The Interplay Between Financial Decision-Making and HRM Practices in Improving Organizational Performance: Evidence from Pakistan

Abstract

The relationship between financial decision and human resource management (HRM) practices is one of the most decisive factors of an organizational success, especially in third world countries like Pakistan. The financial choices affect the allocation of resources, the investment of funds on the employees, and the cost effectiveness, whereas the HRM practices will decide the motivation, expertise and dedication of the staff. This paper looks into the effectiveness of financial decision-making on HRM practices and in effect, organizational performance in the Pakistani service industry. The mixed-method research design that incorporates quantitative surveys of 220 HR and finance practitioners working in banking, telecommunication, educational and healthcare industries with qualitative interviews among 15 top-level executives results in the study finding that a solid financial management practice promotes HRM outcomes, including employee retention, productivity, and satisfaction, to a large extent. The findings prove that the higher the rate of employee productivity and the profit margin achieved by the firms that combine the financial planning and HRM strategy is 20-percent higher and 15-percent better than that of the firms that work separately. These results help to explain how the strategy of HRM is structurally connected to the financial strategy in encouraging sustainable organizational development. The research paper concludes that the integrated decision makes organizations more competitive and stable in the service industry in Pakistan. Nevertheless, the aforementioned authors concur that MNCs' competitive behavior is significantly influenced by the political and cultural contexts of the countries in which they operate and conduct their business.<|human|>However, the authors mentioned above agree that the political and cultural environment of the countries where MNCs operate and do business has a significant impact on their competitive behavior.