Unleashing Employee Potential: A Mixed-Methods Study of High-Performance Work Systems in Bangladeshi Banks

Abstract

This two-stage sequential mixed-methods study explores the contextual configuration of perceived high-performance work systems (HPWSs) and its association with psychological empowerment (PE), trust in immediate managers (ET), affective commitment (AC) and employee performance (EP) in two Bangladeshi private commercial banks (PCBLs). In the first stage, qualitative data were collected through interviews with 15 industry experts. Based on the qualitative findings, a HPWS framework has been hypothesised and tested using the survey data from 436 employees in the two selected PCBLs in Bangladesh. The findings demonstrated that ET and PE both mediated the perceived HPWS–EP link and that perceived HPWS positively influences AC. However, AC does not mediate the HPWS–EP link. In line with the social exchange theory, perceived HPWS can positively predict attitudinal outcomes and employee performance, provided it is configured to the specific institutional context. Implications are drawn for HPWS theory, sustainable HR development and performance, and future international human resource management research.

1. Introduction

This study investigates the use of high-performance work systems (HPWSs) in Bangladeshi local private commercial banks (PCBLs). Despite the growing interest in developing countries in the international human resource development (IHRD) literature [1], an extensive search revealed an absence of much HPWS research within the Bangladeshi context. HPWSs are often viewed as a set of complementary human resource (HR) practices that enhance workforce abilities, employee motivation and involvement [2,3]. The HPWS literature argues that context-driven HR practices improve employee and organisational performance [4,5,6], which is highly relevant to sustainable human resource development (HRD) [7,8,9]. HRD scholars such as Alagaraja [10] have argued that the human resource development (HRD) and human resource management (HRM) fields are increasingly overlapping, where both fields have established HR as an important function in organisations. The extant HRD literature calls for an alliance of these two traditionally competing perspectives to better address the increasing complexities in organizational contexts and provide an enriched understanding of HR in the scholarship and practice of both fields [10]. A recent literature review by Piwowar-Sulej [11] (p. 671) identified employee competence and motivation as the keys to the successful implementation of the idea of sustainable development in an organization, which are essentially driven by HPWSs.

The HPWS framework addresses the complex and critical strategic association of a context-specific bundle of HR practices and performance. However, most early studies on HPWSs were conducted within the American context [12]. The use of HPWSs in the West has predominantly been adopted by large firms with highly skilled workers operating in technologically developed markets [13,14]. Emerging markets behave differently given their institutional, regulatory and legal environments [15,16]. For example, most developing countries have endured the unregulated “informal economy” [17] (p. 127), weak infrastructure and technology [18], which may call for a different set of HR practices to ensure high performance. Furthermore, Khan, Bartram, Cavanagh, Hossain and Akhter [19] found that ethical HR practices are not self-inflicted in such an informal economy, unlike in Western developed country contexts. Rabl, Jayasinghe, Gerhart and Kuhlmann [20] identified the high representation of the USA, China and Spain in the HPWS literature as a major limitation that leaves room for future researchers to cover more country and industrial contexts for future meta-analyses. Nevertheless, only a handful of studies have examined the link between HPWSs and organisation-level outcomes in non-Western developing countries [21,22], leaving a significant gap in the global and cross-cultural HRD literature.

This study explores the impact of employee-perceived HPWSs on their job performance in two selected Bangladeshi banks. Using the social exchange theory (SET) [23], this paper argues that the Western composition and framework of HPWS should be contextually tested and adapted. This study utilises an interview schedule of 15 industry experts and a survey sample of 436 employees in two case study banks in Bangladesh to investigate HPWSs in this context and examine the associations between employee-perceived HPWS, employee trust (ET), psychological empowerment (PE), affective commitment (AC), and employee performance (EP) via self-reported managerial ratings.

The contribution of this study is threefold. First, there is no robust research on HPWSs in the Bangladeshi context. Second, this is the first study that used a contextually configured HPWS composition and framework in the Bangladeshi banking sector. The study set out to unpack the unique HRM “black box” [4,24] in the Bangladeshi context that may lead to an alternative HPWS framework for similar contexts. This will potentially facilitate future cross-cultural comparative and global HRD studies. Third, the study provides insights for HR practitioners in the Bangladeshi banking sector that can also be used by the global or multinational banks operating in Bangladesh or similar contexts to develop a customised bundle of HR practices that may support enhanced performance outcomes.

In the following sections, the theoretical framework and HR context of the Bangladeshi banking sector are presented, the HPWS literature is explored, and our hypotheses are explained. Then the research design and findings are presented. Finally, the key findings are discussed, and their implications and a conclusion are drawn.

2. Theoretical Framework

Social exchange theory (SET) shapes the foundation of this research and its hypothesised causal path. According to SET, relationships evolve into a trusting loyalty overtime through a mutual acceptance of rules of exchange or reciprocity [23,25]. In an organisational context, perceived organisational support (POS) as used in SET will be reciprocated by employees’ effort and performance. Hence, if a HPWS is considered a proxy for POS, then perceived HPWSs should positively predict employee performance in the organisational context.

SET helps explain how a perceived HPWS is positively reciprocated by employee attitudes and behaviours and ultimately by individual-level performance [26], as argued in this study. The perceived HPWS is an individual-level construct that is considered more appropriate to be linked to individual employee outcomes, whereas the traditional HPWS research has considered actual HR practices to predict firm performance rather than individual employee performance [27].

While the norm of reciprocity is fairly universal, individual and cultural differences may influence the degree of endorsement of reciprocity [28,29]. Different models of exchange resources have emerged from SET, which implies that economic and socioemotional outcomes may vary based on different exchange rules. Therefore, the nature and intensity of reciprocity and exchange of resources may diverge across contexts, while the basic norms may be replicated [25].

Using the assertions of SET, we argue that the “perceived HPWS” positively predicts attitudinal outcomes, which in turn should influence employee performance. This study focuses on attitudinal and behavioural outcomes (i.e., job performance), which is considered a proximal approach to linking strategic human resource practices to employee outcomes [5].

3. The Historical and Cultural Context of Bangladeshi Banking Industry

Bangladesh is a collectivist society with a high acceptance of power distance [30]. Scholars often labelled Bangladesh as a country of paradox due to its unexpected economic resilience through regular natural calamities, persistent poverty, political unrest, difficult-to-control population growth, military intervention, inescapable administrative and political corruption [31,32,33] and strong bureaucratic system from its colonial rulers [34]. Despite this, Bangladesh was identified as one of the Next-11 countries and predicted to be the world’s 23rd largest economy in terms of purchasing power parity by 2050 [35,36] and seventh fastest growing economy in the world in 2019. The IMF has also recently marked the financial sector of Bangladesh as the second largest in the South Asian region, which potentially makes it an attractive investment context for global and multi-national banks [37]. However, its banking sector has suffered from a so-called “informal economy” [17] (p. 127) due to the absence of a well-functioning market economy [38]. This phenomenon has significantly influenced the recruitment culture, selection, transfer, promotions [39], T&D and employee relations in PCBLs in Bangladesh.

The banking sector is critical to the economic stability of developing economies such as Bangladesh [40] and highly competitive [41]. There were 56 banks and 31 non-bank financial institutions in Bangladesh in 2013 [42], with roughly a 58 percent contribution to the Gross Domestic Product according to Siddiqi [43] (p. 12). Research has demonstrated that bank-specific factors, such as capital and reserve to total assets (CRTA), loans to deposit ratio of a bank (LDEP), assets and ownership are important in explaining bank performance in Bangladesh [15,16]. CRTA and LDEP are direct outcomes of employees’ discretionary effort and service excellence. Therefore, it is important for HR practitioners in the Bangladeshi banking industry to add value through ensuring strategy-driven attitudinal and behavioural outcomes [44]. A contextually configured HPWS framework may help support employee and organisational performance through positive attitudinal outcomes [45,46].

4. The Literature

HPWS and Employee Performance

A HPWS comprises systematic recruitment, selection, compensation, performance management systems (PMSs), employee engagement and training and development (T&D), among other contextually configured items [4,47]. A consistent stream of context-specific evidence has further developed this construct beyond its inception. Service sector studies, for example, used selective hiring, compensation, PMSs, extensive training, self-managed team (SMT), supportive supervision, lower status distinctions, job quality and security and information transparency or sharing as the HPWS components [48,49,50]. Shih, Chiang, and Hsu [51] and Werner [27] measured the HPWS as perceived by employees, arguing that perceptions occur within individuals. The HPWS bundle for this study has been configured based on the industry experts’ perception of work practices that should positively predict higher employee performance in the selected context (see

Table 1. Sample items in the survey questionnaire.

Labels (Observed Items)	Questionnaire Items
Psychological Empowerment (PE)
EMPOWER1	The work I do is very important to me
EMPOWER4	I am confident about my ability to do my job
EMPOWER7	I have significant autonomy in determining how I do my job
EMPOWER10	My impact on what happens in this unit is large
Employee Trust (ET)
TRUST1	I am confident that I will always receive fair treatment from my line supervisor
TRUST4	The person to whom I report directly can be relied on to look after my best interests
TRUST5	I feel a strong sense of loyalty toward the person to whom I report directly
Selective Hiring
RECRUIT1	Recruitment and selection are impartial
RECRUIT3	Interview panels are used for selection
RECRUIT5	Appointments are merit-driven
Performance Management
PERFORMGT2	Performance is reviewed against agreed goals and organisation-wide requirements with customised personal feedback
PERFORMGT3	A PMS is in place to ensure that staff are competent and accountable
PERFORMGT5	In this unit, the statements of accountabilities and responsibilities are regularly reviewed to ensure that they are relevant to the current organisational needs and goals
Extensive Training
TRAINING1	Providing employees with training beyond that mandated by government regulations is a priority in this unit
TRAINING6	Ample opportunity to discuss training requirements with my line supervisor
TRAINING7	Organisation pays for any work-related training and development
Leadership style of immediate manager	My immediate supervisor:
IMMEMGT2	encourages employees to come up with their own solutions and suggestions
IMMEMGT5	encourages employees to express ideas and opinions
IMMEMGT6	provides continuous encouragement
Self-managed Team
TEAM1	The development of teams is important
TEAM3	Employee suggestions are implemented
TEAM4	Decision making by non-managerial staffs is encouraged
Pay Equity
PAY1	Adequate pay to all
PAY2	Equitable pay to all
PAY3	Adequate pay for me
PERFORM	Supervisor’s rating of individual employee performance

Note: These are only a few selected examples and not the comprehensive list.

and

Table 2. PHPWS components from the qualitative findings.

“Perceived HPWS” Components	Number of Participants that Mentioned the HR Practice	Interpretation
Pay Equity	15	Most participants mentioned the first six HR practices as desirable. For example, a Bank B manager stated: “we must focus on HR policy and practices because this sector in Bangladesh is highly competitive and without good HR practices we cannot attract or retain good people or remain competitive” (BB 2). This statement indicates the importance of selective recruitment and the retention of talent, which the respondent suggested can be achieved by fair performance management, extensive training, good leadership, competitive pay packages and empowerment through teamwork. The HR manager of Bank A said, “hiring, development, pay, retirement benefits are important factors in this industry. Mostly the fair recruitment plus development opportunities must be ensured” (BA 2). Another Bank A manager (BA 7) mentioned fair recruitment and training and development as sources of motivation and commitment. Profit bonus, employee welfare programs, interest-free or reduced-interest home loans and mentoring are mentioned as good PMSs. Many emphasise the supportive leadership of the manager. Based on similar findings from many other respondents, these six items are retained as “Perceived HPWS” measures.
Selective hiring	14
Performance management	13
Extensive training	13
Immediate Manager’s leadership style	10
Self-managed team	7
Information Sharing	None mentioned it voluntarily	When asked, many respondents viewed a high level of information sharing as inefficient in terms of time, cost and outcome considerations. Top management’s information privileges were generally supported by all levels of employees, as they saw the value of confidentiality and the sensitivity of the information.
Job security	Two respondents said job should not be too secured as employees tend to perform less if they feel secured in job.	The employees from the high-performing bank did not express any job insecurity, nor did they demand more assurance for that. They rather expressed self-efficacy about their capability to ensure a new placement in another bank due to their high level of individual performance. In contrast, the employees from the average-performing bank felt no risk of losing their jobs in their respective organisation due to the support from their influential informal internal or external referees. Those who were recruited and selected systematically in Bank B viewed this confidence in informally recruited and secured non-performers as a deterrent to the bank’s performance.
Job quality	None raised this issue voluntarily	Job quality is generally perceived by the respondents as fairly standard in Bangladeshi banks, making no difference to their commitment or individual performance.
Reduced Status distinction	None raised this voluntarily	Reduced status distinction is not perceived as desirable to the respondents. When asked by the interviewer, one respondent from Bank A said, “certain distance should be maintained between the senior and junior employees to ensure efficiency and decorum” (BA 4). In Bank B one participant employee said, “Junior employees feel motivated to work better to reach the higher position as we look up to the boss or managers. If they maintain a similar status, there is nothing to look up to” (BB 6). This phenomenon can be explained by the high-power distance dimension embedded in the Bangladeshi culture.

). Hence, for the scope and purpose of this study, the “perceived HPWS” is defined as the strategically aligned and contextually specified bundle of work practices that are perceived as positively linked to individual performance by the employees of an organisation. The extant literature supports a positive link between HPWSs and performance outcomes [47,48,52]. In line with Boxall et al. [4], we argue that contextually specified HPWSs should favourably influence EP through some affective and desirable attitudinal outcomes [53,54].

An extensive literature search returned over 3418 HPWS articles from eight relevant data bases, but we found only one HPWS study in the Bangladeshi banking context. However, there are a small number of studies on emerging HRM practices [55], employee morale, performance, job commitment and satisfaction in private Bangladeshi organisations [56]. Moreover, some studies on “recruitment and selection”, “reward”, “performance management”, “training and development” and industrial relations issues were found in Bangladeshi local management journals [31,39,43,56,57,58,59]. The evidence from these studies predominantly indicates positive associations between systematic and fair HR practices, if perceived by the employees as such, and their attitudinal or performance outcomes (see Figure 1).

5. Hypotheses

5.1. HPWS and Psychological Empowerment

Spreitzer [60] (p. 1444) defined PE as a motivational construct with four cognitions, meaning, competence, self-determination, and impact. PE makes an individual feel enabled to shape his or her work role and context, which reflects active individual engagement. Academic commentators have acknowledged HR practices as empowering [61], such as the sharing of organisational information with employees, the reduced chain of command controls, and the enhanced autonomy [62]. These work practices are often regarded as components of high-involvement or high-performance work systems [5,63].

Several HRM scholars have affirmed an association between high-performance work systems and psychological empowerment [4,5,12,60,64,65,66,67,68]. Extant HR studies have reported strong statistical associations between practices such as T&D, frequent and direct performance management, supportive supervision and career development and PE [4,24]. According to Murray and Holmes [69], PE may help create a more sustainable workforce. Research has also demonstrated that employees typically value autonomy, which is often preceded and facilitated by the employee experience of espoused HR practices and supportive supervision [4]. Such PE mediates the perceived HPWS–EP link [4,5,61] through the norm of reciprocation [70]. Therefore, we propose the following hypotheses:

Hypothesis H1a.

PHPWS positively predicts PE in the Bangladeshi banks.

Hypothesis H1b.

PE mediates the relationship between perceived HPWS and EP in the Bangladeshi banks.

5.2. HPWS and Employee Trust

HR scholars have predominantly viewed ET as the confidence in the good intentions and competence, the expectation of reciprocal co-operation or the willingness to rely on another party within the organisation [71,72,73,74]. Leader–follower interpersonal trust is considered vital within organisations [71]. Interpersonal trust between employees is often viewed as a two-dimensions construct comprising faith and confidence in the trustworthy intentions and ability of others [75]. These are based on Cook and Wall’s [75] study on the blue-collar workers’ perspectives of their co-workers and/or supervisors. Accordingly, we used the faith and confidence of employees in their line supervisor to measure ET.

Some HR researchers have argued that ET is driven by HRM activities that may lead to higher EP [76,77]. Some scholars proposed and tested a positive association between HPWS and ET [78,79]. The work of Appelbaum et al. [78], Macky and Boxall [79] and Whitener [80] has supported employee trust as a mediator in the perceived HPWS (PHPWS) and employee behavioural outcomes. According to Pfeffer [49], supportive leadership and less-formal supervisor–subordinate interactions may minimise “them vs. us” feelings within organisations and drive the positive ET that is essential for flexible behaviour. ET should also encourage upward communication, transmitting customer feedback from the frontline to the upper echelons of the firm, which may improve overall service quality and job performance. Trust has been proposed and reported to mediate the relationship between perceived HPWSs and employee performance in service-oriented organisations [81,82,83]. This leads to the following two hypotheses:

Hypothesis H2a.

PHPWS positively predicts ET in the Bangladeshi banks.

Hypothesis H2b.

Employee trust mediates the PHPWS–EP link in the Bangladeshi banks.

Kouzes and Posner [84] contented that supervisors perceived as highly credible (trusted) by their employees can more effectively develop a positive, engaged and committed workforce. Some other researchers found that “confidence in management” (one of the dimensions of the ET scale) may considerably help reduce anxiety, which should psychologically empower employees and help improve EP [75]. Casimir et al. [71] (p. 68) suggested that “being trusted by one’s followers may create an obligation or responsibility on the part of the leader to enable or empower a follower to perform”. Employees often relate an egalitarian and participative leadership style to high trust for their managers or leaders, and more participation develops an empowered work team [78]. A recent study has confirmed the correlation between empowerment and creativity, facilitated by trust in authentic leadership [85]. According to Jung et al. [86] (p. 4) “empowering leadership provides employees with a high level of autonomy and the ability to achieve high performance in their work and supports capability-building”. The intrinsic reward, improved creativity and reduced anxiety from such psychological empowerment may also unleash an employee’s performance and development potential. Therefore, we propose the following hypotheses:

Hypothesis H2c.

ET mediates the PHPWS and PE relationship in the Bangladeshi banks.

Hypothesis H2d.

PE mediates the ET and employee performance relationship in the Bangladeshi banks.

5.3. HPWS and Affective Commitment

The western HPWS literature has overwhelmingly supported the statistically significant relationship between HPWSs and AC and the mediational role of AC in the HPWS–performance link [5,87,88]. Meyer and Allen [87] contended that affective commitment may favourably influence attendance, accepting extra roles in a job and individual-level performance. Khan [89] reported AC as an important attitudinal outcome that may be positively influenced by the fair HR work systems. A more recent study by Haque and Khan [90] in Bangladesh found a significant negative relationship between the intention to quit and the meaningfulness of work. However, the affective or attitudinal aspects of commitment have widely been argued to have a more proximal link to employee performance than normative and continuance commitment [91], and hence, the AC construct has been used in this study to explore the HPWS and employee performance link. A handful of studies have suggested that the relationship between attitudinal (or affective) organisational commitment and job performance is contingent on context [89,92]. However, according to Riketta [92], the selected commitment constructs (affective commitment vs. organizational commitment questionnaire), tenure, age or level do not significantly moderate the results.

Rubel et al. [55] found a strong influence of the roles of procedural justice, organizational communication, empowerment, employee development and participation on employee commitment in Bangladeshi PCBLs. Considering that the extant literature predominantly supports the AC–HPWS link and the mediational role of AC in the HPWS–employee performance link has not yet been tested in the Bangladeshi PCBL context, the following hypotheses have been proposed to compare any cross-cultural differences with previous studies conducted in other countries:

Hypothesis H3a.

PHPWS positively predicts AC in the Bangladeshi banks.

Hypothesis H3b.

Affective commitment mediates the PHPWS and employee performance link in the Bangladeshi banks.

6. Methodology

A mixed-method case study is considered one of the more promising research approaches for future management and sociological research [93] to develop a deeper understanding of contextual differences and their impact on perceived HPWSs, employee attitudes, behaviours and performance [68]. The extant literature acknowledges the dearth of mixed-method empirical studies in the management discipline and calls for more rigorous mixed-method research in this field to enrich the quality of the studies [94]. Boxall et al. [4] used sequential mixed-method research to contextually configure the employee experience of espoused HR practices and then test their direct and indirect effects on psychological empowerment and job performance. Similarly, this sequential mixed-method study was conducted in two stages, i.e., a qualitative study followed by a quantitative one.

Two of the local private commercial banks in Bangladesh were selected on the basis of their financial performance from 2008 to 2010 [95,96] as well as managerial independence from shareholder influence, measured by the BvDep (BankScope-Bureau van Dijk) Independence Indicator [97]. The bank with a consistently higher level of performance is identified as Bank A. The average performing bank is referred to as Bank B. The first stage, i.e., semi-structured interviews (see Appendix A for the key interview protocol agenda) among 15 key managers of the case study banks, has helped inform the survey design and instrument. The respondents were selected based on their affiliation with the selected case study banks and are in a top- or mid-level management position with a minimum of five years of experience in the Banking sector in Bangladesh. Only Managing or Deputy Managing Directors, Department Heads and Branch Managers were interviewed from each bank. The data saturation point was selected, based on the logic of Legard et al. [98], where the new data started repeating the previous responses. The qualitative data were analysed using a thematic approach (see Table 2 for the key themes and qualitative findings). In the second stage, data were collected through a questionnaire survey among 436 employees at the two case study sites. The survey results were analysed using Structural Equation Modelling (SEM) in AMOS28.

6.1. Measures

6.1.1. Perceived HPWS and EP

A total of ten HPWS components were selected from the relevant extant literature [48,49,50]. These included selective hiring, PMSs, extensive T&D, compensation, self-managed team, leadership style of the immediate supervisor, sharing information with the employees, minimal status distinctions, job quality and security. The first six items were finally selected based on interviews with industry experts (stage one) for the “perceived HPWS” bundle (see Table 1), following the Boxall et al. [4] rationale for contextual configuration. Subsequently, scale reliability (Cronbach’s alpha), multicollinearity, common method variance (CMV) and convergent and discriminant validity were tested (refer to

Table 3. (Part A) Scale items, Cronbach’s alpha, standardised regression weights, and SMC of latent constructs; (Part B) convergent and discriminant validity.

(A)
Labels (Observed Items)			Cronbach’s Alpha		Std. Regression Weight			SMC
Psychological Empowerment			0.840
EMPOWER1					0.766			0.587
EMPOWER2					0.826			0.683
EMPOWER3					0.785			0.616
EMPOWER4					0.694			0.482
EMPOWER5					0.751			0.564
EMPOWER6					0.543			0.295
EMPOWER7					0.716			0.512
EMPOWER8					0.731			0.535
EMPOWER9					0.777			0.604
EMPOWER10					0.830			0.690
EMPOWER11					0.651			0.424
EMPOWER12					0.639			0.409
Employee Trust			0.839
TRUST1					0.779			0.606
TRUST2					0.641			0.411
TRUST3					0.867			0.751
TRUST4					0.827			0.683
TRUST5					0.757			0.574
TRUST6					0.800			0.641
TRUST7					0.497			0.247
Affective Commitment			0.709
COMMIT1					0.692			0.478
COMMIT2					0.728			0.531
COMMIT3					0.528			0.279
COMMIT7					0.472			0.222
RCOMMIT5					0.829			0.688
RCOMMIT6					0.783			0.613
RCOMMIT8					0.560			0.314
Selective Hiring			0.813
RECRUIT2					0.589			0.347
RECRUIT3					0.466			0.217
RECRUIT5					0.828			0.686
RECRUIT6					0.771			0.594
RECRUIT7					0.750			0.563
Performance Management			0.903
PERFORMGT1					0.618			0.381
PERFORMGT2					0.790			0.624
PERFORMGT3					0.891			0.794
PERFORMGT4					0.921			0.848
PERFORMGT5					0.834			0.696
Extensive Training			0.884
TRAINING1					0.613			0.376
TRAINING5					0.830			0.690
TRAINING6					0.775			0.601
TRAINING7					0.590			0.348
TRAINING8					0.793			0.628
Management/Leadership Style of the Immediate Manager			0.949
IMMEMGT1					0.834			0.696
IMMEMGT2					0.865			0.748
IMMEMGT3					0.856			0.733
IMMEMGT4					0.820			0.673
IMMEMGT5					0.879			0.773
IMMEMGT6					0.877			0.770
IMMEMGT7					0.836			0.698
Self-managed Team			0.739
TEAM1					0.588			0.345
TEAM2					0.877			0.769
TEAM3					0.690			0.476
TEAM4
Pay Equity			0.904
PAY1					0.915			0.838
PAY2					0.835			0.697
PAY3					0.861			0.742
(B)
Latent Constructs	CR	AVE	MSV	ASV	TRUST	HPWS	EMPOWERMENT	COMMITMENT
TRUST	0.897	0.559	0.413	0.298	0.748
HPWS	0.805	0.511	0.340	0.317	0.529	0.715
EMPOWERMENT	0.863	0.520	0.501	0.415	0.643	0.575
COMMITMENT	0.65	0.512	0.325	0.230	0.380	0.570	0.471	0.716

Notes: Standardised estimates of measurement loadings (Std. regression weights); squared multiple correlations (SMC). Thresholds are selected based on Hair, Black, Babin, and Anderson (2010). Reliability (CR > 0.7), convergent validity (CR > AVE, AVE > 0.5), discriminant validity (MSV < AVE, ASV < AVE).

(parts A and B) and

Table 4. (Part A) Inter-item correlation matrix across variables in the final structural model (using CMV-adjusted composites); (Part B) Direct and indirect relationships between variables based on assessment of two-tailed significance.

(A)
Items	HPWS	TRUST	EMPOWERMENT	COMMITMENT	PERFORM
HPWS	1.000
TRUST	0.544	1.000
EMPOWERMENT	0.426	0.420	1.000
COMMITMENT	0.495	0.269	0.211	1.000
PERFORM	0.181	0.273	0.249	0.089	1.000
	(B)
Hypotheses	Two-tailed significance (BC) of direct or indirect effects (95% confidence)
H1a	p = 0.001 (direct effect) Hypothesis accepted
H1b	p = 0.001 (indirect effect) Hypothesis accepted
H2a	p = 0.001 (direct effect) Hypothesis accepted
H2b	p = 0.001 (indirect effect) Hypothesis accepted
H2c	p = 0.001 (indirect effect) Hypothesis accepted
H2d	p = 0.001 (indirect effect) Hypothesis accepted
H3a	p = 0.001 (direct effect) Hypothesis accepted
H3b	p = 0. 581 (indirect effect) Hypothesis rejected

to modify the measures of the latent construct. A confirmatory factor analysis (CFA) further ensured the goodness of fit of the measurement models (using SEM in AMOS).

It is asserted by the qualitative findings that banks evaluate employees with appropriate weights assigned to the strategically aligned key performance indicators. Accordingly, the supervisor’s rating of individual employee performance was used as the measure of EP to avoid common method variance issues [4,99].

6.1.2. Attitudinal Outcomes

Spreitzer’s [60] four-factors PE construct, including meaning, competence, self-determination and impact, was observed through a total of 12 variables. Underpinning Cook and Wall’s [75] “Interpersonal Trust” construct adapted by Podsakoff et al. [100], and Casimir et al.’s [71] five-item trust scale further modified by Schindler and Thomas [101], our construct was initially measured by the competence, credibility, integrity, loyalty and openness dimensions of employee trust. However, the openness items were subsequently dropped to ensure composite reliability for our data context. This study used the Meyer and Allen’s [87,91] affective commitment scale that was later customised by Boxall et al. [4]. All items were measured using a five-point Likert scale, where 1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree and 5 = strongly agree. Only the scale of supervisor ratings was developed based on the practised PMS and format used in the participating organisations.

6.2. Multicollinearity, Common Method Variance, Reliability and Validity

Harman’s single-factor test was applied to measure the common method variances [102]. The first factor explains 26.18 per cent of the total variance and is considered methodologically satisfactory. The “same source” issue was addressed by ex post approaches to statistically controlling the CMV [103]. Only two out of fifty-four paths have shown a slightly higher value than the acceptable limit of 0.2 (e.g., 0.249 and 0.269), and CMV-adjusted composites were then used to test the structural model.

Table 4 (part A) and

Table 5. Inter-item correlation matrix across first-order latent constructs and performance.

	PAY	TEAM	TRAINING	IMMEMGT	PERFORM GT	RECRUIT	IMPACT	SELF DETERMINATION	COMPETENCE	MEANING	NEGETIVE ARTEFACT	AFFECTIVE COMPONENT	PERFORM	TRUST
PAY	1.000
TEAM	0.379	1.000
TRAINING	0.384	0.714	1.000
IMMEMGT	0.262	0.581	0.599	1.000
PERFORM GT	0.342	0.638	0.727	0.510	1.000
RECRUIT	0.388	0.652	0.722	0.480	0.788	1.000
IMPACT	0.081	0.407	0.342	0.370	0.304	0.355	1.000
SELF DETERMINATION	0.109	0.393	0.356	0.382	0.358	0.415	0.707	1.000
COMPETENCE	0.064	0.190	0.171	0.230	0.142	0.186	0.575	0.531	1.000
MEANING	0.170	0.338	0.266	0.340	0.227	0.286	0.624	0.491	0.555	1.000
NEGETIVE ARTEFACT	0.142	0.225	0.189	0.174	0.186	0.206	0.078	0.099	0.156	0.237	1.000
AFFECTIVE COMPONENT	0.392	0.505	0.428	0.389	0.381	0.437	0.362	0.333	0.317	0.380	0.366	1.000
PERFORM	0.071	0.128	0.155	0.273	0.177	0.126	0.214	0.258	0.193	0.161	−0.034	0.091	1.000
TRUST	0.220	0.488	0.476	0.636	0.432	0.423	0.355	0.418	0.281	0.343	0.140	0.337	0.273	1.000

represent the inter-item correlations. There is no multicollinearity issue identified in the structural model. All Variance Inflation Factors (VIF) are below three (as per O’Brien 2007). All average variance extracted (AVE) scores are greater than 0.5 (Table 3, part B), and the MSVs are lower than the AVEs. All latent constructs passed the convergent and discriminant validity tests (Table 3, part B). As per Farrell and Rudd’s [104] guidance, the AVE square root was tested to be higher than the absolute value of the correlations with other factors. The composite reliability (CR) values are also above the acceptable threshold of 0.7 [104], except the AC construct. The CR values are greater than the AVE, which means that within the parent factor, the variables correlate well with each other and the latent variables are well explained by the observed ones.

7. Findings from the Qualitative Stage

The perceptions of 15 experts (HR managers and general executives) from the two case study banks were used to configure the HPWS practices. Eight managers from Bank A and seven from Bank B participated in the interviews. The respondents included divisional heads and the branch in-charges of the vital branches, holding mid- to higher-level position titles. These participants are actively involved in strategic decision making. Bank A participants are labelled as BA (1–8) ad Bank B participants are labelled as BB (1–7).

From among the ten selected HPWS items from the extant service industry literature, six were identified by the researchers, ensuring a horizontal and vertical fit in the selected banks. The item “compensation” was renamed as “pay equity” based on the respondents’ perception. The four excluded components were minimal status distinctions, job quality and security and sharing information with employees.

The reasons for the non-inclusion of these items were twofold. First of all, in the semi-structured interview, none of these items were voluntarily mentioned by the experts, while the majority of respondents mentioned the other six items as critical to employee performance (see Table 2 for the key themes and qualitative findings). Second, when specifically asked, some of the respondents presented noteworthy logic for excluding these items based on their tentative counterproductive role (i.e., perceived absence of strategic fit).

For example, a reduced status distinction was not considered a desirable practice according to one of the mid-level respondents of Bank A. He said, “I look up to our seniors and their huge office space and other visible facilities and I aspire to be like them one day” (BA 3). Another manager of Bank B (BB 1) viewed “creating a visible status distinction” to be a necessary practice to ensure the respect of employees towards authority. Reducing the status distinction would disrupt the discipline and office decorum according to him. He specifically mentioned that if the Managing Director does not have a gate keeper and maintain visible distance from the employees, then anyone will feel free to walk into his office and waste his time on trivial matters. This will encourage an undesirable violation of the chain of command. The high score of the Bangladeshi society in the power–distance dimension [30] also helps explain this perception.

Similarly, the respondents perceive information sharing as insignificant or even counterproductive in some cases. Information is viewed as a source of power. Culturally, Bangladeshi society has a high acceptance of power distance, and subordinates expect to be told what to do instead of given adequate information to decide. An inbuilt culture of mistrust has been observed by the researchers, which may have caused such an indifference towards information sharing. One respondent mentioned that sharing all information to everyone (implying mainly junior officers) in the company could be counterproductive and inefficient. BA 5 (mid-level manager in Bank A) said, “I do not need to know about everything. I have too much information to process every day and if I give access to all types of information to all my subordinates, the secret information may be passed to the outsiders (referring to the competitors)”. Therefore, according to this respondent, information should be restricted and handled with discretion by the authority to ensure high performance.

By the same token, job quality is considered a non-significant factor for a high-performing banker in Bangladesh, according to the respondents. Some of them mentioned that the nature of the job is practically standardised in all private banks in Bangladesh, and there is little or no provision to improve the quality or characteristics of key jobs in the banking sector. One mid-level manager of Bank B said, “we knew what we were getting into when we applied for a banking job. The long hours and stress are part of the package and it’s same in all banks” (BB 4). The low score in the cultural dimension of “indulgence” (a restrained society) can explain this perception towards job quality in Bangladesh. A low “Indulgence” score means people do not put much emphasis on leisure time, and they generally restrain from satisfying their desires [30]. Therefore, improving job quality may be perceived as indulgence and hence wrong, or at least unnecessary, by the respondents to increasing employee performance.

According to the respondents, job security is also not an important issue, as there are better jobs available in the industry for a capable banker. Rather, most bankers would be unwilling to join a bank with any kind of bond binding them to serve the bank for a certain period (and thus providing job security) no matter what incentive is attached to it. High-performing bankers know that they will face no trouble finding a more favourable job in the market anytime. The respondents argued that employees with lower capability and performance would worry about job security and may desire it, but it is not likely to increase their actual performance. By the same token, if the employees are high performers, they will not worry about job security in this market.

The six selected HPWS components generally corresponded to the Western HPWS composition, at least at face value. However, the way some of these components are perceived in Bangladeshi PCBLs are intriguingly distinct. For example, in Bangladeshi PCBLs, selective recruitment means selecting some experts (in specialised areas) as per the central bank’s regulatory framework (e.g., Managing Director is directly appointed by the central bank, i.e., Bangladesh Bank), while using a systematic recruitment process to fill in the management trainee (MT) or probationary officer (PO) positions. However, they also acknowledge the pressure from external, powerful sources (such as Ministers, Members of Parliament or Bangladesh Bank officials) as an important consideration to secure the bank’s smooth operation [39]. Accordingly, each bank has two different streams of fresh recruits on the bank’s payroll, hired through substantially different standards of selection. The recruits in the MT or PO positions go through a rigorous and systematic selection process, while other junior officers (with almost similar initial job descriptions) or assistant officers are selected through sub-standard tests and interviews that can accommodate recommendations from political or regulatory authorities.

This system of favouritism is perceived as fair, and “selective hiring” in Bangladeshi PCBLs that does not correspond to Western practice. However, this system is justified for the stakeholders in Bangladeshi PCBLs (according to the expert respondents) since the junior or assistant officers (recruited through favouritism) get promoted at a much slower pace than the MTs or POs. Therefore, the subsequent preferential promotion, payment or performance evaluation system of MTs over junior officers ensures a horizontal fit between the perceived HPWS components that seem strategically aligned.

The understanding of what constitutes a fair performance evaluation system widely varies across the respondents. Some experts think working longer hours in a bank shows loyalty and citizenship behaviour and therefore should be positively evaluated, while others view that as an indication of inefficiency. The compensation component seems to have a more limited coverage compared to Western measures. In the selected banks, pay equity has a desirable impact on employee performance. Accordingly, this scale has been customised for this study and labelled as “pay equity” in the survey instrument.

8. Findings from the Quantitative Stage

Informed by the qualitative phase, the contextually configured perceived HPWS composition has been identified for the Bangladeshi banking industry in the structured questionnaire for the second phase of this study. The survey results are outlined in the following segments.

8.1. Measurement and Factor Structures of the Latent Constructs

CFA models have been tested individually for each latent construct. A combined CFA model was also tested for the latent constructs’ convergent and discriminant validity and the configural invariance [105] (p. 213) of factor structures across the two groups (Bank A and B). The resultant model achieves a good fit that validates the formation of composites.

The measurement models that were hypothesised theoretically were respecified to ensure construct validity. After dropping 14 items, the remaining 54 observed items loaded significantly into their respective constructs. The standardised regression weights (SRW) range from 0.466 to 0.921(SRW > 0.4; p < 0.01). Out of the 54 retained observed items in four latent constructs, only four items have <0.5 regression weights, the lowest being 0.466 (RECRUIT3). The squared multiple correlations (SMC) of the above items are poor (the lowest is 0.217). However, these items are retained in order to maintain an acceptable level of construct validity and composite reliability. It should be noted that all the other items show good commonality and correlation with their respective construct (SMC > 0.3, standardized regression weight > 0.5). Table 4 (part B) shows the two-tailed significance of the direct and indirect relationships between the independent and dependent variables specified in the associated hypotheses. If the proposed path is significant (p < 0.05), then the presence of a causal relationship is established.

According to Hoe [106], the comparative fit index (>0.90), the root mean squared approximation of error (0.08), the χ² statistic (χ²/df ≤ 3), GFI (≥0.9) and P Close (≥0.05) indicate the goodness of fit. According to Bentler and Chou (1987) and Kline (2010), even in an adequately specified model with more than 300 respondents, non-normality and ordinal data may justify the presence of significant p values (<0.05) in the model fit summary index. Such data may inflate the chi-square, even for a small difference between the observed and the perfect-fit model. Accordingly, a CMIN/df close to 3, CFI > 0.9 and RMSEA < 0.7 in the configural invariance test were deemed acceptable. In the respecified models, the retained variables adequately load into their underlying constructs.

8.2. Testing the Hypothesised Causal Paths

We used the composite variables to measure the presence, strength and significance of the hypothesised direct and indirect effects, and the two-tailed significance of the direct and indirect relationships between the variables determined the acceptability of the hypotheses. The presence of a causal relationship is established by its significance (p < 0.05).

The results indicate that the perceived HPWS positively predicts PE, ET and AC, which supports Hypotheses 1a, 2a and 3a. Moreover, ET and PE mediate the perceived HPWS–EP link, which supports Hypotheses 1b and 2b. ET mediates the perceived HPWS–PE link, which confirms Hypothesis 2c. PE mediates the ET and EP link, which supports Hypothesis 2d. However, AC does not mediate the HPWS–EP link, and therefore, Hypothesis 3b was rejected (see Figure 2 for the respecified model).

9. Discussion

9.1. Influence of the Cultural Context of Bangladesh

The findings show that HPWSs need to be configured to the cultural context of the Bangladeshi banks. A number of senior HR managers and general executives regarded certain HPWS practices, such as reducing status distinctions and information sharing, as counterproductive to employee performance. It is obvious that issues of high acceptance of power distance are of critical importance to the development of HPWS within Bangladeshi banks. Despite the use of many Western HR practices, some seemed to be interpreted differently within the studied context. HRD researchers and practitioners should be aware that HPWS composition is dependent on cultural, industry and occupational factors [4,20,107].

The external and internal contexts played a vital role in configuring the perceived HPWSs in this study [13]. Four of the ten popular service sector HPWS items were cast out by the Bangladeshi banking industry experts during the interviews. The configurational view of HRM emphasises the importance of ensuring a horizontal and vertical fit [108], and the findings from the qualitative stage explain the selection of adapted measures of perceived HPWS composition used in the given context. However, except for the HPWS–AC–EP pathway, the other hypothesised causal links conformed to the Western literature, as Rabl et al. [20]’s meta-analysis suggested. SET indicates both the possibilities of finding universalistic norms and contextual rules of reciprocity, i.e., the psychological causal process of exchange. In this study, while the perceived HPWS composition needed to be contextually configured, the causal structure (basic norms of reciprocity) seemed to conform to Western findings. In line with the proposition of Nishii et al. [109], we therefore argue that a strategically aligned and contextually configured HPWSs will positively predict employee performance in any context if they are perceived as well-intended and effective by the employees.

9.2. The Black-Box of PHPWS–Performance Link in Bangladesh

ET, PE and AC mediate the PHPWS–EP link, according to the extant high-performance work systems literature [4,81,83,110,111]. The proposed mediation roles of PE and ET in our hypothesised HPWS framework have been supported by the findings of this study. However, the PHPWS–EP link was not mediated by AC in any of the selected banks. This can be explained by the informal recruitment practices, consequent work inefficiency and misplaced loyalty of the employees in Bank B, and slow career development opportunities in Bank A. Here, “misplaced loyalty” refers to the loyalty towards the manager/shareholder/external patron who exercised unfair referral power to recruit particular staff. This is termed “patron-clientage relationships” by Sarker [33] and Khan [112].

The affective commitment of poorly recruited and trained employees may not translate into individual employee performance, whereas the highly capable and systematically recruited employees of Bank A also reflected poorly on the AC–EP link, which corroborates with the findings of Khan [89]’s study. The Khan [89] study on AC and employee performance link in the same context has shown no significant association between AC and employee performance. The author identified informal recruitment and selection policies and insufficient and unplanned training as part of the problem of why a loyal and committed worker may not perform well in Bangladeshi PCBLs. Many high-performing employees did not project a high level of AC due to their perceived dissatisfaction with the development opportunities and lack of alignment with the career plan and progress. According to the findings of Khan [89], these high performers still maintained a high level of performance due to their higher capability and interest in finding better jobs on the market despite maintaining low AC.

Though the Khan [89] study did not explore the impact of HPWS on AC or the mediational role of AC in the HPWS–EP link, its contextual explanation may help support our findings. The highly skilled and self-motivated employees of Bank A tend to maintain a higher level of performance, with a clear intension of leaving the organisation due to a lack of career development opportunities in their current organisation. There is a possibility that the respondents did not psychologically disassociate their intension to leave the organisation, i.e., continuance commitment with the AC construct as explained by Khan [89] and Meyer and Allen [87]. For example, employees recruited or promoted through favouritism and consequently lacking job opportunity in a competitive labour market may feel affective commitment, which is, in effect, the continuance commitment in disguise; such affective commitment does not positively predict their performance [89]. This finding is consistent with the notion that HR practices have a synergistic or mutually reinforcing influence on firm performance [12,67,113].

10. Implications and Conclusions

10.1. Implications for the International HRD Research

This study customised and tested a predominantly Western model in a rarely explored developing country context. In absence of any HPWS studies in the context of Bangladesh, the findings of this study may serve as a reference point for future IHRD researchers studying a similar context or for cross-cultural IHRD studies [8,114]. Alagaraja [10,115] has contended that both HRD and HRM are connected in practice and focus on strategic contributions for improving organizational performance to address the complex strategic issues of the organisations. The HPWS has been defined as a bundle of strategically aligned and contextually specified HRM practices, which also includes training and development and self-managed teams as two of the most important drivers of employee performance issues that are directly related to the HRD field. Bangladesh, as a case study context, is especially interesting not only because the HPWS phenomenon has not yet been extensively studied in this context but also because of the complexity and contradictory aspects of its culture and institutional contexts.

The findings of this study support the argument of Boxall et al. [5] that HPWS research “needs to focus on the actual processes experienced by workers—including involvement and intensification—if we are to understand how HPWS work to influence organisational outcomes and how they could work better” (p. 4). Despite showing a very similar statistical association of the hypothesised links, the findings from this mixed-method study help explain why certain well-intended HR practices are not viewed as high-performance work practices in the context of Bangladeshi employees and why affective commitment may not significantly mediate the HPWS–EP link in a different context. This finding implies that an understanding of cultural and institutional context and treating HRD as a complementary part of an HR system or bundle is vital for improving employee performance. Therefore, future IHRD studies should better integrate contextual factors in their research design and focus on the process of ensuring higher performance in the organisation by carefully matching the HRD contents to the other HR and work practices.

10.2. Implications for the HRD Partitioners

The findings of this study show that AC may not effectively mediate the PHPWS and EP relationship in banks operating in Bangladesh or similar contexts if employees are not hired systematically, lack a strong growth need, or lack development capacity. A fair and selective recruitment system may ensure a competent and efficient workforce. For example, an organisation such as Bank A will likely enjoy high EP despite the absence of higher-level AC among employees due to their superior capability and preparation for the job market.

However, these results do not imply that great employee and organisational development outcomes can be achieved in the long run despite impoverished affective commitment among the employees. Turnover rates will be high in such banks if a job is available in the market. Both international and domestic HR practitioners should be aware that the recruitment and selection policy or procedure, career development opportunities and compensation packages must be strategically aligned. Only then will a higher level of affective commitment predict higher employee performance, as the HPWS literature predominantly claims. Unfair or non-systematic recruitment and selection policies will only help retain an inefficient but loyal and satisfied workforce with no positive reflection on their job performance and no promise in the job market. Such commitment will be counterproductive to sustainable performance.

Moreover, perceived contradictory practices such as unfair and informal hiring paired with competitive compensation could be counterproductive. The extant literature predominantly views HR systems as a bundle of complimentary work practices that are not counterproductive [47,116]. The intended HR practices should match the actual practices implemented by the HR agents across the managerial hierarchy [117], or else PE and ET may not improve, despite the presence of well-intended HR policies [66]. Employees may not trust their supervisors is they fail to make fair and objective decisions, and such a lack of trust may negatively impact their performance [101,118,119].

10.3. Conclusions

This study set out to investigate the application of HPWSs in the context of two PCBLs in Bangladesh. Underpinned by SET, the findings demonstrate that HPWS practices need to be bundled according to the unique cultural and institutional context of the Bangladeshi banks. Moreover, selective recruitment, PMSs, credible and supportive leadership, T&D opportunities, fair compensation, and self-managed teams are perceived as HPWSs in selected Bangladeshi PCBLs. The perceived HPWS predicts empowerment, trust, and affective commitment among employees. Furthermore, PE and ET will likely drive EP up. All of these are essential for employee wellbeing, sustainable HRD and performance in organisations. Therefore, HR practitioners and managers at all levels should empower employees and build employee trust by planning and implementing HPWSs. The scope of this study is limited to Bangladeshi PCBLs and the selected attitudinal and behavioural outcomes. In future, HPWS researchers may include job satisfaction, customer focus and compliance in their study to extend the proposed theoretical framework. Future IHRD research may focus on measuring the impact of HPWSs on more specific HRD indicators in comparative or cross-cultural studies. A longitudinal study in a similar context (such as other developing countries or other Bangladeshi industries) or a similar study in a contrasting case study location may extend the boundaries of knowledge and overcome our limited scope for generalisability.