Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study

Sunil Kumari*, Nisha Bamel** and Umesh Kumar***

This study examines adoption of and alignment between business strategy and Human Resource Management (HRM) strategy in the Indian banking sector. It investigates whether or not a fit between a banks business strategy and its HRM strategy is associated with higher performance. For this purpose business strategy typology developed by Miles and Snow was used, and Bird and Beechlers human resource strategy, which includes accumulator, facilitator, and utilizer was used. The results of the present study reveal that a vast majority of the banks are not even found to be following a specific typology of either the HRM strategy or the business strategy.

Introduction
With the advent of liberalization in India, the corporate world has been confronted with two major challenges: foreign competition and adjusting to the rapidly changing global business environment. This situation calls for organizational transformation at the corporate level. In this process of transformation, human capital of an organization can play a crucial role as it has become one of the most valuable resources in organizations (Pfeffer, 1994). Now it has been widely accepted that human capital possibly enhances the competitive advantage of organizations in the wave of hastened competition (Reich, 1990; and Stewart, 1990). In the new millennium, the changing global scenario is set to unravel a major transformation which would have definite implications on corporate performance. The quest for improvement would, on the one hand, underscore the importance of physical capital accumulation for industrial development while on the other, the challenges of improving productivity and efficiency would reinforce the importance of human capital in accelerating corporate growth. In such a scenario, firms would inter alia endeavor to achieve excellence through optimum utilization of human capital. Human Resources (HR) constitute the most significant asset in an organization and this is more so in the case of a service organization like a bank. In fact, banks are basically human organizations requiring no other input (in the form of raw material) to produce the output (in the form of services). Thus, humans are the sole resource (in the form of inputs) in case of a bank. In other words, the quality of services produced by a bank is a function of or dependent upon solely the HR. Thus, the principal task before bank management
* Deceased. She was then working as Associate Professor, Department of Commerce, Choudhary Devi Lal University, Sirsa, Haryana, India. * * Research Scholar, Department of Management Studies, BPS Women University, Khanpur Kalan, India. E-mail: nishabamel@gmail.com *** Research Scholar (HRM and OB), Department of Management Studies, Indian Institute of Technology, Roorkee 247667, Uttarakhand, India; and is the corresponding author. E-mail: umeshbamel@gmail.com . 24 2011 IUP All Rights Reserved. The IUP Journal of Business Strategy, Vol. VIII, No. 3, 2011

is considered to be utilization of its HR to the optimum level for securing better results. Resultantly, banks, as any other service organization, are obliged to pay greater attention to the effective and optimum utilization of their HR. This calls for aligning the HR strategy with the business goals at both the strategic and practical levels in order to face the twin challenges unleashed by the environmental change since the beginning of the previous decade. Appropriate HR strategies, policies and practices are all required to achieve organizational goals. This necessitates that the banks should decide the matters relating to the Human Resource Management (HRM) strategically rather than focusing on HR practices in seclusion (Liao, 2004). Contingency theory supports this association of business strategy and HR practices and concludes that HR practices are guided by business strategy. Researches also provide evidences that the organizations that associate business strategy and HR practices accomplish better performance than the companies that do not (Bird and Beechler, 1995; Huselid, 1995; MacDuffie, 1995; Delery and Doty, 1996; and Huang, 2001). In this paper, we focus on the relationship between business strategy and HRM strategy and the impact this relationship has on performance in the Indian banking sector. The rest of the paper is structured as follows: the next section deals with a brief literature review followed by discussion on methodology adopted. The next section discusses data analysis and results. Further a discussion and conclusion of the study, followed by direction for future research is presented in the final section.

Literature Review
Each firm or bank tailors its particular strategy to fit its unique distinctive competencies, needs and circumstances. Business strategy can be understood as an integrated and coordinated set of obligations and events developed to take advantage of core competencies and to increase competitive advantage (Liao, 2004). These strategies are designed to gain on the organizational resources (Dess et al., 1995), and to guide the future course of actions which are directed to achieve end results (Slevin and Covin, 1997). Appropriate development and implementation of business strategy provides a firm with a clear image of its rivals and self position in the business (Porter, 1985) and also raises its competitive advantage. Miles and Snow (1984) classified strategy into typology of prospector, defender and analyzer strategies, while Porter (1985) classified strategies into: cost leadership, differentiation and focus strategy. Schuler and Jackson (1987) further elaborated the research and tagged a little different from Porter to classify business strategy into three types: (1) cost-reduction, (2) innovation, and (3) quality enhancement. Many scholars employed varied approaches; this study is based on the Miles and Snow (1984) typology of business strategy. We chose this because this typology appears to fit well with our objective of the study. The prospector pursues market expansion and innovation, the defender strives to maintain market position and the analyzer seeks more combination of market expansion/innovation while endeavoring to preserve stability in the existing market. Many organizations view HR department as an administrative function and ignore its importance as strategic partner. Such organizations are less likely to expect association of HRM practices and business strategy that increase bottom line business
Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study 25

results (Huselid et al., 1997). HRM practitioners have been raising their demand to align HRM practices with specific business strategies to enhance organizational performance (Miles and Snow, 1984; Porter, 1985; Schuler and Jackson, 1987; Schuler, 1989; and Van Eynde and Tucker, 1997). Scholars have also put their efforts in this direction to develop a formal HR strategy statement which provides a link between business strategy and HRM practices (Nininger, 1982; Rothwell and Kazanas, 1989; Sibson, 1992; and Storey, 1994). Youndt and Snell (2004) defined six dimensions of HR practicesacquisition, development, egalitarianism, cooperation, documentation and information. Bird and Beechler (1995) in their study identified three HR strategies: accumulator, facilitator and utilizer. Delery and Doty (1996) in their study depicted that profit sharing, result-oriented appraisals, employment security, participation and internal career opportunities affect return on assets and return on equity in positive manner. Delaney and Huselid (1996) further enrich the list by adding findings of their empirical research on 590 firms that HRM practices, i.e., staffing selectivity, training, incentive compensation and promotion opportunities, enhance organizational performance. In another study, Koys (2000) identified employee development, recruiting/staffing, compensation, quality HR programs and client satisfaction as important HRM practices and argued that these contents improved the quality and profitability of business. Wright and McMahan (1992) stated that in order to generate higher business outcomes, a high degree of fit must exist both between HR practices and organizational strategies. This internal fit, in the words of Doty and Glick (1994), maximizes the external fit of organization and its human capital which further creates synergistic effects (Delery and Doty, 1996). Many studies hold this fact true and rational; Martell and Carroll (1995) examined 115 business units and came up with the results that half of them linked business strategy with HRM strategy. Miles and Snow (1978) argued that their typology does not imply one best business strategy; any of the three strategy types can lead to higher performance. On careful examination, the literature reveals that there is a positive association between the business strategy and HRM practices which further enable an organization to gain on its available capital and increase its competitive advantage.

Research Methodology
In this study, HRM and business strategies of the ten selected banks are analyzed (through a set of indicators developed for this purpose). This will form the base of analyzing the match/mismatch between HRM and business strategies and the impact of such a match/ mismatch on their performance.

Study Design
Considering the research problem in hand, it is obvious that the universe for the present study is the Indian banking industry. However, the Indian banking industry comprises of
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several categories such as the public sector banks, old private banks (which came into existence prior to the liberalization process initiated in 1991), the new private sector banks, the foreign banks and the regional rural banks. But the present study is confined to the first two categories, viz., the public sector banks and the old private banks (hereinafter called private banks). Out of the above said two categories of banks, ten banks in all were chosen purposely. The selection of the banks was made on the basis of three factors taken together: (1) the cumulative effect of the geographical location of the banks, (2) size of the banks, and (3) their performance. Of the selected ten banks, seven are public sector banks and three are private banks. The ten selected banks are: OBC CB PSB AB IB UCO SBP BR J&K LVB : : : : : : : : : : Oriental Bank of Commerce Corporation Bank Punjab & Sind Bank Andhra Bank Indian Bank UCO Bank State Bank of Patiala Bank of Rajasthan Ltd. Jammu & Kashmir Bank Ltd. Lakshmi Vilas Bank Ltd.

Both the primary and secondary data were utilized for surveying the type of HR and the business strategies adopted by the selected banks. The primary data collected with the help of structured questionnaire (see Appendix) containing 12 questions was administered to the top management (General Manager/Deputy General Manager) of all the ten banks. The questionnaire contained a set of questions, viz., those related to HRM and business strategies pursued by the banks under study. The secondary data were collected from the published material available in different bank offices; staff training colleges; Indian Institute of Bankers, Mumbai; National Institute of Bank Management, Pune; Indian Banks Association, Mumbai; and trade union leaders. Besides this, data were also procured from the published journals and newsletters of the Reserve Bank of India, etc.

Criterion for Determination of Strategy

Three typologies each of the HRM strategy (Accumulator, Facilitator and Utilizer) and business strategy (Defender, Analyzer and Prospector) were adopted for the present study. With the help of the questionnaire (containing 12 questions), it was ascertained which of the banks adopted which specific typology of HRM strategy and business strategy. Each of these 12 items was allotted one credit point and in this a total of 12 credit points six for the HRM strategy and six for the business strategywere allotted. Hence, the score of a bank on any typology of HRM or business strategy might range from 0 to 6. The median value of these numbers was calculated which turned out to be 3.5. However, since
Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study 27

in our scoring the outcomes are only in whole numbers, therefore, obviously, a minimum of 4 (rather than 3.5) credits have to be taken into consideration. Thus, in the process of awarding credits or credit points for a particular typology of the two strategies, those banks which scored 4 credits or above for a particular typology of HRM strategy or of business strategy were regarded to have adopted that particular typology of the respective strategy. Thus, for instance, if a particular bank has scored at least four credits for accumulator typology of HRM strategy then the bank is regarded to have adopted the accumulator HRM strategy. Banks having shown preference in less than four out of six credit ratings have been ignored and regarded as having not adopted any specific typology of strategy.

Analysis and Results

Human Resources Strategy
In this section, the HR strategy pursued by the ten selected banks have been analyzed with the help of a set of indicators. It is on the basis of this analysis that it will be determined which HR strategyaccumulator, facilitator, utilizeris adopted by a particular bank. This section is divided into six subsections, each dealing with a separate indicator applied to examine the HR strategy pursued by the ten chosen banks.

Mode of Recruitment
The analysis of data collected from all the studied ten banks revealed that in terms of procurement of personnel all the selected public sector banks as well as private banks are following the facilitator strategy of HRM. It shows that banks recruit from both internal and external sources of labor.

Job Security
From the standpoint of job security, all the selected banks (public sector as well as private) are pursuing the accumulator strategy of HRM. In an accumulator HRM strategy, job security is high as there is long-term association of the employees with the organization. In utilizer HRM strategy, job security is low as the recruitment or selection is need or taskbased. The job security is moderate in facilitator HRM strategy.

Performance Appraisal System

The existence or otherwise of performance appraisal system in the selected banks has been studied at two levels, viz., at the managerial level and at the lower level. The seven public sector banks as well as the three private banks) have adopted the utilizer strategy. In utilizer HRM strategy, proper performance appraisal system is a must as selection is closely matching with the immediate task and reward is based on result, i.e., result-oriented approach.

Utilization of Manpower
Results proved that a majority of the selected banks have adopted the accumulator strategy insofar as the utilization of manpower is concerned. Only one bank has adopted the facilitator strategy whereas no bank has adopted the utilizer strategy.
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An accumulator HRM strategy is based on maximum involvement and skill execution. It attempts to build up the HR of an organization through the acquisition of personnel with large, latent potential and development of that latent potential over time in a manner consistent with the needs of the organization, while a facilitator HRM strategy is found on generating new knowledge and new knowledge creation. It seeks to develop the HR of the firm as effectively as possible through the acquisition of self-motivated personnel and encouragement and support to personnel to develop, on their own, the skills and knowledge which they, the employees, believe are important.

Average Tenure
The average tenure of service in the selected banks has been studied at two levels, viz., at the managerial level and at the lower level. If the average tenure of service is taken into consideration, accumulator strategy is found to be applicable in all the public sector banks as well as the private banks as the average tenure is sufficiently high in the case of all these banks, both for the managerial cadres and the lower levels. In accumulator HRM strategy, the job security is high and this leads to high average tenure.

Training
For measuring the performance of the selected banks with regard to providing training to their personnel, following threefold scale has been developed: 1. Those banks, which have provided training to more than 70% of their employees, have been placed in the category of High performers. 2. Banks having provided training to more than 40% but less than 70% of their employees have been placed in the category of Moderate performers. 3. Banks that have provided training to less than 40% of their employees have been termed as Low performers. From Table 1 it becomes clear that insofar as training is concerned, two banks (one public sector bank and one private bank) have adopted the accumulator strategy (high level of training), while three public sector banks and one private bank have adopted the facilitator strategy (moderate level of training). The remaining four banks (three public sector banks and a private bank) are found to be following the utilizer strategy (low level of training) of HRM. The position of training provided to their employees (as obtained from the respondents) is shown in Table 1. Based on the above analysis (Table 2), it is concluded that except two banks, no bank, whether public sector or private sector, has been found to be adopting any typologies of HRM strategy. If we jointly analyze, we come to the conclusion that most of the banks have adopted accumulator HR strategy as out of 60 maximum credit points there are 31 credit points under this category. Thus, the banks have the approach of long-term investment in HR. Only two banks namely J&K Bank Ltd. and Corporation Bank have adopted clear cut HRM strategy, the others have adopted all the typologies partially.
Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study 29

Table 1: Average Percentage of Employees Undergone Training

S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Banks OBC CB PSB AB IB UCO SBOP BR J&K LVB Private Banks Public Sector Banks Category Percentage 60 93 35 51 60 32 38 30 80 55 Level Moderate High Low Moderate Moderate Low Low Low High Moderate

Table 2: Human Resource Management Strategy Followed by Banks Under Study

Banks Accumulator Strategy 3 4 3 3 3 3 2 3 4 3 31 Facilitator Strategy 2 1 1 2 2 2 2 1 1 2 16 Utilizer Strategy 1 1 2 1 1 1 2 2 1 1 13 Total Credit Points 6 6 6 6 6 6 6 6 6 6 60

Oriental Bank of Commerce Corporation Bank Punjab and Sind Bank Andhra Bank Indian Bank UCO Bank State Bank of Patiala The Bank of Rajasthan Ltd. The J&K Bank Ltd. The Lakshmi Vilas Bank Ltd. Total

Business Strategy
Business strategy adopted by the selected banks, as envisaged by the respondents, has been analyzed with the help of certain indicators in the present section. This analysis will help in discovering as to which business strategyDefender, Analyzer, Prospector has been adopted by the banks under study. This section is divided into six subsections, each dealing with a separate indicator applied to examine the business strategy pursued by the ten selected banks.
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Market Strategy
There are two significant yet related components of market strategy of a firm, viz., market segment and market share. While the former pertains to the clientele to which the firm caters to, the latter is the quantum of business done by the firm in relation to the other competitors. These two components of the market strategy of the banks under study have been dealt with below. Market Segment: Regarding the market segment, a bank may be having three options and each one is a characteristic of a particular business strategy: 1. Concentrate on the existing market segmentDefender Business Strategy; 2. Develop new market segmentProspector Business Strategy; or 3. Both, i.e., consolidate the existing market segment and simultaneously develop the new market segmentAnalyzer Business Strategy. The respondents of selected banks have been asked to indicate their assessment about their concentration on the market segment. The responses are presented in Table 3.
Table 3: Market Segment
S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Banks Category Concentrate on the Existing Market Segment X X X Public Sector Banks X X X X Private Banks X X 1 Both Develop New (Concentrate Market on the Existing and Segment Develop the New) X X X X X X X X X X 0 X 9

OBC CB PSB AB IB UCO SBOP BR J&K LVB Total Score

From the results it becomes obvious that while the Bank of Rajasthan has been found to be adopting the defender business strategy, the remaining banks have adopted the analyzer business strategy. Market Share: Table 4 shows that only one bank (the Bank of Rajasthan a private bank) has regarded it better to concentrate on its existing market and thus has adopted the Maintenance of Existing Market. Six of the selected banks believe in moderate and steady growth while the remaining three rely on rapid growth in their market share. Of the six
Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study 31

Table 4: Market Share

S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Banks Category Maintenance of Existing Market Share X X X Public Sector Banks X X X X Private Banks X X 1 Moderate and Steady Growth Rapid Growth

OBC CB PSB AB IB UCO SBOP BR J&K LVB Total Score

X X X X 6

X X X X X X X 3

Table 5: Control Mechanism

S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Banks Category Centralized Decentralized Combination of T wo X X X X X X X 3

OBC CB PSB AB IB UCO SBOP BR J&K LVB Total Score Private Banks Public Sector Banks

X X X X X X X X 2

X X X X X 5

banks which believe in moderate and steady growth, four are public sector banks (Oriental Bank of Commerce, Andhra Bank, UCO Bank and State Bank of Patiala) and the remaining two are private banks (Jammu & Kashmir Bank and Lakshmi Vilas Bank). On the other hand, three of the banks that rely on rapid growth in market share are the public sector banks. These include the Corporation Bank, the Punjab & Sind Bank and the Indian Bank.
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Control System
As is visible from Table 5, none of the chosen seven public sector banks have preferred to adopt the centralized control mechanism while there are two private banks, viz., Bank of Rajasthan and Jammu & Kashmir Bank that have adopted centralized control mechanism. The decentralized control mechanism has found favor with four of the selected seven public sector banks and one private bank. These include Corporation Bank, Indian Bank, UCO Bank and State Bank of Patiala (all public sector banks) and Lakshmi Vilas Bank (private bank). Three banks, viz., Oriental Bank of Commerce, Punjab & Sind Bank and Andhra Bank (all public sector banks) have preferred a combination of both the centralized and decentralized control mechanisms rather than leaning towards any one of the two mechanisms. These findings make it obvious that insofar as the control mechanisms are concerned, two banks (both private) have adopted the defender business strategy, three (all public sector) have adopted the analyzer business strategy while five (which includes four public sector and one private) have adopted the prospector business strategy.

Environment and Business Strategy

As per Table 6, among the selected public sector banks there is no bank which is relatively more internally focused. Of course, there is one private bank, viz., Lakshmi Vilas Bank which has shown more leaning towards its internal dynamics. In contrast to this, none of the selected banks (public sector as well as private banks) is found to be relatively more
Table 6: Environment and Business Strategy
S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Banks Category Exclusively Internally Focused X X X Public Sector Banks X X X X X Private Banks X 1 Exclusively Externally Focused X X X X X X X X X X 0 Both Internally and Externally Focused X 9
33

OBC CB PSB AB IB UCO SBOP BR J&K LVB Total Score

Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study

externally focused. In fact, a majority of the selected banks have been found to be both internally and externally focused. Thus, all the seven selected public sector banks, viz., Oriental Bank of Commerce, Corporation Bank, Punjab & Sind Bank, Andhra Bank, Indian Bank, UCO Bank and State Bank of Patiala, have been found to be both internally and externally focused. Similarly, two of the three private banks, viz., Bank of Rajasthan and Jammu & Kashmir Bank have also preferred the moderate philosophy thus giving almost equal weightage to both. In terms of the relative focus on internal and external environment, it can be concluded that a majority of the banks have been found to be adopting the analyzer business strategy.

Degree of Structural Formalization

Table 7 reveals that three of the seven selected public sector banks (Corporation Bank, UCO Bank and State Bank of Patiala) have exhibited high degree of structural formalization. As against this no private bank has expressed its preference for high degree of formalization. The low degree of structural formalization has not been shown to be adopted by any of the selected public sector banks or even the private banks. In fact, a majority of the selected banks (seven of the ten banks) have preferred a moderate level of structural formalization (i.e., a midway avoiding the extremes). Thus, four of the seven chosen public sector banks (viz., Oriental Bank of Commerce, Punjab & Sind Bank, Andhra Bank and Indian Bank) have been found to be possessing moderate level of structural formalization. Further, all the three private banks have also been found to be having a moderate level of structural formalization (Table 7).
Table 7: Degree of Structural Formalization
S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Banks Category High Moderate Low

OBC CB PSB AB IB UCO SBOP BR J&K LVB Total Score Private Banks Public Sector Banks

X X X X X X X 3

X X X 7

X X X X X X X X X X 10

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This shows that regarding the degree or level of structural formalization, a majority of the selected banks have been found to be adopting the analyzer strategy.

Approaches Towards New Products

The position regarding the approach of the selected banks towards introduction of new products in the market is shown in Table 8.
Table 8: Approach Towards New Products
S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Banks OBC CB PSB AB IB UCO SBOP BR J&K LVB Total Score Private Banks Public Sector Banks Category Very Low X X X X X X X X X X 0 Low X X X X X X X X X X 0 Moderate X X X X X 5 High X X X X X X X 3 Very High X X X X X X X X 2

As is apparent from Table 8, the approach of none of the ten banks under study (both in the public sector as well as in the private sector) towards new products has been found to be Low or Very Low. In fact, the attitude of a majority of the selected banks towards new products has been found to be Moderate as two of the seven selected public sector banks (Oriental Bank of Commerce and Andhra Bank) preferred this sort of attitude towards new products. Further, among the private banks all the three preferred a Moderate attitude towards the launching of new products in the market. Three public sector banks under study (Indian Bank, UCO Bank and State Bank of Patiala), however, showed a High attitude towards introducing new products in the market. As against this, the Very High attitude towards introduction and launching of new products in the market was shown by only two of the public sector banks, viz., Corporation Bank and Punjab & Sind Bank (Table 8). From these findings it can be concluded that insofar as the introduction of new products in the market is concerned, a majority of the selected banks have been found to be adopting the analyzer strategy. Based on the above analysis (Table 9), it is concluded that four public sector banks and one private sector bank have adopted analyzer business strategy. The remaining five banks have not adopted any typologies of business strategy. If we jointly analyze, we come to the conclusion that so far as business strategy is concerned, the studied banks have adopted
Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study 35

analyzer business strategy, implying that these banks have a conservative approach towards new products and market innovation.
Table 9: Business Strategy Followed by of Banks Under Study
Banks Oriental Bank of Commerce Corporation Bank Punjab & Sind Bank Andhra Bank Indian Bank UCO Bank State Bank of Patiala Bank of Rajasthan Ltd. J&K Bank Ltd. Lakshmi Vilas Bank Ltd. Total Defender Business Strategy 1 1 0 1 0 2 2 2 2 2 13 Analyzer Business Strategy 5 3 4 5 3 2 2 4 4 3 35 Prospector Business Strategy 0 2 2 0 3 2 2 0 0 1 12 Total Credit Points 6 6 6 6 6 6 6 6 6 6 60

Discussion and Conclusion

As per its requirements, a firm may adopt any of the three typologies of HRM strategy, viz., accumulator, facilitator or utilizer (Bird and Beechler, 1995). Similarly, the business firms, in order to move in the desired direction with concerted efforts, also have to adopt a business strategy. Accordingly, to suit its purposes, the firm may adopt a defender, analyzer or prospector business strategy. But mere adoption of these two strategies is not enough; it is always desirable to have an incorporation of HRM strategy and the business strategy of the firm (Wright and Snell, 1998). It is advisable for a business firm to adopt a combination of either defender business strategy and accumulator HRM strategy, or to adopt analyzer business strategy and facilitator HRM strategy or to adopt prospector business strategy and utilizer HRM strategy. Experience stands witness to the fact that the firms with a match or fit between the different types of HR strategies and the business strategies usually have a higher profitability (Grant, 2002). Thus, it means that the two strategies ought to be congruent and if it is not so, i.e., if there is a mismatch between the two strategies, profitability of the firm is more likely to be affected adversely. On the basis of the analysis of the data regarding the adoption of HRM strategy and business strategy followed by the selected banks, following observations have been made: The present study was woven around the basic theoretical premise that the banks adopting a fit between their HR and business strategies perform relatively better in comparison to those that do not. However, in the course of the study, it has been
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found that only five banks are found to be following a specific typology of either the HRM strategy or the business strategy. There was only one bank, viz., the Jammu & Kashmir Bank, which was following specific typologies of both the strategies. In fact, rather than adopting a specific typology of the two strategies, their approach towards different typologies was staggering. Further, as many as six banks have been found to be not adhering to any specific typology of either the HRM strategy or of business strategy. This means that they have been adopting a mix of different typologies of the HR strategies and the business strategies as per the exigencies. One inference that may be drawn from the above is that the bank managements are not paying adequate attention to the adoption of strategies. None of the banks maintained a fit between the HRM strategy and the business strategy that they pursued. In fact, when the banks have not even been following any specific typologies of the HRM strategy and the business strategy, the question of maintaining a fit between the two does not arise. It may, therefore, be concluded that at least the sample statistics do not uphold the theoretical premise of maintaining a fit between the two strategies for better performance. Our interview with HRM executives participating in this study suggest that, at least in Indian banks, little thought has been given to the need of adoption and aligning business strategy with HRM strategy. The managers had not yet developed a view of HRM as a strategy activity and consequently, did not see a need to align their HRM strategy with the business strategy. Future of banks shall be affected by the selection of HRM and business strategies in harmony with their mission and vision. The success of the same will depend upon its integration with/fit with HRM strategy. The present scenario is presenting a horrifying picture. The short-term contingency approach vis--vis adoption of HRM strategy will not prove to be beneficial to banks in the long run.

Recommendations for Further Studies

Theoretically, it is being perceived that the firms having a fit between the HRM strategy and the business strategy that they are pursuing are more likely to outperform those firms which do not maintain such a fit. However, results of the present study reveal that a vast majority of the banks (among selected) are not even found to be following a specific typology of either the HRM strategy or the business strategy. Further research can be done to elaborate on the issue by having a large sample size and geographical area. Although there is no theoretical model developed to support the hypothesis, except for a few studies (Wright and Snell, 1998; Grant, 2002; and Wright et al., 2003, etc.), those targeted were from different sectors (manufacturing, heavy industry and service industry). In the Indian context also, there is a big need to explore the issue further to develop an effective and efficient strategic mix of HRM strategy and business strategy.

Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study

37

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Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study 39

Appendix
Instrument for Primary Data Collection Section A: Demographic Details 1. Age: 3. Education: 5. Organizations Name: 7. Years in the Current Organization: Section B: Human Resource Strategy In this section there are 6 questions containing choices as their answers. You only choose the one that is best suited to the query according to your experience in your current organization. 1. Majority of employees in your organization are recruited: a. From internal resources b. From external resources c. Both internally and externally 2. Your job in your organization is: a. Highly secured b. Moderately secured c. Low secured 3. In your organization performance review is done: a. In routine b. Not always 4. My organization a. Seeks development of employee abilities, skills and knowledge over time b. My organization coordinates between accurate placement and flexible team structures c. Moves employees to match abilities, skills and knowledge to specific tasks. 5. Majority of employees in your organization separate only: a. At the time of retirement b. During first few years of their career c. During mid of their career 6. Attending training practices in your organization is a. Mandatory for all b. Not for all c. Need-based
40 The IUP Journal of Business Strategy, Vol. VIII, No. 3, 2011

2. Gender: M/F 4. Job Title: 6. Total Job Experience: 8. Years at Current Position:

Appendix (Cont.)
Section C: Business Strategy In this section there are 6 questions containing choices as their answers. You only choose the one that is best suited to the query according to your experience in your current organization. 1. In your organization strategies are developed to: a. Concentrate on the existing market segment b. Develop new market segment c. Consolidate the existing market segment and simultaneously develop the new market segment 2. Your organization focuses more towards a. Maintenance of existing market share b. Moderate and steady growth c. Rapid growth 3. Control mechanism in your organization is: a. Centralized b. Decentralized 4. Environment and business strategy adopted by your organization are more: a. Internally focused b. Externally focused c. Both internally and externally focused 5. Degree of structural formalization in your organization: a. High b. Moderate c. Low 6. Approaches towards new products: a. Very low b. Low c. Moderate d. High e. Very high (Note: All the information provided by you will be kept confidential and will be used only for academic purposes. No commercial gain will be rendered on the basis of information provided by you). Reference # 33J-2011-09-02-01
Links Between Business Strategy and Human Resource Management Strategy in Select Indian Banks: An Empirical Study 41

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