The Hindu Business Line : Changing HR paradigm in banks

Liberalisation has not only triggered changes in the whole economy, including the banking space, but has also thrown up challenges for banks, in general, and public sector banks, in particular. Whether Human Resource Management (HRM), an important element in the business process evolution, post-liberalisation, has been given a strategic telescopic focus is subject to debate.

The urgent need for organisational transformation, post-liberalisation, basically stems from two important factors — changed business positioning to align with the global players and technology positioning to implement the business positioning. But the most critical element in this exercise is the repositioning of the people in the organisation to effect the changing banking paradigm.

HRD: POST-LIBERALISATION

New generation private banks entered with clear business positioning (investment, retail, and corporate banking) and weaned away, to a certain extent, the cream of experienced and trained human resource in the respective fields from public sector banks (PSBs) and that too in the lower and middle management levels (that constituted the core customer relations human resource).

This resulted in the migration of quality human resource in the technology and functional side of PSBs to the new generation private and foreign banks and to the software companies which set up strategic business units to encash the huge potential in the BFSI (banking, financial service and insurance) space.

Voluntary Retirement Scheme (VRS) in the late 2000 undoubtedly downsized the strength and diluted the quality of HR across all functional spaces, but the PSBs weathered this with excellent growth and profits. But how effectively are the PSBs planning for the future in the HR space?

A look at the age profile of human resource of PSBs is interesting. The average age of the staff, in general, is around 50. In most banks, the age profile of top executives will reveal a residual service of two to four years, the next level three to four years and in junior management cadre, eight to ten years. Mass recruitment in 1974-1980 will be out in the next four-five years. PSBs will witness an exodus of senior personnel in the next five years and the situation could get really alarming.

Technology upgradation as the answer to manage the expanding business is only one part of the story. The level of business explosion will necessitate matching human resource expansion for managing the business transformation. Neglect of this aspect will mean importing top functionaries trans-industry. Hence an urgent case for a holistic HR Plan.

PLAN FOR EMERGING MODELS

An emerging model can be a hybrid of myopic (short term, involving replacements for retirement) and telescopic (long term, involving development and replacement) appraoches.

A sound and futuristic HR policy should recognise the talent within the organisation and design bold initiatives for acquiring fresh resources. The attitude silos among the existing staff about the understanding and conviction of the new business models and their positioning, will be the drivers of success. Some of the suggested initiatives are:

In the junior management cadre, quality is as important as quantity. The attractive opportunities in other sectors leave PSB banks with only mediocre talent. But attrition is a game in any industry and banks have to handle this in a pragmatic way. In this context, myopic human resource planning is the need of the day. PSB banks can look at the following options:

Looking inward and recognising the talent within the bank by framing an HR policy to spot the staff from a specific age-group and promoting them, subject to suitability and eligibility and developing them for the future. This will resu lt in motivation and building commitment and loyalty.

Creating a new sub-junior management cadre for the front office operations and marketing and selecting new resources by loading performance-driven career pushes in the cadre to make it attractive and thus reduce attrition.

The compensation should be innovatively structured matching the performance levels with clearly defined role functions and responsibilities. This model has been successfully implemented by some new generation private sector banks. The level of responsibility and accountability should influence the compensation to act as an exit-barrier.

The changing business lines from a plain vanilla banking solutions to holistic financial and beyond financial solutions provider necessitates a clear understanding of the changing business paradigm. The middle-management resources wit h strong banking background will be the right fit for meeting these challenges. Some action plan suggested in this space are:

A special pool of people from the organisation can be identified and created based on their competencies for new and emerging business opportunities. A residual service of, say, eight to ten years will be the enabler for structuring a position-oriented career path and preparing them for the immediate senior management positions which will open up in the very near future.

From the immediate next batch, with a residual service of, say, ten-15 years, after a competency mapping, eligible human resources have to be identified and an action plan should be drawn to develop them for taking the organisation for ward in the next decade.

This segment is important for keeping the banks afloat in the HR front and has to be taken care of with regard to developing business initiatives skills. This segment will be at the helm of affairs when banks will not only re-enginee r the business models but also get engaged in a host of new business initiatives. Retraining and re-skilling will be the topmost priority for this segment.

To start with, the above two initiatives will definitely bolster the HRM process and a smooth passing of the baton from the existing senior management to the developed and elevated middle management. The process is not a simple number game but a serious initiative which PSB banks should design and implement for a futuristic human resources management.

Some banks may be doing this exercise and would have initiated short- and long-term HR plans but the gravity of the situation in the PSBs needs a HR Vision and Mission Document in tandem with the Business Vision and Mission Document. The PSB managements taking cognisance of the emerging HR paradigm would be the starting point of the whole exercise.

At the cost of reiteration, it is after all human resource that translates corporate objectives into achievements and transforms the organisation. The PSBs must hasten the HR reengineering process and reposition their resources before it is too late.

(The authors are with Indian Overseas Bank, Central Office, Chennai. Their views are personal and can be reached at doctorsethu@gmail.com and jaideosharma@yahoo.com)

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