Author:Madanat, Hilda Ghaleb


The banking sector in Jordan plays an important role in the country's movement toward free market trade due to country's large economic liberalization. Therefore, this sector is considered as one of the core pillars of Jordanian economy. According to Al-Shobaki et al. (2010); the banking sector shows amazing prospects for expansion and diversification. It accounted for 44.6% of total stock market capitalization and contributed 18.7% to GDP in 2004. Therefore, the Jordanian government has been giving great attention on the development of banking organizations. This effort is mainly aimed to improve the quality of bank services, increase competitive advantages of this sector and encourage investment in the country. At the end of 1999, twenty-two national and five international commercial banks were operating in the country with a structural network of 466 branches that play significant role in the revival of the Jordanian economy and country's future. Al-Jarrah (2012) mentioned that banking sector in Jordan plays a crucial role in the economic development and growth. Since last decade, this sector has undertaken various reforms aiming to enhance its dependability and increase its competitiveness. Khammash (2012) has asserted that banking sector of Jordan is comprised of 26 banks with a combined total of 695 branches spread across the country at the end of 2011. The Central Bank of Jordan classified the banks into two main groups; national banks and branches of foreign banks. Each of these groups is further divided into commercial banks and Islamic banks.

Nowadays, majority of the organizations are seeking the best way to improve their business performance and achievements by developing and adopting new workplace practices that enhance sustained level of high performance and job satisfaction. Human Resource Management (HRM) is a widely known management philosophy that has become a key factor for enhancing organizations' competitive advantage. Furthermore, it is recognized as an important tool to enhance customer satisfaction, loyalty and retention that positively affect organizational performance. On the other hand, HRM is the strategic and coherent approach to the management of organization's most valued assets and matches them to the strategic requirements of business. It is being recognized that competitive advantage can be obtained with a qualified workforce that enables organizations to compete and succeed in business (Al-Daibat & Irtaimeh, 2012).

The declining foreign financial aid and assistance, particularly from Arab gulf countries, have aggravated economic and financial hardships in the last few years. This has made local funding of small and medium size development projects essential for Jordan development. Therefore, the banking sector of country is increasingly becoming an important player in country's development. However, published studies investigating the impact of HRM practices on employees' satisfaction in Jordanian organizations are scarce and very limited. Therefore, the findings of this study are expected to enrich the knowledge and fill-in the gap of literature. Thirdly on the practical side, the anticipated outcomes would help decision makers in Jordanian banking sector to recognize the potential of HRM effectiveness and assist them in developing employee satisfaction to gain superior performance.

Human resource management has become more important to general management because of its role in enhancing performance, securing and developing the talents of employees and enhancing cooperation between them to support organizational development (Elarabi & Johari, 2014). Employee satisfaction has always been an important issue and top priority for all type of organizations. Therefore, it is essential to investigate the potential impact of human resource management practices on employees' satisfaction. The study aims to explore the level of effectiveness of HRM practices and employees' satisfaction in the banking sector of Jordan. Moreover, the impact of effectiveness of HRM practices (HR planning, staffing, compensation, training and development, performance appraisal) on employees' satisfaction is investigated.


Human Resource Management is concerned with planning, organizing, directing and controlling personnel functions. Elarabi & Johari (2014) described HRM as a process that specializes in securing and increasing skills of individual employees and enhances communication and cooperation between them to support organizational development. HRM practices have a positive impact on organizational innovation, implementation of business strategies, job performance, financial returns, managing the organizational conflict and a sustainable competitive advantage (Katou & Budhwar, 2010; Caliskan, 2010; Tan & Nasurdin, 2011; Boohene & Asuinura, 2011; Mukhtar & Siengthai, 2011; Atteya, 2012; Loshali & Krishnan, 2013).

Key HRM Practices

Shahraki et al. (2011) outlined most important areas of HRM, inclusive of job design, teamwork, staffing, training, career management, performance appraisal and compensation. The following are the most commonly identified HR practices in the literature:

HR Planning (Workforce Planning)

HR planning is the process that aims to forecast an organization's future needs in terms of workforce. According to Yadav & Dabhade (2014), HR planning refers to good strategic business and people management. These processes aim to estimate future needs of manpower and compare them with the available labor force. Noe et al. (2010) explained that HR managers determined the supply and demand for human resources to avoid any labor shortages or surpluses by taking the right action to face these potential problems.

Staffing (Recruitment and Selection)

According to Werner & DeSimone (2009), recruitment and selection techniques are planned for the identification of potential applicants for current and future jobs and make appropriate choices. Mondy & Mondy (2014) stated that recruitment is the process of attracting individuals on a timely basis in sufficient numbers with appropriate qualifications to apply for jobs with an organization. Durai (2010) indicated that the efficiency of recruitment can be measured in terms of quality and quantity of the applicant pool. Thus, recruitment needs to attract not just applicants, but qualified candidates and encourage them to apply for a job.

Training and Development

Today's dynamic work environment and complex business demands require employees to be skilled in performing multifarious tasks in an efficient and effective way. A well-organized training and development program gives employees continuous knowledge and experience. Training and development is important for increasing job performance, enhancing employee productivity and satisfaction, reducing cost and developing the quality of work. Mondy & Mondy (2014) indicated that training and development are the continuous efforts aimed to improve employee capability and organizational performance by providing employees with the needed knowledge and skills to perform their jobs.


Compensation plays an important role in recruitment and retention of talented people. It pertains to all payments and rewards provided to employees in response to their efforts and as a result of their employment and contribution to business success (Mondy & Mondy, 2014; Noe et al., 2010; Dessler, 2011). Gilmore & Williams (2009) mentioned that compensation is an HR instrument aims to enhance employee performance and behaviors. According to Irshad (2008), every organization wants the best people to work for it and makes every effort to increase their achievements. Attracting the best people and pulling staff from competitors require better compensation.

Performance Appraisal

Aggarwal & Thakur (2013) illuminated several appraisal methods such as; ranking method, graphic rating, critical incident, narrative essays and management by objectives, human resource accounting and others.

Effectiveness of Human Resource Managements

The HR department should manage its functions and practices effectively to improve its performance and the overall performance of the organization. Therefore, HR needs to minimize the operational cost of its activities and provide excellent service to internal and external customers. Bai (2013) emphasized the importance of making sure that all HR activities are concentrated on the objectives of the organization to have the effective SHRM system. Activities that are not meeting this goal need to be improved. Agarwala (2003) agreed that management of human resources must move from traditional programs to a new system of work that fits the specific needs and objectives of an organization and link HR practices with the business needs of the organization. Jain & Gupta (2012) underlined the indicators for effective HRM outcomes which include: employee satisfaction, employee motivation, employee trust, employee commitment and employee loyalty. Hence, the company should maintain a work environment that supports the satisfaction, commitment and motivation of employees. Noe et al. (2010) pointed out that managers at organizational level should be able to define effective HRM practices to help the company enhance customer satisfaction and gain competitive advantages.

Al-Hyasat (2006) investigated the efficiency and effectiveness of HRMS (human resource planning, selection and placement, evaluation of personnel's performance, training of employees) and the relationship between these strategies and organization performance. Research data were collected from employees who occupy positions lower than section head in twenty-one press organizations in Jordan. Findings showed a positive relationship between efficiency and effectiveness of (human resource planning strategies, testing and appointment strategies, strategies of personnel performance...

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