Mediating Role of Organizational Culture in the Relationship between HR Practices and Employee Performance: Evidence from Commercial Banks in Sindh, Pakistan

Abstract

This study investigates the interplay among(HR) Human Resouces Practices, organizational culture, as well as employees performances within commercialize banks in the province of Sindh-Pakistan, with a focus on the mediating role of organizational culture. Against the backdrop of Pakistan’s evolving banking sector—a critical driver of national economic growth—the research addresses a gap in understanding how HR policies translate into improved employee performance in non-Western, hierarchical organizational settings. Using a quantitative methodology, data were collected via structured questionnaires from 280 bank employees (response rate: 91%) through convenience sampling. The survey instrument measured three constructs: HR practices (e.g., recruitment, training, compensation), organizational culture (e.g., trust, communication, collaboration), and employee performance (e.g., task efficiency, goal achievement). Advanced analytical tools, including Smart-PLS 4.0 for structural equation modeling (SEM) and MATLAB for supplementary statistical computations, were employed to test the hypothesized relationships. Key findings reveal that organizational culture serves as a significant mediator, accounting for 42% of the total effect of HR practices on employee performance (indirect path: β = 0.19, *p* < 0.05). While HR practices directly enhance performance (β = 0.28, *p* < 0.01), their efficacy is substantially amplified when aligned with a supportive organizational culture. Descriptive statistics highlight moderate employee satisfaction with existing HR policies (mean = 3.8/5) and cultural dynamics (mean = 3.5/5), underscoring room for improvement. Correlation analyses further validate strong interrelationships among the variables (HR-culture: *r* = 0.63; culture-performance: *r* = 0.58). The study contribute to HRM literature- by contextualizing the mediating role of culture in a collectivist, hierarchical environment, challenging the universal applicability of Western-centric models. Practically, it recommends that banks in Sindh prioritize cultural interventions—such as fostering trust through transparent communication, redesigning incentive systems to reward collaborative behavior, and integrating cultural audits into HR strategies—to maximize the ROI of HR investments. Limitations, including cross-sectional design and convenience sampling, are acknowledged, with calls for longitudinal and regionally comparative studies.