HRM in Private & Public Sector Banks.pdf

7/26/2019 HRM in Private & Public Sector Banks.pdf

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GURU NANAK COLLEGE OF ARTS, SCIENCE & COMMERCE

G.T.B. NAGAR,

SION,

MUMBAI - 400037.

A PROJECT REPORT ON

HUMAN RESOURCE MANAGEMENT IN PUBLIC

AND PRIVATE SECTOR BANKS

IN PARTIAL FULFILLMENT FOR

BACHELOR OF BANKING & INSURANCE

SUBMITED BY

PAVITRA DEVI SOKKALINGAM

ROLL NO. 04

TYBBI (SEMESTERV)

SUBMITTED TO

UNIVERSITY OF MUMBAI

ACADEMIC YEAR

20152016

UNDER THE GUIDANCE

OF

MISS. S.SUDHA


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ACKNOWLEDGEMENT

I would first thanks to Mumbai University for introducing the Bachelor of

Banking & Insurance course. There by giving us a platform to conduct this study

that has helped us to gain practical knowledge about the course.

I would like to extend my thanks to our Principal Dr. Vijay Dabolkar for

their constant efforts to conduct this course smoothly.

I would also like to extend my heartfelt thanks to course coordinator, my

parents, Librarian and friends for their constant support and encouragement

Date:

Place: Mumbai Signature of Student


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DECLARTION

I am Pavitra Devi Sokkalingam the student of Guru Nanak College of Arts,

Science & Commerce studying in T.Y. (Bachelor of Banking & Insurance)

Semester-V. Hereby declare that I have completed this Project on Human

Resources Management in Public and Private Sector Banksin the academic

year 2015-16.

This information submitted is the true & original to the best of my

knowledge.

Date:

Place: Mumbai Signature of Student

(PAVITRA DEVI SOKKALINGAM)


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CERTIFICATE

Guru Nanak College of Arts, Science & Commerce

This is to certify that Pavitra Devi Sokkalingam of T.Y. (Bachelor of Banking and

Insurance) Semester-V (Year 2015-16) has successfully completed the Project on

Human Resources Management in Public and Private Sector Banks under

the guidance of Miss S. Sudha.

Signature of Project Guidance Signature of Principal

Signature of coordinator Signature of External Examiner


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INDEX

Sr.no Topic Page no

1. Introduction to Bank 07

2.

The Structure of Banking System in India 09

3. Functions of Banks 13

4. Introduction to Human Resource Management 21

5. Human Resource Management 24

6. Objectives of Human Resource Management & Nature of

Human Resource Management

26

7. Advantages / benefits / Significance / importance / need of

Human Resource Management

27

8.

Scope of Human Resource Management 29

9. Human Resource Management Practices in Selected Public

and Private Sector Bank

32

10. Human Resource Management in Banks 34

11. Responsibilities of Human Resource Management in Banks 35

12. Current Challenges Faced by Banks in Human Resources

Management

36

13. Challenges Faced by Banking Industry 39

14. Suggestion 45

15.

Human Resource Management in Public and Private Sector

Banks

47


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16. Human Resource Management Practices 48

17. Suggestion 51

18. Human Resource Management in SBI Bank 53

19. Case Study of Human Resource Management in SBI Bank 55

20. Human Resource Management in ICICI Bank 59

21. Case Study of Human Resource Management in ICICI Bank 61

22.

Comparative Analysis 69

23. Suggestions 70

24. Conclusion 73

25. Bibliography and Webliography 74


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Introduction of Bank:

Finance is the life blood of trade, commerce and industry. Now-a-days,

banking sector acts as the backbone of modern business. Development of any

country mainly depends upon the banking system.

The term bank is either derived from old Italian word banca or from a

French word banqueboth mean a Benchor moneyexchangetable.In olden days,

European money lenders or money changers used to display coins of different

countries in big heaps (quantity) on benches or tables for the purpose of lending or

exchanging.

A bank is a financial institution which deals with deposits and advances

and other related services. It receives money from those who want to save in the

form of deposits and it lends money to those who need it.

Characteristics / Features of a Bank:

Dealing in Money:

Bank is a financial institution which deals with other peoples money i.e.

money given by depositors.

Individual / Firm / Company:

A Bank may be a person, firm or a company. A banking company means a

company which is in the business of banking.

Acceptance of Deposit:

A bank accepts money from the people in the form of deposits which are

usually repayable on demand or after the expiry of a fixed period. It gives safety

to the deposits of its customers. It also acts as custodians of funds of its

customers.

Giving advances:

A bank lends out money in the form of loans for those who require it for

different purposes.


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Payment and Withdrawal:

A bank provides easy payment and withdrawal facility to its customers in the

form of cheques and drafts. It also brings bank money in circulation. This

money is in the form of cheques, drafts, etc.

Agency and Utility Services:

A bank provides various banking facilities to its customers. They include

general utility services and agency services.

Profit and Service Orientation:

A bank is a profit seeking institution having service oriented approach.

Ever increasing Functions:

Banking is an evolutionary concept. There is a continuous expansion and

diversification as regards the functions, services and activities of a bank.

Connecting Link:

A bank acts as a connecting link between borrowers and lenders of money.

Banks collect money from those who have surplus money and give the same to

those who are in need of money.

Banking Business:

A banks main activity should be to do business of banking which should

not be subsidiary to any other business.

Name Identity:

A bank should always add the word bank to its name to enable people

to know that it is a bank and that it is dealing in money.

Electronic banking and E-banking:

Electronic banking is offering improved services to the customers are as

follows:

ATM Cards

Credit Cards

Electronic transfer of money


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THE STRUCTURE OF BANKING SYSTEM IN INDIA AND OTHER

DETAILS ( WITH DIAGRAMS )

The structure of banking system in India is significantly different from other

countries. It can be classified as given below:

1. Reserve Bank of India:

Reserve bank of India is the Central Bank of our country. It was established on

1st April 1935 under the RBI Act of 1934. It holds the apex position in the

banking structure. RBI performs various developmental and promotional

functions. It has given wide powers to supervise and control the banking

structure. It occupies the pivotal position in the monetary and banking structure

of the country. In many countries central bank is known by different names.


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For example, Federal Reserve Bank of U.S.A, Bank of England in U.K, and

Reserve Bank of India in India, Central bank is known as a bankers bank. They

have the authority to formulate and implement monetary and credit policies. It

is owned by the government of a country and has the monopoly power of

issuing notes.

2.

Commercial Banks:

Commercial bank is an institution that accepts deposit, makes business loans

and offer related services to various like accepting deposits and lending loans

and advances to general customers and business man.

These institutions run to make profit. They cater to the financial requirements of

industries and various sectors like agriculture, rural development, etc. it is a

profit making institution owned by government or private of both.

Commercial bank includes public sector, private sector, foreign banks and

regional rural banks:

a. Public sector banks:

It includes SBI, seven (7) associate banks and nineteen (19) nationalized

banks. Altogether there are 27 public sector banks. The public sector accounts for90 percent of total banking business in India and State Bank of India is the largest

commercial bank in terms of volume of all commercial banks.

b. Private sector banks:

Private sector banks are those whose equity is held by private shareholders.

For example, ICICI, HDFC etc. Private sector bank plays a major role in the

development of Indian banking industry.

c. Foreign Banks:

Foreign banks are those banks, which have their head offices abroad. CITI

bank, HSBC, Standard Chartered etc. are the examples of foreign bank in India.


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d. Regional Rural Bank (RRB):

These are state sponsored regional rural oriented banks. They provide credit

for agricultural and rural development. The main objective of RRB is to develop

rural economy. Their borrowers include small and marginal farmers, agricultural

labourers, artisans etc. NABARD holds the apex position in the agricultural and

rural development.

3. Co-operative Bank:

Co-operative bank was set up by passing a co-operative act in 1904. They

are organized and managed on the principal of co-operation and mutual help. The

main objective of co-operative bank is to provide rural credit.

The cooperative banks in India play an important role even today in rural co-

operative financing. The enactment of Co-operative Credit Societies Act, 1904,

however, gave the real impetus to the movement. The Cooperative Credit Societies

Act, 1904 was amended in 1912, with a view to broad basing it to enable

organization of non-credit societies.

Three tier structures exist in the cooperative banking:

i. State cooperative bank at the apex level.

ii. Central cooperative banks at the district level.

iii. Primary cooperative banks and the base or local level.

4. Scheduled and Non-Scheduled banks:

A bank is said to be a scheduled bank when it has a paid up capital and

reserves as per the prescription of RBI and included in the second schedule of RBI

Act 1934. Non-scheduled bank are those commercial banks, which are not

included in the second schedule of RBI Act 1934.

5. Development banks and other financial institutions:

A development bank is a financial institution, which provides a long term

funds to the industries for development purpose. This organization includes banks

like IDBI, ICICI, IFCI etc. State level institutions like SFCs SIDCs etc. It also

includes investment institutions like UTI, LIC, and GIC etc.


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Commercial banks:

Banks are those institutions which conduct the business purely on profit

motive. Banks receive surplus money from the people who are not using it and

lend to those who need it for productive purpose. When we speak of a bank, we

generally mean a commercial bank. Commercial banks are those institutions

which conduct the business purely on profit motive. Commercial banks receive

surplus money from the people who are not using it and lend to those who need it

for productive purpose.

A commercial bank is a dealer in short and medium-term credit. It borrowsmoney from a group of people at a lower rate of interest and lends to the other

group of people at some higher rate of interest. The difference between the two

rates of interest is the profit of the bank.

1. Definition Of A Commercial Bank:

Some important definitions of commercial bank are given below.

1.1. Professor G. Crowther:

"A bank is a firm which collects money from those who have it spare. It lends to

those who require it."

1.2. Professor Parking:

"A bank is a firm that takes deposits from households and firms and makes loans to

other household and firms.


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FUNCTIONS OF BANKS - IMPORTANT BANKING FUNCTIONS AND

SERVICES

What are the Functions of Banks? Diagram : The functions of banks are

briefly highlighted in following Diagram or Chart.

These functions of banks are explained in following paragraphs of this article.

A. Primary Functions of Banks:

The primary functions of a bank are also known as banking functions. They are the

main functions of a bank.

These primary functions of banks are explained below.

1. Accepting Deposits:

The bank collects deposits from the public. These deposits can be of

different types, such as:-

a. Saving Deposits

b. Fixed Deposits

c. Current Deposits

d.

Recurring Deposits


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a. Saving Deposits:

This type of deposits encourages saving habit among the public. The rate of

interest is low. At present it is about 4% p.a. Withdrawals of deposits are allowed

subject to certain restrictions. This account is suitable to salary and wage earners.

This account can be opened in single name or in joint names.

b. Fixed Deposits:

Lump sum amount is deposited at one time for a specific period. Higher rate

of interest is paid, which varies with the period of deposit. Withdrawals are not

allowed before the expiry of the period. Those who have surplus funds go for fixed

deposit.

c. Current Deposits:

This type of account is operated by businessmen. Withdrawals are freely

allowed. No interest is paid. In fact, there are service charges. The account holders

can get the benefit of overdraft facility.

d. Recurring Deposits:

This type of account is operated by salaried persons and petty traders. A

certain sum of money is periodically deposited into the bank. Withdrawals are

permitted only after the expiry of certain period. A higher rate of interest is paid.


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2. Granting of Loans and Advances:

The bank advances loans to the business community and other members of

the public. The rate charged is higher than what it pays on deposits. The difference

in the interest rates (lending rate and the deposit rate) is its profit.

The types of bank loans and advances are:-

a. Overdraft

b. Cash Credits

c. Loans

d. Discounting of Bill of Exchange

a. Overdraft:

These types of advances are given to current account holders. No separate

account is maintained. All entries are made in the current account. A certainamount is sanctioned as overdraft which can be withdrawn within a certain period

of time say three months or so. Interest is charged on actual amount withdrawn. An

overdraft facility is granted against a collateral security. It is sanctioned to

businessman and firms.

b. Cash Credits:

The client is allowed cash credit upto a specific limit fixed in advance. It can

be given to current account holders as well as to others who do not have an account

with bank. Separate cash credit account is maintained. Interest is charged on the

amount withdrawn in excess of limit. The cash credit is given against the security

of tangible assets and / or guarantees. The advance is given for a longer period anda larger amount of loan is sanctioned than that of overdraft.


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c. Loans:

It is normally for short term say a period of one year or medium term say a

period of five years. Now-a-days, banks do lend money for long term. Repayment

of money can be in the form of installments spread over a period of time or in a

lumpsum amount. Interest is charged on the actual amount sanctioned, whether

withdrawn or not. The rate of interest may be slightly lower than what is charged

on overdrafts and cash credits. Loans are normally secured against tangible assets

of the company.

d. Discounting of bill of exchange:

The bank can advance money by discounting or by purchasing bills of

exchange both domestic and foreign bills. The bank pays the bill amount to the

drawer or the beneficiary of the bill by deducting usual discount charges. On

maturity, the bill is presented to the drawee or acceptor of the bill and the amount

is collected.


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B. Secondary Functions of Banks:

The bank performs a number of secondary functions, also called as non-

banking functions.

These important secondary functions of banks are explained below.

1. Agency Functions:

The bank acts as an agent of its customers. The bank performs a number of

agency functions which includes:-

a. Transfer of Funds

b. Collection of Cheques

c. Periodic Payments

d. Portfolio Management

e. Periodic Collections

f. Other Agency Functions

a. Transfer of Funds:

The bank transfer funds from one branch to another or from one place to

another.

b. Collection of Cheques:

The bank collects the money of the cheques through clearing section of its

customers. The bank also collects money of the bills of exchange.

c. Periodic Payments:

On standing instructions of the client, the bank makes periodic payments in

respect of electricity bills, rent, etc.


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d. Portfolio Management:

The bank also undertakes to purchase and sell the shares and debentures on

behalf of the clients and accordingly debits or credits the account. This facility is

called portfolio management.

e. Periodic Collections:

The bank collects salary, pension, dividend and such other periodic

collections on behalf of the client.

f. Other Agency Functions:

They act as trustees, executors, advisers and administrators on behalf of its

clients. They act as representatives of clients to deal with other banks and

institutions.


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2. General Utility Functions:

The bank also performs general utility functions, such as:-

a.

Issue of Drafts, Letter of Credits, etc.

b. Locker Facility

c. Underwriting of Shares

d. Dealing in Foreign Exchange

e. Project Reports

f. Social Welfare Programmes

g.

Other Utility Functions

a. Issue of Drafts and Letter of Credits:

Banks issue drafts for transferring money from one place to another. It also

issues letter of credit, especially in case of, import trade. It also issues travelers

cheques.

b. Locker Facility:

The bank provides a locker facility for the safe custody of valuable

documents, gold ornaments and other valuables.

c. Underwriting of Shares:

The bank underwrites shares and debentures through its merchant banking

division.

d. Dealing in Foreign Exchange:

The commercial banks are allowed by RBI to deal in foreign exchange.


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e. Project Reports:

The bank may also undertake to prepare project reports on behalf of its

clients.

f. Social Welfare Programmes:

It undertakes social welfare programmes, such as adult literacy programmes,

public welfare campaigns, etc.

g. Other Utility Functions:

It acts as a referee to financial standing of customers. It collects

creditworthiness information about clients of its customers. It provides market

information to its customers, etc. It provides travellers cheque facility.


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INTRODUCTION OF HUMAN RESOURCE MANAGEMENT:

Human resource management(HRM or simply HR) is a function in

organizations designed to maximizeemployee performance in service of an

employer'sstrategic objectives.HR is primarily concerned with the management of

people within organizations, focusing onpolicies and onsystems.HR departments

and units in organizations typically undertake a number of activities, including

employeerecruitment, "training and development",performance appraisal, and

rewarding (e.g., managing pay and benefit systems). HR also concerns itself

withindustrial relations, that is, the balancing of organizational practices with

requirements arising from collective bargaining and from governmental laws. HR

is a product of thehuman relations movement of the early 20th century, when

researchers began documenting ways of creatingbusiness value through

thestrategic management of the workforce. The function was initially dominated

by transactional work, such aspayroll andbenefits administration, but due

toglobalization, company consolidation, technological advances, and further

research, HR as of 2015 focuses on strategic initiatives likemergers and

acquisitions,talent management,succession planning,industrial andlabor

relations,anddiversity andinclusion.

Instartup companies,trained professionals may perform HR duties. In larger

companies, an entire functional group is typically dedicated to the discipline, with

staff specializing in various HR tasks andfunctional leadership engaging in

strategic decision-making across thebusiness. To train practitioners for the

profession, institutions of higher education, professional associations, and

companies themselves have established programs of study dedicated explicitly to

the duties of the function. Academic and practitioner organizations likewise seek to

engage and further the field of HR, as evidenced by several field-specific

publications. HR is also a field of research study that is popular within the fields of

management andindustrial/organizational psychology, with research articlesappearing in a number of academic journals, including those mentioned later in this

article.

In the current global work environment, most companies focus on

loweringemployee turnover and on retaining the talent and knowledge held by

their workforce. New hiring not only entails a high cost but also increases the risk

of a newcomer not being able to replace the person who worked in a position
https://en.wikipedia.org/wiki/Employee_performance_managementhttps://en.wikipedia.org/w/index.php?title=Strategic_objective&action=edit&redlink=1https://en.wikipedia.org/wiki/Policyhttps://en.wikipedia.org/wiki/Systemhttps://en.wikipedia.org/wiki/Recruitmenthttps://en.wikipedia.org/wiki/Training_and_developmenthttps://en.wikipedia.org/wiki/Performance_appraisalhttps://en.wikipedia.org/wiki/Industrial_relationshttps://en.wikipedia.org/wiki/Human_relations_movementhttps://en.wikipedia.org/wiki/Business_valuehttps://en.wikipedia.org/wiki/Strategic_managementhttps://en.wikipedia.org/wiki/Payrollhttps://en.wikipedia.org/wiki/Employee_benefitshttps://en.wikipedia.org/wiki/Globalizationhttps://en.wikipedia.org/wiki/Mergers_and_acquisitionshttps://en.wikipedia.org/wiki/Mergers_and_acquisitionshttps://en.wikipedia.org/wiki/Talent_managementhttps://en.wikipedia.org/wiki/Succession_planninghttps://en.wikipedia.org/wiki/Industrial_relationshttps://en.wikipedia.org/wiki/Labor_relationshttps://en.wikipedia.org/wiki/Labor_relationshttps://en.wikipedia.org/wiki/Multiculturalismhttps://en.wikipedia.org/wiki/Inclusion_(value_and_practice)https://en.wikipedia.org/wiki/Startup_companyhttps://en.wikipedia.org/w/index.php?title=Functional_leadership&action=edit&redlink=1https://en.wikipedia.org/wiki/Businesshttps://en.wikipedia.org/wiki/Industrial/organizational_psychologyhttps://en.wikipedia.org/wiki/Employee_turnoverhttps://en.wikipedia.org/wiki/Employee_turnoverhttps://en.wikipedia.org/wiki/Industrial/organizational_psychologyhttps://en.wikipedia.org/wiki/Businesshttps://en.wikipedia.org/w/index.php?title=Functional_leadership&action=edit&redlink=1https://en.wikipedia.org/wiki/Startup_companyhttps://en.wikipedia.org/wiki/Inclusion_(value_and_practice)https://en.wikipedia.org/wiki/Multiculturalismhttps://en.wikipedia.org/wiki/Labor_relationshttps://en.wikipedia.org/wiki/Labor_relationshttps://en.wikipedia.org/wiki/Industrial_relationshttps://en.wikipedia.org/wiki/Succession_planninghttps://en.wikipedia.org/wiki/Talent_managementhttps://en.wikipedia.org/wiki/Mergers_and_acquisitionshttps://en.wikipedia.org/wiki/Mergers_and_acquisitionshttps://en.wikipedia.org/wiki/Globalizationhttps://en.wikipedia.org/wiki/Employee_benefitshttps://en.wikipedia.org/wiki/Payrollhttps://en.wikipedia.org/wiki/Strategic_managementhttps://en.wikipedia.org/wiki/Business_valuehttps://en.wikipedia.org/wiki/Human_relations_movementhttps://en.wikipedia.org/wiki/Industrial_relationshttps://en.wikipedia.org/wiki/Performance_appraisalhttps://en.wikipedia.org/wiki/Training_and_developmenthttps://en.wikipedia.org/wiki/Recruitmenthttps://en.wikipedia.org/wiki/Systemhttps://en.wikipedia.org/wiki/Policyhttps://en.wikipedia.org/w/index.php?title=Strategic_objective&action=edit&redlink=1https://en.wikipedia.org/wiki/Employee_performance_management


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before. HR departments strive to offer benefits that will appeal to workers, thus

reducing the risk of losing corporate knowledge.

Meaning:

Human Resource Managementis the process of recruitment, selection of

employee, providing proper orientation and induction, providing proper training

and the developing skills, assessment of employee (performance of appraisal),

providing proper compensation and benefits, motivating, maintaining proper

relations with labour and with trade unions, maintaining employees safety,

welfare and health by complying with labour laws of concern state or country.

Why name human resource management?

Human:refer to the skilled workforce in the organization.

Resource: refer to limited availability or scarce.

Management: refer to maximize or proper utilization and make best use of

limited and a scarce resource.

Altogether, human resource management is the process of proper and maximize

utilization of available limited skilled workforce. The core purpose of the human

resource management is to make efficient use of existing human resource in the

organization. The Best example at present situation is, construction industry has

been facing serious shortage of skilled workforce. It is expected to triple in the next

decade from the present 30 per cent, will negatively impact the overall productivity

of the sector, warn industry experts.

Every organizations desire is to have skilled and competent people to make their

organization more effective than their competitors. Humans are very important

assets for the organization rather than land and buildings, without employees

(humans) no activity in the organization can be done. Machines are meant to

produce more goods with good quality but they should get operated by the human

only.


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"You must treat your employees with respect and dignity because in the most

automated factory in the world, you need the power of human mind. That is what

brings in innovation. If you want high quality minds to work for you, then you

must protect the respect and dignity. "

---Mr. N.R. Narayana Murthy, Chairman Emeritus,Infosys Ltd >>.

Our progress as a nation can be no swifter than our progress in education. The

human mind is our fundamental resource. - John F. Kennedy.

Great Quotations:

The greatest tragedy in America is not the destruction of our natural resources,

though that tragedy is great. The truly great tragedy is the destruction of our human

resources by our failure to fully utilize our abilities, which means that most men

and women go to their graves with their music still in them. - Oliver Wendell

Holmes.

The human mind is our fundamental resource. - John F. Kennedy.
http://www.infosys.com/http://www.infosys.com/http://www.infosys.com/


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HUMAN RESOURCE MANAGEMENT:

For any organization to function effectively, it must have resource of men

(Human Resource), money, materials and machinery. The resources by themselves

cannot fulfill the objectives of an organization, they need to be collected,

coordinated and utilized through human resources. And, the effective management

of human resources is also vital. Hence, Human Resource Management (HRM) has

emerged as a major function in organizations. Human Resource Management is the

organizational function that deals with issues related to people such

ascompensation, hiring,performance management, organization

development,safety, wellness, benefits,employee motivation, communication,

administration, and training.

The administrative discipline of hiring and developing employees so that

they become more valuable to the organization.

Human Resource management includes:

1.

Conductingjob analyses,2. Planning personnel needs, andrecruitment,

3. Selecting the right people for the job,

4. Orienting andtraining,

5. Determining andmanaging wages and salaries,

6. Providing benefits and incentives,

7. Appraising performance,

8. Resolving disputes,

9. Communicating with all employees at all levels. Formerly called personnel

management.

10.Maintaining awareness of and compliance with local, state and federal labor

laws.

11.These are also called as functions of human resource management for the

purpose of effect you utilization of human resource.

The ten "Cs" of human resources management are: cost effectiveness,

competitive, coherence, credibility, communication, creativity, competitive

advantage, competence, change, and commitment. The ten "Cs" framework was
http://www.whatishumanresource.com/compensation-managementhttp://www.whatishumanresource.com/performance-appraisalhttp://www.whatishumanresource.com/healthy--safetyhttp://www.whatishumanresource.com/employee-motivation-introductionhttp://www.whatishumanresource.com/job-analysis-1http://www.whatishumanresource.com/recruitmenthttp://www.whatishumanresource.com/pre-employment-testshttp://www.whatishumanresource.com/orientation-of-employeehttp://www.whatishumanresource.com/Employee-Training-Introductionhttp://www.whatishumanresource.com/compensation-managementhttp://www.whatishumanresource.com/employee-benefits-introductionhttp://www.whatishumanresource.com/performance-appraisalhttp://www.whatishumanresource.com/performance-appraisalhttp://www.whatishumanresource.com/employee-benefits-introductionhttp://www.whatishumanresource.com/compensation-managementhttp://www.whatishumanresource.com/Employee-Training-Introductionhttp://www.whatishumanresource.com/orientation-of-employeehttp://www.whatishumanresource.com/pre-employment-testshttp://www.whatishumanresource.com/recruitmenthttp://www.whatishumanresource.com/job-analysis-1http://www.whatishumanresource.com/employee-motivation-introductionhttp://www.whatishumanresource.com/healthy--safetyhttp://www.whatishumanresource.com/performance-appraisalhttp://www.whatishumanresource.com/compensation-management


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developed by Alan Price in his book "Human Resource Management in a Business

Context".

The HR Directoris a top-level manager responsible for the administration

of all human resource activities and policies. The director oversees compensation,

benefits, staffing, affirmative action, employee relations, health and safety, and

training/development functions. They also supervise professional human resources

staff.

Definitions:

Many great scholars had defined human resource management in different ways

and with different words, but the core meaning of the human resource

management deals with how to manage people or employees in the

organization.

Edwin Flippodefines - HRM as planning, organizing, directing,

controlling of procurement, development, compensation, integration,

maintenance and separation of human resources to the end that individual,

organizational and social objectives are achieved.

The National Institute of Personal Management(NIPM) of India has

defined human resources personal management as that part of management

which is concerned with people at work and with their relationship within an

enterprise. Its aim is to bring together and develop into an effective organization

of the men and women who make up enterprise and having regard for the well

being of the individuals and of working groups, to enable them to make their

best contribution to its success.

According toDecenzo and Robbins, HRM is concer

ned with the people

dimension in management. Since every organization is made up of people,

acquiring their services, developing their skills, motivating them to higher

levels of performance and ensuring that they continue to maintain their

commitment to the organization is essential to achieve organsational objectives.

This is true, regardless of the type of organization government, business,

education, health or social action.


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OBJECTIVES OF HUMAN RESOURCE MANAGEMENT:

1. Societal objective: To be socially responsible to the needs and challenges of

society while minimizing the negative impact of such demands upon the

organization. The failure of organizations to use their resources for society's

benefit may result in restrictions. For example, societies may pass laws that

limit human resource decisions.

2. Organizational objective: To recognize that HRM exists to contribute to

organizational effectiveness. HRM is not an end in itself; it is only a means to

assist the organization with its primary objectives. Simply stated, the

department exists to serve the rest of the organization.

3. Functional objective: To maintain the department's contribution at a level

appropriate to the organizations needs. Resources are wasted when HRM is

more or less sophisticated than the organization demands. A department's level

of service must be appropriate for the organization it serves.

4. Personal objective: To assist employees in achieving their personal goals, at

least insofar as these goals enhance the individual's contribution to the

organization. Personal objectives of employees must be met if workers are to be

maintained, retained and motivated. Otherwise, employee performance and

satisfaction may decline, and employees may leave the organization.

NATURE OF HUMAN RESOURCE MANAGEMENT:

Human Resource Management involves management functions like

planning, organizing, directing and controlling

It involves procurement, development, maintenance of human resource.

It helps to achieve individual, organizational and social objectives.

Human Resource Management is a multidisciplinary subject. It includes the

study of management, psychology, communication, economics and sociology.

It involves team spirit and team work.

It is a continuous process.


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ADVANTAGES / BENEFITS / SIGNIFICANCE / IMPORTANCE /

NEED OF HUMAN RESOURCE MANAGEMENT:

I emphasize this - no matter how good or successful you are or how clever or

crafty, your business and its future are in the hands of the people you hire.

--- Akio Morita (Late) (Businessman and co-founder of Sony Corporation. Japan)

Ref: The Book: MADE IN JAPAN. Page.No.145

Human Resource Management becomes significant for business organization

due to the following reasons.

Objective: Human Resource Management helps a company to achieve its

objective from time to time by creating a positive attitude among workers.

Reducing wastage and making maximum use of resources etc.

Facilitates professional growth: Due to proper Human Resource policies

employees are trained well and this makes them ready for futurepromotions.

Their talent can be utilized not only in the company in which they are currently

working but also in other companies which the employees may join in the

future.

Better relations between union and management: Healthy Human Resource

Management practices can help the organization to maintain co-ordinal

relationship with the unions. Union members start realizing that the company is

also interested in the workers and will not go against them therefore chances ofgoing onstrike are greatly reduced.

Helps an individual to work in a team/group: Effective Human Resource

practices teach individuals team work and adjustment. The individuals are now

very comfortable while working in team thusteam work improves.
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Identifies person for the future: Since employees are constantly trained, they

are ready to meet the job requirements. The company is also able to identify

potential employees who can be promoted in the future for the top level jobs.

Thus one of the advantages of HRM is preparing people for the future.

Allocating the jobs to the right person: If

properrecruitment andselection methods are followed, the company will be

able to select the right people for the right job. When this happens the numberof people leaving the job will reduce as the will be satisfied with their job

leading to decrease inlabour turnover.
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SCOPE OF HUMAN RESOURCE MANAGEMENT

The scope of Human Resource Management refers to all the activities that

come under the banner of Human Resource Management. These activities are as

follows.

Human resources planning:Human resource planning or Human Resource

Planning refers to a process by which the company to identify the number of

jobs vacant, whether the company has excess staff or shortage of staff and to

deal with this excess or shortage.
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Job analysis design: Another important area of Human Resource

Management isjob analysis.Job analysis gives a detailed explanation about

each and every job in the company.

Recruitment and selection: Based on information collected from job

analysis the company prepares advertisements and publishes them in the

newspapers. This isrecruitment.A number of applications are received after

the advertisement is published, interviews are conducted and the right

employee is selected thus recruitment andselection are yet another important

area of Human Resource Management.

Orientation and induction: Once the employees have been selected

aninduction ororientation program is conducted. This is another important

area of Human Resource Management. The employees are informed about

the background of the company, explain about the organizational culture and

values and work ethics and introduce to the other employees.

Training and development: Every employee goes undertraining

program which helps him to put up a better performance on the job. Training

program is also conducted for existing staff that have a lot of experience.

This is called refresher training. Training and development is one area where

the company spends a huge amount.

Performance appraisal: Once the employee has put in around 1 year of

service,performance appraisal is conducted that is the Human Resource

department checks the performance of the employee. Based on these

appraisal future promotions, incentives, increments in salary are decided.

Compensation planning and remuneration: There are various rules

regardingcompensation and other benefits. It is the job of the Human

Resource department to look into remuneration and compensation planning.
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Motivation, welfare, health and safety: Motivationbecomes important to

sustain the number of employees in the company. It is the job of the Human

Resource department to look into the different methods of motivation. Apart

from this certainhealth and safety regulations have to be followed for

thebenefits of the employees.This is also handled by the HR department.

Industrial relations: Another important area of Human Resource

Management is maintaining co-ordinal relations with the union members.

This will help the organization to preventstrikeslockouts and ensure smooth

working in the company.

The Human Resource Officeris responsible for providing support in the various

human resource functions, which include recruitment, staffing, training and

development, performance monitoring and employee counseling.
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HUMAN RESOURCE MANAGEMENT PRACTICES IN SELECTED

PUBLIC AND PRIVATE SECTOR BANKS

I. INTRODUCTION:

The study of human resource management practice has been an important and

critical area in management and organizational performance from last several years

especially in the banking industry. Influence of Human Resource Management

practices on organizational performance has been an important area of research in

past 25 years indicating positive relationship between HR practices and

organizational performance. Human resource management (HRM) practices are

being increasingly treated as dependent rather than independent variables in the

olden days, management gurus and researchers were involved in exploring how

HRM practices affected employee performance, and overall bank performance.

The banking industry, one of the major segments of the financial system plays a

crucial role in the economic and social development of a country. A strong and

healthy Banking system is indispensable in a modern society as a financial

intermediary and occupies a uniqueposition in a nations economy. Indian banking

sector has been passing through different phases such as pre-nationalization, post-

nationalization and post liberalization phase.

II. PUBLIC SECTOR BANKS:

Public sector banks are those banks that are owned by the government. The

government owns these banks. In India 20 banks were nationalized in 1969 and

1980 respectively. Social welfare is there main objective of these banks. They are

divided into two groups i.e. Nationalized Banks and State Bank of India and its

associates. Among them, there are 19 nationalized banks and 8 State Bank of India

associates. Public Sector Banks dominate deposits and advances in the banking

industry. Public Sector banks dominate the commercial banking scenario in India.

These public sector banks can be further classified into:

1) State Bank of India

2) Nationalized banks

3) Regional Rural Banks


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III. PRIVATE SECTOR BANKS:

These banks are those banks that are owned and run by private sector. An

individual has control over these banks in proportion to the shares of the banks

held by him. Private sector banks came into existence to supplement the

performance of Public sector banks and serve the needs of the economy better. As

the public sector banks were merely in the hands of the government, banks had no

incentive to make profits and improve the financial. The main difference is only

that public sector banks follow the RBI Interest rules strictly but private sector

banks can effect some changes but only after approval from the RBI!

IV. WHY HUMAN RESOURCE MANAGEMENT IS IMPORTANT FOR

BANKS:

Human Resource Management is important for banks because banking is a service

industry. Management of people and risk are two key challenges faced by banks.

Efficient risk management may not be possible without efficient and skilled

manpower. Banking has been and will always be a People Business. Though

pricing is important, there may be other valid reasons why people select and stay

with a particular bank. Banks must try to distinguish themselves by creating their

own niches or images, especially in transparent situations with a high level of

competitiveness.

In coming times, the very survival of the banks would depend on customer

satisfaction. Values need to be emphasized through concrete actions on the ground

and it would be the banks human resource that would deliver this.


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HUMAN RESOURCE MANAGEMENT IN BANKS

The Classification of the Indian Banks into broad groups such as public sector, old

private sector, new private sector, foreign, regional rural banks and cooperatives

are largely on the basis of ownership pattern. It is also well known that the

business mix, delivery channels and IT strategies of these organizations vary

substantially. What is little known but of greater importance is that each of these

banks follows very distinct HR practices which have contributed, substantially, to

the business processes.

HUMAN RESOURCE MANAGEMENT IN PUBLIC SECTOR BANKS

In the recent times, the contours of HR function in public sector banks are slowly

but definitely changing. One could say that these banks are discovering the HR

function and it is hoped that these banks will fast catch up with others. It may be

recalled that, in a controlled environment and to meet with the rapid branch

expansion since 70s- Public Sector Banks (PSBs) have adopted HRM practices

similar to that of Government departments. Herein HRM did not have a direct role

in business development but was more concerned with centralized recruitment to

staff and providing them across the country.

HUMAN RESOURCE MANAGEMENT IN PRIVATE SECTOR BANKS

The HR function has practiced by private banks is effectively involved in the

identification of specific skills that each job warrants and recruiting suitable staff

by every way possible. In these banks, recruitment is a continuous process with a

strong focus on getting the right person for the right job by offering appropriate

compensation, incentives and designation. There is a great energy spent in keeping

the turnover low and offering appropriate training inputs. Possibly there are as

many pay structures as there are employees. More importantly, HRM has a role in

monitoring and mentoring the employee. There are no routine transfers. Rather

people are recruited in different geographical locations and different levels.

Technology has helped in centralizing the back office and other functions such that

service can be provided from a distance. These institutions adopt a proactive

performance appraisal system but still short of 360 Degree appraisals. Their

training process is concerned with both skill building and motivating. It should,

however be said that the demand for professionals on account of growth of Indian

Business is such that the efforts of HRM have not helped it from completely

staving off staff turnover in the ranks.


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RESPONSIBILITIES OF THE HUMAN RESOURCE MANGEMENT

DEPARTMENT IN BANKS

Role:

The role of the Human Resource Department is to create the climate and

conditions in which management throughout the Bank will be enabled to

optimize the individual and collective contributions of all employees to the

short and long term success of the Bank.

Responsibilities:

To be the principal sponsor & guardian of HR policies in the Bank.

To propose and obtain agreement on changes to these policies which have been

agreed are being implemented throughout the Bank.

To contribute fully to the task of meeting the business challenges which the

bank has to face by supporting Branch / Unit Managers in continuously

developing the potential of employees and in creating conditions in which all

the employees are motivated to meet the objectives of the Bank.

To continuously monitor the Banks strategies to ensure that HR policies are

appropriate and that employees numbers and skills are fully supportive of such

strategies.

To deliver a full range of personnel services in support of line management.

These services include manpower planning, recruitment/transfer, remuneration,

training and employee welfare.

To support line management in their day-to-day management of the workforce

by providing advice and consultancy on personnel and performance

management issues.


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CURRENT CHALLENGES FACED BY BANKS IN HUMAN

RESOURCE MANAGEMENT

Effective work force:

A time-consuming and hectic job is to hunt the right talent. Higher the

professional value of the vacancy, tougher is the search. Identifying the right

stuff followed by negotiation is the element which makes the job tough for the

employee. Banks are keenly interested to fill up two types of breeds of

professionals.

Ones who are outstanding professionals with high job hopping attitude--- these

are those who come-in-work for some time and then leave for better prospects.

Others are those who are keenly picked-up, trained and area somehow retained

to be developed as future management within the bank.

Management trainees are a growing popular phenomenon where freshly

qualified business graduates are engaged by banks and a certain percentage of

these well-equipped professionals stay back within the organization to grow

into the footsteps of senior managers.

Banking jobs being apparently lucrative for many, attract a large number of

candidates against advertised vacancies in media creating a large database

management problem. This has been facilitated by specialized hiring agencies

who may take up the job of hiring in case of large number of vacancies.

Right People:

The most difficult agenda of HRM across the banking sector is to retain the

right people. Sudden growth of retail banking and other services has put

pressure on HR Managers in banks to engage more professionals within shorter

span of time thereby attracting manpower in other banks on attractive packages

has made the job market very competing.

A bank in a normal course invests time and money to hire and train the

appropriate workforce for its own operations. This readymade force is often

identified and subsequently picked-up on better terms by others.


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Compensation:

How much to pay the right employee and how much to the outstanding

performer. Banks have traditionally followed pay scales with predetermined

increments, salary slabs, bonuses and time based fringe benefits like car and

house advance, gratuity, pensions, etc.

The situation is not the same anymore. An increment of Rs500-800 per annum

is no more a source of attraction for a professional anymore. A basic pay with

traditional formulas of linkage with medical and other facilities has no soothing

today.

A promise of future growth, learning culture and corporate loyalty is out of

dictionary and does not mean anything to this energetic and competent

performer today.

A waiting period of 3-4 years in each cadre haunts the incumbents who strongly

believe in immediate compensation. A freshly hired professional requires a

brand new car or car loan n resuming office quite contrary to his previous breed

Of bankers who would wait for the job seniority to qualify for a car loan.

Job Satisfaction:

Everybody in the bank wants to work in the professional department,

preferential location, city of his own choice and boss of his liking. An

administrative deviation from any of these results in lowered job satisfaction.

Although hiring is normally based on regional requirement matching the area of

activity with that of employees nativity yet other elements like appointment in

the department of choice and preference makes the job of HR manager quite

challenging.

What the HR manager cannot afford is the dissatisfied employee who not only

disrupts the smooth working himself, but also spreads the negativity to others

by his de-motivated attitude.


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Morale Boosting:

What has long been overlooked is the morale boosting of the employees by the

organization. Human beings even if satisfied of material wellbeing need to be

appraised and encouraged constantly.

Smart banks have realized this need and have taken steps to keep their work

force motivated through proper encouragement like man of the mouth awards,

repeat get-togethers, conferences, sports events, dinners, company sponsored

travel, reunions, etc. This is the way employees create a feeling of

belongingness.


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Challenges Faced By Banking Industry

Here are the ten challenges that the HR function in India faces:

1) The first and foremost challenge that HR function in India faces is to convert

the abundant population pool into useful human resource.

2) Training and development of human resource to match ever changing industry

demands re-quires HR to develop new and innovative ideas that suit individual

as well as industry criteria.

3) Employee motivation and satisfaction is another area of concern for the HR

today. In order to reduce attrition, HR needs to realize that monetary needs are

not the only drive for an individual and that a sense of belongingness must be

imbibed in employees.

4) With the increase in number of job options available nowadays, the HR function

of an organization must take care that they hire those people who believe in long-

term commitment to the organization. The HR then must take up the challenge of

retaining them by developing retention techniques like Holiday plans fun-at-work

etc.

5) Because of cutthroat competition, HR in India also faces the task of buildingcompetitive ad-vantage for the company over national and international

competitors.

6) The growing importance that companies are nowadays giving to cost-cutting has

posed HR with the challenge to minimize expenditure on HR not compromising on

the productivity.

7) Since right-sizing has been a growing trend in Indian organization, the HR now

faces the task of identifying and retaining the key employees of an organization

and letting go those that do not suit its future requirements.


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8) HR also faces the challenge of creating a balanced organization that originates

from mergers and acquisitions. HR needs to assimilate those policies that are

mutually agreeable to the companies being merges as well as profitable for the new

organization.

9) Globalization poses HR with challenges such as expatriation and repatriation.

HR needs to train employees that leave their nation for fulfilling a foreign

assignment. It also needs to pro-vide such employees with adequate moral support

and assure them of job security on their return.

10) With multinational organizations on the rise, HR needs to focus on issues such

as cross-cultural training so that problems that can arise because of differences in

international professional values can be diminished.

Meeting HR Challenges:

The banking sector has been growing at a very fast pace in India not only in the

terms of its size but also in terms of the services being provided. With banks

reaching the remote areas in the country one can anticipate positive things like

financial aid to farmers and increased financial awareness. However, with the

increase in size and activities of banks, the number of banks in private sectors has

also increased thereby posing challenges like cost-efficiency, technological

advancement, and credibility related issues. The task before the HR is to develop

strategies that help banks in gaining competitive advantage and encourage

innovation in its products and services.

Managing Human Resource:

Considering the above HR challenges which our Indian banking industry is facing,

we can manage the human resources by proper Planning like

Hiring the right person for the right job

Retaining and Developing

Managing people/ conducting exit interviews


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Hiring the Right Person for the Right Job:

In assessing whether the "right person" has been selected for the "right job", the

most prominent theoretical concept that emerges is the concept of "fit". Different

writers emphasize different types of fit. Sekiguchi (2004: 179) in a review of

literature on person-environment fit discusses two types of fit that emerge as the

most prominent types of fit: person job fit and person-organization fit. In pursuing

person-job fit, companies seek to match the job holder's knowledge, skills and

abilities to the requirements of the job. Companies can ascertain person-

organization fit by focusing on how well the individual fits with the culture or

values of the company and the individual's capacity to work well with other

company employees.

Banks have to plan for the following:

A steady, carefully calibrated recruitment programme.

As rapid technological changes transform business continuous skill up-

gradation.

A new generation of the workforce working alongside an older generation as a

team. Banking, it is a team work and these new situations require cultural

adjustments and therefore, change management.

Retaining and Developing Employees:

We may be able to get the most suited people for our work but then the challenge

is to retain these people and to develop them. There are several dimensions to this

issue such as training/ re-skilling of employees, performance measurement,

promotion policy, transfer policy, talent management, communication, etc. In this

study some of them for discussion:

Training and Development:

With drastic growth of banks it calls for efficient and well trained staff members to

handle/deal with the consumer needs. Banks are shaping up as financial hub for

their clients to grow in size and well recognized in the world market. To pull

consumers banks are offering traditional with advance services like SMS banking,


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ATM, internet banking, priority banking, demat. So we can say that it caters to the

need of the bottom to the highest class of society providing something to everyone.

Universal banks have become modern dayssupermarket extending almost every

facility of banking under one roof.

Banks like Bank of Baroda are conducting Grooming and etiquettes programmes

for front line employees and also for employees selected for overseas posting in

order to improve their service levels and qualitative interaction with customers and

various stakeholders better. SEED (Self efficiency and effectiveness development)

programme being run for frontline staff of the Bank in order to improve their

service skills and servicing efficiency.

In Punjab National Bank, in the light of the large scale human resources gaps

that Bank is likely to face in the next few years need for Succession Policy has

been felt. The Policy envisages mapping of the 'existing pool' against the 'future

requirement' from the projected business figure to ensure that adequate number of

officials are available in the pool and also to foresee the surplus / deficit in the pool

for ascertaining the requirement of succession in a particular vertical. Bank has a

three tier training set up comprising of Central Staff College (CSC) at Delhi at

apex level catering to training needs of Top / Senior / Middle Management Grade

officers, three Regional Staff Colleges (RSCs) located at Belapur Navi Mumbai,

Lucknow and Panchkula for training needs of Senior / Middle /Junior Man-

agement officers as well as workman staff and seven Zonal Training Centres

(ZTCs) at Dehradun, New Delhi, Jaipur, Kolkata, Kozhikode, Ludhiana and Patna

looking after the training needs of Middle / Junior Management Grade officers &

Workman Staff. IT Training Centre located at Faridabad caters to the training

needs of officers exclusively in the areas of Information Technology.

Performance Management:

Banking service is one sector where a great degree of attention is being paid to

performance appraisal system. Several of the nationalized banks have changed

their performance appraisal system or are in the process of changing them. In most

of the banks that follows the traditional system, their officers are being assessed on

the following characteristics:

General Intelligence

Job Knowledge


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Initiative and resourcefulness

Supervision

Business Capacity

Ability to assess sound

Business propositions

Dependability

Relationship with junior & senior colleagues

Relationship with public

Conduct, manners, Managerial ability

Failures that attracted issue of warning by superiors

Several of the banks also have self-appraisal as a part of performance appraisal,

although mostly such self-appraisal is more of a communication of achievements.

A fair, transparent and objective mechanism for performance management is a

must for all banks because an effective Performance Man-agement System is the

key to talent management and succession planning. RBI is shortly going to

introduce a new Performance Management System that will work on goal setting,

potential appraisal of performers and developing a talent pipeline. With all these

changes we are also going to face major challenges on the Talent Management

front.

In coming times, the work force will get complex and there will be a need to jugglea wide variety of people with varied needs and preferences, resulting in an array of

relationships between the organization and those who work for it.

Peter Drucker had, more than a decade ago, expressed the need for what he called

non-traditional work relations: flexible schedules, contract arrangements, virtual

teams, etc.

Some other HR practices and benefits given to employees:

Gratuity:

HDFC Bank provides for gratuity to all employees. The benefit is in the form of

lump sum payments to vested employees on resignation, retirement, death while in


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employment or on termination of employment of an amount equivalent to 15 days

basic salary payable for each completed year of service. Vesting occurs upon

completion of five years of service.

Superannuation:

Employees of the Bank, above a prescribed grade, are entitled to receive retirement

benefits under the Banks Superannuation Fund. The Bank contributes a sum

equivalent to 13% of the employees eligible annual basic salary (15% for the

Managing Director, Executive Directors and for certain eligible erstwhile

Centurion Bank of Punjab (eCBoP) staff) to insurance companies, which

administer the fund. The Bank has no liability for future superannuation fund

benefits other than its contribution, and recognizes such contributions as an

expense in the year incurred, as such contribution is in the nature of defined

contribution.

Short Term Employee Benefits:

In State Bank of India the undiscounted amount of short-term employee benefits,

such as medical benefits, casual leave etc. which are expected to be paid in

exchange for the services rendered by employees are recognized during the period

when the employee renders the service.

The Bank operates a Provident Fund scheme. All eligible employees are entitled to

receive benefits under the BanksProvident Fund scheme. The Bank contributes

monthly at determined rate (currently 10% of employeesbasic pay plus eligible

allowance). These contributions are remitted to a trust established for this purpose

and are charged to Profit and Loss Account. The Bank provides for pension to all

eligible employees. The benefit is in the form of monthly payments as per rules

and regular payments to vested employees on retirement, on death while in

employment, or on termination of employment. Vesting occurs at different stages

as per rules.


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SUGGESTIONS

The banking sector has grown from a few institutions primarily involved in deposit

acceptance and trade finance into a complex multi-player markets where large

number of commercial banks, financial institutions and specialized banks are

operating with various product activities. Like many other organized sectors,

banking requires multi-layer manpower for its various requirements of

professionals and support staff. The range may require reasonably educated

security guards on the one hand and a highly educated and trained professional as

head of corporate finance. With liberalization of activities within the banking

sector, for example, more emphasis on consumer and house finance and personal

loans, etc. Banking has turned itself into a more market based business where

banks have expanded their reach more to customersdoor step in a big way making

banking more practical. This has further highlighted the need for proper

development of man power to run banks efficiently. Smart banks have realized this

need and have taken steps to keep their workforce motivated through proper

encouragement like man of the month award, repeat get-together, conferences,

sports events, dinners, company sponsored travel, reunions, etc.

In spite of all these facilitations there still exist several lacunas in the HRM

practices in banking industry.

Some of the specific suggestions based on survey of literature as well as the group

discussions and survey are given here under:

1) There should be a balanced compromise between organizational need and

individual need. Total insensitiveness to individual preference gives rise to

frustration at some point of time, which as a consequence has a real damaging

effect on the organizational growth itself.

2) While there must be rewards for performance, non-performance must be

punished/ reprimanded. Promotions must be only on merit.

3) There must be uniform, impartial and balanced employee performance review

system.This system in fact needs a total review.


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4) Enthusiastic and pleasant behaviour of staff to the customer is necessary.

5) There must be a clearly defined system of succession planning and career

growth planning in banks.

6) Attitudinal changes are required at the top level.

7) Human resource Balance Sheet should accompany financial statements.

8) In order to become HRD conscious, the Public Sector Banks should allow

independent functioning of HRD section, where the top person should be himself a

good successful banker, a real HRD person free from any biases.

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9) More openness, transparency in personal matters, high value of human dignity,

people oriented management system, creating belongingness and trust, two-way

communication.

10) Banks should have a system, whereby the training needs of an employee are

identified and are duly fulfilled at every stage of career growth.

11) Have special R & D wings in HRD Department for ongoing in house &

external research development, review and implementation of HRD policies.

12) There should be award schemes administered by prestigious organizations and

Govt. agencies for best HRD policies & Practices amongst Public Sector Banks,

etc.


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HUMAN RESOURCE MANAGEMENT IN PUBLIC AND PRIVATE

SECTOR BANKS

Introduction:

At present, Indian banking sector is facing wide variety of opportunities and the

bright future scenario. The changing economic scenario, represented by rapid

process of globalization has brought out all the nations of the world together,

without geographical boundaries for trade and commerce but with great amount of

employment opportunities for individuals. Due to rapid advancement in

information technology and telecommunication in the recent years, the banking

industry has been undergoing rapid changes, reflecting a number of ongoing

reform processes. However, there are certain problems in the Indian Banking

system, which require great attention.

Some of the major problems are:

Continuous accumulation of morass, which hampers the profitability of the

banks.

Accumulation of Non-Performing Assets (NPAs), which threatens capital

adequacy and continuous stability of banks.

Some of the public sector banks are facing heavy over staffing, which reduces

productivity of the banks.

Above all these require a drastic change in the recruitment, training, placement

and promotion policies of the banks. Thus, the main concern is how to remove

legacies of the past and meet the demands and challenges of the new era.


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HUMAN RESOURCE MANAGEMENT PRACTICES

Human resources management practices play a very vital role in achieving the

organizations goals and maintain the competitive advantage.

HRM practices refer to organizational activities directed at managing the pool of

human resource and ensuring that the resources are employed towards the

fulfillment of organizational goals (Schuler & Jackson 1987). Human resource

management practices is the management of people within the internal

environment of organizations, comprises the activities, policies, and practices

involved in planning, obtaining, developing, utilizing, evaluating, maintaining, and

retaining the appropriate numbers and skill mix of employees to achieve the

organizations objectives (Appelbaum 2001). Presently organizations are

competing through implementing the unique HRM practices and due to the

globalization organizations adopt the most up-to-date HRM practices in order to

accomplish the organizational goals. Best HRM practices are advantageous for

both employee and employer; it plays an important role in constructive growth of

the organization.

Keeping in view of HRM practices, it is understood that the HRM did not has

direct role in business development but was more concerned with centralized

recruitment to staff. In this context, the review of the study covers the following

most important indicators of HR practices, which were followed by any public

sector bank.

Job analysis:

Job analysis involves collecting information about the characteristics of a job using

one of several methods: observation, interviewing, questionnaires, or more

specialized job analysis methods such as position or functional analysis.

Organizations sometimes use a combination of job analysis methods (Hawthorne,

2004; Mathis & Jackson,

1997). All the Banking authorities reported that they follow a combination of

several methods for job analysis of the employee.

Recruitment and selection:


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Public Sector Banks follows systematic procedure in recruitment and selection

activities. For Recruitment and Selection these banks follows some standard most

of the cases. The practiced arrangement for selection and recruitment is the

corporate decide what positions will have to fill and how to fill the immediate as

well as future requirements.

This total procedure is designed to cover all positions from bottom to top level.

Indian Public Sector Banks use both methods of recruitment i.e., internal and

external markets. Usually, for clerical and officer posts, external market is used

through advertising etc. On the other hand, the managerial/executive positions are

filled up through promotions and transfers i.e., for higher positions the internal

market is usually relied upon. In some of the PSBs in India, the practice of

recruiting specialists such as technical employees, management trainees etc.

directly from the reputed institutions through campus interviews have been started.

Some banks are also utilizing the services of consultants and employment on

contract basis.

Training and Development:

HRD as one of the major functional area in HRM. Continuing education and

training programmes are essential considerations to enrich their careers and excel

their development. Banking activities and knowledge is ever changing. In order to

cope up with these changes and to develop employees careers all banks

established their own training institute. Those institutes organized different types

of training and development programmes based on the employees need.

Those needs are identified by need assessment activities.Volume-3, Issue-12, Dec-

Training is more in IPSBs because the training system in the banking industry has

a strong structural base, and has capabilities to handle training in large numbers.

The system has also developed several innovative activities in the training area

such as on-location training, manager to messenger programmes. Further the

IPSBs have a good support to training efforts from apex level training institutions

such as National Institute of Bank Management (NIBM), Bankers Training College

(BTC), and College of Agricultural Banking (CAB). The IPSBs have more than

three hundred individual bank level training colleges and training centers.


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Training is given emphasis by all banks, although not much systematic training

need analysis is carried out. The training colleges conduct training programmes for

relatively junior level bank staff. For most of the senior level training, banks

depend on external agencies, especially foreign training organizations. Training

establishments of some of the bigger banks complain of under utilization.

Performance Appraisal:

Performance appraisal is the systematic, periodic and an impartial rating of the

employees excellence in matters pertaining to his present job and of his

potentialities for a better job.(Edwin B. Flipp).

Public Sector Banks in India give more attention towards performance appraisal in

the organizations. Performance appraisal based on quality of output, potential of

the employee within the organization etc. need to be incorporated across all grade,

cadres and levels. This will not only ensure maximizing productivity, but also go a

long way in motivating star performers aligning with the long-term mission and

vision of banks.

Compensation:

In general, the compensation in Public Sector banks is mostly based on seniority or

work experience. The Indian public sector banks should reward their professionally

qualified employees by scale up-gradation and special increments besides

motivating and encouraging them to acquire new knowledge. Common pay

structures based on number of years of service with the bank put in etc need to be

phased out in a planned manner.

SUGGESTIONS


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On the basis of review of this study the following suggestions are made for better

HRM practice in the Public sector banks in India:

In the recruitment and selection process of employees, the banks should give

priority to the candidates who has graduate and above degrees in Information

Technology, experience, skills, competencies etc. It is also suggested that

institutional training should provide effective skills to employee. Employees

should be motivated to utilize the material and libraries so that competency gap

would be reduced.

It is necessary for restructuring of salary to motivate employees in particularly

in public sector banks.

To develop human resources, the bank should undertake different human

resource development programmes including continuing education and training,

IT-orientation, career development, etc.

Banks can send bright employees to abroad on fellowship/scholarship for

higher studies and learn new technology in order to attain competence at global

level.

Banks should organize seminars, workshops, conferences, different shortcourses, and training programmes on financial matters, current issues, software

up gradation on regular basis that would definitely help to develop

knowledgeable manpower, create awareness and change mental attitudes among

the professionals.

All banks should allocate sufficient budget and sends competent employees to

international conferences and seminars to prepare them for the competitive

knowledge global market.

Human Resource Department is essential to empower the department or

divisions for handling different issues in HRM in banks. The divisions should

be incorporated with well-organized human resource information systems and

modern information technology facilities.


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Public sector banks should frequently invite staff for suggestions and their

active participation in meetings in order to encourage and staff satisfaction.

The training colleges conduct training programmes for relatively junior level

bank staff. For most of the senior level training, banks depend on external

agencies, especially foreign training organizations. It is to better to utilize of

bigger banks training institutions even for senior level instead of depending on

external agencies or foreign organizations.

It is suggested that employee potential should be evaluated based on objective

assessment but not on favoritism. Transparency in evaluation and promotion

policy also suggested.


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HUMAN RESOURCE MANAGEMENT IN SBI BANK:

State Bank of India is the nation's largest and oldest bank. Tracing its roots

back some 200 years to the British East India Company (and initially established as

the Bank of Calcutta in 1806), the bank operates more than 15,000 branches within

India, where it also owns majority stakes in six associate banks. State Bank

of India (SBI) has more than 80 offices in nearly 35 other countries, including

multiple locations in the US, Canada, and Nigeria. The bank has other units

devoted to capital markets, fund management, factoring and commercial services,

credit cards, and brokerage services. The Reserve Bank of India owns about 60%of

State Bank of India Human Resources Development Department

HRDD Vision

The Vision of the Human Resources Development Department (HRDD) is

essentially to facilitate the Bank to carry out central banking activities, i.e. to create

an enabling environment to enhance the efficiency of the organization. To draw out

from our staff the very best by a system of proper placements, incentives, To create

an atmosphere of trust, a certain security of expectations and feeling that the

organization cares about the well-being and personal aspirations of the staff. This

would help align personal aspirations with professional goals and help enhance

efficiency.

The Mission of HRDD is to create a facilitating environment to enhance the

efficiency of the Bank; to empower the staff so as to draw out the latent potential;

and to catalyze conditions for a more wholesome quality of life on the work

as wells personal front. Functions of to evolve HR policies on Recruitment: For the

decade as a whole, for the SBI group, 25.4% of the staff were officers, 51.0% were

clerks, and 23.6% were subordinate staff. The composition of staff was the same

for the nationalized banks with 27.9% of staff being officers, 50.7% being clerks,

and 21.4% being subordinate staff.

Performance and Potential Appraisal: The promotion to a higher management level

is best thought of through the lens of a tournament model (Lazar and Rosen, 1981)

where the prize in terms of compensation for a position in the hierarchy is fixed in

advance and is independent of absolute performance. In effect, an employee is


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promoted to the next higher level/grade not because he is good, but because he is

better than everybody else at the current level/grade.

Placement Promotion and Career Progression, Out of Turn Promotion/ Increment

to Sports Person industrial Relations, Deputation / Secondment. Retirement and

Voluntary Vacation Motivation, Training Establishments, Mobility

(Transfer/Rotation),Remuneration and Reward Mechanism

Documents

HRM in Private & Public Sector Banks.pdf