Contextualising employee engagement in crisis: a protective caring approach to employee engagement in the banking sector in Bosnia and Herzegovina

Abstract

Purpose

This study focuses on HR practices that foster employee engagement during Covid-19. Companies in transition economies are particularly vulnerable to crisis and downsizing and other recessionary practices are frequently used.

Design/methodology/approach

Drawing on the model of caring human resource management, we utilise interviews with human resource representatives of 10 banks in the transition economy of Bosnia and Herzegovina. We analyse the banks at two different times to demonstrate how and why companies adapt their HR practices.

Findings

Our findings show a changing mindset in the deployment of highly context-specific HR practices. Strengthening company culture through a sense of community and communication ensure stability and continuity in work. Rather than layoffs, flexible work has become standard.

Practical implications

By highlighting the interplay between HR practices and employee engagement, we contribute to the discussion on engagement in exceptional circumstances and challenging settings and demonstrate how caring responsibilities “migrate” into HR practices in the professional context of a transition economy.

Originality/value

We propose a context-specific “protective caring approach” to foster employee engagement during crises.

Citation

Bešić, A., Hirt, C. and Rahimić, Z. (2024), "Contextualising employee engagement in crisis: a protective caring approach to employee engagement in the banking sector in Bosnia and Herzegovina", Employee Relations, Vol. 46 No. 9, pp. 42-59. https://doi.org/10.1108/ER-12-2023-0623

Introduction

Imagine working in a country with no job security or regular payment. You go to work every day, but your employer tells you that your salary will be paid late (sometimes months later). In addition, the country suffers from a protracted political crisis, relatively little investment, and a persistent discourse about permanent emigration. Imagine you have a family, a partner and children. Would you find this to be an attractive environment for you to live and work? We assume the clear answer to this question is no.

Now imagine an international (or domestic) company in the banking sector. Although the political situation has always been challenging, employees were seeking secure employment in the sector, and for decades the reputation of an international company or a company paying salaries on time was enough to attract skilled labour. Banks regularly received best place to work awards. Despite having a well-developed human resource management (HRM), banks did not have to worry about employee wellbeing or flexible work, as there was a constant flow of new employees. Times have changed. Over the past years banks have become less appealing, making it harder for them to recruit new employees and, more importantly, to retain them. Because of this, banks have started to consider what HRM can do to alleviate this situation.

Then the Covid-19 pandemic hit in 2020, leaving banks unsure how to react or what might happen next. The government’s deficiencies became immediately apparent as there was little to no support, guidance or equipment. Companies fired people left and right, and salaries were cut. In some cases, people were put on furlough without clear guidance on the short or mid-term developments.

Banks had to decide whether to follow the general reaction with recessionary human resource (HR) practices or whether to leverage the crisis situation to keep employees and ensure their wellbeing and engagement.

The above vignette is the starting point of our study which is set during the Covid-19 pandemic in Bosnia and Herzegovina. The context of Bosnia and Herzegovina as a transition economy serves as a fitting empirical context with its strong banking sector and complex institutional environment (Ortlieb et al., 2019). Due to decades of political and economic instability that followed the war in Bosnia and Herzegovina in the 1990s, the country seems to be in perpetual crisis. The labour market suffers from skilled labour emigration and many jobs have limited prospects for good salaries or promotion. Organisations face a paradoxical situation with high unemployment and a lack of qualified and motivated employees. The banking sector was severely affected by Covid-19 and governmental failure in mastering the pandemic. This has left banks with considerable discretion as how to react to the crisis and how to care for their employees.

Employee engagement, as the “simultaneous investment of an individual’s physical, cognitive, and emotional energy in active, full work performance”, aims to increase productivity, work quality, retain talent and improve performance (Rich et al., 2010, p. 619). Especially employee-intensive organisations, such as banks, have a considerable need for knowledgeable and dedicated employees. Employee engagement gained significance, especially in the wake of the Covid-19 pandemic and its resulting changes in work environments. Questions on how to engage employees during a crisis and the role of HR practices in fostering engagement are increasingly important for businesses (Collings et al., 2021a; Kulik, 2021; Minbaeva and Navrbjerg, 2023), and engagement is a crucial topic in research and practice (Davis and Van der Heijden, 2023; Conway et al., 2016; Saks, 2022).

We shed light on HR practices organisations adopt for employee engagement during crises. We examine how HR professionals in the banking sector respond to the crisis and how they try to demonstrate a caring approach to HRM. Such HRM can result in an organisational climate of care to which employees will respond with higher levels of engagement (Saks, 2022). Based on Gilligan (1982) managers may have attitudes towards their employees that are rooted in care, and go beyond serving the needs of the business. Applying such a perspective to HR practices (e.g., Magrizos and Roumpi, 2020) helps us to understand how people interpret and apply caring responsibilities in a professional context and allows us to better grasp managers’ motives and emotional experiences as they interact with employees as required staff members (Au et al., 2023). Since businesses in Bosnia and Herzegovina are vulnerable to crises and struggle with employee engagement, adopting caring HR practices rather than downsizing is a novel and comparably understudied approach. We pay attention to broader contextual factors (Davis and Van der Heijden, 2023; Farndale et al., 2022; Bakker et al., 2011) and consider the interplay of HR practices and engagement, to gain a deeper understanding of management practices (Minbaeva and Navrbjerg, 2023). While many companies employ recessionary HR practices (e.g., Oruh et al., 2021; Teague and Roche, 2014), these prove rather short-sighted and counterproductive. Hence, our research questions read:

How do HR managers adapt their HR practices in response to Covid-19?’ and ‘How does management’ perceive the role of ‘care’ in fostering employee engagement through HR practices in times of crisis?

Our contribution is bifold. First, drawing on the model of caring HRM (Saks, 2022) we identify HR practices for fostering engagement in two distinct phases throughout the pandemic – the initial phase (Spring–Summer, 2020) and the consolidation phase (Autumn, 2020–Spring, 2021). Initially, companies quickly reacted to the crisis and focused on clear communication about changes in work and health and safety. Then they consolidated their experience by experimenting with work-from-home models and innovative forms of training to foster engagement. Second, we respond to the call for non-Western contexts in engagement research (Banihani and Syed, 2020; Kossyva et al., 2023) and provide context-specific insights into the understanding and interpretation of engagement (Collings et al., 2021b).

Employee engagement in crisis: the model of caring HRM

Employee engagement is the expression of physical, cognitive and emotional aspects while performing one’s role (Kahn, 1990). It can be understood from psychological and practitioner-oriented perspectives. Psychologists (Kahn, 1990; Schaufeli and Bakker, 2004) focus on antecedents and drivers of feelings, cognitions and behaviours (Truss et al., 2013), whereas management approaches emphasise creating a strong culture, appreciating contributions, and building trust. A recent review article by Kossyva et al. (2023) emphasises the increasing interest in engagement. In addition, Davis and Van der Heijden (2023) argue that employee engagement is dynamic and context-specific. As outlined by Saks (2006), Saks and Gruman (2014), Schaufeli (2013) and Kossyva et al. (2023), employee engagement is broader than the adjacent concept of work engagement, because it includes the employee’s relationship with their job as well as the organisation.

Organisations face contingencies in managing employee engagement (Jenkins and Delbridge, 2013). As outlined by Gerhart (2005, p. 178), “it seems unlikely that one set of HR practices will work equally well no matter what the context”. In times of crisis, additional contextual ambiguities become apparent (Arrowsmith and Parker, 2013). Studies on employee engagement in crises mainly highlight negative effects, e.g., elevated stress levels and workloads (Keeble-Ramsay and Armitage, 2014); social or psychological distancing (Caligiuri et al., 2020); changes in work environments and increased uncertainty (Carnevale and Hatak, 2020) or issues with balancing work and care obligations (Arora and Suri, 2020). This can lead to disconnectedness, a lack in motivation and negative effects on wellbeing (e.g., Li et al., 2020). While there is understanding about the role of HRM in fostering employee engagement (Saks, 2022), few empirical studies reveal HR practices that are likely to drive engagement (Adikaram et al., 2021). To achieve positive outcomes, a mix of HR practices, including appropriate rewards, learning and development opportunities, leadership and involvement are required (e.g., Monks et al., 2012).

Saks (2022) proposed a model of caring HRM and employee engagement. Caring HRM includes a system of HR practices, such as training and development, flexible work arrangements, or health and wellness initiatives. If HR practices lead to an organisational climate of care and concern for employees, they in return will care for the organisation and respond with higher levels of engagement. As a result, the caring HRM and engagement model contends that caring is a crucial factor connecting a HRM system to employee engagement. There is, however, little empirical evidence addressing the role of caring HR practices for employee engagement in crises, such as Covid-19. To reinforce employee commitment during the pandemic, Su et al. (2021) focus on health and safety practices, communication, cooperation, employee benefits and workforce adjustment practices. De-la-Calle-Durán and Rodríguez-Sánchez (2021) emphasise safety, communication, compensation and cultivating informal links with supervisors and colleagues, as well as remote work. Mani and Mishra (2020) suggest value, vision and virtue to enhance the quality of engagement, as pre-Covid-19 employee engagement strategies lose impact due to organisations’ existential anxieties. Adikaram et al. (2021) highlight the importance of context and identify a softer approach with bundles of HR practices to manage employees during crisis in Sri Lankan companies.

Overall, studies point to the need for flexibility and responsiveness of HRM in times of disruptive change (e.g., Biron et al., 2020). However, as empirical data on caring HR practices for engagement during crises is scarce, we aim to provide a better understanding of the mechanisms connecting context-specific HR practices to employee engagement.

HRM, employee engagement and the impact of Covid-19 on businesses in Bosnia and Herzegovina

Bosnia and Herzegovina has a complex political system and radical changes have affected the country, including the transition from a planned towards a market economy and the devastating effects of the 1992–1995 War. Over the 30 years since the start of the war, institutions remain crisis-ridden, the country is politically divided and has only recently been recommended as a candidate to join the European Union (EU). Political turmoil, corruption, and widespread bureaucracy shape the economic context.

In transition economies, the financial sector holds a significant position in the economic landscape (see Macini et al., 2022). For many years, foreign financial companies were in a favourable position to pick and choose staff, due to widespread unemployment. Since the economic crisis in 2008, however, emigration has become an acute issue, resulting in a lack of qualified labour and difficulties in filling positions – even for international companies, which were, historically, seen as desirable. For many years, various rankings listed banks as employers of choice, but due to high competition between banks and market saturation this has changed. For a long time, HRM remained operational, but in the last decade, a more strategic orientation has emerged (Bešić and Ortlieb, 2019). In terms of employee engagement, research shows that employees value job security (Kožo, 2020) and organisations that invest in employee motivation (Knezović and Đilović, 2020).

Covid-19 revealed the weakness of the government. While regulations restricted movements and disrupted business operations, the procurement of necessary testing and vaccines was slow and although decrees were issued, the resulting measures were poorly enacted. Weak governmental support forced many businesses to apply common recessionary measures to cope with the pandemic, such as furloughs or wage cuts (FBiH Employers' Association, 2020). However, as we will show, the banks analysed chose a different path.

Methodology

Data collection

We adopted a qualitative approach with purposive sampling, striving for a representation of the sector (Braun and Clarke, 2006; Gioia et al., 2013; Aguinis and Solarino, 2019). The banking sector is highly concentrated, with 80% in the hands of multinationals, predominantly from the EU and Russia (FIPA, 2021), with a few medium sized domestic banks. We reflected this in our sample with eight international and two domestic banks, including the largest players in the market.

We identified the banks based on previous research experience in the banking sector in the country (see Bešić et al., 2022) and via company websites and collected data in two rounds via Zoom. We relied on personal contacts as gatekeepers to access the HR departments. A first round of interviews took place from October–December 2020 and a second round from March–April 2021. Table 1 shows an overview of the company sample and the 13 interviewees, who were all HR experts well-suited to provide information related to HR practices during the pandemic. We focused on HR experts, as they developed a strategy, implemented HR practices during the crisis, and were able to present a broad view of the banks’ HR practices with the intention to influence company goals such as talent retention, which is linked to engagement. To obtain a thorough understanding of the practices within the banks, we focused on the main actors in the sector. Interviewing HR experts therefore provided us with the rationale behind their HR practices and their alignment with organisational needs. We thus purposefully focused on HR experts instead of employees, given that we looked at the decision-making process on the HR practices in the companies.

The first and third author conducted the interviews in Bosnian. They lasted between 45 and 60 min, were audio-recorded and transcribed verbatim.

We used semi-structured interview guidelines, which were slightly adapted for different banks. Our questions addressed HR practices, changes due to the pandemic, and crisis-management. We also asked about working from home, distance leadership, communication and collaboration. The interviews were supplemented by notes, background information, and pandemic-related postings from company websites and newspaper articles, resulting in over 150 pages of documents.

Data analysis

We analysed the data through thematic analysis using the software MAXQDA. We used Braun and Clarke’s (2006, 2019) six-phase approach: familiarisation, coding, initial constructs and revisions, development of themes, refinement, write up. Figure 1 displays our data structure, with a list of codes that led to first-order constructs, second-order dimensions and aggregate themes. Following Saldaña (2016), two of the authors independently coded the transcripts, reflected on the codes and agreed on the themes.

We started with an inductive analysis. Based on the frequency addressed by the interviewees, we developed 40 initial codes, which we refined and merged into 12 first-order constructs (e.g., “role of HR during the pandemic”). Second, we merged those into seven second-order dimensions relating to changes caused by the pandemic (“impact of the pandemic on work”) and the strategic orientation (“HR strategy”) and role of HRM during the pandemic (e.g., “communication”). Here, we followed a deductive approach. We viewed the dimensions through the lens of caring HRM and focused on similarities and differences between the banks. This helped us develop four themes, with different foci across time. In the initial phase, most banks reacted quickly to the pandemic and ensured health and safety requirements were followed. This phase also revealed the need for communication while employees were working remotely, in order to foster a sense of community and engagement. In the consolidation phase, the banks focused more on experimentation.

Inspired by Saks’ (2022) caring HRM approach, we outline a context-specific protective caring approach, with communication, HR practices that lead to a strong culture, and caring leadership being key in fostering employee engagement (see Figure 2).

Findings

We structured the findings along the initial and the consolidation phases. We addressed both the HR practices applied, and the management’s perception of how this affected employee engagement. Consequently, we illustrate a changing mindset in the deployment of caring HR practices as a novel approach to cope with crises.

Initial phase

Strengthening the company culture within the HR strategy – caring HRM through community and communication

All banks have a HR strategy stressing talent management and a person-organisation-fit, which reflects the current, more strategic role of HRM. According to the experts, HR practices build on the idea of fostering community. They emphasise finding people that match the culture. The biggest challenge in finding and retaining talent is the decreasing attractiveness of the sector, wide-spread emigration and the lack of skills:

There is one thing especially in banking. Banks used to be very elite institutions to work in, in terms of some security and opportunities you get. Lately, […] there is a lot of work and it is no longer as lucrative financially as it used to be. We are becoming a not so desirable employer. […] (HR Director, IBank-3)

At the start of the pandemic, all banks focused on their culture to ensure a sense of community, keeping in mind their need to attract and keep talent:

What makes us stand out from other companies is our specific organisational culture […]. It is not possible that someone brilliant in a functional sense will join [our bank] and survive [in our culture] if they do not follow our values. During Covid, this has not changed dramatically. (HR Director, IBank-2)

A lack of personal communication during the pandemic resulted in fear or unease. As a consequence, banks counted on increased communication and introduced practices like counselling, mental health and wellbeing training, and online coffees or yoga to boost morale.

At the onset of the pandemic, our interviewees confirmed that banks reacted quickly with a constantly adapting ‘business continuity plan’. HR directors were members of newly established crisis management teams. Given the slow governmental response, banks had to take measures to protect their employees. As noted by the HR director of IBank-5: “There is no help from the government”. Hence, banks provided guidelines to employees via the intranet, including changes in working hours for those unable to work from home and procurement of protective equipment. HR took a coordinating role in procurement, ensuring that health and safety protocols were followed, and quickly communicating changes to ensure that employees felt secure at work and were not afraid of losing their jobs.

HR experts emphasised that especially during the pandemic clear communication was necessary to pursue long-term goals, continue business, and ensure job security. According to the interviewees, management built on an environment of openness, caring and two-way communication:

We strongly focus on the development of our organisational culture. Employees’ opinions are important to us here. We research employee engagement where we look at which fields require further development. […] (HR Director, IBank-3)

The banks fostered communication to safeguard community:

Our management is often here and asks how we are doing. […] Employees know that there are no hidden intentions and activities [from the management]. (HR Director, IBank-2)

The HR experts also stressed community by developing a sense of belonging, being part of a team and communicating that someone cares. Listening, showing interest and reinforcing positive behaviour resulted in more engaged employees according to our interview partners:

We called each of our employees who were ill at least once every two or three days to ask if they needed help. […] We gave guidelines to employees on how to behave if the first symptoms appear, if someone in their family is ill (HR Director, IBank-6)

Invigorating community and communication further helped HR to develop their role as a bridge-builder between employees and management:

[…] And these were messages of importance, for example, that no one will lose their jobs […] So we had no lay-offs and we did not close any branches. This communication about ‘this will happen then and then and it will last until then’ is a good way to work and we are all okay with it. HR is, of course, crucial here. (HR Director, IBank-1)

Navigating through the context – caring by providing job security

In the country context, we found that during the crisis job security was most important. Few employees went on sick leave and showed engagement by performing efficiently when working from home. This is, however, only part of the story. The situation in the labour market contributes to the positive impact on engagement. Although banks have become less attractive employers, employees had few other opportunities, especially during the pandemic.

The interviews reveal how HR reacted to this unfavourable situation by ensuring job security. At the same time, the context enabled banks to profit from the need for job security and higher levels of engagement. Even when employees were Covid-positive, they continued to work from home as they identified with the company culture:

[…] employees had an exceptionally positive attitude towards their work tasks, so that those employees who were supposed to be in isolation and / or had symptoms of Corona, were ready to work on their own initiative […]. (HR Director, IBank-8)

Or as another HR director reported:

[…] those who were positive, but were feeling well, like myself […] I was not on sick leave but was working from home. That was really very widespread. (HR Director, IBank-3)

In sum, the initial phase showed that banks strengthened employee engagement through fostering community – leveraging their company culture and providing care – as well as communication by keeping their employees informed. Finally, they were able to leverage their employees’ need for job security by providing an organisational climate of care. According to the interviewees, this mixture contributed to higher levels of engagement during the first few months of the pandemic.

Consolidation phase

Embracing flexible work arrangements while stabilising rewarding

According to the interviewees, banks generally welcomed digitalisation, and most managed to adapt job design and the necessary equipment for remote work. The interviewees stated unanimously that some changes will remain permanent, such as an increase of online meetings and recruitment. Most banks considered this as advantageous and as a substitute for financial benefits:

[…] we have introduced these types of benefits for some workers. It’s one way to win people over. If I can't pay you financially, you have some other benefits […]. (HR Director, DBank-2)

Simultaneously, banks adapted their terms and conditions of work:

We are very flexible, adapting on the go [ …]. We are doing this internal survey [ …] and based on that we will decide on how to implement work from home. (HR Director, IBank-5)

This gave employees a feeling of being looked after and an overwhelming number of them valued the flexibility of working from home provided they had the right equipment. Banks also experimented with online recruitment, however interviewees concluded that a combination suited them better:

Since the beginning [of the pandemic] we conduct most interviews online, but we do a final interview in person respecting the epidemiological situation. [ …] And when this is all over, we will surely use these tools to some extent, not constantly though, as I think this is not the best way overall. (HR Director, IBank-4)

Emphasis was placed on investing in HR development and enabling participation in decision making. Our interviewees experienced more engaged employees when they had the opportunity to learn:

We used trainings a lot, and we even paid our employees if they had to listen to a webinar to get a certificate, we paid and rewarded our employees who achieved those certificates, so last year we had almost four days of training per employee. (HR Business Partner, IBank-6)

Banks encouraged employees to make their views known:

We have a programme where every employee can suggest an idea and the best idea is rewarded. People are quite active in giving these ideas. (HR Director, IBank-2).

We saw no evidence of incentives, such as profit sharing or share ownership. Rather, the banks managed to maintain the status quo by continuing to pay salaries, thus providing security to employees:

It is very important to mention, what sets our bank apart the others, is that we paid salaries during the pandemic as if the employees were working at the bank. At no point did we cut the travel subsistence even though the employees worked from home, we did not reduce the lunch subsistence, we paid a one-time assistance to all our employees. (HR Director, IBank-6)

Innovations in work-life balance and wellbeing

Although uncommon in companies in Bosnia and Herzegovina, banks took an innovative role in mental health support. The interest in employees’ concerns strengthened personal relationships and the HR departments’ role as a service provider:

We decided that we should be there because we have to be available to our employees. Even if it is just for a chat. […]. (HR director, IBank-2)

The wellbeing of employees also played a decisive role for community:

We noticed during that period that the whole situation had an impact on colleagues, both in some psychological sense and in the way they organised their work. The connection got lost in a way. We intervened […] and educated all levels of management on how to manage people who work remotely, how to maintain a high level of commitment among colleagues, how to communicate. (HR Development Manager, IBank-7)

In sum, companies became more flexible in work design. All banks proactively encouraged direct participation and HR development, adapted communication and showed increased care for their community. Taken together, these strategies let employees participate more actively in how banks defined and delivered work.

Discussion

Drawing from Saks’ (2022) model of caring HRM, we identified context-specific HR practices fostering engagement (Farndale et al., 2019; Cooke et al., 2022). While a strategic orientation emerged before the pandemic, our findings demonstrate how the crisis consolidated the HR’s role in strategic decision-making and the relevance of people management practices (Wright et al., 2001). Based on our analysis, banks focus on a protective caring approach that aims to foster engagement. Our theoretical contribution revolves around a dynamic perspective where we identify caring HR practices including job design, allowing employees to work from home; flexible work arrangements, promoting online meetings and digitalisation; work-life balance and health and wellness programmes such as mental health training; participation in decision making, giving employees a voice and allowing them to express their viewpoints; as well as health and safety provisions to strengthen identification and culture of health and safety through guidelines and practices.

In addition to caring HR practices as described by Saks (2022), a strong emphasis on community and transparent communication (Mani and Mishra, 2020) makes HRM work go beyond traditional HR practices, in the sense of people management practices (Wright et al., 2001). Our study identifies practices that contribute to a strong sense of belonging (Risley, 2020) and job security (Guarnaccia et al., 2018). Such a caring approach is particularly important in transition economies, where clear communication and assurance of safety – physically and with regard to the workplace – is unusual but resulted in employees going the extra mile at work.

A protective caring approach towards employee engagement

We demonstrate a dynamic development in the companies, where certain aspects became more prevalent over time. Whereas safety, a strong company culture and communication were crucial in the initial phase, flexibility and wellbeing played a decisive role in the consolidation phase (see Figure 2).

In the initial phase, banks took it upon themselves to protect employees because governmental support was negligible. Given the stilted labour market, people suffered from insecurity. Our findings show a higher workload during the pandemic with concomitant evidence for more employee engagement. The fear of losing a job and not finding another during the pandemic exerted a coercive pressure on employees. In conjunction with evermore company support, this led to higher engagement. In the country context, job security is vital and banks use this fact as leverage. Knowing that most employees face the dichotomy of either quitting – and risking long-term unemployment – or accepting demanding working conditions, banks have realised engagement might only be superficial. For this reason, they employ practices to foster community through participation and relationship management, and experiment with work-life initiatives. Furthermore, the fact that banks did not use lay-offs or wage cuts gave employees security, increased loyalty and commitment.

In the consolidation phase, banks focused on flexible work arrangements. Practices providing opportunity focused on development and giving employees the chance to learn and grow through their participation in work activities. Banks re-directed HRM efforts towards innovative communication and education – IBank-6, for example, provided funds to take online courses at universities, such as Harvard. According to the interviewees, employees were proud that their bank let them participate in prestigious programmes, in which they could not only acquire knowledge, but also foster community through relationships. Similarly, Katou (2017) shows that employee development during crises leads to job satisfaction and engagement, and Strauss et al. (2022) demonstrate how HRM can foster engagement via open forms of communication regarding the crisis.

To understand the mechanisms behind the practices identified and the impact on employee engagement, context-specificities are highly relevant. Covid-19 is not the first crisis in Bosnia and Herzegovina where uncertainty, insecurity and volatility are permanent features of the working environment. This becomes obvious when comparing the pandemic to the War in Bosnia and Herzegovina, when people faced tremendous hardship. Employees have learnt to adapt quickly and to keep moving forward. Covid-19 has again highlighted the rapid adaptation, flexibility, and improvisation skills of the people of Bosnia and Herzegovina, which are remnants of the wartime period. Despite a 25-year gap between generations, many employees navigated the challenges of war and pandemic by drawing comparisons. During recessions, downsizing and mass layoffs typically receive the greatest attention with often detrimental effects on employees and organisations (Johnstone, 2024). Consequently, during protracted times of crisis and before Covid-19 employees and supervisors tended to remain silent about their demands and needs. Only the absence of social closeness and immediacy during the pandemic led to a shift in how the management of people is perceived and enacted. In their systematic literature review Edvardsson and Durst (2021) state, consistent with what we have found, that in times of crisis that threaten the health and well-being of employees, management support and soft HRM are the best approaches. Still, we acknowledge that different responses are necessary based on the type of crisis (Newman et al., 2023). Nowadays, businesses in Bosnia and Herzegovina are facing a labour shortage for the first time, signalling a shift in the nature of the employer-employee relationship. Lukić Nikolić et al. (2022) emphasise the pivotal role of HR departments particularly during the pandemic in Bosnia and Herzegovina. Findings reveal that HR departments spearheaded efforts in safeguarding employee health, facilitating remote work where feasible, implementing flexible hours, restructuring workspaces for physical distancing, and enhancing hygiene measures. Moreover, HR departments actively provided psychological support to help employees adjust to new work conditions during the pandemic.

We found that specific factors, like fear of being made redundant, have an impact on engagement. This enables banks to use relatively simple HR practices, the most important of which are fostering community, communication and experimentation. Mahmutović and Delić (2022) stress job security’s importance during crises, showing its positive correlation with organisational commitment. They find that higher-income employees exhibit a commitment to their organisations driven by perceived benefits and a sense of obligation, even in challenging times.

From the analysed context, several lessons can be learnt for HRM in general, namely showing concern for employees and providing an organisational climate of care, communicating job security in uncertain times, fostering relationships with employees, and showing a strategic vision for the future.

Implications and limitations

On a theoretical level, we identified a protective caring approach and demonstrated the necessity of dynamically combining various HR practices to address engagement during crises. We show the need for flexible and context-specific HRM that goes beyond the traditional understanding of HR practices. On a practical level, when governments fail to cope with crises, organisations must focus on additional factors that influence employee engagement, such as employee care and job security (Oruh et al., 2021). Context-specific macroeconomic effects can lead to beneficial effects on engagement, e.g., the interplay between fear of losing jobs and working harder. Clearly, crises do not always require recessionary HR practices. Although it might be easier to lay employees off, we demonstrated the relevance of the protective caring approach. While Covid-19 is one of many crises, context-specific developments in the labour market might play a bigger role in companies’ HR practices (see also Johnstone, 2024). In our case, due to the staff shortage in Bosnia and Herzegovina, banks rely on their employees and vice versa employees rely on a trustworthy employer, who is able to withstand crises.

The pandemic has underscored how crucial employees are to a company’s success. The ageing of the population, slow population growth, and the departure of young professionals and students who studied overseas have all contributed to the challenge in hiring qualified employees. Consequently, it is imperative that HR departments of Bosnian–Herzegovinian companies, such as banks, give top priority to employee welfare, strengthen organisational culture, and develop a proactive strategy. HRM must focus on strengthening its connection to the organisation by providing guidance on how to implement HR practices to reduce job losses during a crisis. In this capacity, HR professionals need to actively take into account job security as a component of HRM that benefits companies, employees, and society as a whole. Companies will have to regularly assess the effectiveness of their HR strategies and remain agile in adapting to changing conditions. Additionally, they must seek feedback from employees to understand their evolving needs and concerns. These efforts may improve employee engagement and retention as well as the company’s attractiveness as an employer.

While our findings show how the companies implement a caring HRM to foster employee engagement, this study has limitations. First, the ongoing nature of the topic set limits to the number of interviews. Nevertheless, our sample reflects the banking sector in Bosnia and Herzegovina and our interviewees are experts with several years of HRM experience. Since we conducted all interviews in Bosnian and translated the quotations into English, a second limitation is language, but through re-translation, we aimed to ensure that the nuances were not lost (Welch and Piekkari, 2006). Finally, we are aware that we presented the views of HR and not the employees, but we acknowledge that contextual contingencies such as a fear of job loss need to be considered critically as they can potentially result in overcompensation (e.g., Arora and Suri, 2020). Likewise, consistent demands for flexibility and change brought on by ongoing crises may eventually lead to an increase in disenchanted employees (Cartwright and Holmes, 2006). Thus, future studies on engagement should include the employee’s perspective. Given that our findings present one context, we encourage researchers to study other contexts and crises from a comparative perspective, for instance, in environments with and without a long history of conflict.

Conclusion

This study shows that employees are engaged when they understand what is happening during times of crisis, when management is attuned to their needs and when changes are clearly communicated. We examined the HR practices adopted by banks to navigate the pandemic with little governmental support. Contrary to common recessionary practices in such contexts, we identify a protective caring approach for employee engagement. This strengthens the company culture, allows employees to experience agency in their work, and feel engaged. Beyond that, practices that maintain stability can have a beneficial impact on employees.

Companies need to pay attention to the contextual drivers as we cannot view the banks’ reaction to the pandemic in a binary manner. They behaved according to their context and leveraged the difficult position of employees in the labour market. In this respect, banks have not always responded ideally to the pandemic. However, the paradoxical situation in the labour market and the need for qualified and motivated employees triggered positive mechanisms for engagement. A stronger focus on care and adjusting to the circumstances of ongoing crises allowed the banks to exemplify how to defy challenging situations through the context-specific protective caring approach in their HR practices.

Figures

Figure 1

Data representation

Figure 1.

Figure 2

A protective caring approach to employee engagement

Table 1

Company sample and interviewees

	IBank-1	IBank-2	IBank-3	IBank-4	IBank-5	IBank-6	IBank-7	IBank-8	DBank-1	DBank-2
Ownership	International	International	International	International	International	International	International	International	Domestic	Domestic
Size	Large	Large	Large	Large	Large	Large	Large	Medium	Large	Medium
No of employees	450	360	500	434	1,300	445	1,230	150	354	200
No employees in HR	4	4	8	5	16	5	13	2	7	4
Interview partners (13 in total)	HR Director, f	HR Director, f HR Business Partner, f	HR Director, f	HR Director, f	HR Director, f	HR Director, f HR Business Partner, f	HR Development Manager, f HR Business Partner, m	HR Director, f	HR Business Partner, m	HR Director, m

Source(s): Company websites and interviews with HR representatives. Small: 0–50, medium 50–250, large over 250 employees; IBank: international bank; DBank: domestic bank