TRENDS IN BANKING. Lateral recruitment on the rise in public sector banks

Chief Ethics Officer, Chief Marketing Officer, Chief Investment Officer, Chief Learning Officer, Head-Analytics, VP-Marketing…

These are some of the roles and designations that are being offered by public sector banks, seeing which one realises that change is afoot. Public sector banks are increasingly recruiting senior management professionals directly or laterally from the market to handle new roles.

Earlier, they recruited probationary officers who joined in the junior management grade or at the bottom of the corporate ladder and then climbed their way to the top over the next three decades. This was the era of ‘generalists’ —although specialist officers who had expertise in agriculture, legal or accounting would be recruited periodically and they would have their own separate career paths to the top.

It was hoped that the generalists would acquire experience along the way and use the ‘principles of management’ to handle whichever department they were posted to — very akin to how IAS officers get rotated across different enterprises and departments and get a ‘rounded perspective’.

But that is changing. With increasing complexities in banking, new specialisations and requirements have come up.

This has necessitated recruiting staff with relevant experience — that is compelling these banks to look outside.

Some departments have done this even earlier to get cutting edge experience from the private sector — for instance, information technology. Banks, including SBI, have looked to recruit systems analysts, digital analysts, and even chief technology officers on contract basis. That’s been extended a step further now — SBI, Bank of Baroda and Union Bank are in the process of setting up an analytics department in their banks to help analyse their customer base and come up with statistical models and other techniques to improve the sale of their products.

Now, newer roles are being created to recast organisations and their structures and prepare them for a new era. For instance, SBI has recruited a ‘Chief Ethics Officer’ to propagate a culture of ethics and enhance the bank’s brand and reputation.

Similarly, it has recruited a professional for investor relations — to liase with brokerages, rating agencies and monitor their reports, brief the top management, benchmark SBI against competition and facilitate improvement in perception of the bank as being investor friendly. Earlier, this may have been done informally by the CFO as part of his or her many duties.

Other public sector banks have also followed this lead for functions, such as marketing, legal, risk management, ‘learning’, investments, economic research, fraud management, etc. A little over a year ago, under the government’s active encouragement, two public sector banks – Bank of Baroda and Canara Bank — even got their chief executives from the private sector.

Typically, all these appointments are on contractual basis for a period of three years. In some cases, these are extendable by another two years.

While there is the usual line about compensation not being a limiting factor for the right candidate, some posts mention a lumpsum compensation package with a variable component linked to performance.

This is in contrast to regular jobs of a permanent nature where the compensation is structured at different pay scales with periodic hikes at intervals of a few years and other associated perks, such as housing, medical, et al. Some posts, in deference to market realities, carry a package that would be higher than those drawn by MDs in public sector banks.

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