A human touch

Atmadip Ray

Popular perception has it that if one were to walk into the cavernous interiors of any state-run bank, one can see folks idling away. But that, to an extent, is a thing of the past. Voluntary retirement schemes (VRS) have for one, ensured that passing the buck is not all that easy. Pressure on bottomlines is mounting, there’s work to be done, and skill-sets need to be upgraded.

Enter human resource development: the latest buzzword in the banking fraternity. Most banks are in the process of adopting a comprehensive human resource management (HRM) package or are seriously considering it as a "differentiator." At a time when each bank has a comprehensive plan towards the adoption of the latest in automation, computerisation, inter-bank connectivity, ATMs and more, HRM will be, of all, the more special one in the coming times.

Opines Bank of Baroda’s (BoB) executive director Dr AK Khandelwal: "A time will come when all banks will be more or less equal in strength when it comes to technological-capability. The differentiator will be HRM."

Now take technology. To an extent, this is getting commoditised. But its adoption has not been an easy one. Why? Despite the huge expenditure on information technology, banks are yet to come up with results as employees find themselves all at sea when it comes to comprehending the complexities of finer technology. And this is not all.

"Skills in competing areas should also be developed.... risk management, asset-liability management, foreign exchange dealing, treasury management and corporate credit become important areas in banking operations," says Dr Khandelwal, adding: "HRM is set to become as important as balance-sheet management for banks. The differentiating factor for banks in the future would be the quality of human resources."

The need of the hour is an overall upgradation of human resources and it is imperative that skill-sets of employees are upgraded to meet the future challenges. Better on-job training apart, qualified and responsible staffers could be an imperative in curbing the ever-increasing non-performing assets (NPAs): the nagging menace in the banking circle.

Opines Bank of Maharashtra’s chairman and managing director SC Basu: "The NPA hazard is partly because of lack of managerial skill. Professionalism is needed in bankers approach to reduce bad loans. Unless we look at cleaning the menace of NPAs, the productivity and profitability will be seriously hampered in the coming days. HRM is the core area where banks should now resort upon to enhance skill and entrepreneurship to increase profitability."

What is human resource management (HRM)?

Notes Dr Khandelwal: "It aims at building new competency for model banking, unleashing the potential of employees and rejuvenating existing mechanisms of appraisal, training, promotion system, talent management, leadership development, and succession planning. These call for a professional HR function. We need to bring in HR specialists in banks, or we need to have bankers specialising in the HR job."

Says the All-India Bank Employees’ Association’s (AIBEA) general secretary, Tarakeswar Chakrabarty: "In a service industry, human resources comprise of those who render these services to the society. Hence the scope of HRM in banks is sky-high."

So what is the scene like? Mr Chakrabarty is blunt: "There is hardly any bank with a well thought-out policy and plan for the development of human resources. The so-called human resource department is engaged in finding faults with the staff, penalising them, giving them more work and reducing the man-power in the bank... Human resources, I feel, is the most important area in banks and is most neglected. It is fashionable to speak about HRM but is hardly implemented. If the task is properly defined, it is up to the HRD to find out expertise and skills, incentives and imperatives, so that in a competitive climate one could better the best."

HRD has also caught the fancy of bank-management after they saw an unprecedented exodus of staff through VRS. With reduced numbers, existing staffers have been facing an uphill task in carrying out day-to-day operations. The work load has increased manifold.

"VRS has deprived many banks of skilled people," argues Mr Chakrabarty, "it is high time that experts are drafted into action to develop well thought-out HRD policies taking all categories of employees into confidence and after thorough discussion with them."

After the huge exodus by way of VRS, banks’ prime target is enhancing staff-efficiency. It can be achieved only through infusion of young and technology-savvy professionals at various levels: particularly at field levels. So far, banks have recruited technically-qualified personnel in banks, but very few of them are in direct touch with customers. The outlook of the employees also need to be changed with customer-centric business operations becoming more in vogue. Employees have to interact more with branches and their customers to educate them about the benefits technology carries for them.

State-run banks, in particular, are introducing productivity-based incentive schemes to prop up the performance levels of employees. It is already in vogue in private and foreign banks wherein the standalone business unit model is evident. Remunerations are linked to what you do in that specific area. The once-size fits all package is not in. But package, again, is not everything.

"We do not think that cash and promotions are the only incentives available. Recognition for good work through awards and right placement are some of the incentive forms we have adopted as part of welfare schemes," says State Bank of India (SBI) deputy general manager-HRD Vijay Kulkarni.

"Banks need to develop a comprehensive HRM policy document encompassing actionable philosophy. Among the key challenges before state-run banks is to create smart frontline staff who will be knowledgeable about all the schemes that are offered and have a positive attitude to deliver. This requires very systematic and well-orchestrated efforts", says Dr Khandelwal.

He adds: "Banks need to develop leadership at three levels: branch, regional or zonal, and corporate... Banks should also take up the project of talent management. Each bank should have a core group of people to systematically groom and train people to take up leadership in critical positions. They have to take a look at their existing ways of evaluating performance of key persons and introduce a 360 degree appraisal mechanism, which is appraisal by public relation groups, subordinates and customers."

Most agree that banks have to visibly improve upon their existing systems as only a disciplined work force can deliver results in a competitive environment. Through proper HRM, state-run banks can effectively compete with private banks and foreign banks. Bankers are increasingly becoming aware of the fact that HRM is an area which will critically impact the future of the banking sector.

But the going will prove to be tough for banks as HR alone cannot deliver. A key issue for state-run banks, in particular, is direct recruitments and pay-packets: an intrinsic part of any good deal for employees. It is a period of churn for banks.