The Relationship of HR Roles and HR Practices with Organizational Performance in Financial Institutions in El Salvador

Abstract

Following existing literature in different contexts, this study explored the HR roles and HR practices and their relationship with organizational performance in financial institutions in El Salvador. Based on a previous exploratory study conducted in El Salvador, the HR roles seem to be more functional oriented than that of a business partner that generates value to the organization. This study used Ulrich’s HR roles model as well as the Cranet HR practices survey, to determine the relationship with firm performance. Such performance was gathered from Fitch ratings publications during the year of 2010. Both instruments, especially the HR practices survey, went through an intensive validation process to adjust them to the contextual targeted location. They were translated into Spanish and distributed among the sample. The sample of this study was comprised of those financial institutions registered in El Salvador and listed by Fitch Ratings, Central America. Correlation and Regression were employed to determine the relationship. Based on the outcomes from the data analysis, partial relationship was found regarding both HR roles and HR practices towards organizational performance. In addition to the findings that partially support the hypothesis, this study reports the responses per item that showed high percentages in regards to “I don’t know” or “No use” options which led the conclude that the theories on HR roles and practices might be fairly new to the sample in the study.