A bank's corporate strategy emphasises rapid digital transformation. HR introduces competency-based recruitment, reskilling programmes, agile team structures and rewards linked to digital innovation. However, the finance department continues to allocate most resources according to traditional branch-based metrics, while operations evaluates employees primarily on transaction volume. Which diagnosis is most accurate?

Vertical fit refers to alignment between HR strategy/practices and the organisation's overall business strategy. Here, HR practices support digital transformation, so vertical fit exists. Horizontal fit refers to the internal consistency or complementarity among different HR practices and organisational systems. Here, recruitment, training and rewards promote digital transformation, but finance and operations continue to reinforce traditional behaviours. Thus, internal systems are not aligned. Therefore: Strong vertical fit + weak horizontal fit = A