Assessment of Strategic Human Resource Management Practices and Challenges in Selected Ethiopian Commercial Banks

This study aimed to assess the strategic human resources management practices and associated challenges in commercial banks in Ethiopia. The study used a descriptive research method. A sample of 345 employees was selected using stratified random sampling and a response rate of 85% was attained. Data was collected using a self-administered questionnaire. Data analysis was conducted by applying statistical computations for averages and standard deviation. From the study, it was found that the overall strategic human resource practices in some commercial banks were perceived positively. These banks consider their HR professionals as strategic business partners, and thus, evaluation of HRM in terms of its contribution to business goals is a popular practice. However, several challenges distort the principle of strategic HRM and hinder HR from fully acting as a strategic partner. The major challenges included improper organisational structure, insufficient resource allocation, lack of cascading business strategy statements to defined HR activities, and the prevalence of group favouritism and political affiliation. This study found that there is a lack of congruence of the HRM system with other organisational strategies under operation, such as total quality strategy. Thus, it can be concluded that even if the practices of SHRM have been in a good direction in the surveyed banks, the failure of effective implementation of HRM policies created a mismatch between human resource policies and other aspects of the organisation. Therefore, the study suggests that the surveyed banks invest in human resources through training and management development, to improve individual employee capabilities and organisational capabilities to effectively link human resources with business strategy.