Employee Productivity Performance Analysis of State Bank of India

By Swati Sinha* Abstract: The efficiency or the growth of a bank can be measured through various measures like deposits, advances, working funds, incomes, expenditures, profits, assets, number of account and branches etc. The role of employees is also of great significance as each and every activity of a bank is directly related to the attitude, motivation and work culture of the employees. Therefore, the parameters, which are used to measure the efficiency of banks, should also include the performance of employees. In the present study, the employee productivity performance analysis of SBI has been performed on the basis of two ratios i.e. working funds per employee ratio and operating profit per employee ratio.

* Research Scholar, Faculty of Commerce, Banaras Hindu University, Varanasi-221005 1

Employee productivity performance analysis is a popular technique for the appraisal of financial performance of a bank. It simply means the total resources invested and the profits generated on the investment per employee of the bank. For a bank, its employees are the most valuable corporate asset. Therefore, it is necessary to evaluate profitability of a bank in terms of its employee's productivity. In the present study, an attempt has been made to appraise the financial position of the bank through the application of employee productivity performance analysis technique. For the purpose of the study, the largest nationalised bank of India i.e. State Bank of India (SBI) has been selected. The financial data of the bank has been taken for a period of six years, i.e., from fiscal 2003 to fiscal 2008. Basically, there are two types of productivity ratios, which are as under: 1) Working Funds per Employee 2) Operating Profit per Employee 1. Working Funds per Employee Working funds per employee ratio is basically related with the employees productivity. It can be calculated by dividing the working funds by the total number of employees. Higher the ratio, better it is. Thus, the working funds per employee ratio of SBI has been calculated as under and can be analyzed with the help of following table: Working Funds per Employee Working Funds = Working funds Total no. of Employees

= Working capital i.e. (Current Assets - Current Liability)

Table 1. Working Funds per Employee (SBI) Years Working Funds (Rs. in Billion) 3416.15 3821.83 4211.43 4979.44 5380.25 6687.16 Total no. of Employees (in Thousand) 0.210 0.207 0.206 0.198 0.185 0.179 Working Funds per Employee (Rs. in Thousand) 16267.38 18462.95 20443.83 25148.69 29082.43 37358.44

2003 2004 2005 2006 2007 2008

The ratio of working funds per employee for SBI has been presented in table 1. It shows that the ratio of SBI, in the last six years has performed very satisfactorily. The ratio has observed a consistent increase and it lies between the range of Rs. 16267.38 and 2

Rs. 29082.43. In the first year 2003, the ratio stood at Rs. 16267.38, which increased to Rs. 18462.95 in 2004. In 2005, it increased to Rs. 20443.83, whereas in 2006 it increased to Rs. 25148.69. In 2006, it further increased and moved up to Rs. 29082.43, whereas in the last year 2008 it increased directly to Rs. 37358.44. Therefore, there is an increasing trend in the working funds per employee ratio for the last six years, and the ratio has increased from Rs. 16267.38 in 2003 to Rs. 37358.44 in 2007, recording an overall increase of Rs. 21091.06. It shows that the productivity of employees has increased in a significant manner. 2. Operating Profits per Employee The operating profit per employee ratio is related with the profit-employee productivity. It reflects the profit or the earnings generated by per employee of the bank. It can be calculated by dividing the operating profits of the bank by total number of employees. Higher the ratio, more profitable is the bank. Thus, the ratio of operating profit per employee for SBI has been calculated as under and can be analyzed with the help of following table: Operating Profit Per Employee Operating Profit = Operating Profits Total no. of employees

= Operating Income - Operating Expenses

Table 2. Operating Profit per Employee (SBI) (Rs. in Billion) Years Operating Income (A) Operating Expenses (B) Operating Profit (A - B) Total no. of Employees (in Thousand) 0.210 0.207 0.206 0.198 0.185 0.179 Operating Profit per Employee (Rs. in Thousand) 370.29 461.50 533.54 570.65 540.49 732.23

2003 2004 2005 2006 2007 2008

157.18 187.98 210.65 230.24 218.23 257.16

79.42 92.45 100.74 117.25 118.24 126.09

77.76 95.53 109.91 112.99 99.99 131.07

The ratio of operating profit per employee for SBI has been presented in table 2. It shows that in the last six years, the ratio of SBI has performed well. It lies between the

range of Rs. 370.29 and Rs. 732.23. In the first year 2003, the ratio stood at Rs. 370.29, which increased to Rs. 461.50 in 2004. In the next two years, it further increased. In 2005, it increased to Rs. 533.54, whereas in 2006 it increased to Rs. 570.65. But in 2007, a decrease has been recorded in the ratio and it came down to Rs. 540.49. However, in the last year 2008 again, an increase has been registered and the ratio moved up to Rs. 732.23. Therefore, the operating profit per employee ratio of SBI has increased from Rs. 370.29 in 2003 to Rs. 732.23 in 2008, recording an overall increase of Rs. 361.94. Though, the ratio has observed a continous increase, but in 2007 the performance of the employees has deteriorated resulting in a decline in the ratio. The reduction in the operating income of the bank has caused that decrease in the ratio. The total staff strength of SBI is getting reduced with every coming year, but even after that the operating profit per employee ratio of the bank is consistently increasing, which shows the efficiency of employees. Conclusion: After going through the working funds per employee ratio and the operating profit per employee ratio of SBI, it has been concluded that, in terms of both the ratios, the bank has performed in a satisfactory manner. The working funds per employee ratio of the bank has increased from Rs. 16267.38 in 2003 to Rs. 37358.44 in 2007, recording an overall increase of Rs. 21091.06, whereas the operating profit per employee ratio of the bank has increased from Rs. 370.29 in 2003 to Rs. 732.23 in 2008, recording an overall increase of Rs. 361.94. It simply reflects that the productivity and the profit generating capacity of employees, both are increasing in an appropriate and profitable manner. However, the bank must take corrective measures to restrict the reduction in the total staff strength.

REFERENCES: 1. Amandeep (1993) Profits and Profitability in Commercial Banks, New Delhi, Deep & Deep Publications. 2. Annual Reports of SBI. 3. Chaudhary, C.M. (1992) Dynamics of Indian Banking, Jaipur, Printwell Publishers, First edition. 4. Debasish, S.S. and Mishra Bishnupriya (2005) Indian Banking System, New Delhi, Mahamaya Publishing House, First Edition. 5. Vinayakam, N. (1995) Indian Banking By 2000 A.D, Delhi, Kanishka Publishers, First Edition. 6. www.statebankofindia.com