Human Resource Management, Total Quality Management and Competitive Advantages: Evidence from Pakistani Banking Industry

Abstract

This study aimed to investigate the relationship between human resource management (HRM) practices, total quality management (TQM) practices and competitive advantages in banking industry of Pakistan. HRM practices included Recruitment & Selection, Training & Development, Performance Appraisal, and Compensation & Reward. TQM practices consist of Leadership, Continuous Improvement, Customer Satisfaction, Employee Empowerment, and Strategic Planning. And lastly, competitive advantages is represented by Cost Leadership, and Differentiation. We applied (Obeidat, Yousef, Tawalbeh, & Masa'deh, 2018) model to banking sector of Pakistan. An Adopted questionnaire was designed and distributed over a sample of 300 employees. The research hypotheses were tested by using structured equation modeling. The result shows that Compensation & Reward positively and significantly affect all TQM practices as well as cost leadership. Similarly, Performance Appraisal also produce a significant positive impact on Strategic Planning, and Leadership dimensions of TQM, Hoverer, negatively affect cost leadership. Recruitment & Selection positively affect cost leadership. Strategic planning an importance factor, significantly affect both competitive advantage factors. Interestingly, Training & Development have a significant but negative effect on TQM factors namely Continuous Improvement, Leadership, and Strategic Planning. The findings imply that in banking industry, the effect on HRM factors on TQM is not equal, some are even negative, hence should be used diligently with the prospective of both TQM and competitive advantages.