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__________________________
© Copyright 2019 the authors.
67
Journal of Business Administration and Education
ISSN 2201-2958
Volume 11, Number 2, 2019, 67-96
A Study on HRM Practices and Its Impact on Organizational Performance in
Private Sector Banks in Kashmir District
Dr. Rafia Gulzar
Assistant Professor
Dar Al Uloom University
Al Falah Area- 3535
Saudi Arabia Riyadh-133140
Tel: +966 11-494-9000
Email: [email protected]
brought to you by COREView metadata, citation and similar papers at core.ac.uk
provided by InfinityPress
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
68
A Study on HRM Practices and Its Impact on Organizational Performance in Private
Sector Banks in Kashmir District
ABSTRACT
This article enlightened to explore and compare human resource management
practices and their impact on organizational performance in Indian Private Sector
Banks( HDFC and JKB). From 1960s, the banking industry gave a boost to the Indian
economy. The results of many debates have ensured that banks can be the good source
of employment in India and the banking sector emerged as a large service sector to
enhance the economy of India. Considering the employees as an asset in service industry
especially in banks the role of human resource management is very important. Research
suggests that service quality has been increasingly recognized as an important factor that
is responsible for the good performance of any organization. Impact of human resource
management practices on organizational performance has been studied extensively in
Multinational companies, education sector and manufacturing sector. However only a
few research has been conducted in private banking industry. Even these researchers
have not compared human resource management practices Private Sector banks in
Jammu and Kashmir. The research was based on self-administered questionnaire survey
of total 384 employees. It consists of 24 managers, 266 subordinates from JKB, 8
managers, and 86 subordinates from HDFC bank. The main HRM practices studied
were General climate, OCTAPACE culture, Selection, job definition, career
planning, training, performance appraisal and compensation. The data were analyzed
statistically and finding revealed that HRM practices have huge impact on the
organizational performance in banking sector. At the end, research also depicted some
limitation as well as future research directions.
Keywords: Human Resource Management Practices, private sector banks, HDFC, JK
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
69
INTRODUCTION
The establishment of HRM practices in the banking industry could be made possible not
only with the sustained and continuous struggle of employees associations for decades,
but also the management introduced changes on pro-active basis over a long period of
time. During 1950's "staff departments with the enlarged function of manpower planning,
employee training, performance appraisal of employees, employees discipline, employee
administration, and the like. Still further, during 70's and 80's of the last century,
emphasis was laid on Human resource development(HRD), which provided a new
orientation to HRM in banking industry. Various HRM practices which were absent in
banks were acquired by banks, with the changes introduced by the bank managements
over a period of time. Since these HRM practices by the banks were acquired under
various circumstances and situations, inter – linkages and complementarities between
practices were missing. While evolving various HR practices like induction, training,
transfer policy, promotion, performance appraisal, placement, etc., the need for expected
future business development, expansion and diversification have never been considered.
So, these HR practices were evolved in a truncated form and haphazard manner.
To sum up the developments in respect of HRM in banking industry during the second
half of the last century. Mankidy (2000) observes:-
• The employees in the early stage were exploited by bank managements who held
traditional views about employees and employment relations. There was,
therefore, hardly any personnel management worth the name in banks then.
• Emergence of trade unions was partly in response to these exploitative conditions
which existed in banks.
• Most aspects of HRM in banks today, viz. promotion wages and salaries including
other monetary allowances, welfare measures such ad medical aid and leaves of
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
70
different types , superannuation facilities, etc., were taken out of the unwilling
hands of management through the organized efforts of employees. In other words,
a major part of banks HRM is dictated to the banks by the trade unions.
• Banks have also adopted certain aspects of HRM like training, performance
appraisal and related HRD activities. Some of these have had partial success in
operations.
• The pressure –oriented development of HRM, to some extent, continues in
banking even today.
Even in the non–bargain areas of HRM like training, performance appraisal system(PAS)
, traces of creativeness is clearly visible, for instance, training efforts are primarily carried
out as a statistical process to satisfy the requirements of the Reserve Bank of India .PAS
have been adopted because they are in vogue in other organizations and are now viewed
more as ritual then as effectives means and preconditions for employees development.
The banking industry nowadays is focusing on having a small number of large players
that can compete worldwide rather than having a large number of fragmented players".
The major Banks in India are depicted in Exhibit 1.1:
Exhibit 1.1: Depicting major Banks in India
1 ABN-AMRO Bank 17 Centurion Bank
2 Abu Dhabi Commercial Bank 18 China Trust Commercial Bank
3 American Express Bank 19 Citi Bank
4 Andhra Bank 20 City Union Bank
5 Allahabad Bank 21 Corporation Bank
6 Axis Bank (Earlier UTI Bank) 22 Dena Bank
7 Bank of Baroda 23 Deutsche Bank
8 Bank of India 24 Development Credit Bank
9 Bank of Maharashtra 25 Dhanalakshmi Bank
10 Bank of Punjab 26 Federal Bank
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
71
11 Bank of Rajasthan 27 HDFC Bank
12 Bank of Ceylon 28 HSBC
13 BNP Paribas Bank 29 ICIC1 Bank
14 Canara Bank 30 1DB1 Bank Indian Bank
15 Catholic Syrian Bank ° 31 Indian Overseas Bank
16 Central Bank of India 32 Induslnd Bank
33 NG Vvsva Bank 45 State Bank of India (SBI)
34 Jammu & Kashmir Bank 46 State Bank of Bikaner & Jaipur
35 JPMorgan Chase Bank 47 State Bank of Hyderabad
36 Karnataka Bank 48 State Bank of Indore
37 Karur Vysya Bank 49 State Bank of Mysore
38 Laxmi Vilas Bank 50 State Bank of Saurastra
39 Oriental Bank of Commerce 51 State Bank of Travancore
40 Punjab National Bank 52 Syndicate Bank
41 Punjab & Sind Bank 53 Taib Bank UCO Bank
42 Scotia Bank 54 Union Bank of India
43 South Indian Bank 55 United Bank of India
44 Standard Chartered Bank 56 United Western Bank Vijaya Bank
Main Objective of the Study
• To compare HRM practices in the private sector banks.
• To study how well HRM tasks are implemented in JKB and HDFC (Private Banks).
• To study about the effectiveness of HRM practices on organizational performance
in Private banks in Kashmir.
• Based on the results, to offer suggestions and recommendation for betterment in
the HR practice in private sector bank.
Hypothesis
H1: The overall human resource practices of private sector banks has positive impact on
organizational performance.
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
72
H2: The employees in private sector banks believe that there is a relation between HR
practices and organizational performance.
H3: HDFC bank employees are more satisfied than employees of JKB.
Sample Size
Employees from the leading Private sector bank –Jammu and Kashmir Bank and HDFC
Bank from the private sector were included as respondents in the research. A sample of
360 employees working in these banks at different levels were contacted for the purpose
of this research.
Review of Literature
Human Resource Management is very important for banks because banking is a service
industry. Research suggests that service quality is recognized as a crucial factor that
determines the level of success of any business (Parasuraman et al., 1988). Banking sector
in this case cannot be an exception. Level of quality service is widely used to evaluate the
performance of banking services (Cowling and Newman, 1995). The banks realize that
customers will be loyal if they receive higher values than competitors (Dawes and
Swailes, 1999) while on the other hand, banks in return can earn higher profits if they are
able to position themselves better than their competitors within the specific market
segments (Davies et al., 1995). People management and risk management are two key
challenges banks are facing. It has become big threat as well as opportunity for banks to
manage its workforce and at the same time risks that find out the success in the business
of banking. Skilled & efficient labor is responsible for efficient & effective risk
management. Banking is "People Business" means it start from people (employees) and
ends with people (customers). Below table is schematic view of definitions of variables
used in this research from literature perspective.
JOU
RN
AL
OF
BU
SIN
ES
S A
DM
INIS
TR
AT
ION
AN
D E
DU
CA
TIO
N
73
Exh
ibit
1.2
: S
chem
ati
c v
iew
of
def
init
ion
s o
f v
aria
ble
s u
sed
fro
m l
iter
atu
re p
ersp
ecti
ve
Def
init
ion
s/co
nce
ptu
al f
ram
ewo
rk
So
urc
e A
uth
or’
s N
ame
Yea
r o
f
pu
bli
cati
on
S. N
o.
Hu
man
Res
ou
rce
Man
agem
ent
HR
M a
s a
con
cep
t in
vo
lvin
g a
ll m
anag
emen
t d
ecis
ion
s th
at a
ffec
t th
e
rela
tio
nsh
ip b
etw
een
th
e o
rgan
izat
ion
& e
mp
loy
ees
A C
on
cep
tual
Vie
w o
f H
RM
. in
Man
agin
g
Hu
man
Ass
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Fre
e P
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, New
Yo
rk
Ch
ap.
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r, M
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ren
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alto
n, R
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HR
M a
s b
ein
g c
on
cern
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ith
th
e n
eces
sity
to
ach
iev
e h
arm
on
y a
mo
ng
dif
fere
nt
HR
M p
oli
cies
an
d p
ract
ices
in
ord
er t
o m
ake
thes
e m
utu
ally
sup
po
rtiv
e in
stea
d o
f co
nfl
ict.
“Lin
kin
g c
om
pet
itiv
e st
rate
gie
s w
ith
hu
man
res
ou
rce
man
agem
ent
pra
ctic
es”,
Aca
dem
y o
f M
anag
emen
t E
xec
uti
ve,
Vo
l.1,
No
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p. 2
07-1
9.
Sch
ule
r,
R.S
. an
d
Jack
son
, S.E
. an
d
1987
.2
HR
M i
s “a
co
her
ent
& s
trat
egic
ap
pro
ach
to
war
ds
man
agem
ent
of
org
aniz
atio
n’s
mo
st v
alu
ed a
sset
s –
the
emp
loy
ees
wh
o i
nd
ivid
ual
ly &
coll
ecti
vel
y c
on
trib
ute
to
war
ds
the
ach
iev
emen
t o
f th
e o
bje
ctiv
es o
f th
e
bu
sin
ess”
.
A
han
db
oo
k
of
per
son
nel
m
anag
emen
t
pra
ctic
e. L
on
do
n: K
og
an P
age.
Arm
stro
ng
(19
95),
19
95
.3
Org
aniz
atio
n P
erfo
rman
ce
Per
form
ance
of
org
aniz
atio
n i
nv
olv
es a
sses
sin
g o
f fo
ur
pro
cess
es l
ike
fin
anci
al,
cust
om
er,
emp
loy
ee
gro
wth
an
d
lear
nin
g
and
in
tern
al
bu
sin
ess
pro
cess
es.
“Pu
ttin
g t
he
Bal
ance
d S
core
card
to
Wo
rk”,
Har
var
d
Bu
sin
ess
Rev
iew
, S
epte
mb
er-
Oct
ob
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34-1
47.
Kap
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, R
.S.,
No
rto
n,
D.P
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1993
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Org
aniz
atio
nal
per
form
ance
can
be
stu
die
d o
n t
he
bas
es o
f p
aram
eter
s
lik
e fi
nan
cial
, m
ark
et s
har
e, g
row
th,
cust
om
er s
ati
sfac
tio
n,
etc.
wit
h
ano
ther
co
ntr
ol
gro
up
.
HR
D A
ud
it, N
ew D
elh
i: R
esp
on
se B
oo
ks
(A
Div
isio
n o
f S
age
Pu
bli
cati
on
s) N
ew D
elh
i.
Ro
a, T
.V.
19
99
.5
Per
form
ance
is a
set
of
fin
anci
al a
nd
no
nfi
nan
cia
l in
dic
ato
rs, w
hic
h o
ffer
info
rmat
ion
on
th
e d
egre
e o
f ac
hie
vem
ent
of
ob
ject
ives
an
d r
esu
lts.
“A c
on
cep
tual
an
d o
per
atio
nal
del
inea
tio
n
of
per
form
ance
”,
Bu
sin
ess
Per
form
ance
Mea
sure
men
t, C
amb
rid
ge
Un
iver
sity
Pre
ss.
Leb
ans,
M.,
Eu
ske,
K.
20
06
.6
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RN
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DM
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TR
AT
ION
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D E
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N
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Hu
man
Res
ou
rce
Dev
elo
pm
ent
HR
D i
s a
syst
emat
ic e
xp
ansi
on
of
peo
ple
’s w
ork
-rel
ated
ab
ilit
ies,
focu
sed
on
th
e at
tain
men
t o
f b
oth
org
aniz
atio
nal
as
wel
l as
per
son
al
go
als.
Fig
ure
of
eig
ht
eval
uat
ion
- a
fu
nd
amen
tal
chan
ge
in
the
trai
ner
s ap
pro
ach
'',
Th
e
Tra
inin
g O
ffic
er, V
ol.
17
No
. 9, S
epte
mb
er.
Jon
es
1981
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HR
D s
ho
uld
be
con
cep
tual
ized
as
an a
pp
roac
h t
hat
su
pp
ort
s th
e
imp
act
that
peo
ple
can
hav
e o
n o
rgan
izin
g. T
he
focu
s o
f H
RD
is
on
acti
on
, dev
elo
pin
g t
he
cap
acit
y t
o a
ct, g
ener
atin
g c
red
ibil
ity
th
rou
gh
acti
on
, in
flu
enci
ng
, an
d w
ork
ing
wit
h o
ther
s in
sit
uat
ion
s lo
aded
wit
h
emo
tio
n a
nd
po
liti
cs.
Th
e fu
ture
P
ract
ice
of
HR
D,
Hu
man
Res
ou
rce
Dev
elo
pm
ent
inte
rnat
ion
al.
6(4)
559-
63.
Vin
ce ,R
. 20
03
.8
HR
D c
ov
ers
fun
ctio
ns
rela
ted
pri
mar
ily
to
tra
inin
g, c
aree
r
dev
elo
pm
ent,
org
aniz
atio
nal
dev
elo
pm
ent
and
res
earc
h a
nd
dev
elo
pm
ent
in a
dd
itio
n t
o o
ther
org
aniz
atio
nal
HR
fu
nct
ion
s w
her
e
thes
e ar
e in
ten
ded
to
fo
ster
lea
rnin
g c
apac
ity
at
all
lev
els
of
the
org
aniz
atio
n, t
o i
nte
gra
te l
earn
ing
cu
ltu
re i
nto
its
ov
eral
l b
usi
nes
s
stra
teg
y a
nd
to
pro
mo
te t
he
org
aniz
atio
n’s
eff
ort
s to
ach
iev
e h
igh
qu
alit
y p
erfo
rman
ce.
Ho
w
do
H
RD
p
ract
itio
ner
s d
escr
ibe
lear
nin
g
at
wo
rk?
Hu
ma
n
Res
ou
rce
Dev
elo
pm
ent
Inte
rnat
ion
al,
Vo
l.7,
N
o.
4,
pp
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-544
.
Slo
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V.,
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nja
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. an
d
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Th
e H
RD
is,
th
us,
a c
on
tin
uo
us
pro
cess
to
en
sure
th
e d
evel
op
men
t o
f
emp
loy
ee c
om
pet
enci
es, d
yn
amis
m,'
mo
tiv
ati
on
an
d e
ffec
tiv
enes
s in
a s
yst
ema
tic
an
d a
pla
nn
ed w
ay
.
Rew
ard
Su
per
ior
Per
form
ance
of
Ind
ivid
ual
s: A
key
to
Ach
iev
e C
om
pet
itiv
e
Ad
van
tag
e T
ho
ug
h C
om
pet
ent
Peo
ple
, A
mu
lti-
dis
cip
lin
ary
per
spec
tiv
e (e
dit
ed b
y
Dav
id J
ain
an
d J
pad
iya)
Tat
a M
cGra
w H
ill
Pu
bli
shin
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o. L
on
do
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New
Del
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479.
Mu
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Job
Def
init
ion
Job
des
crip
tio
ns
can
be
use
d t
o d
eter
min
e th
e g
rou
pin
g o
f in
div
idu
als
into
sm
alle
r w
ork
un
its
and
as
a v
alid
ati
on
fo
r th
e o
ver
all
stru
ctu
re o
f
the
org
aniz
atio
n
Fro
m
job
-bas
ed
to
com
pet
ency
-bas
ed
org
aniz
atio
ns.
Jo
urn
al
of
Org
aniz
atio
nal
Beh
avio
r, 1
5(1)
,
Law
ler,
E. E
.
1994
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Job
def
init
ion
is
the
wri
tten
fo
rmat
of
du
ties
an
d t
ask
s a
sin
gle
wo
rker
is
exp
ecte
d t
o p
erfo
rm.
Th
e h
um
an
reso
urc
es
glo
ssar
y,
2nd
ed
.
Bo
ca R
ato
n, F
L: S
t. L
uci
e P
ress
.
Tra
cey
, W.R
.
1998
12
Car
eer
pla
nn
ing
Car
eer
pla
nn
ing
sta
nd
s fo
r th
e fo
rwar
d-l
oo
kin
g e
mp
loy
men
t p
oli
cies
of
an
org
aniz
atio
n,
wh
ich
ta
kes
in
to
acco
un
t th
e ca
reer
o
f in
div
idu
al
exec
uti
ves
, in
vo
lved
in
var
iou
s ta
sks,
par
ticu
larl
y c
riti
cal
task
s.
Per
spec
tiv
e M
anag
emen
t,
Him
alay
a
Pu
bli
shin
g H
ou
se B
om
bay
, 682
.
Mic
hae
l 19
93
13
Car
eer
op
po
rtu
nit
ies
and
rew
ard
s ar
e im
po
rtan
t fa
cto
rs i
n p
rov
idin
g a
dev
elo
pm
enta
l cl
imat
e in
an
y o
rgan
izat
ion
.
HR
D A
ud
it, N
ew D
elh
i: R
esp
on
se B
oo
ks
(A
Div
isio
n o
f S
age
Pu
bli
cati
on
s) N
ew D
elh
i.
Rao
, T V
19
99
14
Car
eer
pla
nn
ing
is a
co
nti
nu
ou
s p
roce
ss f
or
an in
div
idu
al t
o d
evel
op
his
ow
n
occ
up
atio
nal
co
nce
pt
bec
ause
o
f sk
ills
o
r ab
ilit
ies,
n
eed
s,
mo
tiv
atio
ns
and
asp
irat
ion
.
Hu
man
Res
ou
rce
Ma
nag
emen
t, 4
th
Ed
itio
n, T
he
Eco
no
mic
Pu
bli
shin
g H
ou
se,
Bu
care
st, p
.332
Man
ole
scu
, A.
2003
15
Car
eer
pla
nn
ing
mu
st a
lig
n i
nd
ivid
ual
nee
ds
wit
h o
rgan
izat
ion
al n
eed
s
and
op
po
rtu
nit
ies,
ev
alu
atin
g, a
dv
isin
g a
nd
info
rmin
g i
ts e
mp
loy
ees
on
care
er
pla
nn
ing
, in
div
idu
al
dev
elo
pm
ent
effo
rts
wit
h
trai
nin
g
and
dev
elo
pm
ent
pro
gra
ms.
Pla
nn
ing
an
d
care
er
man
agem
ent
in
org
aniz
atio
ns,
Jo
urn
al
of
Org
aniz
atio
nal
Psy
cho
log
y, 3
(4)
Po
pes
cu N
evea
n ,A
. 20
03
16
Em
plo
yee
s P
arti
cip
atio
n
He
con
ten
ded
th
at w
ork
ers
par
tici
pat
ion
in
vo
lves
cre
atin
g o
pp
ort
un
ity
un
der
su
itab
le c
on
dit
ion
fo
r p
eop
le t
o i
nfl
uen
ce t
he
dec
isio
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Th
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hic
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nfl
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-
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p
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A f
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the
eval
uat
ion
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the
qu
alit
y
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an i
nd
ivid
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’s p
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rman
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n a
n o
rgan
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Em
plo
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cep
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per
form
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app
rais
al
syst
em
and
th
eir
rela
tio
nsh
ips
wit
h
som
e p
erso
nal
an
d
org
aniz
atio
nal
fact
ors
: A
n
emp
iric
al
stu
dy
in
th
e
org
aniz
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he
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It
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mo
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niq
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for
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mu
nic
atin
g
per
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exp
ecta
tio
n a
sses
smen
ts o
f th
e p
ote
nti
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of
emp
loy
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and
id
enti
fies
th
e
nee
d f
or
imp
rov
emen
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Man
agin
g
emp
loy
ee
atti
tud
es
and
beh
avio
rs
in
the
tou
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an
d
ho
spit
alit
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val
uat
e th
e d
evel
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men
t o
f th
e
emp
loy
ee’s
att
itu
de
and
beh
avio
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Imp
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pra
ctic
es o
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erce
ived
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m
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In
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Tra
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g a
nd
Dev
elo
pm
ent
Tra
inin
g i
s an
ex
pen
siv
e w
ay o
f at
tem
pti
ng
to
en
han
ce h
um
an
pro
du
ctiv
ity
.
Th
e sh
ape
of
thin
gs
to
com
e.
In
F.
Hes
selb
ein
&
P
.Co
hen
(E
ds)
.Lea
der
to
lead
er: E
nd
uri
ng
insi
gh
t o
n le
ader
ship
fro
m
the
Dru
cker
fo
un
dat
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's a
war
d w
inn
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jou
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(p
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109
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F
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inin
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icat
es t
he
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in
vo
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im
pro
vin
g t
he
apti
tud
es,
skil
ls a
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ab
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the
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pec
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man
re
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P
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nn
el
Man
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Tra
inin
g r
efer
s to
act
ivit
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wh
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eq
uip
em
plo
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s o
r u
pg
rad
es
wo
rker
s w
ith
nee
ded
sk
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to
per
form
/ ca
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ou
t b
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th
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pre
sen
t
job
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Hu
man
re
sou
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man
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and
th
e
glo
bal
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An
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pir
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Ch
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Co
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Per
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om
pen
sati
on
is
the
do
min
ant
HR
pra
ctic
e th
at
org
aniz
atio
ns
com
mo
nly
use
to
ev
alu
ate
and
rew
ard
em
plo
yee
s.
Str
ateg
ic
hu
man
re
sou
rce
pra
ctic
es,
top
man
agem
ent
com
mit
men
t,
team
so
cial
net
wo
rks
and
fir
m p
erfo
rman
ce:
the
role
of
hu
man
re
sou
rce
pra
ctic
es
in
crea
tin
g
org
aniz
atio
nal
co
mp
etit
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Co
mp
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anag
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an
in
teg
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par
t o
f H
RM
ap
pro
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fo
r
man
agin
g p
eop
le a
nd
as
such
it
sup
po
rts
the
ach
iev
emen
t o
f b
usi
nes
s
ob
ject
ives
Rel
atin
g
Co
mp
eten
ces
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pay
: T
he
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Ex
per
ien
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JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
78
Approaches in Studying Relationship between HRM Practices and Organizational
Performance
In contrast to empirical works on individual HRM practices and organization
performance relationship, the relationship between HRM practices & organizational
performance has been the subject of significant examination. Jackson, Schuler and Rivero
(1989) studied effects of HRM systems on organizational financial performance through
behavioral approach. They realized that it is essential for organizational viability that
HRM systems provide the capabilities to acquire, develop, motivate and retain
employees who will enhance organizational effectiveness. In explaining the significance
of human resources to organization performance, the majority of work in HRM has
adopted the resource-based view of the organization (Barney, 1991; Delery, 1998).
According to this view, an organization can gain a competitive advantage from the
human resources it possesses. However, the organization does not obtain a competitive
advantage from the HRM policies, but from human resources that the organization
attracts and retains (Delery, 1998). These arguments point to the performance potential
of a universal approach to HR focus on capital enhancement. However, apart from the
theoretical arguments, there were also evidences supporting a positive relationship
between universal approach to HRM practices and organizational performance.
Arthur (1994) adopted an approach to intra-industry examination of the HRM practices
of thirty American steel minimills. In addition to the impact of HRM practices on
organization’s performance, the contingency approach is concerned with the similarity
or fit between various policies and practices adopted by organizations. Arthur employed
an experimental classification identifying two types of HRM systems (control and
commitment) to test the extent to which the combination of practices utilized by
organizations could forecast differences in organizational performance. His findings
show that minimills using the commitment systems of HRM had higher productivity,
lower scrap rates and lower turnover than those minimills using control systems.
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
79
Huselid (1995) studied the impacts of thirteen HRM practices on organization’s
performance. Two measures of HRM practices were identified. First were designated
“employee skills & organizational structures” with practices enhancing skills, abilities,
role performance, while the second was labeled “employee motivation”, with practices
aimed at evaluating & reinforcing desired employee behaviors. His findings showed
when these two measures were regressed on productivity individually both measures
produced positive & significant results. However when these were entered
simultaneously, motivation remained significant. Most of the previous studies verify the
relationship between HRM practices and organizational performance. However, various
approaches to these examinations have emerged. The following section gives a critical
review of the various approaches taken in the area of HRM, and the assumptions made
under each approach.
Previous research in HRM has used one of the following ways to examine the
effectiveness of HRM practices on organizational performance viz, universalistic,
contingency or configurationally approach (Delery & Doty, 1996).
Universalistic perspective
Universalistic perspective is the simplest form of theoretical model in the HRM literature.
Universal perspective seeks for “best practices”. Researches in the universalistic
perspective are micro analytical in nature that some HRM practices are always better than
others and that all organizations should adopt these practices.
The extensive work of Huselid’s (1995), work reflected the “universalistic” approach to
HRM. This perspective is based on the assumption that there are certain “best” HRM
practices which contribute to increased financial performance regardless of the strategic
goals of organizations. Further, a universalistic approach to HRM research is based on
the assumption that HRM practices contribute to worker motivation which leads to
increased productivity. Also it results in increased efficiency (Ichniowski, Kochan,
Levine, Olson & Strauss, 1996). While many authors agreed with these assumptions
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
80
(Osterman; 1994, Pfeffer, 1994), various studies have utilized different mix of HRM
practices and there has been very limited work that provides a definitive description as
to which HRM practices should be included in a “best practice” system. Huselid (1995),
for instance, utilized thirteen HRM practices. Pfeffer (1994) however, utilized sixteen
management practices to achieve higher productivity & profits. Delery & Doty (1996),
listed seven practices that are considered strategic in nature. Practices listed were internal
career opportunities, formal training system, appraisal measures, profit sharing,
employment security, voice mechanism & job description.
Contingency perspective
Contingency thinkers hypothesize that an organization needs to adapt certain HRM
practices for various organizational strategies. However a number of researchers have
argued that contingency perspective is more appropriate approach to HRM (Butler, Ferris
& Napier, 1991; Jackson & Schuler, 1995; Dyer, 1985; Lengnick-Hall & Lengnick-Hall,
1988; Schuler & Jackson, 1987; Schuler, 1989). The contingency thinkers argue that, for
organization to be effective its HRM practices must be consistent with other aspects of
the organization.
The major difference between contingency approach & universalistic perspective is that
these studies have tried to link variations of HRM practices to specific organizational
strategies (Hoque, 1999;Youndt, Snell, Dean & Lepak, 1996; Khatri, 2000). Schuler &
Jackson (1987) and Schuler (1989), pointed out that HRM practices which are not
synergistic & consistent with organizational strategy and which conflict with other HRM
practices are confusing in effect. These end up creating an ambiguity which can slow
down individual & organizational performance. Porter (1985), has provided a framework
that specifies three strategies for competition: cost leadership as the low cost product or
service provider; differentiation, such as by superior quality or service and focus or niche
strategies that concentrate on narrow area of differentiation. Thus the contingency view
would maintain that if an organization has adopted a cost leadership strategy, then it
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
81
should have human resources practices consistent with this strategy. With cost
leadership, an organization would probably not have a compensation system for
executives nor would it pursue a practice of wage leadership. Furthermore, the
compensation system also should fit the organization culture and additional matching
will be required when the organization has several cultures.
The study conducted by Delery and Doty (1996), on HRM practices in the banking
industry examined the impact of the universalistic and contingency approaches. The
researchers tested the universalistic approach by examining the direct organization
performance effects of several individual human resource practices on the position of
loan officers. These practices included (1) internal career opportunities (2) extensive
training (3) result- oriented performance appraisals (4) employment security (5)
participative decision making (6) clear job descriptions and (7) profit sharing.
Organizations performance was measured with two accounting ratios: return on assets
(ROA) and return on equity (ROE). For tests of contingency approach, the researchers
used a product/market innovation instruments to categorize the banking organizations
into the Miles and Snow strategic types: prospectors (emphasis on innovation), analyzers
(imitators of innovators and focused operations), and defenders (low-cost producers).
Results of the universalistic approach revealed that result- oriented appraisal, profit
sharing and employment security all had a positive impact on ROA while profit sharing
also has a positive impact on ROE. In order to test the contingency approach, the
researchers examined the incremental impact on the performance of the strategy
interactions with each of the human resource practices. Results of the contingency
approach indicated that for banks in the prospector's strategic category, the use of results
– oriented appraisals produced higher ROA and ROE. Interestingly defender banks that
allowed loan officers to participate in decision-making had better ROA and ROE.
Conversely, prospector banks performed better with less participative decision making.
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
82
In addition, more internal career opportunities produced positive impacts on ROA and
ROE in prospector banks while the reverse held for defender banks.
Configurational perspective
The configurationally perspective is focused on how patterns of multiple, planned
human resource deployment and activities achieve the organization’s goals. A closely
related body of work calls for a configurational approach to HRM and argues that it is
the pattern of HRM practices that contribute to the attainment of organizational goals
(Wright & McMahan, 1992). According to the configurational perspective, in order to be
effective, an organization must develop its HRM system in such a way that it achieves
both horizontal and vertical fit. Horizontal fit means internal consistency of the
organization’s HRM practices and compatibility of the HRM system with other
organizational characteristics and features comes under vertical fit.
According to configurational perspective, the impact of HRM practices on organizational
performance is dependent on the implementation and usage of an effective combination
of HRM practices called HRM bundles (Arthur, 1994; MacDuffie, 1995). Such bundles of
complementary practices are used to produce high performance effects than individual
HRM practices (Ichniowski et al., 1997). Ichniowski et al. (1997) explained that interaction
effects among HRM policies are important determinants of productivity so organizations
realise the largest improvements in productivity by adopting bundles or clusters of
complementary practices rather than making changes to single practices. Kalleberg and
Moody (1994), found a tendency for performance enhancing HRM policies and practices
to occur together, thereby creating high performance work systems. Likewise both
Arthur (1994) and Becker and Huselid (1998), also found potential impact of systems or
bundles of HRM practices on organisational performance.
Alcázar et al., (2005), argue that configurational bundles must not be confused with
universalistic bundles or systems because while the former consists of holistic patterns of
interrelated, synergistic practices, the latter comprises single practices combined in an
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
83
additive manner. In other words, the configurational approach involves more complex
typologies of ideal types of HRM systems than found in universalistic approaches.
All the above-mentioned approaches has shown that there is a positive relation between
HRM practices and performance of an organization.
Data Analysis and interpretation
Most of the organization does possess certain unique characteristics, the results are
bound to differ from each other .Exhibit 1.3 and exhibit 1.4 depicts the overall perception
of managers and subordinates towards the Human resource management practices in
private sector banks. The private sector banks include HDFC and JKB. It is clear from the
exhibit 1.3 ,that the highest percentage 53.6% of managers from HDFC agree that general
climate of an organization is good that plays important role to improve the performance
of an organization and 53.2% of JKB managers also agree and is statistically significant
(p-value ≤0.0001). JKB with a score of 46.7% of agree with the perception the OCTAPACE
culture has direct impact on the organizational performance followed by HDFC (39.3%)
and is statistically significant with p-value ≤0.0001. The result from the table shows that
31.2% of managers of HDFC perceives that bank has good selection process and
techniques that leads to effective performance of an organization followed JKB (16.3%)
and is statistically significant (p- value ≤0.0001). The table shows that 52.6% of JKB
managers agree with the statements of Job definitions followed by HDFC with 46.9%. It
is clear from the result that if job description and job specifications will be clear to the
employees that will directly improve performance of an employees and leads to the
increase in the performance of an organization. The majority of the managers (51.8% of
HDFC and 42% of JKB) agree that career planning is clear to all the employees and is
statistically significant. The table also depicts that 50.0% of HDFC managers are neutral
towards the employee's participation while 41.1% managers of JKB agree with the
statements of employee's participation and statistically significant with p-value ≤0.0001.
Both managers private sector banks agree with the performance appraisal variable of
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
84
HRM practice with the highest percentage of 51.8% in HDFC then JKB (44.7%) which
implies that performance appraisal and organizational performance are closely linked
with each other. Training plays an important role in enhancing the skills of employees
and 50% of HDFC managers agree with the training variable of HRM practice followed
by the managers of JKB with 46.9%. The results shows that 32.5% of HDFC managers
strongly agree that company takes care of employees while setting the compensation
followed by JKB (26.0%) with p-value ≤0.0001 and is statistically significant. After
analyzing the above table, we can accept both alternate hypotheses that HRM practices
have significant association with organizational performance and HRM have significant
impact on organizational performance and reject null hypothesis.
It is also clear from Exhibit 1.4 that overall perception of subordinates varies in the private
sector banks as well. For general climate, the highest percentage of agree is shown by the
subordinates of JKB (39.6%) and for OCTAPACE culture the greatest percentage of Agree
is shown by the subordinates of HDFC ( 33.1% and are statistically significant with p-
value ≤0.0001. While in Selection the highest percentage of agree is shown by the
subordinates of HDFC (43.1%) followed by JKB (39.8%) and in job definition the highest
percentage of agree is shown by the subordinates of JKB (42.6%) followed by HDFC
(37.5%). The respondents from sample study strongly agree in the following order HDFC
(32.7%) and JKB (32.4%) towards the career planning of HRM variable .It was observed
that 27.8% of subordinates of HDFC agree with the statement of employees participation
while 28.1% JKB agree that employees participation plays major role in enhancement of
organizational performance. The table reveals that 34.5% of HDFC subordinates agree
with the statement of performance appraisal followed by JKB (32.5%) and is statistically
significant with p-value ≤0.0001. The highest percentage of agree for training variable is
shown by the subordinates of HDFC (52.8%) followed by JKB (35.0%). The table depicts
that 32.5% of HDFC subordinates agree with compensation variable of HRM practices
followed by 21.4% of JKB subordinates and is statistically significant with p-value
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
85
≤0.0001. From the exhibit 1.3 it is clear that perception of employees towards HRM
practices is positive. This indicates that HRM practices are positively related with
organizational performance and HRM practices has direct impact on organizational
performance.
Exhibit 1.3: Index of perception of managers towards variables of HRM practices in Private
Sector
Variables
Banks
Sample
size (n)
Agreement (%)
p-value Strongly
disagree Disagree Neutral Agree
Strongly
agree
General Climate (GC) HDFC 8 12.5 8.9 14.3 53.6 10.7
≤0.0001*
JKB 86 2.7 8.8 21.1 53.2 14.3
OCTAPACE Culture (OC) HDFC 8 17.9 28.6 39.3 14.3
JKB 86 3.3 13.1 19.1 46.7 17.8
Selection(S) HDFC 8 2.1 14.6 52.1 31.2
JKB 86 2.1 11.0 20.0 50.6 16.3
Job Definition (JD) HDFC 8 6.2 12.5 12.5 46.9 21.9
JKB 86 0.3 12.8 22.1 52.6 12.2
Career planning (CP) HDFC 8 5.4 5.4 23.2 51.8 14.3
JKB 86 2.0 14.8 26.6 42.0 14.6
Employees participation
(EP)
HDFC 8 4.2 16.7 50.0 29.2 ≤0.0001*
JKB 86 5.8 21.7 24.4 41.1 7.0
Performance Appraisal (PA) HDFC 8 1.8 12.5 17.9 51.8 16.1
≤0.0001* JKB 86 4.3 12.3 28.7 44.7 10.0
Training(T) HDFC 8 2.1 10.4 14.6 50.0 22.9
≤0.0001* JKB 86 2.9 17.1 21.3 46.9 11.8
Compensation (C) HDFC 8 7.5 10.0 32.5 32.5 32.5
≤0.0001* JKB 86 6.3 29.5 31.4 26.0 26.0
JOURNAL OF BUSINESS ADMINISTRATION AND EDUCATION
86
Exhibit 1.4: Index of perception of subordinates towards various variables of HRM practices
in Private Sector
Variables Banks Sample
size (n)
Agreement (%)
p-value Strongly
disagree Disagree Neutral Agree
Strongly
agree
General Climate(GC) HDFC 24 10.7 22.6 26.8 32.1 7.7
≤0.0001*
JKB 266 5.5 21.2 24.6 39.6 9.0
OCTAPACE Culture(OC) HDFC 24 11.3 13.7 26.2 33.3 15.5
JKB 266 7.5 21.8 28.2 31.8 10.7
Selection(S) HDFC 24 14.6 6.9 22.2 43.1 13.2
JKB 266 4.6 17.0 26.7 39.8 11.8
Job Definition(JD) HDFC 24 6.2 17.7 16.7 37.5 21.9
JKB 266 5.1 17.3 21.4 42.6 13.7
Career planning(CP)
HDFC 24 12.5 13.7 31.0 32.7 10.1
≤0.0001* JKB 266 5.8 27.1 27.3 32.4 7.3
PNB 33 3.5 14.3 22.9 38.1 20.3
Employees participation(EP) HDFC 24 15.3 19.4 29.2 27.8 8.3
≤0.0001* JKB 266 12.5 30.1 24.7 28.1 4.6
Performance Appraisal(PA) HDFC 24 11.3 15.5 28.6 34.5 10.1
≤0.0001* JKB 266 8.2 22.4 28.1 32.5 8.8
Training(T) HDFC 8 0.7 11.8 19.4 52.8 15.3
≤0.0001* JKB 86 7.7 24.2 22.9 35.0 10.2
Compensation (C) HDFC 8 10.0 18.3 33.3 32.5 5.8
≤0.0001* JKB 86 13.5 30.5 26.3 21.4 8.3
Perceptions of managers and subordinates towards the overall HRM practices in the private
sector
The overall research results presented in Exhibit 1.5 regarding the perception of managers and
subordinates towards the overall HRM practices in the private sector banks (HDFC & JKB) . The
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87
table shows that perception of managers lies in the range of scale that is satisfactory. The overall
values of mean in case of managerial group of HDFC are > 60% except for employee participation.
The table shows that perception of subordinates lies in the range of scale that is dissatisfactory
and recorded overall percentage of mean score >45 in HDFC. The overall mean score of managers
of HDFC against General Climate is 3.41(60.25) which are marginally higher than subordinates
which is recorded as 3.04(51.00). The table also exhibits that managers recorded highest values
for mean and scored >70 % against selection process and training and development with the mean
score 4.13 and 3.81. On the other hand subordinates of HDFC shows the highest mean score of
3.70(67.50) against training which is slightly less than the managerial staff. The table also reflects
the lowest mean score 3.04(51.00) of managerial staff recorded against the employee participation
variable.The rest of the variables scored by manager's of HDFC shows reasonably good response.
When we look at the exhibit 1.5, the interesting observation comes into light that subordinates
express positive view against Job Definition and Training and Development which scored >60%.
However the rest of HRM variables scored by subordinates of HDFC show average response.
This is indication of the fact that there is a tremendous scope of improvement of various HRM
practices in case of subordinates of bank.
The perception of managers of JKB also falls in satisfactory range of scale as compared to
subordinates. The table amply that the overall mean values of managers recorded >60% for HRM
variables except for compensation and employees participation. The table also shows clearly that
in case of managerial staff possess highest mean and scored >60% against Selection Process with
the mean score 3.68. On the other hand subordinates of JKB shows the highest mean score of
3.43(60.75) against Job definition. The table also reflects the lowest mean score 2.97(49.25) of
managerial staff recorded against the compensation variable. The rest of the variables scored by
manager's shows reasonably good response. When we look at the table 1.4, the interesting
observation comes into light that subordinates express positive view against Job Definition >60%.
However the rest of HRM variables scored by subordinates show average response. Which is
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88
indication of the fact that there is a tremendous scope of improvement of various HRM practices
in case of subordinates is concerned.
It is clear from the table that satisfaction levels of the employees both managers and subordinates
in JKB are less as compared to the employees of HDFC. Thus it is clear from the table 1.5 that
contradictory statements among the managers and subordinates in both the organization are
observed. Managers claim that top management of banks goes out of their way to assure that
employee adore their work. Managerial personnel also claim that their main focus is to develop
their subordinates in banks. On the other hand interesting observation come to light that
subordinates blame that employee's participation is rare in making any decision and
compensation is not based on competency or ability of an employee. However as compared to
managers, subordinates are highly dissatisfied with existing HRM practices in both banks. The
HDFC employees are comparatively better than JKB which is clearly reflected from aggregate
values of mean and their respective percentage ranging between 3.04(51.00) to 4.13(78.25) in
managers and 2.94(48.50) to 3.70(67.50) in subordinates. While in JKB overall values of mean and
their respective percentage ranging between 2.97(49.25) to 3.68(67.00) in managers and 2.81(45.25)
to 3.43(60.75) in case of subordinates. From the above analysis, we can conclude that managers as
a whole are more satisfied than subordinates towards the HRM practices in the sample study
organizations. We can also conclude that satisfaction of HDFC employees towards the HRM
practices is higher than JKB employees. Higher the level of satisfaction higher is the
organizational performance thus we can say the HRM practices are closely related with
organizational performance.
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Exhibit 1.5: Perceptions of Managers and Subordinates towards the overall HRM practices in private
sector
Variables
HDFC
Managers
N=8
HDFC
Subordinates
N=24
JKB Managers
N=86
JKB Subordinate
N=266
Mean
score
%
Mean
score
Mean
score
% Mean
score
Mean
score
%
Mean
score
Mean
score % Mean score
General
Climate 3.41
60.25 3.04
51.00 3.61
65.25 3.25
56.25
OCTAPACE
culture 3.50
62.25 3.28
57.00 3.62
65.50 3.16
54.00
Selection
Process 4.13
78.25 3.33
58.25 3.68
67.00 3.37
59.25
Job
Definition 3.66
66.5 3.51
62.75 3.64
66.00 3.43
60.75
Career
Planning 3.64
66.00 3.14
53.50 3.52
63.00 3.08
52.00
Employee
Participation 3.04
51.00 2.94
48.50 3.22
55.50 2.82
45.50
Performance
Appraisal 3.68
67.00 3.17
54.25 3.44
61.00 3.11
52.75
Training and
Development 3.81
70.25 3.70
67.50 3.48
62.00 3.16
54.00
compensation 3.43 60.75 3.06 51.50 2.97 49.25 2.81 45.25
Conclusion
The respondents mostly managers of sample study organizations perceived satisfactory
attitude towards existing HRM practices in the sample study organizations. The
managers showed high level of satisfaction with the developmental policies of the top
management and were happy with the prevailing HRM climate in the sample study
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90
organizations. It is evident from the overall results that the employees of HDFC are more
satisfied than the JKB at both managerial level as well as subordinate level.
Suggestions and Policy Implications
The research study attempts to analyze the impact of HRM practices of HDFC and JKB
by focusing on relationship between HRM practices variables on organizational
performance in the within the Jammu and Kashmir state of India. In order to achieve and
meet with the world wide standards and to sustain in a competitive market banks need
to create such an organizational climate that has great impact on the quality of
organizational performance. For keeping the climate favorable certain important issues
to be considered seriously, like good quality of leadership, treating employees humanly,
mutual confidence, two way communications and opportunity for development. .There
is an intense need for restructuring of OCTAPACE Culture so that it can bring about
changes required for better performance. Recruitment and selection should be based on
internationally accepted personality traits to be globally competitive. The sample study
organization has to create such strategies that will help them to attract the best candidate
from the market in order to achieve competitive edge. It is suggested that employees
should be allowed to shape their duties in an unpredictable situations. The management
should be flexible so that continuous support, collaboration, trust and confidence among
employees can be imparted and developed. Employees in the sample banks should have
clear career path that motivates employees to work effectively and efficiently in order to
achieve organizational goal. Further horizontal promotion can be introduced apart from
vertical promotion so that frustration of the employees can be minimized. Because of
these factors the employees will definitely feel job security rather than looking for another
jobs in other organization. There is an urgent need for redesigning the PAS and self-
appraisal and peer appraisal should be introduced so that PAS serves as important input
for promotion, transfer, career planning, training, salary administration and reward
system in these sample banks. . It is also suggested that besides imparting job specific
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91
training the banks under study should focus on varied training programs that can impart
new knowledge and skill linked with the career progression. It is clear that employees
are not satisfied with the compensation policy in the sample study organization that
should be taken care because of its volatile and critical nature. The performance based
salary will hopefully save the sample study organization from the already unfavorable
composition of workforce, cross cultural environment and other demographic factors.
Limitation and direction for future research
The research study made number of limitations. The main limitation of this research
study is about sampling issue as the sample size of HDFC was small as compared to JKB.
In addition to that, the study focused on perceptions of organizational performance and
HRM practices as reported by the employees. Hence, it is subject to common source and
common method bias as perception varies from person to person. The study did not cover
all the HRM practice variables that have an impact and relationship with organizational
performance.
In order to validate the findings of the study, case study, focus groups and longitudinal
studies are another interesting approach that can be undertaken for future research.
Additionally, the research model of this study can be tested in other service sector like
education, hospitals and tourism with the large sample size so that the research model
can be generalized.
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92
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