Factors Affecting Human Resource Management in Insurance Companies in Punjab: An Exploratory Factor Analysis

Abstract

Purpose: This study identifies the underlying factors that shape Human Resource Management (HRM) in life and general insurance companies operating in Punjab, India, and tests the reliability and validity of a scale to measure them.

Design and Methodology: A structured questionnaire of 28 items on a five-point Likert scale was administered to 312 employees of public and private insurers across six districts of Punjab (Ludhiana, Amritsar, Jalandhar, Patiala, Bathinda and SAS Nagar). Internal consistency was tested with Cronbach's alpha and corrected item-total correlations. Sampling adequacy was tested with the Kaiser-Meyer-Olkin (KMO) measure and Bartlett's test of sphericity. Exploratory Factor Analysis (EFA) with principal component extraction and varimax rotation was used to identify the factors. Convergent validity was assessed through composite reliability (CR) and average variance extracted (AVE), and discriminant validity through the Fornell-Larcker criterion and the heterotrait-monotrait (HTMT) ratio.

Findings: The KMO value was 0.879 and Bartlett's test was significant (χ² = 3747.05, df = 378, p < 0.001). Seven factors with eigenvalues above 1 explained 67.07% of the total variance: Training and Development, HR Technology and Digitalisation, Recruitment and Selection, Compensation and Incentives, Performance Appraisal, Work-Life Balance, and Organisational Culture and Leadership Support. All factors showed Cronbach's alpha between 0.787 and 0.861, CR between 0.826 and 0.877, and AVE above 0.50. Employees rated Work-Life Balance (mean 2.69) and Compensation and Incentives (mean 2.81) lowest, and HR Technology highest (mean 3.47).

Practical Implications: Insurers in Punjab can use the validated scale as a diagnostic tool. The weak scores on work-life balance and pay point to target pressure and incentive design as the main areas for HR intervention.

Originality: Few studies examine HRM in insurance at the state level in India. This paper offers a validated seven-factor measure for Punjab's insurance workforce and a base for later confirmatory and structural studies.