Abstract
This research examines the impact of High-Performance Work Systems (HPWS) on employee job satisfaction in the economically volatile context of the Sri Lankan banking sector. Through a mixed-methods design, combining survey-based quantitative analysis (n=217) and semi-structured qualitative analyses, the study examines how HPWS components, recruitment and selection, training and development, performance appraisal, and compensation and benefits, affect job satisfaction.
The theoretical framework, highlighting the strategic importance of HPWS and its evolution, is grounded in an integrated theoretical lens combining the Ability, Motivation, and Opportunity (AMO) model, Social Exchange Theory, and Job Demands–Resources (JD-R) model. This tri-theoretical integration explains both the enabling mechanisms and contextual boundaries of HPWS effectiveness, which frames HPWS practices as job resources that mitigate stress and promote engagement in high-pressure environments such as banking.
Quantitative findings revealed a nuanced relationship: while training & development and compensation & benefits significantly predicted job satisfaction, recruitment & selection and performance appraisal showed non-significant effects. The derived model (JS = 0.664 + 0.192TD + 0.513CB) highlights these dominant drivers in the crisis context. Qualitative analysis provided explanatory depth, revealing that performance appraisal often functions as a job demand inducing stress, while economic uncertainty neutralises the impact of recruitment practices.
The study concludes that the effectiveness of HPWS is context-dependent, with cultural hierarchies and economic crises shaping how practices are perceived and valued. The adoption of a contextually calibrated HPWS in the Sri Lankan banking sector can lead to substantial improvements in employee job satisfaction, thereby contributing to better customer service, reduced turnover, and increased overall productivity. It offers actionable recommendations for banking sector managers to refine HR strategies by prioritising developmental training, ensuring compensation fairness, and redesigning the appraisal system to reduce stress. Overall, this research contributes to academic literature by expanding HPWS theory into non-Western intensive industries.