THE EFFECTS OF HRM PRACTICE ON EMPLOYEES' ENGAGEMENT

Employee engagement is considered as one of the most powerful drivers of a company’s competitive advantage and high performance. Employee engagement involves creating prospects for employees to attach with their managers, colleagues and organizations. This study sought to assess the effects of HRM practices on employee engagement in Commercial Bank of Ethiopia. The HRM practices covered were performance appraisal, training and development, reward and compensation and communication. The study adopted a explanatory research design, covering a sample of 335 respondents drawn from a target population of 2050 employees of CBE. The data collected through a self-administered questionnaire was analyzed using descriptive and inferential statistics. Regarding HR practices or drivers of Employee Engagement, the average level of satisfaction for Communication is M=3.86, training and development M=3.66, Reward and compensation M=3.83 and performance appraisal M=3.74.The mean value for vigor M=5.57, dedication M=5.53, absorption M=5.5 and the overall mean of engagement was M=5.54. Correlation tests revealed a moderate positive correlation between reward and compensation with coefficient of 0.437. Performance appraisal, communication and training and development were weak positive correlation with coefficients of 0.277, 0.280 and 0.259 respectively at a 0.01 significance level. Regression analysis revealed that an increase in reward and compensation, performance appraisal, communication, and training and development package by one unit would increase employee engagement by 1.321, 0.159, 0.306 and 0.207 units respectively. All the variables covered had positive correlation on employee engagement. However, reward and compensation was the significant contributor of employee engagement. The study recommends CBE should give special attention to reward and compensation that promote employee engagement which has a positive large coefficient and significant impact on engagement.