processing in this study will be both manual and computerized system. In the
data processing procedure editing, coding, classification and tabulation of the collected data
will be used. The researcher will edit the collected raw data to detect errors, omissions,
checking that there is an answer for each question and the questions are answered accurately
and uniformly. The process of assigning numerical or other symbols will come next which
will be used by researchers to reduce into a limited number of categories or classes. After this
the process of classification or arranging large volume of raw data into classes or groups on
the bases of common characteristics will be applied. Data having the common characteristics

43
will be placed together and, in this way, the entered data will divided into a number of groups.
Finally, tabulation will be used to summarize the raw data and displayed in the compact form
(in the form of statistical table) for further analysis.

3.7.2. Methods of data analysis

The data analysis is the further transformation of the processed data to look patterns and
relationships between data groups. Therefore, the data used for this study will be analyzed by
using both inferential and descriptive statistical analysis. Inferential statistical data analyses
will regression and correlation to analyze the data. Descriptive statistical analysis such as
averages, percentages, frequencies and tables will be used to analyze and present the data.
Generally both data processing and analysis procedures will undertake by computer using
Microsoft excel (version IBM SPSS Statistics version 26) program.

3.7.2.1. Descriptive analysis

The researcher will use descriptive analysis to reduce the data into a summary format by:

 Tabulation – the data arranged in the table format.

 Measure of central tendency – minimum and maximum values, mean and standard
deviation were used to describe the data obtained from the respondents.

3.7.2.2. Inferential statistics analysis

According to Sekaran (2000), ‟inferential statistical analysis allows researchers to infer from
data through analysis the relationship between two variables; differences in a variety among
different subgroups; and how several independent variables might explain the variance in a
dependent variable.” In this study the researcher conduct normality test before conducting
inferential statistics analysis in order to decide which method of analysis is fit to the data
gathered for the. According to (Mc Daniel and Gates, as cited by Adam Martin, 2007), if the
Likert scale data is normally distributed the analysis should be (Parametric method): Liner

44
regression and Pearson correlation. If the Likert scale data is not normally distributed the
analysis should be (Non-Parametric method): Ordinal regression and Spear Man
Correlation. Table 3.1: bellow present summary of data analysis.

Table 3.1 Summary of data analysis

45
Variab Items Measurements Hypothesize
les d
Likert scale relationship
OC1 I would be happy to spend the rest of my career in this bank 1SDA-5SA
commitment (OC)

OC2 I feel as if this organizations objectives are my own ″

Organizational

OC3 I have many alternatives to consider leaving this organization. ″

OC4 I feel an obligation to remain in this organization ″
OC5 This organization deserves my loyalty ″
OC6 I enjoy discussing about my organization with people outside it ″
IDVAR1A Our organization follows the policy of matching pay with Performance ″ Significant
Incentives (IDVAR1)

IDVAR1B The pay we receive is competitive compared to that of Employees doing similar ″ and
Compensation and

work in other organizations. positive

IDVAR1C We are satisfied with the benefits we receive. ″
IDVAR1D The benefits we receive in our organization are similar to what most of the other ″
organizations in the industry provide to their employees
Human resource management practice (HRM)

IDVAR1E Rewards and incentives are fairly distributed in our Organization. ″

IDVAR1F Rewards in our organization are strictly linked to employee Performance. ″
(x1)

IDVAR1G The existing reward and incentive plans do not motivate us for better performance ″
IDVAR2A We are encouraged to participate in various seminars and workshops etc. ″ Significant
IDVAR2B Training in our organization includes social skills, general problem solving ″ and
skills and broader knowledge of the organization and business. positive
(IDVAR1) x2
Development
Training and

IDVAR2C The training needs of the employees in our organization are assessed on the basis ″
of their performance appraisal
IDVAR2D We are assigned challenging jobs to charge our enthusiasm and develop our skills ″
IDVAR2E The contents of the training programs organized are always relevant to the ″
changing needs of our jobs and our business
IDVAR3A Our organization places the right person in the right job. ″ Significant
Recruitment

IDVAR3B There is a good orientation for the newly hired employees ″ and
IDVAR3C There is an accuracy of person specification in our organization ″ positive
IDVAR3D Selection of a candidate in our organization is strictly based on his/her merit. ″
and

IDVAR3E There is a well-designed induction program for new hired employees ″

46
 IDVAR3F I have given a clear job description that describes about my job ″

Selec

(IDV
AR1
tion
IDVAR3G Adequate and relevant information about the organization and job is provided to ″
the candidate at the time of recruitment.
Communication and IDVAR4A I always can get an opportunity to air my views ″ Significant
IDVAR4B
We have given an opportunity to participate in the policy design that guide and ″ and
(IDVAR1) x4 rule our working lives positive
Info. Sharing

IDVAR4C There is a quarter meeting that are open to all to discuss the work progress ″
IDVAR4D There is smooth and friendly employer employee dialogue ″
IDVAR4E There is a Free flow of information to both employees and management on the ″
achievements of the company
IDVAR4F There is a good orientation for the newly hired employees ″ Significant
IDVAR5A There is fairness, transparency and equitability of management during decision ″ and
making positive
IDVAR5B Continuous efforts are made in our organization to create a sense of belonging ″
(IDVAR1) x5

among employees and feel like a member of the Corporate family

Job security

IDVAR5C Most of the supervisors in our organization encourage us to discuss our problems ″
with them
IDVAR5E Management identifying employee problems and helping solve them ″
IDVAR5E We do not work under the threat of losing our jobs ″
Job satisfaction (JS) A There are adequate tools and resources needed to do the job. ″ Significant
(JS) (x6) (JS) B The amount of work expected of me is reasonable. ″ and
(JS) C Your work is according to your qualification and skills. ″ positive
(JS) D Employees in the organization have necessary authority to perform their duties ″
effectively
(JS) E Employees get appreciation and rewards if the desired work / targets are ″
accomplished.
(JS) F Company has good career prospect for its employees. ″

OC= β0 + β1 (HRMP1) + β2 (JS2) + E = β0 + β1(X1) + β2(X2) + β3(X3) + β4(X4) + β5(X5) + β6(X6) + E.

If the Likert scale data is normally distributed If the Likert scale data is not normally
The analysis will be (Parametric method): distributed
The analysis will be (Non - Parametric 47
 Liner regression method):
 Ordinal regression
 Pearson correlation  Spear Man Correlation
48
 3.8. Validity and Reliability Test

3.8.1. Validity

Validity represents how well a variable measures what it is supposed to measure more simply,
validity is the accuracy of measurement (Saunders, 2003). In order to ensure the validity of
this study and data collection instrument, a pilot survey will be conducted on randomly
selected employees by making use of the questionnaire developed for this study in order to
ensure that the questionnaire is appropriate and statements are generally understandable.
Besides, proper detection by an advisor will also take to ensure validity of the instruments.
Finally, the improved version of the questionnaires will be printed and distributed.

3.8.2. Reliability test

Sekaran (203) mentioned reliability of a measure is an indication of the stability and

consistency with which the instrument measures the concept and helps to assess the goodness
of the measure. Zikmund (1997) affirms this that reliability is the degree to which measures
are free from random error and therefore yield consistent results. Thus this research was used
Cronbach‘s Alpha as a measure of internal consistency. Cronbach’s Alpha is a reliability
coefficient that indicates how well items in a set are positively correlated to one another
(Sekaran, 2003) by using of the following formula α= rk/ (I + (K-I) r), where k is the number
of variables in the analysis and r is the mean of the inter-item correlation and also he affirms
that normally, reliabilities of 0.7 range is considered acceptable and over 0.8 is good.
Depending on this a pre- test was given to employees of two branches. The branches in the
pre-test were not included in the final sample. Feedback from the respondents had value to
improve the data collection instruments by eliminating any ambiguities and inadequate terms.
Based on this the following Cronbach’s alpha was identified

49
Table 3.2: Cronbach’s alpha

Reliability Statistics
Cronbach's Alpha N of Items
.859 42
No. Variables No. of items Cronbach’s alpha
1 Compensation and incentives 7 .983
2 Training and development 5 .982
3 Recruitment and selection 7 .971
4 Communication and information sharing 6 .967
5 Job security 5 .967
6 Job Satisfaction 6 .967
7 Organizational Commitment 6 .967
8 Total 42 .859

3.9. Ethical Considerations

As suggested by Trochim, (2000); and Sekaran, (2006), the researcher warranted the strict
devotion of the following ethical conducts: Respondents take part in the research voluntarily
and data will be collected based on the purpose of the research will clearly explained to
respondents, Information provided by respondents will be treated with strict confidentiality
and the researcher ensured that participants will remain unknown throughout the study and
there will no misrepresentation or distortion of the actual data collected from respondents.

50
CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND DISCUSSION

4.1. Introduction

This chapter presents the assessment made to evaluate the role of HRM practice and
employees job satisfaction on employees’ organizational commitment of Awash Bank at
North Addis District. The first section of this chapter provides the demographic characteristics
of employees which participated in the survey. Then an assessment is made on the factor
analysis used as data redaction method and the validity and reliability testes conducted on the
constructed factors. The correlation and regression analysis on the study factors is presented
afterwards. Finally, a discussion is given on the major findings of the data analysis.

4.2 Response rate of respondents

Totally three hundred four respondents (three hundreds for questionnaire and four for
interview) were targeted for the study and three hundred questionnaires were distributed to the
targeted respondents. However out of this number, 283 questionnaires were received out of
which 17 were poorly or inappropriately filled and were therefore not used in the analysis. The
questionnaire which is used in the analysis is 94.3% and this indicates that it is adequate for
analysis and interpretation of the data.

Table 4.1: Distributions of the total Respondents

Category Position Target Actual Percentage

clericals CSO 163 157 55.48%
SCSO 90 79 27.92%
CSM 47 47 16.6%
Total 300 283 100%

51
 4.3. Demographic Characteristics of Respondents.

Information related to demographic variable of respondents are displayed as follows in table

Table 4.2 Demographic characteristics of respondents

No. Factor Category Frequency Percent

F 115 40.6
M 168 59.4
1 Gender total 283 100.0
Below 30 142 50.2
30-39 98 34.6
2 Age 40-49 34 12.0
50 and above 9 3.2
total 283 100.0
Diploma (6) 1 0.4
Degree 203 71.7
3 Level of education Master’s degree 79 27.9
total 283 100.0
2yr 21 7.4
3yr 116 41.0
4 Length of service 4yr 48 17.0
5yr 23 8.1
6yr and above 75 26.5
total 283 100.0
CSO (16) 157 55.5
SCSO 79 27.9
5 current position CSM 47 16.6
total 283 100.0
2500-5000(21) 47 16.6
5001-7000 112 39.6
6 Monthly income 7001-10000 72 25.4
Above 10000 52 18.4
total 283 100

52
As shown from the above table, a relatively similar composition of male and female
employees of the banks was represented in the study and most of the banks’ employees are in
the younger age group which has also been exhibited in the data received from participants of
the study.

The level of education of respondents was mostly bachelor‘s degree (71.73%) due to the fact
that respondents were officers, middle of top management personnel and usually, a first degree
is required for such position

As it is possible to see from the above table, most of the respondents (40.99%) has been
working in their organization for three years, 26.50% of the respondents were six and above
and only 8.13 were worked their organization for five years

Relating to their current position, 55.48% were at CSO (Customer Service Officer) level,
27.92% were SCSO (Senior Customer Service Officer) level and only 16.61% were CSM
(Customer Service Manager) level.

The respondents‘ monthly income, as described in the above table, out of 283 respondents
only 16.61% of respondents gain 2500-5000, the rest 39.58% respondents got 5001-7000 and
25.44% of the respondents received a monthly income of 7001-10,000. Very few of the
respondents (18.37%) received a monthly income of above 10,000 birr.

4.4 Descriptive Statistics of HRM Practice, Job Satisfaction and Organizational

Commitment

In this section employee‘s perception of HRM practice their job satisfaction and
organizational commitment are discussed. Respondents were asked to indicate the extent to
which they agreed to statements relating to HRM practices undertaken by their organizations,
their job satisfaction, and organizational commitment on five-point Likert scale (1=Strongly
disagree – 5= Strongly agree) a mean of above 2.9 is regard to measure satisfaction at the test

53
variables. Standard deviation was used to indicate the variation or dispersion from the average
(mean). The detailed statistical result for each statement is attached in the appendix 3.

Table 4.3: Descriptive Statistics of HRM Practice, Job Satisfaction and Organizational
Commitment

N Std. Minimu
Variables Valid Missing Mean Deviation m Maximum
Compensation and 283 0 2.5098 .85373 1.14 4.00
incentives
Training and 283 0 3.3852 .65768 2.20 4.40
development
Recruitment and 283 0 3.6007 1.04882 1.29 5.00
selection
Communications and 283 0 2.9511 1.29247 1.00 5.00
information sharing
Job security 283 0 2.9025 1.27021 1.00 5.00
Job satisfaction 283 0 2.8522 1.25495 1.00 5.00
Organizational 283 0 2.5760 1.40303 1.00 5.00
commitment

4.4.1 Human Resource Management Practices

A. Compensations and incentive

Compensations and incentive are measured based on intrinsic and extrinsic rewards or pay and
benefits. Studies show that compensation satisfaction/dissatisfaction plays an important part in
employees’ commitment. Although there is a general agreement that compensation levels do
not single handedly guarantee to employee commitment, it is an essential starting point in
most strategies to attract & remain them committed (Chew.2004).

54
As it is seen from the above table and (appendix3A), the mean of compensation and incentives
received below the average. The respondents agreed with stated statement of the existing
reward and incentives plan do not motivate us for better performance; (mean 3.208 with
standard deviation 1.449). This indicates that the total reward & incentive which offered in
these two banks is not satisfied. Furthermore the respondents are not satisfied with the policy
of matching pay with performance (mean =2.689 with SD= 1.549) and the fairly distribution
of rewards & incentives in their organization. They also believed that the pay they receive is
not competition compared with other employees in other organization in the same industry
(mean= 2.2332 with SD= 1.30548 and 2.2155 with SD =1.27698). So this confirms that the
respondents are not satisfied with the benefits they received (means= 2.0353 with SD=
1.15723). Totally the standard deviation of all the above mentioned statements show that they
are highly deviates from the average mean. This is also confirmed by the HR managers during
interview that because of some scarce of resources employees were not given all that they
demanded but would be improved upon with time. But still they don‘t believe that they are
paying less than the others which are found in the industry.

B. Training and development (IDVAR2)

Related with Training & development Huselid (1995) has suggested that HRM practices such
as providing training are important determinates of employee commitment.

As it is seen from the above table the mean of training and development received above the
average (mean= 3.3852). As it shows in appendix 3B, the mean and standard deviation of
training and development, ranges from 2.8905 to 3.7138, most of the respondents are satisfied
with the content of the training program, the relevancy of the changing needs of their job and
their business (mean= 3.7138 SD= 1.19071).

They also believed that they are assigned challenging Jobs to charge their enthusiasm
&develop their skill (mean=3.6042 SD= 1.15420). In addition to this the bank aligns the
contents of the training programs with changing needs of their jobs and their business needs.

55
But only the respondents are not satisfied with the statement of ‗we are encouraged to
participate in various seminars at workshops’ (mean=2.8905 SD=1.21982). Those HR
managers of the bank who involved in the interview are assured that the organization give
more emphasis for training and development this is because of the banking industry it is
highly sensitive. The types of the training depend on the objective of the business and
employee. There is on and off job training depending on the change needs of the job and
business needs. They also agreed with the issue of not participating employees in different
seminars and workshops. The reason they raised was that in such seminars and workshops
their representative of branch managers and employee unions participate only. And they share
what they get to employees easy way.

C. Recruitment and selection

According to Huselig (1995) HR Practices of high performance companies are found that
attracting and selection the right employee increases the employee productivity, boosts
organizational performance and contributes in increasing employee’s organizational
commitment (Beckes and Huselid, 1999).

Relating with this issue respondents are asked to rate issues as shown in appendix 3C. They
confirm that there is a well-designed induction program for new hired employee and there is a
good orientation for the newly hired employees (mean=4.1484 and 4.0601). They also
believed that they have given a clear job description plus adequate and relevant information
about the organization (mean=4,000, 3.8516 respectively). But still they doubt that weather
their organization placed the right person in the right job and if there is accuracy of person
specification in their organization (mean=2.9399 and 2.9894 respectively). In general relating
with recruitment and selection the bank has a well-designed recruitment & selection program.
This explained in table 4.4 (mean=3.6007) as of training and development (mean=3.3852).

As the managers confirmed that their organization use a mixed of recruitment tools like
internal and external recruitment through internet, newspaper, board screen and referral and an

56
in depth induction is given to the new hired employees and this make them to feel belonging,
feel confident and being achiever. In addition to this the organization works hard on matching
of the right person with the right place.

D. Communications and information sharing

Related with communication and information sharing, it fosters organizational transparency

which reduce turnover. (Ahmed and Schroeder, 2003) and increases synergistic working
relationship among employees (Nonaka, 1994). So making all information available for
employees makes them confident on their organization and then leads them to commit to their
organization. Depending on this concept employee are asked to rate on different issues relating
with communication and information sharing as depicted on the appendix 3D.

In most parts of the issued, the respondents are in between as shown on table 4.4
(mean=2.9511, i.e. almost = a mean of 2.9 which is a mean of above 2.9 regard to measure
satisfaction in this study). Respondents indicated that managers clearly communicating them
what the organization‘s expectation and they also indicate that there is a free flow of
information to both direction, employees& managers, on the achievements of the company
(mean=3.6643 SD=1.23929 and 3.1378 SD=1.38843 respectively). But on the rest issues they
seem that they are not satisfied, especially on getting opportunity to air their view, on
participation of policy design, on quarterly meeting to discuss the work progress and on
smooth & friendly employee – employer dialogue. On these issues the mean is almost below
the average level of 2.9. In the interview, the HR managers verified on the issues that the
employees are not satisfied. As they mentioned that district managers, HR experts, branch
managers and labor union are participating in the review meeting. As they confirmed that
there is a quarter meeting to discuss the quarter achievement of the organizations generally
and braches specifically. Decisions on HR practices were implemented through the
supervision of the HR managers.

E. Job security

57
Many empirical studies show that job security has a positive effect on the firm performance.
Ahmed and Schroeder (2003) found that among others, job security impacts operational
performance indirectly through organization commitment. Delery and Doty (1996) confirm
that after they study the US banking sector, job security has a positive relationship with firm
performance. To check and suggest some results relating with job security employees of
Awash Bank were asked to rate some of the issues as it presented in appendix 3E.

Out of the five issues, the respondents are seeming that they are a little beat satisfied with the
two issues of “we do not work under the threat of losing our jobs and management identifying
employee‘s problems and helping solve them (mean=3.6219 SD=0.06354 and 3.0212
SD=0.08465 respectively)”

On the rest issues, like the fairness, transparency & equitability of management during
decision making, the continuous effort of management to make employees feel belonging and
supervisors’ encouragement of discussion employee‘s problem with them, they are not
satisfied. As it is possible to see from the appendix 3E, their mean are 2.2294 SD=0.07560,
2.6502 SD=0.09247, and mean=2.9894 SD=0.07747 respectively. So this indicates that the
banks need to raise the employees perception on the above three issues whose their average
mean are below 3. In general relating with job security the employees’ perception receive
average mean (i.e. 2.9025). This indicates that the bank needs to raise the employees’
perception on job security issue.

The HR manager of the bank reflected about the above issues in the interview that the
organization is working transparently and fairly. To make it effective there is controlling
mechanism of checklist. The two branch managers of the banks also reflects the above issues
as same as the HR manager but they don‘t believe that the compensations and incentives
currently satisfactory.

58
 4.4.2 Job Satisfaction and Organizational Commitment

According to the table 4.4 above, the mean and standard deviation organizational commitment
of the Employee indicates that the employees of the bank have generally low intention towards
the option of long term commitment to the organization as demonstrated by the mean value
which was 2.57 with standard deviation of 1.403, which is below the average. The mean and
standard deviation of job satisfaction (Mean= 2.8522 and Std. Deviation= 0.666) is also
indicates that the employees of the bank have generally low satisfaction on their job. These
results indicate that the bank needs to work on employee’s job satisfaction and organizational
commitment.

4.5. Results of Inferential Statistics

4.5.1. Result of Normality Test

Normality test was conducted to identify whether the Likert scale data are normally distributed
or not in order to identify which method of analysis should be employed to further analysis
and address the research problem. The assumptions we take into consideration in the normality
test are first number of our data set: if the data set are more than 100 we check Kolmogorov-
Smirnov’s statistical result. When it is less than 100 we examine Shapiro-Wilk’s statistical
result. Second if the data is statistically insignificant i.e. > 0.05 the data is said to be normally
distributed, while its level of significant is < 0.05 i.e. statistically insignificant the data said to
be not normally distributed. In this regard the normality test result of the study data is
presented in the following table.

Table 4.4: normality test result

59
 Kolmogorov-Smirnova Shapiro-Wilk
Statistic Df Sig. Statistic Df Sig.
Compensation and incentives .138 283 .000 .935 283 .000
Training and development .220 283 .000 .917 283 .000
Recruitment and selection .142 283 .000 .911 283 .000
Communications and .114 283 .000 .936 283 .000
information sharing
Job security .143 283 .000 .929 283 .000
Job satisfaction .127 283 .000 .935 283 .000
Organizational commitment .114 283 .000 .936 283 .000

a. Lilliefors Significance Correction

As it shows in the above table the Likert scale data of the study are not distributed normally.
All data are statistically significant at the p value of 0.000 level i.e. p < 0.05 level of
significance. Furthermore the researcher checked further test by logged each variable in order
to know if the data are normally distributed before proceeding to further analysis. As
presented in table 4.6 bellow, the logged test result of the data shows that the data are not
distributed normally. There for as far as our data are not distributed normally the inferential
statistics analysis employed in this study should be Non-Parametric method): Ordinal
regression and Spear Man Correlation.

Table 4.5 logged normality test result

Kolmogorov-Smirnova Shapiro-Wilk
Statisti
c Df Sig. Statistic Df Sig.
Compensation and .162 283 .000 .918 283 .000
incentives
Training and development .227 283 .000 .892 283 .000
Recruitment and selection .200 283 .000 .837 283 .000
Communications and .137 283 .000 .891 283 .000
information sharing
Job security .169 283 .000 .912 283 .000
Job satisfaction .144 283 .000 .918 283 .000
Organizational commitment .137 283 .000 .891 283 .000

60
a. Lilliefors Significance Correction

4.6 Spear man correlation Coefficient

In order to determine whether there are significant relationships between the HRM practice,
job satisfaction and employees organizational commitment, Spear Man correlation coefficient
was computed.

Accordingly table 4.7 presents the Correlation between the HRM practice, job satisfaction and
employees organizational commitment of Awash Bank at Addis Ababa North Addis district.
The correlation coefficient indicates that there is a positive and substantial relationship
between HRM practices, job satisfaction and organizational commitment of employees.

Table 4.6: The results of Spear Man Correlation Coefficient

Recruitment

Communica
developmen

Job security
Compensati

commitmen
information

Organizatio
satisfaction
incentives

tions and
selection
Training

sharing
on and

and

and

Job

nal
t

Spearman's Compensation 1.000

and incentives
rho Training and .571** 1.000
development
Recruitment and .799** .836** 1.000
selection
Communications .813** .820** .993** 1.000
and information
sharing
Job security .807** .830** .993** .994** 1.000

61
 Job satisfaction .810** .820** .994** .995** .999** 1.000
Organizational .813**
.820**
.993**
1.000**
.994**
.995** 1.000
commitment

**. Correlation is significant at the 0.01 level (2-tailed).

As shown in table 4.7 the relationship between HRM practice, job satisfaction and
organizational commitment of employees, here the correlation coefficient indicates a positive
substantial relationship exists. Substantial/strong relationship exists between Compensation
and incentives, Training and development, Recruitment and selection Communications and
information sharing, and Job security aspects of HRM practice and organizational
commitment of employees ranging from .813, .820, .993, 1.000 .994, and .995 correlation
coefficient respectively. Employee’s Job satisfaction and Organizational commitment has also
strong and positive correlation with .995, correlation coefficient. The correlation coefficient
value of (r =.813, .820, .993, 1.000 .994, .995 p < 0.01) respectively which is statistically
significant at 95% confidence level. Furthermore the correlation between aggregate HRM
practice and job satisfaction with employees organizational commitment is presented in the
following table 4.8.

Table 4.7 correlation between aggregate HRM practice and job satisfaction with employees
organizational commitment

Human
Job resource
Organizationa satisfacti management
l commitment on practice
Spearman's Organizational Correlation 1.000
rho commitment Coefficient
Job satisfaction Correlation .995** 1.000
Coefficient

62
 Human resource Correlation .995** .994** 1.000
management practice Coefficient

**. Correlation is significant at the 0.01 level (2-tailed).

As shown in table 4.8 the relationship between HRM practice as a single variable, job
satisfaction and organizational commitment of employees, here the correlation coefficient
indicates a positive substantial relationship exists with .995, correlation coefficient to both
variables.

4.7 Test Result of Ordinal Regression Model Assumptions

Different tests were run to make the data ready for analysis and to get reliable output from the
research. These tests were intended to check whether the ordinal regression model
assumptions are fulfilled when the explanatory variables are regressed against dependent
variables. Accordingly, the following result presents how well the data fits ordinal multiple
regression model assumption.

A. Goodness of statics

Good ness of statics helps us to determine whether the model adequately describes the data.
The goodness of statics is tested by model fitting and goodness- of – fit test.

I .Model fitting information

The model fitting information gives us how well the model fits the data. It is the test result of
the null hypothesis which states that: there is no significance difference between the base line
model to the final model (baseline model is without any independent variable and the final
model is with all possible independent variable). If the model is significant (i.e. p < 0.05) this
shows that there is a significant difference between baseline model and final model. And the

63
reverse is true when the p value is > 0.05. The table below shows the model fitting
information.

Table 4.8: Model fitting information

-2 Log
Model Likelihood Chi-Square Df Sig.
Intercept Only 904.675
Final .000 904.675 6 .000

As showed in the above Table 4.9 the model which employed is well fits the data with p
value .000, level of significance which is < 0.05 level of significance recognized as the model
adequately fits the data.

II. Goodness-of-Fit

The second one is a goodness – of – fit test, it generally refers to measuring how well do the
observed data correspond to the fitted (assumed) model. It tests the null hypothesis which
stated that: the observed data is having the goodness of fit with the fitted model. Here an
insignificant value (i.e. p >0.05) would mean that there are no significant difference in the
observed data and fitted (assumed) model. The result of goodness of fit test for this study is
presented under the following table 4.10.

Table 4.9: The result of goodness of fit test

Chi-Square Df Sig.
Pearson 41.879 254 1.000
Deviance 55.249 254 1.000

The above table present Pearson and deviance Chi-square result which tells us the goodness of
fit. As it show 1.00 significance level which is statistically insignificant i.e. >0.05 significance
level it approved that there are no significant difference in the observed data and fitted model.

B. Pseudo R – square

64
 Pseudo R – square indicates the proportion of the variance explained by the independent
variables on the dependent variable in the regression model. Technically it is not explained the
variation; but it can be used as approximate variation in the criterion variable. The following
table provides us the result of Pseudo R – square.

Table 4.10: Pseudo R-Square

Cox and Snell .953

Nagelkerke .963
McFadden .963

Link function: Logit.

As it shows in the above table 4.11, the result of pseudo R – square is 0.963 which is more
than the recommended 0.7. Based on this result we can argued that there has been a 96.3%
improvement in the prediction of outcome (i.e. organizational commitment) based on
predictors in comparison to the null model. Or approximately 96.3% of employees’
organizational commitment changed as a result of job satisfaction and HRM practice.

C. Test of parallel line

The last one is test of parallel lines. Assumption of ordinal regression we examine on this test
is that; odds of falling into the highest (vs. lowest) categories on the dependent variable are the
same. In simplest term effects of the predictors (independent variables) are the same across the
level of the dependent variable. The result of test of parallel line tells us whether or not we are
violating this assumption. The result of the test is expected to be insignificant (i.e. p value is >
0.05). If the p value is significant, we must use multi nominal logistic regression. Table 4.12:
bellow presents the test result for this study.

Table 4.11: Result of test of parallel line

Test of Parallel Lines a

65
 -2 Log
Model Likelihood Chi-Square Df Sig.
Null Hypothesis .000
General .000b .000 18 1.000

a. Link function: Logit.

b. The log-likelihood value is practically zero.

As it showed in the above table the result of test of the parallel line for the study is
insignificant with the p value of 1.000, which full fil the null hypothesis and or fit the model
assumption

As it is presented above the data are satisfied all assumptions of the mode. Therefor we can
conclude that the data are ready for further analysis and we can get reliable output from the
ordinal regression analysis as well as the research.

4.8 Ordinal Regression Analysis

For the purposes of determining the extent to which the explanatory variables explain the
variance in the explained variable, ordinal regression analysis was performed. Ordinal
regression analysis is used to assess the impact of one or more predictor variables in the
outcome variable. It is a method to determine the reason result relationship of independent
variables and dependent variable. The results of the ordinal regression analysis are narrated as
under. Regress organizational commitment of employees (as the dependent variable) on HRM
practice and job satisfaction (as independent variables) for Awash Bank of Addis Ababa North
Addis district.

Table 4.12: Result of ordinal regression

Estimate Std. Error Wald df Sig. 95% Confidence

Interval

66
 Lower Upper
Bound Bound
Threshold [DVARa = 1.00] 35.070 7.810 20.165 1 .000 19.763 50.377
[DVARa = 2.00] 44.497 7.967 31.196 1 .000 28.883 60.112
[DVARa = 3.00] 56.900 9.520 35.720 1 .000 38.240 75.560
[DVARa = 4.00] 73.524 10.382 50.150 1 .000 53.175 93.873
Location IDVAR1 5.225 1.607 10.579 1 .001 2.077 8.374
IDVAR2 2.011 1.684 1.425 1 .233 -1.291 5.312
IDVAR3 -1.901 3.186 .356 1 .551 -8.146 4.343
IDVAR4 5.525 3.463 2.546 1 .111 -1.262 12.312
IDVAR5 -9.132 8.845 4.202 1 .040 -35.469 -.796
IDVAR6 24.623 10.325 5.687 1 .017 4.386 44.860

Link function: Logit.

The results of ordinal regression coefficient are simply interpreted as the estimated or
predicted change in log odds of being in a higher (as opposed to a lower) group or category on
the dependent variable. It helps us to know whether our independent variable have a
significant effect on the dependent variable. The positive estimate or coefficient interpreted as
for every one unit increase on independent variable, there is a predicted increase of certain
value in the log odds of falling at a higher level on the dependent variable. Or more generally
it indicates that there is an increased probability of falling at a great level on the dependent
variable as value rise on an independent variable. While the negative estimate or coefficient
associated with an increase likely hood of an independent variable falling in to the lower
category in the dependent variable.

On this regard the result of the regression analysis show that job satisfaction (IDVAR6),
communications and information sharing (IDVAR4), compensation and incentives (IDVAR1),
and recruitment and selection (IDVAR2) as predictor of employees organizational
commitment have a positive effect on employs organizational commitment with the estimate
or coefficient of 24.623, 5.525, 5.225, and 2.011 respectively. While job security (IDVAR5)
and Recruitment and Selection (IDVAR3); have a negative effect as predictor of employees’
organizational commitment with the coefficient of -9.132, and -1.901, respectively. However,

67
as the result indicates the only independent variables which have a significant effect on
employees organizational commitment are compensation and incentives (IDVAR1),
communications and information sharing (IDVAR4), and job satisfaction (IDVAR6), with a
significant level of 0.001, 0.040, and 0.017, respectively.

Another important part of ordinal regression is an odd ratio. The odd ratio is the exponential
value of the estimate or coefficient of each independent variable. It represents the odd of
falling into higher or lower category on the dependent variable with a unit change in the
independent variable. Table 4.14: below presents the odd ratio of the independent variables.

Table 4.13: result of odd ratio

Variables Estimate (B) Odd ratio (Exp(B))

IDVAR1 5.225 185.861171
IDVAR2 2.011 7.4707844
IDVAR3 -1.901 0.14941913
IDVAR4 5.525 250.886338
IDVAR5 -9.132 0.000108149
IDVAR6 24.623 4.93E+10

As it presented above the (Exp(B)) Colum contains odds ratios reflecting the multiplicative
change in the odds of being in a higher category on the dependent variable organizational
commitment of employees for every one unit increase on the independent variable holding the
remaining the remaining variable constant. An odd ratio > 1 suggest that an increase
probability of being in the higher level on the dependent variable as values increase on an
independent variable. While an odd ratio < 1, it suggests that a decreasing probability with
increasing value on an independent variable. An odd ratio = 1, suggests that there is no
predicting change in the likely hood of being in a higher category as values on an independent
variable increase.

In this regard the odd ratio indicates that the odd of being in a higher level on employees’
organizational commitment increased by a factor of 185.861, 7.470, 250.88, 1.334, and

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4.93E+10, for every one unit increase in compensation and in compensation and incentives
(IDVAR1), training and development (IDVAR2), communication and information sharing
(IDVAR4), job security (IDVAR5), and job satisfaction (IDVAR6) respectively. And also the
odds ratio indicate that the odds of being in a higher level on employees organizational
commitment decries by a factor of 0.149, for every one unit increase in recruitment and
selection aspects of HRM practice (IDVAR3).

4.9 Discussion of Results

The purpose of this study was to investigate the role of HRM practice and employee job
satisfaction (predictor variables) in predicting organizational commitment of employees
(outcome measure) in Awash International Bank S.C. Moreover it aims to investigate the
combined and relative effects of selected HRM practices and employee job satisfaction on
organizational commitment. Additionally, the aim was to find out if there were correlations
between and among HRM, employee job satisfaction and organizational commitment in
Awash International Bank S.C. The study tested seven hypotheses and addressing nine
research questions regarding the effect selected HRM practice employees’ job satisfaction and
organizational commitment. Brief discussion is provided for each selected HRM practices and
job satisfaction effects on organizational commitment of employees. In this regard, the
findings extend our knowledge on the association between selected HRM practices, employee
job satisfaction and organizational commitment in Ethiopian Banking sector.

1. The relationship between and among HRM practice, employee job satisfaction
and organizational commitment of employees

The study reveals that there is a positive and substantial relationship between and among
HRM practice, employee job satisfaction and organizational commitment of employees. As
shown in table 4.8 HRM practice as a single variable and job satisfaction have a positive and
substantial relationship with organizational commitment of employees (i.e. with .995,
correlation coefficient). These findings are consisted with previous studies that highlighted

69
that human resource practice and employee job satisfaction were found to be contributing
positively to employees’ organizational commitment (Haruna and Marthandan, 2017;
Nwachukwu and Chladkov’a, 2017; Taghrid, 2015).

2. The effect of compensation and incentives as HRM practice on organizational

commitment of employees

H1: Compensation and incentives has a positive and statistically significant effect on
organizational commitment of employees.

The study revealed that compensation and incentives as HRM practice have a positive and
statistically significant effect on organizational commitment of employees. As the regression
result indicates: compensation and incentive aspect of HRM practice was a significant
predictor of employees’ organizational commitment. The coefficient value showed that for
every unit increase in compensation and incentive practice there is a predicted increase of
5.225 in the log odds of employees’ organizational commitment with the significance value of
0.001. the result of the odd ratio also indicate that the odd of being in a higher level on
employees organizational commitment increased by a factor of 185.861 for every one unit
increased in compensation and incentive practice of HRM. These result revealed that an
increase in the presence of compensation and incentive practice will result an increment on
employee’s organizational commitment. There for the study hypothesis of the study: (H1:
Compensation and incentives has a positive and statistically significant effect on
organizational commitment of employees.) is accepted.

These findings are consistent with previous studies that highlighted that Compensation and
incentives has a positive effect on organizational commitment of employees. The studies by
Chew and Chan (2008) and Hong et.al (2012) who found out that effective compensation
reduces employee turnover and increases organizational commitment. Whiles Chew and Chan,
(2008) employed a Structural Equation Model to establish that remuneration positively
predicted organizational commitment and intention to stay on a job; Hong et.al, (2012) used

70
regression analysis and found out that, there is a significantly positive relationship between
compensation and organizational commitment.

According to March and Simon (1958) as long as an organization pays an individual monetary
inducement that matches or exceeds the individual’s input into the organization; the individual
will remain committed to the organization. Another reason why compensation influences
organizational commitment is that employees who receive good compensation may feel that
they are appreciated by the organizations for their performance and contributions (Lai, 2011).
They may then be motivated to contribute more and also stay with the organization. Thus
employees place a lot of value on compensation and it is therefore not surprising that
compensation has a positive significant relation on employee organizational commitment.

3. The effect of training as HRM practice on organizational commitment of

employees

H2: Training and Development has a positive and statistically significant effect on
organizational commitment of employees.

Another objective of the study was identifying the effect of training as HRM practice on
organizational commitment of employees. To this end the study result shows that training and
development practice have a positive effect on employees’ organizational commitment. But its
effect was not statistically significant. As it presented in table 4.14, since training and
development practice has a positive estimate/coefficient and odd ratio (i.e. B = 7.47, exp B =
2.011), it shows that training and development practice have a positive effect on employees
organizational commitment. This interoperated as a unit increase in training and development
results in increase (by 2.011 times) in the likelihood of employees’ commitment to their
organizations. But as the p value is > 0.05 (i.e. P=0.233) this effect is statically insignificant
Thus the alternative hypothesis (H2: Training and Development has a positive and statistically
significant effect on organizational commitment of employees) couldn‘t be accepted fully.

71
There for this study reviles that training and development has a positive and insignificant
effect on employees’ organizational commitment.

Besides this finding according to previous researches continuous efforts are needed to ensure
effective and adequate training is provided to employees in order to achieve organizational
goals with higher degree of commitment, confidence and satisfaction towards their
organization. The study of Dowlig and Welch (2004), found the training have significant
effect on employees’ commitment as employees feel that they work for providing more
trainings and development programs concerned about their future capacity and make them up-
to-dated to the current and future demands of the work they do and will do. Therefore,
according to this study, training and development aspects of HRM practice has effect on
organizational commitment of the employees. Similarly, Waris (2005) argues that when
employees believe employers have invested in them through training and development, they
become satisfied and subsequently cultivate a sense of belonging to the organization.

4. The effect of selection and recruitment as HRM practice on organizational

commitment of employees

H3: Recruitment and selection have a positive and statistically significant effect on
organizational commitment of employees.

Recruitment and selection is the other type of human resource management practice that this
study examines its effect on employee’s organizational commitment. The study revealed that
recruitment and selection aspect of HRM practice has not significant effect on employee’s
organizational commitment. Even if the regression coefficient and the odd ratio showed a
negative effect (i.e. the negative coefficient (B = -1.901) shows that for every one unit increase
in recruitment and selection aspect of HRM practice, there is a predicted decrease of 1.901in
the log odds of being in the higher level on employee’s commitment, and or A unit increase in
recruitment and selection results in a 0.149 times decrease in employee’s commitment); this

72
effect is statistically insignificant with the p value of 0.551 which is greater than the necessary
level of significance p ≥ 0.05. Thus the alternative hypothesis completely rejected.

It was indicated by Schuster, (1986) that the right people should always be hired so that the
cost of recruitment can always be kept low. Huselid, (1995) also added that hiring the right
people increased productivity and that placing the right advertisement, ensuring clarity of job
description, inducting and orienting the new employee would help achieve the benefits of
good recruitment and selection exercise. On the whole, apart from “clarity of job description”,
all the recruitment and selection factors are not usually practiced although it is important. This
means that these unpracticed but important factors can impede the retention of talented
employees in the company.

5. The effect of communication and information sharing as HRM practice on

organizational commitment of employees

H4. Communication and information sharing have a positive and statistically significant effect
on organizational commitment of employees

The study results revealed that internal communication and information sharing have a
positive and insignificant effect on the commitment of employees. As it presented in table
4.14; the B coefficient (5.525), and odds ratio of (250.886), shows communication and
information sharing has a positive effect on organizational commitment of employees. The
odd ratio of 250.886 means that a unit increases in communication and information sharing
will lead to 250.886 times more likelihood of employees committed to their organizations.
While the statistical significance level with p value = 0.111(i.e. > 0.05) shows that its effect is
insignificant. Therefor the alternative hypothesis (Communication and information sharing
have a positive and statistically significant effect on organizational commitment of employees)
is partially rejected.

It has been confirmed in the literature that, information sharing fosters organizational
transparency which reduces turnover (Ahmad and Schroeder, 2003) and forges synergistic

73
working relationship among employees (Nonaka, 1994). These findings are in line with this
study in arguing that communication and information sharing have a positive effect on
employee’s commitment; but what makes this study different from these literatures is that the
study find out the effect is statistically insignificant.

6. The effect of job security as HRM practice on organizational commitment of

employees

H5: Job security has a positive and statistically significant effect on organizational
commitment of employees

The above table 4.14 shows that the influence of job security is B = -9.132, expB =
0.000108149, with the sig P value 0.040. This shows that a unit increases in job security will
lead to decrease by 0.000108149 times more likelihood of employees’ commitment to their
organizations. In other word job security has a negative and significant effect on
organizational commitment of employees. Therefore the alternative hypothesis (Job security
has a positive and statistically significant effect on organizational commitment of employees)
is completely rejected. But here opponent empirical reviews are observed in different
literatures that employees would always want to feel secured about the jobs they do. This is a
practice that can compel employees to have an intention to quit the job they were doing. It was
indicated by Pfeffer (1998) that a company that has learnt that job security contributes to its
performance, invests again in job security and that the company must signal a clear message
that jobs are secure; then, employees believing that this is true, feel confident and commit
them to expend extra effort for the company‘s benefit. It therefore means that the company
enjoys from ensuring that employees’ jobs are secured.

7. The effect off employee job satisfaction on organizational commitment

H6: Job satisfaction has a positive and statistically significant effect on organizational
commitment of employees.

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The study results supported that job satisfaction has a significant positive effect on
organizational commitment of employee. As it present in the regression result job satisfaction
have a coefficient B = 24.623 and odd ratio of exp (B) = 4.93E+10, with the significance level
p value = 0.017. This shows that employee job satisfaction was a significant positive predictor
of employees’ organizational commitment. The coefficient value showed that for every one
unit increase in employees job satisfaction there is a predicted increase of 24.623 in the log
odd of being at a higher level on employee’s organizational commitment. The odd ratio also
revealed that a unit increases in job satisfaction will lead to increase by 4.93E+10 times more
likelihood of employees’ commitment to their organizations. Therefore, the alternative
hypothesis (Job satisfaction has a positive and statistically significant effect on organizational
commitment of employees.) is accepted. The findings of this research also prove that job
satisfaction highly associated with organizational commitment in the studied organization.

The finding also in line with previous studies according to Wilmark J. Ramos (2018), the level
of employees’ job satisfaction generated from their work varied greatly. The banks’
atmosphere, methods, security and operations affected how employees feel satisfied with their
jobs, which in turn was significantly related to employees‟ organizational commitment. In
addition, the involvement of employees in the decision making processes and their initiative
were also significant for their continuous organizational commitment. Their individual
suggestions, recommendations and complaints were also important.

8. The combined and relative contribution and effects of HRM and employee job
satisfaction on organizational commitment

The study further sought to identify the combined and relative contribution and effects of
employee’s job satisfaction and aggregate HRM practices on employee’s organizational
commitment. To this end in order to identify the relative contribution and effects of the two
independent variables the researcher, computes all HRM practice aspects in to one aggregate
HRM practice variable and analyze the effect by using SPSS. And also in order to identify the
combined effect of both variable by computing the two variable mean and converted to a

75
single variable job satisfaction and HRM practice (JSHRMP) the researcher tries to analyze
the effects of job satisfaction and HRM practice when they are putting together on employees
organizational commitment. The regression result is presented in the following tables.

Table 4.14 the relative effects of HRM practice and job satisfaction on employee’s
organizational commitment.

95% Confidence Interval

Estimate(B
) Std. Error Wald df Sig. Exp (B) Lower Bound Upper Bound
Threshol [DVARa = 1.00] 35.938 6.234 33.236 1 .000 23.720 48.155
d [DVARa = 2.00] 45.477 7.067 41.409 1 .000 31.626 59.328
[DVARa = 3.00] 58.165 9.066 41.162 1 .000 40.396 75.934
[DVARa = 4.00] 73.849 10.587 48.659 1 .000 53.099 94.599
Location AGHRMP 3.921 3.401 1.329 1 .049 50.45087 -2.745 10.586
IDVAR6 12.182 2.686 20.569 1 .000 195242.96 6.917 17.447

Table 4.15 the combined effects of HRM practice and job satisfaction when they are puts
together.

Estimate Std. Error Wald df Sig. Exp (B) 95% Confidence

(B) Interval
Lower Upper
Bound Bound
Thresho [DVARa =1.00] 40.903 5.521 54.896 1 .000 30.083 51.724
ld [DVARa =2.00] 49.996 6.627 56.912 1 .000 37.007 62.986
[DVARa =3.00] 63.615 8.600 54.714 1 .000 46.759 80.471
[DVARa =4.00] 78.369 10.474 55.987 1 .000 57.841 98.897

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Location JSHRM 17.402 2.331 55.734 1 .000 3610709 12.833 21.971
7.12

Link function: Logit.

As it is presented in the above table 4.15 job satisfaction has relatively strong positive and
significant effect than the aggregate HRM practice has on employee’s organizational
commitment. As the statistical result shows when all aspects of HRM practice variables used
in this study are put together as one single variable they have a coefficient B = 3.921 and odd
ratio of exp (B) = 50.45087, with the significance level p value = 0.049. This shows that HRM
practices ware a significant positive predictor of employees’ organizational commitment. The
coefficient value showed that for every one unit increase in HRM practices there is a predicted
increase of 3.921 in the log odd of being at a higher level on employee’s organizational
commitment. The odd ratio also revealed that a unit increases in HRM practices will lead to
increase by 50.45087 times more likelihood of employees’ commitment to their organizations.

On the other hand job satisfaction have a coefficient B = 12.182 and odd ratio of exp (B) =
195242.96, with the significance level p value = 0.00. This shows that employee job
satisfaction was a significant positive predictor of employees’ organizational commitment.
The coefficient value showed that for every one unit increase in employees job satisfaction
there is a predicted increase of 12.182 in the log odd of being at a higher level on employee’s
organizational commitment. The odd ratio also revealed that a unit increases in job satisfaction
will lead to increase by 195242.96 times more likelihood of employees’ commitment to their
organizations.

when we compere the relative effect of the two variables on employees organizational
commitment job satisfaction will lead to increase 195242.96 times more likelihood of
employees’ commitment to their organizations than HRM practice will (i.e. 50.45087 times
more likelihood of employees’ commitment to their organizations). Therefor job satisfaction

77
has a positive and very significant effect on employee’s organizational commitment than the
aggregate HRM practices have.

The last but not the list finding of the study is the combined effects of HRM practice and job
satisfaction when they are puts together as predictor of organizational commitment of
employees. The study revealed that HRM practice and job satisfaction when they are puts
together as predictors of organizational commitment of employees have a positive and very
significant effect on employees commitment. As shows in table 4.16 job satisfaction and HRM
practice as a single variable they have a coefficient B = 17.402 and odd ratio of exp (B) =
36107097.12, with the significance level p value = 0.000. This shows that job satisfaction and
HRM practice as a single variable ware a significant positive predictor of employees’
organizational commitment. The coefficient value showed that for every one unit increase in
job satisfaction and HRM practice there is a predicted increase of 17.402 in the log odd of
being at a higher level on employee’s organizational commitment. The odd ratio also revealed
that a unit increases in job satisfaction and HRM practice will lead to increase by 36107097.12
times more likelihood of employees’ commitment to their organizations.

The results of this study, consistent with the findings of Ali et al.’s (2019), revealed that job
satisfaction was correlated with organizational commitment. Additionally, HRM (represented
by their managers) provides suitable conditions for increasing employees satisfaction and job
motivation through appropriate awarding, which are based on the actual evaluation of
performance and increasing salary in accordance to employees’ capabilities, aiming to
improve their organizational commitment.

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CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter will provide a conclusions and recommendations are based on researcher‘s
insights gained regarding study findings and limitations. In addition, recommendations are
presented for the Bank under the study and for other professionals interested in pursuing
additional research to exceed the scope and findings of this study.

5.2 Conclusion

The purpose of this study was to investigate the role of human resource management practice
and employee job satisfaction in predicting organizational commitment in Awash Bank S.C. at
North Addis district of Addis Ababa. The independent variables are human resource
management and employee job satisfaction, while the dependent variable is organizational
commitment. The explanatory variables that were conducted on this research to investigate
effects of HRM practice on organizational commitment of employees were Compensation and
incentives, Training and development, Recruitment and selection, Communications and

79
information sharing, and Job security. Based on the result from data analysis and findings of
the research, the researcher has concluded the following points.

It could be concluded from the findings that, there was a very youthful staff population with
average of age below thirty years. Again, the employees had enviable level of education with
two-thirds of the employee having bachelor degree. Also, most of the employees are newly
employed having spent up to three years with the company.

The descriptive statistics of the HRM practice also indicate that employees of the banks
perceived that the bank is not fully utilizing the HRM practice aspects which could be
implemented to enhance employee commitment which indicate the practice of HRM is
medium. It also revealed that employees job satisfaction and commitment to their organization
is generally low. These results indicate that the bank needs to work on employee’s job
satisfaction and organizational commitment.

According to this conducted research, there is a positive and substantial relationship between
selected HRM practices aspects, job satisfaction and organizational commitment of
employees.

The study sought to examine the effects of HRM practices on organizational commitment of
employees and has identified that almost the aggregate selected HRM practices and job
satisfaction significantly affect employee’s organizational commitment.

The study revealed that job satisfaction, and compensation and incentives as HRM practice
have a positive and statistically significant effect on employee’s organizational commitment of
the bank. While Job security as HRM practice has a negative and statistically significant effect
on organizational commitment of employees.

From the finding it could be concluded that, HRM practices: training and development,
communication and information sharing have a positive effect and recruitment and selection
has a negative effects on organizational commitments of employees’ in the bank. While their
effect found to be statistically insignificant.

80
This study provides evidence that job satisfaction has relatively strong positive and significant
effect than the aggregate HRM practice has on employee’s organizational commitment in the
bank.

The study revealed that HRM practice and job satisfaction when they are puts together as
predictors of organizational commitment of employees have a positive and very significant
effect on employees commitment.

Also, though there was evidence that job security does not lead to employee’s organizational
commitment it is necessary for the effective functioning of an organization. Beside the
evidence that HRM practices: training and development, communication and information
sharing have not significant effect in employee’s commitment they could be an important tools
in order to harvest the ground for increased organizational commitment of employee’s and
also when we take the aggregate effects of these selected aspects of HRM practice ware a
significant positive predictor of employees’ organizational commitment.

Finally, all the variables considered in this study combined are able to predict employee’s
organizational commitment about 96.3% of the time which huge at any rate. This means that
the rest 3.7% will be other contributors to employees committed to their organization.

5.2 Recommendation

From the summary of the findings made from examining the role of human resource
management and employee job satisfaction in predicting organizational commitment and
review of related literatures, the following points are forwarded as recommendation in order to
help the Bank solve the identified gap relating to employee organizational commitment and to
foster better employee’s commitment. In order to make employees committed to the
organization, the bank need to accept HR practices as a tool for effective and better employee
commitment so as to realize their objective set with ease.

In order to maintain productive and committed employees in the Bank, revision of the current
compensation and incentives scheme must be undertaken for the improvement and

81
implementation of a competitive and fair compensation and incentives scheme. It will also be
an evidence to suggest that benefits are at the top of the list of reasons why employees choose
to stay with the Bank or to join it in the first place. Flexibility in benefits packages can also
enhance commitment, as it creates responsiveness to the specific needs and circumstances of
individual employees. Here needs to take in to account that although compensation plays a
significant role in the life of employee, it is recommended that employers must not interpret it
as the only basis for retaining their employees because among other things, employees must
deserve the kind of compensation they receive. Certainly their qualifications, experience and
productivity must be commensurate with the compensation and incentives they receive.

From this study, it is evident that banks are investing in the training of their employees.
However, they are also losing the employees they have trained to their competitors. Indeed, it
seems poaching is common in the banking in Ethiopia. To address this problem, it is
recommended that the banks asses employees knowledge gap before offering training to their
employees and should collaborate and formulate appropriate measures to help control these
happenings. Keeping up the training and career development practice of the Bank to ensure
the provision of opportunities for every employee, in order to ensure that the workforce is
highly skilled and thereby enhancing employees’ organizational citizenship and commitment,
and bring direct positive impact on employee intention to be committed. The Bank can adapt
one of the most common retention strategies, which is job rotation. Job rotation is the practice
of moving the employees around different functions of the organization with a clear emphasis
on making sure that they operate in domains other than the ones assigned to them initially.
This ensures that the employees get trained on competencies beyond that of their assigned role
and this would lead to greater motivation to gain additional skills and motivate them to
perform and committed better.

Putting the right person or skill in the right palace ends in a good output of the organization
(Schuster, 1986). Even though the organizations invest on recruitment and selection, still there
is a gap on putting the right skill in the right place and person specification. So to address this

82
problem it is recommended that banks need to review their recruitment and selection criteria
and use more recruitment and selection tools.

To retain skillful and committed employees of the organization, firms need to communicate
and inform all information about the firm performance, make them participate in policy
design, give opportunity to air their view and communicate them friendly. This in turn fosters
organizational transparency (Ahmed and Schroeder, 2003) and increases synergistic working
relationship among employees (Nonaka, 1994). Every time organizations are recommended to
review what their organizations communication and information sharing policy.

As this study reveals that job security affects employee commitment negatively, but studies
show that it has a positive relationship with employee commitment. This may be happened
because of it is a new field practice. So banks are advised to design a policy relating to job
security, train employees, implement it properly and review it depending on the results.

5.3 Recommendation for Future Studies

This study only covered 283 employee participants from North Addis Districts of Awash Bank
in Addis Ababa. Future researches can be done by incorporating a larger sample taken from
various Awash Bank in order to have a clearer knowledge about the role of HRM practices
and job satisfaction as predictor of employee’s organizational commitment and their impact on
employees’ commitment on the banking sector of the country. In addition, this study took to
only five of Human Resource Management practices aspects. Future research can adopt
additional other HRM practices in order to identify their role as predictor of employee
organizational commitment in different organizations.

83
84
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92
APPENDICES

Appendix 1: Questionnaire

ADMAS UNIVERSITY

SCHOOL OF POSTGRADUATE STUDIES

DEPARTMENT OF BUSINESS ADMINISTRATION

Dear sir/madam

This questionnaire is designed to collect information about the role of human resources
management practices and employee job satisfaction in predicting organizational commitment
in Awash Bank S.C. The data or information collected in such a way shall be used as primary
data in my thesis, which I am conducting as a partial fulfillment for the requirement of my
study in MBA at Admas University.

Finally, I confirm you that the information that you share me will be kept confidential and
only used for the academic purpose. No individual’s responses will be identified as such and
the identity of persons responding will not be published or released to anyone. All information
will be used for academic purposes only.

Your honest and thoughtful response is invaluable

Thank you for your participation

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Kind regards,

Instructions

 No need of writing your name

 In all cases where answer options are available please make tick mark (√) in the
appropriate box where the choice is appropriate for you.

PART I: Socio- Demographic Characteristics

1. Gender

Male Female

2. AGE below 30-39 40-49 50 yrs and above

3. Highest level of education

Diploma degree masters degree other (specify) -----------

4. How many years have you been working at the bank?

2 years 3years 4 years 5 years 6 years and above

5. Current position at the bank

CSM SCSO CSO

6. Monthly income

Below 2,500 2,500-5,000 5,001-7,000 7,001-10,000 above 10,000

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PART II: Impact of Motivational Packages on Employee Performance

The following questions are presented on a five point Likert scale. If that aspect is much better
than you hoped it could be choose 5 (strongly agree), if that aspect is even better than you
expected it to be choose 4 (agree) if that aspect is what you would like it to be choose 3 (fair),
you would like choose 2 if it to be somewhat poor (disagree) and if that aspect is much poorer
that you would like it to be choose 1 (strongly disagree). Please put (√) in the place where the
choice is appropriate for you.

No Statement Ranks
COMPENSATION AND INCENTIVES (IDVAR1) 1 2 3 4 5
1. Our organization follows the policy of matching pay with
Performance
2. The pay we receive is competitive compared to that of
Employees doing similar work in other organizations.
3. We are satisfied with the benefits we receive.
4. The benefits we receive in our organization are similar to what
most of the other organizations in the industry provide to their
employees
5. Rewards and incentives are fairly distributed in our Organization.
6. Rewards in our organization are strictly linked to employee
Performance.
7. The existing reward and incentive plans do not motivate us for
better performance
TRAINING AND DEVELOPMENT (IDVAR2) 1 2 3 4 5
1 We are encouraged to participate in various seminars and
workshops etc.
2 Training in our organization includes social skills, general

95
 problem solving skills and broader knowledge of the
organization and business.
3 The training needs of the employees in our organization are
assessed on the basis of their performance appraisal
4 We are assigned challenging jobs to charge our enthusiasm and
develop our skills
5 The contents of the training programs organized are always
relevant to the changing needs of our jobs and our business
RECRUITMENT AND SELECTION(IDVAR3) 1 2 3 4 5
1 Our organization places the right person in the right job.
2 There is a good orientation for the newly hired employees
3 There is an accuracy of person specification in our organization
4 Selection of a candidate in our organization is strictly based on
his/her merit.
5 There is a well-designed induction program for new hired
employees
6 I have given a clear job description that describes about my job

7 Adequate and relevant information about the organization and

job is provided to the candidate at the time of recruitment.
COMMUNICATIONS AND INFORMATION 1 2 3 4 5
SHARING(IDVAR4)
1 I always can get an opportunity to air my views
2 We have given an opportunity to participate in the policy design
that guide and rule our working lives
3 There is a quarter meeting that are open to all to discuss the work
progress
4 There is smooth and friendly employer employee dialogue

5 There is a Free flow of information to both employees and

management on the achievements of the company
6 There is a good orientation for the newly hired employees
JOB SECURITY(IDVAR5) 1 2 3 4 5
1 There is fairness, transparency and equitability of management
during decision making

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2 Continuous efforts are made in our organization to create a sense
of belonging among employees and feel like a member of the
Corporate family
3 Most of the supervisors in our organization encourage us to
discuss our problems with them
4 Management identifying employee problems and helping solve
them
5 We do not work under the threat of losing our jobs

JOB SATISFACTION (IDVAR6) 1 2 3 4 5

1A There are adequate tools and resources needed to do the job.

2B The amount of work expected of me is reasonable.

3C Your work is according to your qualification and skills.
4D Employees in the organization have necessary authority to
perform their duties effectively
5E Employees get appreciation and rewards if the desired work /
targets are accomplished.
6F Company has good career prospect for its employees.

ORGANIZATIONAL COMMITMENT (DVAR1) 1 2 3 4 5

1A I would be happy to spend the rest of my career in this bank

2B I feel as if this organizations objectives are my own

3C I have many alternatives to consider leaving this organization.

4D I feel an obligation to remain in this organization

5E This organization deserves my loyalty

6F I enjoy discussing about my organization with people

outside it

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Appendix2: sampling system for Awash Bank North Addis District Branches

NO BRANCHES NO BRANCHES remarks

1 Abware 39 Kara Alo
2 Addisu Gebeya 40 Kara Mazoria
3 aleltu 41 Kara Road
4 5 Kilo 42 Kebena
5 Arat killo 43 Kechene
6 Balderas 44 Kechene Chilot Adebabay
7 Chancho 45 kotobe
8 Churchil Road 46 Lamberet
9 Dale Dembel 47 Legetafo
10 Debrebirhan 48 Megenana
11 Dera Gundo Meskel 49 Megenagna adebabay
12 Desie Ber 50 Mehal Arada
13 Ferensay legasiyo 51 Mukaturi
14 Fitch 52 Piazza
15 Gerbeguracha 53 Rufael
16 Gojam berenda 54 Sandford
17 Gulele Finance 55 Sendafa Beke
18 Gurd shola 56 Sheger
19 Burayu Branch 57 Sheno
20 41 Eyesus Branch 58 Shiro Meda
21 Abebe Bikila Branch 59 Shogole
22 Abune Petros Branch 60 Kara Alo
23 Abware Branch 61 Gedam Sefer Branch
24 Addis Ababa Branch 62 Gefersa Branch
25 Addis Alem Branch 63 Genet Tsigie Branch
26 Addisu Gebeya Branch 64 Ginchi Branch
27 Adwa Dildey Branch 65 Gindeberet Branch
28 Alem Ketema Branch 66 Goha Tsion Branch
29 Ambo Branch 67 Guder Branch
30 Arada Ghiorgis Branch 68 Gullele Branch
31 Arat Kilo Branch 69 Gundo Meskel Branch
32 Arbegnoch Branch 70 Gurara Kidane Mihret Branch
33 Asko Branch 71 Hamle 19 Branch
34 Atse Minilik branch 72 Hidebu Abote Branch
35 Bela Branch 73 Holeta Branch
36 Birhanina Selam Branch 74 Huluka Branch
37 Buba Branch 75 Gedam Sefer Branch

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 38 41 Eyesus Branch 76 Gefersa Branch

Appendix3: Mean and St. Deviation of Dependent and Independent Variables

Mean Std.
NO Rating scales Deviati
Items Statisti Statistic
SDA% DA% N% A% SA%

1A We are satisfied with the 104 43 14 81 41

benefits we receive 36.7% 15.2% 4.9% 28.6% 14.5% 2.0353 1.15723
2B The benefits we receive in our
organization are similar to 112 82 14 61 14
what most of the other
organizations in the industry 39.6% 29.0% 4.9% 21.6% 4.9% 2.2155 1.27698
provide to their employees
3C The pay we receive is
competitive compared to that 124 71 56 18 14
of Employees doing similar 43.8% 25.1% 19.8% 6.4% 4.9% 2.2332 1.30548
work in other organizations.
4D Rewards in our organization 117 63 42 47 14
are strictly linked to employee
Performance. 41.3% 22.3% 14.8% 16.6% 4.9% 2.5124 1.39236
5E Rewards and incentives are 84 56 56 42 45
fairly distributed in our 29.7% 19. %8 19.8% 14.8% 15.9% 2.6749 1.43918
Organization.
6F Our organization follows the 87 87 14 67 28
policy of matching pay with 30.7% 30.7% 4.9% 23.7% 9.9% 2.6890 1.54901
performance
7G The existing reward and 51 45 56 56 75
incentive plans do not
motivate us for better 18.0% 15.9% 19.8% 19.8% 26.5% 3.2085 1.44975
performance

Appendix3A: Mean and St. Deviation of compensations and incentives (IDVAR1)

99
Appendix3B: Mean and St. Deviation of training and development (IDVAR2)

Mean Std.
Items Rating scales Deviati
No.
Statisti Statistic
SDA% DA% N% A% SA%

1A We are encouraged to 28 42 42 143 28

participate in various 9.9% 14.8% 14.8% 50.5% 9.9% 2.8905 1.21982
seminars and workshops
etc
2B Training in our organization 42 45 14 140 42
includes social skills,
general problem solving 14.8% 15.9% 4.9% 49.5% 14.8% 3.3357 1.31698
skills and broader
knowledge of the
Organization and business.
3C The training needs of the 28 14 42 126 73
employees in our organization
are assessed on the basis of 9.9% 4.9% 14.8% 44.5% 25.8% 3.3569 1.15001
their performance appraisal
4D We are assigned 28 14 56 129 56
challenging jobs to charge 9.9% 4.9% 19.8% 45.6% 19.8% 3.6042 1.15420
our enthusiasm
and develop our skills
5E The contents of the training 56 45 67 98 14
programs organized are
always relevant to the 19.8% 15.9% 24.7% 34.6% 4.9% 3.7138 1.19071
changing needs of our jobs
and our
business

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Appendix3C: Mean and St. Deviation of recruitment and selection (IDVAR3)

Mean Std.
Rating scales Deviatio
No. ITEMS Statisti Statistic
SDA% DA% N% A% SA%

1A Our organization places the 70 31 42 126 14

right person in the right job. 24.7% 11.0% 14.8% 44.5% 4.9% 2.9399 1.32084
2B There is an accuracy of person 14 56 112 101
specification in our 0% 4.9% 19.8% 39.6% 35.7% 2.9894 1.14075
organization

3C Selection of a candidate in our 42 45 84 98 14

Organization is strictly 14.8% 15.9% 29.7% 34.6% 4.9% 3.1873 1.32766
based on his/her merit.
4D Adequate and relevant 42 45 67 67 56
information about the
organization and job is 14.8% 15.9% 24.7% 24.7% 19.8% 3.8516 .85005
provided to the candidate at
the time of recruitment.

5E I have given a clear job 14 42 101 126

description that describes 4.9% 0% 14.8% 35.7% 44.5% 4.0000 1.22039
about my job
6F There is a good orientation for
the newly hired employees 28 14 129 112 4.0601 .86701
9.9% 4.9% 0% 45.6% 39.6%
7G There is a well-designed 28 42 157 56
induction program for new 4.1484 1.01017
hired employees 0% 9.9% 14.8% 55.5% 19.8%

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Appendix3D: Mean and St. Deviation of communications and info. Sharing (IDVAR4)

Mean Std.
Rating scales Deviat
N Statisti Statistic
O ITEMS SDA% DA% N% A% SA%

1A I always can get an opportunity 56 59 42 84 42

to air my views 19.8% 20.8% 14.8% 29.7% 14.8% 2.5053 1.38218
2B We have given an opportunity to 85 91 14 65 28
participate in the policy design
that guide and rule our working 30.0% 32.2% 4.9% 23.0% 9.9% 2.6007 1.22602
lives

3C There is a quarter meeting that are 56 45 28 112 42

open to all to discuss the work 19.8% 15.9% 9.9% 39.6% 14.8% 2.8092 1.48956
progress
4D There is smooth and friendly
employer- employee dialogue 69 80 28 48 58 2.9894 1.37733
24.4% 28.3% 9.9% 17.0% 20.5%
5E There is a Free flow of 28 28 28 126 73
information to both employees
and management on the 9.9% 9.9% 9.9% 44.5% 25.8% 3.1378 1.38843
achievements of the company
6F There is a good orientation for
the newly hired employees 62 77 84 32 28 3.6643 1.23929
21.9% 27.2% 29.7% 11.3% 9.9%

102
Appendix3E: Mean and St. Deviation of job security (IDVAR5)

Rating scales Mean Std.

NO Devia
ITEMS
SDA% DA% N% A% SA% Statisti Statistic
1A There is fairness, transparency 95 64 28 37 59
and equitability of
management during decision 33.6% 22.6% 9.9% 13.1% 20.8% 2.2297 1.27172
making
2B Continuous efforts are made in 14 27 70 113 59
our organization to create a
sense of belonging among
employees and feel like a 4.9% 9.5% 24.7% 39.9% 20.7% 2.6502 1.55555
member of the Corporate
family

3C Most of the supervisors in 70 28 56 84 45

our organization encourage
us to discuss our problems 24.7% 9.9% 19.8% 29.7% 15.9% 2.9894 1.30325
with them
4D Management identifying 56 45 56 98 28
employee problems and 19.8% 15.9% 19.8% 34.6% 9.9% 3.0212 1.42405
helping solve them
5E We do not work under the
threat of losing our jobs 109 80 28 52 14 3.6219 1.06947
38.5% 28.3% 9.9% 18.4% 4.4%

103
 Rating scales Mean Std.
NO Devia
ITEMS
SDA% DA% N% A% SA% Statisti Statistic
1A There are adequate tools and 95 64 28 37 59
resources needed to do the job.
33.6% 22.6% 9.9% 13.1% 20.8% 2.2297 1.27172
2B The amount of work expected 14 27 70 113 59
of me is reasonable.
4.9% 9.5% 24.7% 39.9% 20.7% 2.6502 1.55555
3C Your work is according to your 70 28 56 84 45
qualification and skills.
24.7% 9.9% 19.8% 29.7% 15.9% 2.9894 1.30325
4D Employees in the organization 56 45 56 98 28
have necessary authority to 19.8% 15.9% 19.8% 34.6% 9.9% 3.0212 1.42405
perform their duties effectively
5E Employees get appreciation and
rewards if the desired work / 109 80 28 52 14 3.6219 1.06947
targets are accomplished. 38.5% 28.3% 9.9% 18.4% 4.4%
6F Company has good career
prospect for its employees. 62 77 84 32 28 3.6643 1.23929
21.9% 27.2% 29.7% 11.3% 9.9%

Appendix3F: Mean and St. Deviation of Job Satisfaction (IDVAR6)

104
105
Appendix3C: Mean and St. Deviation of Organizational Commitment (DVAR)

Rating scales Mean Std.

NO Devia
ITEMS
SDA% DA% N% A% SA% Statisti Statistic
1A I would be happy to spend
109 80 28 52 14 3.6219 1.06947
the rest of my career in this
bank 38.5% 28.3% 9.9% 18.4% 4.4%
2B I feel as if this organizations 70 31 42 126 14
objectives are my own 24.7% 11.0% 14.8% 44.5% 4.9% 2.9399 1.32084

3C I have many alternatives to 56 45 67 98 14

consider leaving this
19.8% 15.9% 24.7% 34.6% 4.9% 3.7138 1.19071
organization.
4D I feel an obligation to remain in 70 28 56 84 45
this organization 24.7% 9.9% 19.8% 29.7% 15.9% 2.9894 1.30325
5E This organization deserves my
62 77 84 32 28 3.6643 1.23929
loyalty
21.9% 27.2% 29.7% 11.3% 9.9%
6F I enjoy discussing about my 112 82 14 61 14
organization with people
39.6% 29.0% 4.9% 21.6% 4.9% 2.2155 1.27698
outside it

106