Human Resource Management (HRM) practices play a crucial role in enhancing organizational effectiveness and sustainable competitive advantage. Among these, reward and recognition practices motivate employees, improve job satisfaction, and strengthen organizational capabilities. In Islamic banking, these practices should align with Shariah principles of justice, transparency, and ethical conduct. However, empirical evidence on their impact in Bangladesh remains limited. This study examines the effects of reward and recognition practices on organizational capabilities among employees of Islamic Bank PLC in the Pabna district of Bangladesh. A quantitative research design was employed, and data were collected from 120 employees using a structured questionnaire. The data were analyzed using IBM SPSS Statistics Version 26 through descriptive statistics, reliability analysis, Pearson's correlation, and multiple regression. The findings confirm reliable measurement scales (Cronbach's alpha > 0.70) and significant positive relationships between reward practices, recognition practices, and organizational capabilities. Together, these practices explain 74.8% of the variance in organizational capabilities (R² = 0.748), with recognition practices (β = 0.451, p < .001) exerting a stronger influence than reward practices (β = 0.398, p < .001). The study concludes that effective reward and recognition practices enhance organizational capabilities and support employee commitment and organizational sustainability in Islamic banking.

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