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

PREPARED BY Dhara & Radhika

INTRODUCTION
Banks are basically human organizations requiring no other input (in the form of raw material) to produce the output (in the form of services). Banks, as any other service organization, are obliged to pay greater attention to the effective and optimum utilization of their HR. Objective: To know relation between business strategy and HRM strategy and its impact on performance in Indian banking

LITERATURE REVIEW
Miles and Snow- Prospector, Defender and Analyzer strategy of business
Bird and Beechler strategy for HRM

Accumulator, facilitator, utilizer

Wright and McMahan(1992) to generate higher business outcomes, a high degree of fit must exist both between HR practices and organizational strategies.

RESEARCH METHODOLOGY
Study Design
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. OBC, CB, PSB, AB, IB, UCO, SBP, BR, J&K, LVB Primary and secondary data

RESEARCH METHODOLOGY
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. 12 credit points, six for the HRM strategy and six for the business strategy were allotted. 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.

ANALYSIS AND RESULTS

Human Resources Strategy
Accumulator Strategy 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. Facilitator Strategy is found on generating new knowledge and new knowledge creation. Utilizer Strategy deploys human resources through acquisition and dismissal of personnel according to short term need of the firm matching employee skill to specific task requirement.

ANALYSIS AND RESULTS

Human Resources Strategy
Mode of Recruitment (Facilitator) Job Security (Accumulator) Performance Appraisal System (Utilizer) Utilization of Manpower Average Tenure (Accumulator) Training

Average Percentage of Employees Undergone Training

Sr. No.
1 2 3 4

Banks
OBC CB PSB AB

Category

Percentage
60

Level
Moderate High Low Moderate

Public Sector Banks

93 35 51

5
6 7 8 9

IB
UCO SBOP BR J&K Private Banks

60
32 38 30 80

Moderate
Low Low Low High

10

LVB

55

Moderate

Human Resource Management Strategy Followed by Banks Under Study

Banks Accumulator Strategy 3 Facilitator Strategy 2 Utilizer Strategy 1 Total Credit Points 6

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

4
3 3 3 3 2 3 4 3 31

1
1 2 2 2 2 1 1 2 16

1
2 1 1 1 2 2 1 1 13

6
6 6 6 6 6 6 6 6 60

ANALYSIS AND RESULTS

Business Strategy
1. Market Strategy Market Segment Market Share 2. Control System 3. Environment and Business Strategy 4. Degree of Structural Formalization 5. Approaches Towards New Products

Market Segment
Sr. No. Banks Category Concentrate on the Existing Market Segment Develop New Market Segment Both (Concentrat e on the Existing and Develop the New)
YES YES

1 2

OBC CB Public Sector Banks

NO NO

NO NO

3
4 5 6 7 8 9 10

PSB
AB IB

NO
NO NO NO NO YES

NO
NO NO NO NO NO NO NO

YES
YES YES YES YES NO YES YES

UCO
SBOP BR J&K LVB Private Banks

NO NO

Market Share
Sr. No.

Banks

Category

Concentrate on the Existing Market Segment

Moderate And Steady Growth

Rapid Growth

1 2 3 4 5 6 7 8 9 10

OBC
CB PSB Public Sector Banks

NO NO NO NO NO NO NO YES

YES NO NO YES NO YES YES NO YES YES 6

NO YES YES NO YES NO NO NO NO NO 3

AB
IB UCO SBOP BR J&K LVB Total

Private Banks

NO NO 1

Control Mechanism
Sr. No. Banks Category Centralized Decentralized Combination Of Two

1 2 3 4 5

OBC CB PSB AB IB Public Sector Banks

No No No No No

No Yes No No Yes

Yes No Yes Yes No

6
7 8 9

UCO
SBOP BR J&K LVB Total Private Banks

No
No Yes Yes

Yes
Yes No No

No
No No No

10

Yes
2

Yes
5

No
3

Environment and Business Strategy

Sr. No. Banks Category Exclusive Exclusive Both ly ly Internally Internally Externally and Focused Focused Externally Focused
NO
NO

1
2 3 4 5 6 7

8
9 10

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

NO
NO NO NO NO NO NO

YES
YES YES YES YES YES YES

Public Sector Banks

NO NO NO NO NO

NO

NO
NO NO

YES
YES NO

Private Banks

NO YES

Degree of Structural Formalization

Sr. No. Banks Category High Moderate Low

1 2 3 4 5

OBC CB PSB AB IB Public Sector Banks

No Yes No No No

Yes No Yes Yes Yes

No No No No No

6
7 8 9

UCO
SBOP BR J&K LVB Total Private Banks

Yes
Yes No No

No
No Yes Yes

No
No No No

10

No
3

Yes
7

No
10

Business Strategy Followed by Banks Under Study

Banks Defender Business Strategy Analyzer Business Strategy Prospectors Business Strategy Total Credit Points

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

1
1 0 1 0 2 2 2 2 2 13

5
3 4 5 3 2 2 4 4 3 35

0
2 2 0 3 2 2 0 0 1 12

6
6 6 6 6 6 6 6 6 6 60

CONCLUSION
It is advisable for a business firm to adopt a combination of either defender BS and accumulator HRMS, or analyzer BS and facilitator HRMS or prospector BS and utilizer HRMS. In the course of the study, it has been found that only five banks are found to be following a specific typology of either the HRM strategy or the business strategy. Others have been adopting a mix of different typologies of the HR strategies and the business strategies as per the exigencies.