Business Strategy, SHRM, HR Outcome and Organizational Performance: Evidence From an Indian Industry
DR. ASHUTOSH MUDULI
Associate Professor School of Petroleum Management, Pandit Deendayal Petroleum University Gandhinagar, Gujarat,
Abstract: Over the past decade, there has been an increasing emphasis by researchers and practitioners alike on the importance of human resources as one of the key ways of gaining a competitive advantage for a firm. Consequently, numerous researches have been conducted on business strategy and its effect on human resource management within the context of firm performance. Most of the research on this theme have been conducted in USA, and very less number of research are conducted in the context of emerging economy like India. Further, the controversies related to the suitable methodology require the use of alternative methodologies, such as case studies for studying the relationship between business strategy and HRM. The study aims to understand the relationship among Business strategy, SHRM activities, HR Outcome and Organizational Performance variables in the context of an Indian industry. For this purpose qualitative and quantitative data were collected from various the largest public sector steel making company of India. The result illustrates importance of business strategy in planning and implementing SHRM practices. It also agrees that SHRM variables are primarily based on the business strategy adopted by the organization. Further, the study also supplements the existing literature on SHRM by agreeing to a fact that SHRM practices are designed to achieve some deliberately identified HR outcomes such as commitment, satisfaction, motivation etc. Further, the paper also witnessed that relevant HR outcome always contributes to the company
in the form of better organizational performance. Key words: Indian steel industry; corporate strategy; human resource restructuring;
commitment; delayering; productivity
The Human Capital approach to Human Resource Management proposes that, unlike traditional sources of competitive advantage, a quality, motivated work- force is a source of competitive advantage that is diffi- cult for competitors to replicate (Luthans and Sommer, 2005).Over the past decade, there has been an increas- ing emphasis by researchers and practitioners alike on the importance of human resources as one of the key ways of gaining a competitive advantage for a firm (Chew and Chong, 1999). Consequently, numerous research has been conducted on business strategy and its effect on human resource management within the context of firm performance (Bird and Beechler, 1995; Huselid 1995; MacDuffie, 1995; Delery and Doty, 1996; Huang, 2001; Ghebregiorgis and Karsten 2007).
For example, Youndt, Snell and Lepak (1996) found that business strategy and HRM practices interaction is an important factor in organizational effectiveness. Richard and Johnson (2001) conducted a study to understand the impact of human resource diversity practices on firm performance. Rothmann et al, (2002) observed that effective utilization of human resources brings out positive employee outcomes which have direct implication for organizational effectiveness. Chow (2006) mentioned that business strategies paired up with appropriate HRM practices will have a positive effect on firm performance.
Although a number of research have been con- ducted on Business strategy and HRM, most of them have been conducted in USA, with a smaller number of studies carried out in Europe (e.g. Zheng, 2007; Boselie et al., 2001; Hoque, 1999) and Asia (Krish- nan, 2005; Bjorkman and Xiucheng, 2002; Ngo et al., 1998). Hence, additional empirical studies are clearly needed in other settings. There is not much research on Business strategy and HRM in emerging economies in general, and India in particular. This paper tries to fill the gap. Further, some commentators have been critical to the methods used for studying HRM as being biased and therefore limiting the scope of generalization of findings (Guest, 2001; Wright et al., 2001; Wright and Boswell, 2002). Due to these limitations, there has been constant call for the use of alternative methodologies, such as case studies (Bose- lie et al, 2005; Guest, 2001; Simón, Cristina, 2007). The current study is addressing the gap by adopting case study method. Again, the identified research gap is further corroborated with the observation of Aryee, and Law, (2007) where the researchers commented ‘future human resource management research will seek to move beyond the demonstration of main effects to an examination of how (Datta et al., 2005) and why human resource practices are related to organizational performance (Collins & Smith, 2006).
Further, the researcher preferred to choose Steel industry because of the inherent strength of the in- dustry to contribute to the economic advancement of the nation. Since the steel industry is closely related to economic stability and national development, it can be considered as a national strategic industry (IT IS Program Office 2007). India became the fourth largest producer of crude steel in the world in 2010 as against the eighth position in 2003 and is expected to become the second largest producer of crude steel in the world by 2015. The country has acquired a central position on the global steel map with its giant steel mills, acquisition of global scale capacities by players, continuous modernization & up gradation of old plants, improving energy efficiency, and backward integration into global raw material sources. However, following the globalization movements in India, the industry has been exposed to new challenges in the form of competition, both from within and outside the country. As the intensity of competition increased, the need for Indian steel industry to continuously improve their performance becomes inevitable. Thus, this study concentrates on SAIL, the largest steel making public sector company in India and attempted to study and understand the relationship between the Business strat- egy and the SHRM practices adopted by the company.
The study aims to understand the relationship among Business strategy, SHRM activities, HR Out- come and Organizational Performance variables in the context of an Indian industry. Extensive literature survey was conducted to understand the relationship among the said variables. Qualitative and quantitative data were collected from the largest public sector steel making company of India by using multiples sources.
2. BUSINESS STRATEGY AND HUMAN RESOURCE RESTRUCTURING OF THE COMPANY
Steel Authority of India Ltd.(SAIL), a Maharatna company, is India’s largest steel producer, holding 20 percent market share of domestic crude steel production. The company catered to almost the entire gamut of the mild steel business – Flat products in the form of Plates, HR coils/sheet, CR coils/ sheets, Galvanised plain/Corrugated Sheets and Long products comprising Rails, Structural, Wire-rods and merchant products. Established in the year of 1973, the company had gone through a bad weather in 1990’s, particularly after the economy was opened and control over price and distribution lifted. Subsequently, action was initiated to improve the company’s profitability and ensure long term competitiveness, with internal formulation of a Turnaround and transformation plan. At the 275th meeting of the company’s Board of Directors held on October 31, 2001, SAIL, adopted a vision statement: “To be a respected world class corporation and the leader in the Indian steel business in quality, productivity, profitability, and customer satisfaction.” To achieve the vision, the company prepared a business strategy which aimed at Gaining competitive advantage over other firms by: sustaining a lower overall cost of doing business, offering a superior production and service, often, but not always, built around superior brands and brand image, and by building special relationship, special understanding, special products and special features of production, service and delivery which enable firms to ‘own’ some niche of the market. SAIL realized that implementation of business restructuring measures such as restructuring of assets, cost cutting measures, marketing initiatives, operational improvements, and restructuring through Strategic Business Units requires restructuring the HR practices also. This resulted in framing and implementing a number of HR practices such as delayering of the structure, downsizing the workforce, developing the skill through training and development programme etc. which are expected to align with business strategy of the company. This results in a long leap of Sales turnover of the company, which has increased from Rs.15630.79 crore in 2001-02 to Rs. 47041 crore in 2010-11. The net reportable profit has gone up from Rs. -1706.89 in 2002 to Rs.4904.74 crore in 2011.
3. CONCEPTUALIZATION AND HYPOTHESIS
A strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage (Liao 2005). Business strategy implies a series of systematic and related decisions that give a business a competitive advantage relative to other business (Schuler and Jackson 1987). SHRM involves designing and implementing a set of internally consistent policies and practices that ensure a firm’s human capital contributes to the achievement of its business objectives (Baird & Meshoulam, 1988). As indicated in the framework (Figure-1), Business strategy of a firm determines the SHRM practices, SHRM practices are designed to achieve higher level of HR Outcomes, leading to higher organizational performance (Boselie et al., 2001; Fey et al., 2000; Guest, 2001; Park et al., 2003; Paul and Anantharaman, 2003).
3.1. Business Strategy and SHRM Activities
HRM has evolved from administrator and record keeper to strategic partner and value added contributor (Becker et al., 2001; Cascio, 2003; Gelade and Ivery, 2003; Ramlall, 2003). Since decades the need for aligning HR policies and practices with business strategies has gained momentum in the works of various researchers (Krishnan, 2005; Paul and Anantharaman, 2003; Richard and Johnson, 2001).
The concept of business strategy derives primarily from Porter’s (1985) classifications of generic strategies: cost leadership, differentiation, and focus. Miles and Snow (1984) have classified business strategies into four types: defender, prospector, analyser and reactor. The authors have studied the differences in the HR strategies according to the organizational types (namely, defender, prospector, analyser and Reactor). They discuss “make” or “buy” HR strategies where HRM systems focus on building or acquiring human resources. While studying the compensation strategies in different organizational types, Romero and Cabrera, (2001) observed that the increases in compensation for the managers of prospector companies will be calculated giving more importance to performance than to length of service, where as the compensation of the managers of companies with a defender strategy will be characterized as being basically fixed. The compensation of the managers of companies with an analyser strategy will have characteristics of both the algorithmic and the experimental modes. Referring to Porter’s strategy types, Schuler and Jackson (1987) have classified business strategies slightly differently from those of Porter into three types: cost reduction, innovation and quality enhancement. In the context of HRM, the authors observed that companies adopting cost reduction strategy demands workers to work harder, where as innovation strategy requires workers to work differently and quality strategy needs them to work smarter. Similarly, in case of innovation-based strategy, impetus is to be given for free thinking and bringing in new ideas.
Thus, the above analysis clearly indicates that the strong relationship between Business strategy and SHRM activities.
This leads to the following hypothesis:
Hypothesis 1: SHRM is strongly related to Business Strategy.
3.2. SHRM Practices and HR Outcomes
Planning and implementation of suitable SHRM practices lead to higher levels of HR Outcomes (Boselie et al., 2001; Fey et al., 2000; Guest, 2001; Park et al., 2003; Paul and Anantharaman, 2003). There is a general consensus that SHRM contribute to organizational performance that is mediated through the development of HR outcomes (Katou and Budhwar, 2006).
Beer et al. (1984) identified ‘competence, commit- ment, congruence and cost-effectiveness’ as the HR Outcome related variables. Referring to HR Outcome, Becker and Huselid (1998) proposed that intervening variables such as ‘employee skills, employee motivation, job design and work structure link to operating performance’, which in turn influences profits and market value. Wright and McMahan (1992) concluded that effective HRM helps to create a ‘skilled (based on HRM policies such as careful recruitment, selection, training and development), motivated, committed and satisfied (based on HRM policies such as employee involvement, communication, performance related pay) workforce’. Guest and Peccei (1994) focused on HR Outcomes such as ‘competency, motivation, satisfaction, commitment, cooperation, retention and absenteeism’. According Guest (2001) HRM activities influence, directly or indirectly, organizational per- formance by creating a workforce that is ‘competent and cooperated, motivated, committed and satisfied’. Zupan and Kase, (2005) suggested labour productiv- ity, generalized and mutual trust in organization, work organization efficiency, relative employee satisfaction (comparisons over time or benchmarking against other companies), absenteeism, learning capabilities and flexibility, relative labour costs and commitment as measures of HR outcomes.
The above background leads to the following hypothesis:
Hypothesis 2: SHRM Practices are positively related with HR Outcomes.
3.3. HR Outcomes and Organisational Performance
The relationship between HR Outcomes and Or- ganizational performance has been the subject of sig- nificant empirical examination ( Katou and Budhwar, 2006; Khatri, 2000; Guest, 2001; Delery and Doty, 1996; Huselid and Becker, 1996; Huselid, 1995; Kal- leberg and Moody , 1994 ). Effective utilization of human resources brings out positive employee out- comes which has direct implication for organizational effectiveness (Rothmann et al, 2002).
According Guest, (2001) HRM activities influence directly or indirectly organizational performance by creating a workforce that is ‘competent and cooper- ated, motivated, committed and satisfied’. In SHRM models, generally company performance is measured by some profit or market-value-related measures. So far, researchers have been more eager to use market- based measures of financial performance because accounting-based profitability indicators seem to be subject to numerous biases (Huselid, 1995; Huselid et al., 1997). In order to test the impact of human resource practices on a company’s performance, Kalleberg and Moody (1994) used eleven variables (Investment payback, Larger dividends, Company capitalization, Financial return, Economic return, Product quality, Increase in market share, Innovation, Strategy success, Customer loyally, Capacity to attract/retain talented personnel )as a subjective performance measure. Based on an extensive literature survey, Katou and Budhwar (2006) covered six variables such as Effectiveness, Efficiency, Development, Satisfaction, Innovation, and Quality to refer organizational performance. Khatri (2000) used two financial indicators (percent- age growth in sales in the last three years and percent- age profit margin in the last three years) and three non financial indicators (public image and goodwill, quality of services and efficiency of operations ) for measuring organizational performance. Chand & Ka- tou (2007) used multiple organisational performance variables (sales growth, productivity, profitability, goal achievement, good services) to measure Organ- isational performance.
Thus, on the basis of the above literature survey, we accepted the following indices as indicator of organizations performance:
- Profit Maximization
- Market Leadership
- Improved Productivity
Hypothesis 3: Organizations performance is strongly related with HRM outcome
The various methods that have been used for the purpose of the study include: the case study method, the survey method and the historical method. The study in this context assumes three forms:
I. Use of available material on various dimensions of Human resource management,
II. Collection of relevant information through inter- views with cross section of management representa- tives and key union leaders and,
III. Eliciting the opinion of sample executive and non executives about the effect of SHRM on the existing HR policies and practices through a questionnaire.
The case study method was used by the researcher for an in-depth analysis of the business strategy and HRM practices adopted by the organization. The sur- vey method was used to understand the inter relation- ship between Business Strategy and SHRM, SHRM and HR Outcome and HR Outcome and Organizational Performance.
The study entailed a good deal of preparation and planning in order to obtain meaningful and reliable data. Broadly, the inquiry progressed through the fol- lowing the phrases.
The personnel department of the plant was of great help at this stage in obtaining the detailed list of dif- ferent categories of employees employed in the plant. At this stage, some preliminary discussions were held with some of the managerial personnel and trade union leaders of the plant.
All the available literature, both published and unpublished, was monitored by the researcher and the same was studied by him to get theoretical grasp of the subject and to attain conceptual clarity.
In this phase the research design was finalized. A formal letter was addressed to all the Heads of Department of the plant, the supervisors and officials of trade unions functioning in RSP for the purpose of the study and seeking their cooperation. It was also assured that the study was academic and strict secrecy and confidentiality of the information supplied would be maintained.
4.1.3. Preparation of tools
An elaborate schedule for collection of relevant in- formation from the management was designed cover- ing such aspects as historical background , manpower position, technology, products, production process, HRM policy and practices in the pre liberalization and post liberalization period, etc.
Another Schedule was prepared for gathering information from the trade union officials regarding such aspects of the unions as origin and growth of the unions, finances, membership, unions’ attitude towards management policies etc.
The information gathered through interviews conducted for Management representatives and Trade unions were compiled and a questionnaire was developed for eliciting the opinion on the effect of Business Strategy on the existing SHRM activities. Before finalization of the questionnaire, pre-testing of the questionnaire was carried out for the qualita- tive investigation. Fifteen percent of the total sample was administered the questionnaire for this purpose. Subsequently, the language was simplified, unneces- sary questions were deleted and counter checks were added in the questionnaire.
The sample comprised employees working in Rourkela steel plant, SAIL. The number of sample respondents selected for the study was 74 in case of executives and 238 in case of non-executives. The respondent were selected from various divisions of the plant (Works division, Project and modernization and services division including Administration and town- ship units) using stratified random sampling method. Care was taken to include workers belonging to various categories: Highly skilled, Skilled, Semi skilled and Unskilled and others. The particulars of the sample are presented in table 1 and table 2. As indicated in the tables, the percentage of samples drawn from the above mentioned categories of employees were 3% in case of executives and 1% in case of non executives.
To measure effectiveness of HRM, We considered the effectiveness of Business Strategy (8 items), SHRM (5 items), HR Outcome (4 items), and Orga- nizational Performance (3 items).
‘Business Strategy’ of the organization is mea- sured by referring to the instruments used by Huang (2001). By using the definition from Dowling and Schuler (1990), Porter (1985), and Schuler and Jackson (1987a), Huang (2001) employed the three competi- tive strategies: cost leadership, innovation, and qual- ity enhancement to design the instrument to measure the Business strategy of a firm. The eight item based instrument was used by the researcher to measure the Business strategy of the sample unit. Responses were made on a scale ranging from 1 (strongly disagree) to 5 (strongly agree).
SHRM practices were measured through an adapted scale derived by Huselid et al. (1997). Huselid et al. (1997) defined SHRM practices was defined as ‘per- ceptions of how well the HRM function developed a organisations employees to support its business needs including facilitating teamwork, communications, and involvement, enhancing quality, and developing talent to serve the business in the future’. The item con- sidered under SHRM practices include: delayering, downsizing, training and development, empowerment and communication. All twelve items were measured on a Likert-type scale ranging from (5) highly satisfied to (1) very dissatisfied. Responses were reversely coded, so higher values indicate higher perceived effectiveness.
For HR Outcome, we referred the instrument used by Katou & Budhwar (2006), Guest, (2001) and Wright and McMahan (1992). HR Outcomes were measured under the philosophy of a perceived rating of HR Outcome by the sample population (Katou & Budhwar, 2006). According Guest (2001), HRM activities influence directly or indirectly organiza- tional performance by creating a workforce that is ‘competent and cooperated, motivated, committed and satisfied’. We accepted the four items suggested by Guest, (2001) to measure HR Outcome. All four items were measured on a Likert-type scale ranging from (5) highly satisfied to (1) very dissatisfied. Responses were reversely coded, so higher values indicate higher perceived effectiveness.
In order to test the impact of human resource practices on a company’s performance, Kalleberg and Moody (1994) used eleven variables as a subjective performance measure. Following this work, execu- tives were asked to provide perceptual performance data via 5-point Likert scales, where 5 represents the highest score in the item. We have adopted the follow- ing three variables for measurement of organizational performance:
- Profit Maximization
- Market Leadership
- Improved Productivity
4.4 Reliability Analysis
The researcher applied an alpha analysis to the re- search variables Business Strategy, SHRM Practices, HR Outcome and Organisational Performance to judge the reliability. The obtained alpha coefficient for the Business Strategy was 0.7149. Alpha coefficients for SHRM activities, HR Outcome and Organisational Performance were 0.7565, 0.7530 and 0.7435 respec- tively. These alpha coefficients indicate data reliability as they meet the minimum acceptable level of 0.70 as advocated by Price (1972). Table 1 reports the obtained results of the reliability analysis.
5. STATISTICAL ANALYSIS AND DISCUSSION
For the purpose of analysis of data, descriptive analysis, correlation analysis and multiple regression analysis were used on a standardized data set using SPSS version 19.0.
Table 2 presents the descriptive statistics and zero-order correlations among variables in the study. As shown in the table, Business Strategy is related to SHRM practices (.581), HR Outcome (.400) and to the Organization performance (.423). SHRM practices are related to HR Outcome(.550) and the Organization per- formance(.375) and Finally, HR Outcome is strongly related with the Organization performance(.368). In all the above cases, the p value for two tailed test of significance is 0.000 which shows strong positive relations between the variables.
Agreeing with the past research (Delery 1998; Baird and Meshoulam , 1988; Liao, 2005; Huang 2001; Ghebregiorgis, and Karsten, 2007), the Busi- ness strategy of SAIL is found strongly related to SHRM practices (.581). Results of regression analysis (Table 3.a.) shows that the R square value is 0.334 and F=105.984(p=0.000). This reveals that 33% of total variance in SHRM is explained by TPM activities. Further, significance of individual regression coeffi- cients was examined to identify whether TPM is sig- nificantly related to the dependent variable (SHRM). As shown in the section labeled “coefficients,” sig- nificant levels for coefficients of SHRM was found to be 0.000. It is concluded that Business strategy had positive and significant effects on SHRM.
This means that Business strategy adopted by SAIL is strongly related with SHRM practices adopted by the company. In other word, the drive for cost leader- ship, innovation, and quality enhancement as Business strategy has played an important role in planning and implementing delayering, rationalization, human resource development, empowerment, and commu- nication as important SHRM areas through which the company leverage in the new era of competition. Supporting this findings, Muduli (2002) wrote “in the context of the new external environment, SAIL has considered HRM Strategy as an integral part of Corporate strategy to achieve the goal of the organiza- tion” . The restructuring package , as approved by the government of India on Februrary 15, 2000 identified HR as an important factor of business restructuring. Over the years, there has been an unwavering focus on the development and management of HR of SAIL, with emphasis on creating a committed workforce (SAIL News, 2002). ‘With the decision to restructure, the fo- cus was on trimming the fat simultaneously increasing efficiencies at all levels. The plant firmly believed that only the collective involvement of the people in this programme can really help the company to turnaround’ (Muduli, 2002). For example, the business strategy of SAIL was supported by the Delayering practices adopted by the company. As part of Delayering, SAIL was able to reduce the existing levels in to 4 clusters. This has helped the organization in speedier disposal of work, greater empowerment for the employees and rationalized work flow. It has further strengthened the inter personal relationships, increased confidence and enhanced Productivity.
SAIL’s Business strategy of Cost competitiveness was achieved through rationalization of manpower. Report says SAIL had a fixed manpower cost amount- ing to almost 22% of its turnover which placed the company at a disadvantage vis a vis its competitors, which incurred manpower costs in the range of 6 to 7% of their turnover on an average. Internationally, leading steel producers employs around 1500 workers to produce one million tons of steel. Going by that standard, SAIL should have employed only 18,000 people in operational areas even while producing a full capacity level of around 12 million tones. With over 1.48 lakh employees on its rolls, SAIL remains with a huge handicap in its efforts to become globally competitive. Further, SAIL intensive drive towards the company’s turnaround and transformation for achiev- ing global competitiveness has necessitated the com- pany to adopt several innovative training programmes.
Agreeing with the earlier findings, SHRM is found strongly related with HR Outcome (.550) (Guest, 2001; Guest and Peccei, 1994; Wright and McMa- han, 1992; Paul and Anantharaman, 2003). Results of regression analysis (Table 3.b.) shows that the R square value is 0.303 and F=90.246 (p=0.000). This reveals that 30% of total variance in HR Outcome is explained by SHRM activities. Further, significance of individual regression coefficients was examined to identify whether SHRM is significantly related to the dependent variable (HR Outcome). As shown in the section labeled “coefficients,” significant levels for coefficients of SHRM was found to be 0.000. It is concluded that SHRM had positive and significant effects on HR Outcome.
This means that if the employees are highly satis- fied with SHRM practices (delayering, rationaliza- tion, human resource development, empowerment, communication and other major policy initiatives), the plant can have a more competent and cooperated, motivated, committed and satisfied workforce. The finding is corroborating with the Message statement from the Chairman, SAIL in 2010 where the chairman recognized that ‘ At the end of the day, SAIL is really about its people—committed, talented, passionate employees who want to create, do something mean- ingful and lasting, realize their full potential, make a positive impact in their area of work. I appreciate your commitment to the company’s successes’.
Agreeing with the previous studies (Katou & Bud- hwar, 2008; Khatri, 2000; Guest, 2001; Delery and Doty, 1996; Huselid and Becker, 1996), HR Outcome of the company is found positively related with the Company Performance (.368). Results of regression analysis (Table 3.c.) shows that the R square value is 0.135 and F=90.246 (p=0.000). This reveals that 13% of total variance in Company Performance is explained by HR Outcome. Further, significance of individual regression coefficients was examined to identify whether HR Outcome is significantly related to the dependent variable (Company Performance). As shown in the section labeled “coefficients,” significant levels for coefficients of HR Outcome was found to be 0.000. It is concluded that HR Outcome had positive and significant effects on Organisational Outcome.
Qualitative data collected from the secondary sources is an evidence to the past research findings that ‘highly competent and cooperated, motivated, committed and satisfied workforce always result in more organization performance’. For example, the manpower productivity in SAIL has shown a constant improvement as a result of a number of such initiatives. Data shows the average labour productivity of the four main plants has risen from 92 ingot tones per man per year in 1995-96 to a level of 226 tonnes per man year in FY ’10, the highest since inception. The McKinsey & Co.’s report is an evidence to the fact that in the recent past RSP had achieved an average of 78% on the Customer Satisfaction Index(CSI) against a target of 80% on the CSI. The audited financial performance for January- March (Q4) of FY ’10 is showing profit after tax (PAT) of Rs 2,085 crore, with a year-on-year improvement of 40%. The company achieved net sales turnover of Rs 11,955 crore during the quarter, as against Rs 11,790 crore in the corresponding period last year (CPLY). SAIL’s Q4 profit before tax (PBT) at Rs 3,067 crore reflected 34% y-o-y growth.
6. LIMITATION AND POINTS FOR FUTURE RESEARCH
Limitations are part and parcel of any kind of re- search work. So, the present study is assumed to be not free from limitations. First limitation that could potentially affect the result of the study is the num- ber of sample units and the sample size. The study confines to only one unit of the company i.e. RSP of SAIL and the sample size is only 312(74 representing executives and 238 from non- executives). As such, the findings may not generalise to all industries in India and abroad. However, as qualitative data and information were also collected from management and union representatives, the study can contribute significantly to understand the relationship between Business strategy and SHRM through a case related to Indian steel industry. Nonetheless, Future research may take a broad sample size on the basis of which the result can be more generalized.
Another limitation is that the data was self reported. The participants may have completed the survey to the best of their knowledge and ability, but the responses may not have been completely accurate. This might have created the potential problem of common method variance in the variables examined. Direct involvement of the researcher in the data collection may result in more accuracy of responses.
Future study may also attempt to examine the inter- active effects of various combinations. For example, the effect of specific business strategy(cost leader- ship, innovation, and quality enhancement) on HRM strategy; the effect of Business and HRM strategies on specific HR outcome, or/and the effect of business and HRM strategies on Organizational performance can be studied by adopting a case study method, specifically in the Indian context.
However, with in the said limitation the study at- tempts its level best to help the readers to understand the relationship between Business strategy and SHRM practices in an Indian context through a case.
The study primarily aimed at understanding the ef- fects of business strategy on SHRM practices through an examination of how (Datta et al., 2005) and why SHRM practices are related to organizational perfor- mance (Collins & Smith, 2006). Thus, attempt was made to understand the relationship between Business strategy and SHRM practices, SHRM practices and HR Outcome and HR Outcome and Organisational Per- formance. To accomplish these objectives, we made an in depth study of HRM practices of Steel Authority of India Ltd, the largest public sector steel making unit of India. Data and information were collected through various quantitative and qualitative methods. We found strong positive relationship among Business strategy, SHRM practices, HR Outcome variables and Organizational performance.
The result illustrates importance of business strategy in planning and implementing SHRM practices. It also agrees that SHRM variables are primarily based on the business strategy adopted by the organiza- tion. Further, the case also supplements the existing literature on SHRM by agreeing to a fact that SHRM practices are designed to achieve some deliberately identified HR outcomes such as commitment, satis- faction, motivation etc. The case is evidence to a fact that these outcome are company specific and may vary from organization to organization depending upon a number of internal and external factors. Further, the paper also witnessed that relevant HR outcome always contributes to the company in the form of better orga- nizational performance.
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DR. ASHUTOSH MUDULI Associate Professor School of Petroleum Management, Pandit Deendayal Petroleum University Gandhinagar, Gujarat,