Human Resource Management


Human Resource Management is essential in all sectors and this project deals with human resources in general and in the banking sector. Before discussing Human Resources in the banking sector it is essential to understand the basic concept of human resources as well as that of management. The term human resources is variously defined in political economy and economics, where it was traditionally called labor, one of three factors of production. Its use within corporations continues to define common conceptions of the term. Modern analysis emphasizes that human beings are not predictable commodity "resources" with definitions totally controlled by contract, but are creative and social beings that make contributions beyond "labor" to a society and to civilization. The broad term human capital has evolved to contain the complexity of this term, and in macro-economics the term "firm-specific human capital" has evolved to represent the original meaning of term "human resources".


Human Resource Management


Human Resource Management or Personnel management is the activity of managing personnel, usually employees. In any organization, managing personnel is the process of making sure the employees (not the customers) are as productive as they can be. This can include hiring, firing, or transferring people to/from jobs they can do most productively. This subject is a major at many universities, or a minor in the business school. It is also known as personnel administration, which is functionally an equivalent term.


Human Resource Management

A business unit needs employees to look after different activities. This is called manpower or human resource. Such human resource needs to be developed fully so that it will make positive contribution for the progress and prosperity of a business unit. For this systematic development and management of human resources is necessary. Human Resource Management (HRM) deals with: (a) Training (b) Self-development (c) Promotions (d) Performance appraisal of manpower recruited in an organization. HRM is an organized learning experience aimed at matching the organizational need for career growth and development. It is a process involving series of learning activities designed to acquire desired level of competence among employees. HRM is a continuous process and it needs money. Such investment creates a team of efficient, skilled and trained manpower which brings success and stability to a business unit. HRM programmes offer long term benefits to an organization.


Human Resource Management

(1) Upgrading Manpower:
HRM is basically concerned with the upgrading of manpower working in an organization. This leads to improvement in the individual performance of an employee and also corresponding improvement in the organizational performance.

(2) Stress on Training:
HRM includes various schemes arranged for providing education, guidance, training and opportunities to learn and develop employees of all categories and working in different departments. There is an integrated use of sub-systems (training, career developments, organizational development) in the HRM programme.

(3) Attention to learning and career development:
Learning, self-development, career development and possible through HRM programme.These are the core areas of HRM. Career development is possible through joining training courses, reading books and periodicals. Learning and career development raise the capacity of employees to work at highest levels. They are given higher positions with monetary benefits.

(4) Organizational Development:
HRM includes organizational development, which includes effective communication within the organization, coordination of different activities, elimination of conflicts of different types and creation of orderly atmosphere in the whole organization.


Human Resource Management (5) Team Spirit : HRM is basically for developing team spirit in the whole organization. skilled and efficient manpower. For this. on the job and off the job training programmes are introduced from time-to-time. which is a valuable asset of a business unit. NEED AND IMPORTANCE OF HUMAN RESOURCE MANAGEMENT: 5 . Training and guidance are given on different aspects of business management to enable managers to deal with complex managerial problems and challenges. HRM programmes create matured. Employees occasionally must be terminated for breaking rules of failing to perform adequately. (6) Huge spending by Management: All companies invest huge money on HRM activities but such expenditure is absolutely essential for survival in the present competitive business world. (8) Continuous Activity: HRM is rightly treated as a continuous activity due to new developments taking place regularly in the business world. It is multi-disciplinary in character. (9) Wide Scope: The scope of HRM programmes is very vast. departments and levels of management are properly integrated. (7) Termination of Employment: Termination is an unpleasant part of any manager’s job. Team spirit facilitates orderly growth of the organization in the right direction. For this.

introduction of new technology. automation. (5) To satisfy the demand of self-development of employees: HRM is needed to meet the needs of employees in regard to selfdevelopment and career development aspirations. (3) To develop strength for survival: HRM programme are necessary for survival in the present competitive marketing environment. (4) To face challenges of technological changes: Technological changes are taking place rapidly in every area of business. training 6 .Human Resource Management (1) To create stable labour force: HRM programme are needed in order to create stable. efficient. HRM programme are needed in order to absorb technological changes taking place with speed. In fact. (2) To update the quality of manpower: HRM activities are needed for updating the quality of manpower as per the growing and changing needs of an enterprise. All this is possible through HRM. Even the vacancies at higher levels can be filled in internally due to HRM programme as they provide training and opportunities of self-development to employees working at lower levels. computers. An enterprise can face market competition only by improving quality. This avoids managerial obsolescence. Employees demand. will not be possible unless training is provided to the manpower. etc. skilled and matured manpower required by an enterprise for the present and future period. reducing costs and avoiding wastages.

HRM is needed in order to keep ready a team of competent managers as a second line of defence. etc. (7) To facilitate expansion and diversification: HRM activities are needed to meet the manpower requirements resulting from expansion and diversification programme undertaken at the enterprise level. (8) To utilize production capacity fully: HRM is needed in order to use the available production capacity to the optimum level. managers. It provides skilled manpower for this purpose. Executives. promotions and transfers. refresher courses. HRM programme are needed to fulfill self-development and career development of employees. supervisors leave the job or retire due to age factor. (6) To meet future manpower needs: HRM is needed to meet the future manpower needs of the organization. SCOPE OF HUMAN RESOURCE MANAGEMENT: (1) Training: 7 . Competent juniors must take their positions. for their self-development. Attention should be given to HRM much before the introduction of expansion programme.Human Resource Management facilities. career guidance.

Human Resource Management Training is an essential element of HRM. Training is possible by different methods. Career development is an integral part of HRM. An employee is told about his strengths and weaknesses and assistance is given to remove weaknesses and make the plus points more strong. This develops skills and capacity to work at higher levels and positions. which is useful to the organization in the long run. It is useful for self-development and career development. Potential appraisal of employees is useful for developing their special qualities. The opportunities likely to develop in the organization should be brought to their notice. which can be used fruitfully along with the expansion and diversification of activities of the company. (5) Employees welfare: 8 . Superiors are supposed to provide information and guidance to their juniors in this regard. They should be motivated for self-development. It is useful for proper placement and career development of employees. Potential appraisal is possible by the superior with the help of different methods. This technique is useful for building a team of capable employees and is also used for their self-development. (2) Performance Appraisal: Performance appraisal is an important area of HRM. (3) Potential Appraisal: It relates to the study of capabilities of employees. The purpose of performance appraisal is to study critically the performance of an employee and to guide him to improve his performance. (4) Career planning and development: Under HRM employees should be given guidance for their self-development and career development.

Such facilities support training and other measures introduced for HRM. turnover. (9) Human resource information system: 9 . skills and experiences which will be useful in the near future. A forward looking policy on employee benefits like job security. It also keeps plans ready to deal with problems like absenteeism. low productivity or industrial disputes. to grow and to develop new qualities. Reward is an appreciation of good work. free transport and medical insurance. Welfare facilities are useful for creating efficient and satisfied labour force.Human Resource Management Employees welfare is within the scope of HRM. subsidized canteen. (8) Quality of work life: Quality of work life depends on sound relations between employers and employees. Rewards and incentives motivate employees and raise their morale. (7) Organizational development: HRM aims at providing conflict-free operations throughout the organization. attractive pay. Such facilities raise the morale of employees. (6) Rewards and incentives: HRM includes provision of rewards and incentives to employees to encourage them to learn. It may be in the form of promotion. higher salary or higher status. participative management and monetary and non-monetary rewards will go a long way in improving the quality of work life helps employees to strike an identity with the organization. Employees welfare include the provision of medical and recreation facilities.

Human Resource Management Such system acts as an information bank and facilities human resource planning and development in a proper manner. It facilitates quick decision making in regard to HRM. Every organization has to introduce such system for ready reference to HRM matters. 10 . Updating of such information is also essential.

experiences to payroll records. these ERP systems have their origin on software that integrates information from different applications into one universal database. organizations began to electronically automate many of these processes by introducing innovative HRMS/HCM technology. HR executives rely on internal or external IT professionals to develop and maintain their Human Resource Management Systems (HRMS). The HR function's reality : All in all. To reduce the manual workload of these administrative activities. data. Human Resource Information Systems (HRIS). On the whole. capabilities. skills. shape an intersection in between human resource management and information technology. and payroll processes. EHRMS). from personal histories. It merges HRM as a discipline and in particular its basic HR activities and processes with the information technology field. To varying degrees. HR Technology or also called HR modules. The linkage of its financial and human resource modules through one database is the most important distinction to the individually and proprietary developed predecessors. the HR function is still to a large degree administrative and common to all organizations. Before the "client-server" 11 .Human Resource Management HUMAN RESOURCE MANAGEMENT SYSTEMS: Human Resource Management Systems (HRMS. which makes this software application both rigid and flexible. most organizations have formalized selection. Efficient and effective management of the "Human Capital" Pool (HCP) has become an increasingly imperative and complex activity to all HR professionals. The HR function consists of tracking innumerable data points on each employee. Due to complexity in programming. evaluation. whereas the planning and programming of data processing systems evolved into standardized routines and packages of enterprise resource planning (ERP) software. capabilities and limited technical resources.

The advent of client-server HRMS authorized HR executives for the first time to take responsibility and ownership of their systems. The payroll module sends accounting information to the general ledger for posting subsequent to a pay cycle. as well as labour distribution capabilities and data analysis features. Data is generally fed from the human resources and time keeping modules to calculate automatic deposit and manual cheque writing capabilities. 3) benefits administration and The payroll model: automates the pay process by gathering data on employee time and attendance. Sophisticated HCM systems can set up accounts payable transactions from employee deduction or produce garnishment cheques. The benefit administration model: permits HR professionals to easily administer and track employee participation in benefits programs ranging from 12 . The time and labour management module: applies new technology and methods (time collection devices) to cost effectively gather and evaluate employee time/work information. In consequence of the high capital investment necessary to purchase or program proprietary software. The most advanced modules provide broad flexibility in data collection methods. 2) time and labour management 4) HR management. every single HR automation process came largely in form of mainframe computers that could handle large amounts of data transactions. these internally developed HRMS were limited to medium to large organizations being able to afford internal IT capabilities. and generating periodic pay cheques and employee tax reports. These client-server HRMS are characteristically developed around four principal areas of HR functionalities: 1) "payroll". This module is a key ingredient to establish organizational cost accounting capabilities. calculating various deductions and taxes.Human Resource Management architecture evolved in the late 1980s.

enrolment in training classes (employee side) and to instruct a personnel action. such as travel reimbursement.Human Resource Management healthcare provider. 13 . and pension plan to profit sharing or stock option plans. Leading edge systems provide the ability to "read" applications and enter relevant data to applicable database fields. The system records basic demographic and address data. Through employee or manager self-service (ESS or MSS). compensation planning records and other related activities. HRMS/HCM technology replaces the four core HR activities by streamlining them electronically. which lead to business innovation. While using the internet or corporate intranet as a communication and workflow vehicle. Costly and time consuming HR administrative tasks. Typically. Consequently. leading to greater HR and organizational efficiency. the HRMS/HCM technology can convert these into web-based HRMS components of the ERP system and permit to reduce transaction costs. selection. capabilities and skills management. 3) benefit administration and 4) HR management. insurance policy. notify employers and provide position management and position control. benefits enrolment. managers and HR professionals alike. 1) payroll. 2) time and labour management. HR professionals can spend fewer resources in managing administrative HR activities and can apply freed time and resources to concentrate on strategic HR issues. The HR management module: is a component covering all other HR aspects from application to retirement. authorize access to information for employees (manager's side) are being individually handled and permit to reduce HR transaction time. training and development. HR activities shift away from paper based processes to using self-service functionalities that benefit employees. leading to HR and organizational effectiveness. personnel data change.

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. Now the head of HRM is an important member of the senior teams of any thriving business. comprising mostly the multi-national companies was practicing the same. Thus even the high automation would require proper man behind the machine to 14 . The banking has become a complex activity within the financial market linked directly and indirectly with an over-all national growth and its impact as an integral part of regional segment of a global banking environment. financial institutions and specialized banks are operating with various products and activities. Corporate goals are translated into viable realities and profits only with human element who play their due role in achieving the desired results. Almost every bank and financial institution is involved in various functions in a day's job and thus requires a highly effective team and appropriate manpower to run the show.Human Resource Management HUMAN RESOURCE MANAGEMENT IN BANKING: Human resource management (HRM) has long been overlooked in the corporate sector in the country where a small section. it has grown into an important activity. Although the idea is new for many local businesses where entrepreneurs are at the beginning of the learning curve yet in reality the theme is getting support from the organized entrepreneurs. With the growing realization of proper HRM in the corporate sector.

Recruitment was a routine function and was done in a mechanical way to hire people with specific educational background irrespective of their real value to the institution. calculators. pieces of furniture.g. For many years. banking has turned itself into a more market-based business where banks have expanded their reach more to customers' door steps in a big way making banking more practical. Personnel departments were primarily engaged in approval of leaves. This idea has been realized by top managements in progressive banks. more emphasis on consumer and house finance and personal loans. The range may require reasonably educated security guards on the one end and a highly educated and trained professional as head of corporate finance at the other. conducting disciplinary enquiries and termination from service. This has further highlighted the need for proper deployment of man-power to run banks efficiently. HRM banks like other institutions have been handling this sensitive activity through respective personnel departments. equipment and appliances. Like many other organized sectors. Success stories of large banking companies have been evident of the fact that HRM 15 . for example.Human Resource Management make things happen. issuance of show cause. With liberalization of activities within the banking sector. This means human resources were managed like other physical assets e. etc. banking requires multi layer manpower for its various requirements of professionals and support staff. handling of staff loans.

Managing this educated. 16 .Human Resource Management is quite different from management of physical assets. Its strong sensory and decision-making capacity has to be greatly emphasized by the employers. The work forces constituting all levels of employees are constantly thinking in many dimensions. Human brain has its own peculiar chemistry. their brains can be controlled to think beyond the current situation of employment. By no means. on the other they think of their long run goals and objectives. skillful and trustworthy work force is not an easy job. On the one hand it is the assigned duty and task they are to perform and for which they are paid by their employer.

bank management is more directly responsible for decisions. Job rotation has been a major plan of developing expertise. practices. Indian Banking is the happening place witnessing exciting days.Human Resource Management ROLE: HUMAN RESOURCES MANAGEMENT IN BANKS Human Resources Management is concerned with people. profit and size. 17 . Unlike the past when the balance sheets were not transparent and regulation was not calibrated. work and life. successful HRM attaches great value to people and creates an organization which is both competitive and compassionate. The personnel policies. were driven by grades and seniority. business goals are meet and sustained. Wherever the HRM the functions and practices are aligned with overall corporate strategies. adoption of new technology and growth HRM becomes critical and could be the major growth driver. They have in addition responsibility towards the shareholders and need to proactively grapple with many issues. Technology has changed the layout of the workplace. The business mix and the focus have shifted. HRM of banking should be no different from the rest of the business. information. HRM did not have a direct role in business development but was more concerned with centralized recruitment of staff and providing them across the country. performance. Wherever HR develops professional with appropriate competencies it becomes the driver of the business by partnering the development process. Similarly. today. Success of the bank is measured in terms of the market share. be it salary or promotion or transfer. It would be interesting to study the role of HRM in the Indian Banking. It is concerned with building an infrastructure that impacts employees. As Indian Banking starts grapping with issues of globalization. customers and other stake holders. The management canvass has become vast and challenging.

Human Resource Management However. Role of Hum an Resources m anagem ent 47 14 17 14 8 HR Provides advice and counsel to business HR Actively participates & provides resources HR is aware of Business Transformations HR business transformation effort Others 18 . as banking is fundamentally a matter of banker customer relationship. Given this. it is evident that technology can expedite and improve delivery of banking services. but technology alone cannot drive business development efforts. ensure that the banks perform very well and play a vital role in the transformation of banks into global leaders. the demand on HRM for making available professional to perform new jobs and new locations is endless. Actually it is only the human resources that can use the technology efficiently.

Banking jobs being apparently lucrative for many.Human Resource Management CHALLENGES FACED BY THE BANKING INDUSTRY IN TERMS OF HUMAN RESOURCE MANAGEMENT: (1) Effective work force: A time-consuming and hectic job is to hunt the right talent. trained and are some how retained to be developed as future management within the bank. 19 . Ones who are outstanding professionals with high job hopping attitude . Banks are keenly interested to fill up two types of breads of professionals. This has been facilitated by specialized hiring agencies who may take up the job of hiring in case of large number of vacancies. Higher the professional value of the vacancy. 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. Others are those who are keenly picked-up. Its just sitting by the river and waiting for the right fish to catch.these are those who come in . attract a large number of candidates against advertised vacancies in media creating a large data base management problem. tougher is the for some time and then leave for better prospects. Identifying the right stuff followed by negotiation is the element which makes the job tough for the employer.

gratuity. A bank in a normal course invests time and money to hire and train the appropriate work force for its own operations. A promise of future growth. 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 effect today. salary slabs. Sudden growth of retail banking and other services has put pressure on HR mangers 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. The situation is not the same anymore.Human Resource Management (2) Right people: The most difficult agenda of HRM across the banking sector is to retain the right people. A waiting period of 3-4 years in each cadre haunts the incumbents who strongly believe in immediate compensation. There are examples to this. learning culture and corporate loyalty is out of dictionary and does not mean anything to this energetic and competent performer today. etc. pension. (3) Compensation: How much to pay to the right employee and how much to the outstanding performer. bonuses and time-based fringe benefits like car and house advance. This ready-made force is often identified and subsequently picked-up on better terms by others. Thanks to the car 20 . Banks have traditionally followed pay scales with predetermined increments.

Although hiring is normally based on regional requirement matching the area of activity with that of employee's nativity yet other elements like appointment in the department of choice and preference makes the job of HR manager quite challenging. city of his own choice and boss of his liking. Human beings even if satisfied of material well being 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 month awards. preferential location. A freshly hired professional requires a brand new car or car loan on resuming office quite contrary to his previous breed of bankers who would wait for the job seniority to qualify for a car loan. (4) Job satisfaction: Everybody in the bank wants to work in the preferential department. An administrative deviation from any of these results in lowered job satisfaction. repeat get21 . (5) Morale boosting: What has long been overlooked is the morale boosting of the employees by the organizations.Human Resource Management financing modalities car is no more a fantasy item any more. What the HR manger 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.

Challenges for HR in days to come 20 15 12 10 17 12 7 7 Cross training of staff for use in different Measuring effectiveness Developing basic IT skills Forecasting Requirements Availability of leadership across Building Leadership Fostering a Learning culture Knowledge Management 22 . conferences. dinners. reunions. sports events. etc.Human Resource Management togethers. This is the way employees create a feeling of belongingness. company sponsored travel.

Invariably. On selection. finalizing pay and related aspects. This seems to be in vogue in private sector and foreign banks.specific training. in these organization. planning for the long term needs term needs of the bank. dovetailing employee preference in the deployment process. retaining talents. It is clear that the HR departments feel that they are effectives when it is a question of ability to post staff with appropriate skills and capabilities for the jobs. HR functionaries have indicated that jobs are becoming specialists in nature. Also these departments have enough room / flexibilities with regard to their ability to make changes in staffing pattern / position based on changes in business conditions. The selection process was through advertisement for a large number of posts. HRM effectiveness could also be studied with reference to its role in staffing of each department / unit. the candidates were given a induction training and job. 23 . Indeed the concept of job rotation is contrary to the development of specialist skills. and capacity to make staff changes that drives business changes are the corner stones of HR strategy. Some of the banks have also started offering market related pay. the department will have a say in the matter and work hand in glove with the line departments.Human Resource Management EFFECTIVENESS OF HUMAN RESOURCE DEPARTMENT : Posting right person for the right job. There are campus recruitments and sporadic instances of specialists being inducted at higher levels. In an effective organization. the line department and HRD is involved in the head hunting. Undoubtedly this has been a successful model as it has thrown up a large number of very efficient leaders in the sector.

D = ability to make changes in the staffing pattern / position based on changes in business conditions. THE EXPECTATION FROM HUMAN RESOURCE 24 . C = Incorporate employee preferences in the deployment.Human Resource Management H R M effectiveness Effective Not Effective 120 100 80 60 40 20 0 A B C D A = Posting of staff with appropriate skills and capabilities. B = Identify Long Term trends in the supply and demand for staff and plan accordingly.

There is a need for well trained officers to deal with high net worth individuals where continuity and close knowledge of customer is important. who. 25 . People with specialists skills such as risk management and channel management are needed in hurry. In the circumstances an important task at hand is training the staff member.Human Resource Management MANAGEMENT: (1) (2) (3) (4) There is an urgent need of inducting marketing people at different levels. on account of age profile is not comfortable working in an IT environment. Customer relationship management has come to centre stage and calls for specialist people. HRM should also take immediate steps to improve productivity. There is a simultaneous need to balance the demand of IT savvy youngsters joining the organization who ask for high salaries.

Mr. performance and professional training demonstrate that they are ready to accept new challenges. Milos Tucakovic.Human Resource Management AN EXTRACT FROM A LECTURE ORGANIZED BY THE ACADEMY OF BANKING AND FINANCE : Following is an extract from a lecture given by Milos Tucakovic who is the Head of the Personnel and Training Division at the Hyatt Regency Hotel in Belgrade. HR Manager. Adaptation of world standards to domestic conditions and local culture. to HR division managers from Serbia’s commercial banks and the central bank. held in NBS and organized by Academy of Banking and Finance. was the guest lecturer at the round table of HR managers in the banking sector. the Head of the Personnel and Training Division at the Hyatt Regency Hotel in Belgrade. work. 51 percent owned by the famous Pritzker family and 49 percent owned by domestic shareholders. This lecture was held in NBS and it was organized by the Academy of Banking and Finance. Human resources management. Tucakovic presented his experience in managing human resources in the 5-star hotel. main corporate culture values and personnel quality standards required in this prestigious hotel were only some of the issues addressed by Milos Tucakovic in his lecture. Aside from 26 . Milos Tucakovic. raised some new questions for banking sector’s HR division managers who displayed interest in evaluating other managers’ experiences and possibly applying them in their future work. presented from the viewpoint of top-level international hotel industry. The management of the Hyatt Regency Belgrade Hotel tends to recruit its management personnel from the ranks of its own employees whose characteristics. pointed out that the specific advantage of his hotel’s forming part of a world chain of luxury hotels provides an opportunity for exchanging first-rate trainers and the simple option of professional training abroad.

develop their staff. 27 . managers are required to have the following skills: ability to implement changes. commitment to clients/accuracy in work. The high level of services and business practice for which the Hyatt chain of hotels is recognizable worldwide is also maintained by means of the “Mystery Guest Audit” institution. organize work. is a person from the company who conducts an unannounced check of compliance with standards. “Main characteristics required in all employees are energy. to make decisions. which practically means the unannounced visit by a “phantom” guest. In addition to the foregoing. provision of first-rate services. to plan and view things in the long-term. the program of independent development of managers requiring the candidate to exercise self-initiative. intended for facilitating the performance of specific tasks. as this visitor is called in the Hyatt. team spirit.” Milos Tucakovic pointed out.Human Resource Management divisional training. telephone communication skills. hence. This guest. be acquainted with the market and the business environment. have the ability to solve problems and be acquainted with the company procedures. collegiality and punctuality. Since the Hyatt Regency Belgrade was one of the first companies in this region to invest in personnel selection and training in the modern sense. honesty. whose identity and time of coming is not known. hygiene and general work safety standards. adaptability. in addition to various forms of training. The management and the owners of the Hyatt Regency Belgrade Hotel believe that training is a type of employee benefit. all employees attend a compulsory training programme in the course of which they become acquainted with the company and the hotel. the hotel also offers “Hyattrack”. complaint resolution. communicativeness. selling skills. to motivate others. it was interesting to learn about the characteristics required and developed in its personnel.

there are always two employee recognition lists: one encompassing front-office personnel. and the other one including back-office personnel whose work is also crucial for the proper functioning of the system.Human Resource Management It should also be noted that commendations by guests are taken into account when evaluating employees. but with a view to providing an equal opportunity for all employees. who are in direct contact with guests. 28 .

In addition. The other topics of their concern included the most reliable headhunting criteria. special attention would be devoted to retail. Senior Adviser in the NBS. The topics to be focused on within banking education would comprise basics of international banking and finance. corporate and investment banking. The meeting took place in the NBS Villa in Topcider on 16 September with representatives of 28 commercial banks. commercial banks and the Association of Serbian Banks. interdependencies between the central bank and commercial banks. HR managers also expressed interest in exchange of experience. efforts and availabilities and about motivation and stimulation systems in business environment. They also stressed the need to find out more about evaluating staff performance. Rautenberg said that the Academy. i. as well as mortgages and insurance business. choice of new professionals for the bank. would particularly assist in creating a joint strategy for the development of human resources in this field. on adequate computer literacy. Besides satisfaction of eventually meeting their colleagues from other banks. relations with international institutions and modern banking systems. The HR Managers were welcomed by Mr. but also the most desirable ways of parting with employees who failed to meet the expectations or had 29 . in the manner of organizing human resources and in education of employees in the banking industry. and Aleksandara Lujic and Jasmina Milosevic from the NBS. Wolfgang Rautenberg.e.Human Resource Management The First Roundtable of Commercial Banks’ HR Managers The newly founded “Academy of Banking and Finance” has organized the first in the series of planned round tables for HR managers working in the banking industry. Mr. communication skills and specific banking knowledge. and would also facilitate daily work for the managers taking care of the employees in the banking and finance industry. Rautenberg explained that the training to be offered to commercial banks would primarily insist on the English language as the language of banking. Mr. as a joint venture of the National Bank.

Mr. The need for general managers to increase their awareness of the significance of HR operations and investments in human capital was singled out as a vital aspect of the education. as it is often mistakenly thought” Mr. Wolfgang Rautenberg underlined in his address to the commercial banks’ HR managers. especially with respect to managing people and organizations. “It is up to you to change the image of the HR sector into what it really is – and that is much more than just administration. Rautenberg also emphasized the importance of training for managers.Human Resource Management to be made redundant. together with acquiring international presentation skills. 30 .

place and role of the human resources management function within banks. discussing the importance. organization. underestimating the significance of human resources. the participants in the roundtable emphasized that the fundamental problem they face in their organizations on a daily basis is how to retain young qualified personnel. use and develop personnel with a view to realizing the objectives of the organization.Human Resource Management The Second Roundtable of Commercial Banks’ HR Managers The second roundtable of banking sector human resources managers.” Professor Janicijevic pointed out in the course of the roundtable discussion. In the course of the discussion. 31 . gave a presentation on “Contemporary Human Resources Management”. “To manage human resources means to systematically attract. stressing the importance of training managers in contemporary management in this field. as well as to prevent the reduction of work to a mere administering of working relations and transferring responsibility to the organizational unit. Professor Janicijevic pointed out that a basic precondition for an efficient human resources management in banks is to correct the misconceptions of bank’s management. Professor at the Faculty of Economics. Nebojsa Janicijevic. attended by representatives of commercial banks. In this sense. was held today by the Academy of Banking and Finance in the NBS Villa in Topcider.

Their attitude seemed to be. Bio-data sheets were issued and participants took part in mentoring skills workshops. On-going verbal and written guidance was offered by the project manager and coordinator. The limited. expressed at focus groups of managers and executive managers. 8 females). Westpac's mentoring was born out of a need. These workshops were augmented. it was agreed that the program helped improve the visibility of women in this particular workplace. both from people wanting to be mentors and also from hopeful mentorees. Mentoring relationships which cross functional areas have assisted in breaking down barriers.Human Resource Management ARTICLE ON CASE STUDY. Every effort was made to stay in telephone contact with all participants. mid-point and project conclusion) were also used.that's why I'm a mentor. Initial career progression indications are positive with a rise noted in the number of internal job applications by participants. At the July meeting of the Making Mentoring Connections Network. "I already have communication skills . provided opportunities for checking reactions and progress. The breakfast. and this will need to be tracked over time. trial nature of the pilot meant that some people had to be turned away. two weeks later.WESTPAC BANKING CORPORATION. a case study of the pilot mentoring program in the Westpac Banking Corporation was presented by Niki Kesoglou. Human Resource Manager of Westpac's Policy. 6 females) and 14 mentorees (6 males. 32 . ARTICLE WRITTEN BY SANDRA O’NEILL. There was an overwhelming response to circulation of a mentoring booklet and invitation. to examine career progression and to retain high potential people resources (particularly for female staff) within the company. and their comments and input acted upon. Three sets of evaluation questionnaires (at six weeks. and also a mid-point follow-up workshop with both mentors and mentorees. The pilot included 18 mentors (12 males. Westpac's program was feedback-intensive. Although the Westpac culture generally exhibits little gender bias. Westpac encountered some unwillingness on the part of some mentors to attend training. but they were given assurances they would be considered for involvement in such a program when it goes company-wide." Many satisfying outcomes of the pilot program have been observed. Projects & Diversity Department. by a "get acquainted" breakfast.

Some banks are convinced that the software developers have had to consider the effectiveness issues in their design. and see little value in starting with process redesign. Retail banks sell 65 to 80 percent of their new products to 33 . The contact management system and the CRM are often the purview of marketing. Often in isolation. Vendors have become very effective in making this case. the technology decision starts with a traditional approach to define business requirements leading to software selection and then implementation. In those cases. but sales and marketing management develop it. For example. Human Resources will drive the incentive system. Banks have opted to design the technology implementation process around meeting the customers' needs and limiting the work effort required. cost and time. Further. depending on the bank management's mindset toward the purpose of the software and its valued place in the new business or service delivery processes. Individual system owners most often do not want to complicate the decision to acquire and install "their system" by including total integration of all data requirements in the process resulting in largely disconnected technological environments. the "owners" of an element of the process make the system choices for the pieces of technology they require. Most banks do not have an integrated technology solution. The challenge has been to accomplish straight-through processing in order to eliminate potential errors and work duplication. the loan accounting system is often in the hands of loan operations and the credit division usually makes the credit system decisions.Human Resource Management TECHNOLOGY: Banks are taking a variety of approaches in implementing technology to make improvements in retail delivery. Branch administration may decide on the document preparation system. Technology vendors prefer to install their software in the easiest and most operationally effective way possible. The methods differ. technology is not often applied to simple processes that could reduce errors.

The conclusion is that performance is more highly correlated to the process design and integration of data systems. but. asset size.Human Resource Management existing customers. very few have accomplished the connectivity in an efficient or effective manner. and type of organization. The study examined top-tier performers by line of business. Keeping this in full view. The trend in technology is straight-through processing or electronic integration of all the required data elements and support systems. to date. This advantage will certainly impact the amount of work that a CSR (Customer Service Representative) is able to complete on a comparative basis. and better quality of data elements. An interesting discovery from the most recent Nolan Efficiency Ratio Benchmarking Study (analysis completed july 2003) reveals that there is no correlation between a particular software system and higher retail performance. 34 . The few banks that are integrated have lower time to close. the new business process should allow the existing core systems to populate the appropriate customer data whenever a customer opens a new product or service. Independent surveys conducted by the Robert E. lower cost. without noting any significance related to performance and system use. Nolan Company reveal that many banks have this objective.

The following statistics from the 2003 Nolan Efficiency Ratio Benchmarking Study show the range of teller performance from high-performing banks to average performers. Those banks designed their transactions to include redundant steps to help measure and track the balancing process. the operational focus was on security factors. They conclude that this work is not cost beneficial. and a practice called "backing" deposit slips and/or withdrawal slips. including triple counting the cash back to customers. but other conditions can directly influence transaction performance. Backing referred to writing the exact currencies transferred on the back of the slip to potentially simplify the balancing process later in the day (for example. a directional view is required. Top-tier performing banks examined the value of each element of transaction processing and found that the work expended in triple counting and backing added 20 percent or more to the transaction time. The relative cost per transaction is 35 percent higher in the average banks than the high-performing banks. Transaction effectiveness is a significant factor. 35 . Each bank places differing process and security time burdens on the teller position. Teller effectiveness is an area where banks have gone through cycles over the past 20 years. not as a true measure of what individual banks need to achieve to realize high performance. ten 20s. The audit department often imposed security into the processing steps without regard to timeliness and the service impact on customers. Although banks need these statistics to look at teller performance. two 5s and five Is = $265. including balancing. In the 1980s. The data demonstrates that high-performing banks handle 13 percent more transactions per month than average banks. 00). the importance was on transaction accuracy.Human Resource Management TELLER EFFECTIVENESS: Industry data is best used as directional information. five 10s. In these banks. Many banks fired tellers for being out of balance.

Wide variances exist in the time and effort banks put into teller training. the sales referral policies and requirements. A drive-up teller will usually 36 . procedures and systems. Recruiting appropriate personnel from the branch location often helps in keeping tellers with the bank longer. communications. ranging from the mid teens in some banks to over 100 percent in others. The national average is 33 to 35 percent. assign them a branch teller monitor to assist in getting started.Human Resource Management Teller performance variables can include: the impact on training. the teller turnover rate. The teller turnover rate is generally lower in a down economy. Some banks institute a three-week formal training process where tellers learn about the bank's commitment to customers and how it supports the bank's strategy. In these cases. in week four. the trainer will influence the procedure with their individual biases and not necessarily the bank's standard practices. and. when management considers that more tellers interact with customers daily than any other position in the bank. the customer base being serviced. Some banks provide no formal training but have tellers work with a "teller trainer" in the branch to learn the policies. it follows that service and transaction training is essential to high performance. Effective training can cut errors and help to ensure that the speed of processing is elevated through a confident and competent staff. Banks that seem to have lower rates of turnover often have practices in place to reward high performance. the actual teller performance. One of the reasons is that teller opportunities to perform are not equal. The annualized teller turnover rate is typically one of the highest areas in a bank. They train individual transactions in a uniform and controlled way and then. the opportunity to perform at a high rate related to staffing and scheduling. The cost of effective training appears high on the surface. Not many banks are equipped to measure the actual teller performance or even relative performance within a branch or from branch to branch. the use of part-time tellers and teller pools that can support multiple branches due to illnesses and vacations. but.

The learning curve for tellers is typically three months. etc. High turnover branches will have lower real performance due to more tellers who are in a learning curve. The standards and the work measured must accurately reflect the branch conditions as believed by branch management and then used to develop schedules. that can lead to lower 37 . Within the branch. The teller position is a "customer demand" work environment and while management sometimes uses fill-in work to help the utilization. but currently there are three that have the features necessary to model both teller and CSR positions effectively.Human Resource Management handle more transactions per hour due to handling two customers at a time and a limit on transaction types. Differences in work are attributable to a varying mix of transaction types due to customer base. Some banks tailor standards to location-type such as urban. possibly differing cashing limits for tellers due to experience or branch characteristics. GMT. where a teller at either end of the teller line will not have as many opportunities. university. as well as differences due to the actual performance of standard work. it typically comes down to effective staffing and scheduling. Banks must factor in tailored work standards and develop scenarios that reflect the conditions of each branch location as close as possible to reality. Banks must account for all of these differences. To analyze real teller performance. the bank would need sophisticated modeling to calculate customer arrivals during the tellers' working hours along with customers in line to determine teller opportunity. physical location of bank checks and encoding equipment. all three have the modeling capabilities and report generation necessary to be effective with a diverse set of branch locations. Hundreds of teller staffing and scheduling models are available in the marketplace. shopping mall. and Exometrics all have the required queuing models and the flexibility to place staffing and scheduling in the hands of retail management. the teller at the head of the queue will service every customer in slow periods. Demos. The flexibility of the model used is only one element in staffing and scheduling success. and potential use of cash dispensers in some locations. and with a bank turnover rate of 35 percent. rural.

Staff modeling is a dynamic process and the tools used should be dynamic as well. Management may decide to utilize three full-time tellers to allow for coverage during peaks and deliver service properly. Line of business performance is determined by how people.5 and 2. Many banks have trained their teller staff in how and what to refer with an expected volume of two closed referrals per day. In the past six years. which may also slow down the transaction processing and resultant service levels. Banks can adjust the staffing model for effective service in locations with high turnover until the time that problem is resolved. Often a branch requires the equivalent of between 1. The incentive system should not penalize them or it will force even higher turnover. Incentive systems can direct tellers to concentrate on referrals. The reported results from the recent Nolan Efficiency Ratio Benchmarking Study show that top-performing banks' branch personnel are processing 13 percent more transactions per month than the average banks and are supporting 39 percent more deposit accounts. policy. This shift in many institutions has contributed to difficulty in making any comparisons. it is very difficult to evaluate the performance of tellers since management must staff to volume and allow for breaks and coverage. and the connectivity of software. The factors that prevent banks from performing at the higher level relate to process efficiency. not the software. In low-volume locations. Teller incentives are largely weighted on paying for closed referrals over and above any measure for service and productivity.Human Resource Management performance in selected branches. True performance is difficult to measure without a tool to properly balance the customer demand to the service staff hours. deployment of staff through scheduling and staffing. This decision places the teller in a position where they cannot perform on the same level as a teller in a branch where customer demand is high and relatively constant. retail banking has experienced a significant shift to transform practices to primarily a sales orientation.5 tellers per hour in remote locations. process and technology are deployed. 38 .

Human Resource Management CSR EFFECTIVENESS There are a variety of issues that impact the performance of Customer Service Representatives (CSRs) in the current environment. Banks have wide differences 39 .

The primary activities we see CSRs handling are sales/new business. while other banks see marketing as having a primary role in driving potential customers into the branch. COMPARISON BETWEEN HIGH-PERFORMING BANKS AND AVERAGE PERFORMERS. In any event. A factor influencing this difference in performance is that average performing bank CSRs spend more time opening individual accounts and therefore open fewer accounts per month than the time allows. Average performing banks. and 19 percent on administration and other. on the other hand. Performance is a function of how banks manage and structure time. 18 percent on fee and non-fee services. Independent studies conducted by the Robert E. see their CSRs spending more time in problem resolution (25 percent) and less time (30 percent) in actual sales and account opening. and administration. Some banks will establish an objective for outside sales asking CSRs to have involvement in community functions in the sales effort. This is where the significance of work process has the greatest impact. 40 .Human Resource Management in deployment. Other banks will view the CSRs as part of the retail branch sales and service team. service. branch support. and will deploy their time to sales and service first with a component of teller support in their mix of responsibilities. the key is to establish the branch objectives in line with the bank's strategic direction. Some will limit the activities of the "platform staff" to strictly new business and support service. Nolan Company show that high-performing banks have a work distribution of 55 percent on sales and account opening. 8 percent on customer problem resolution.

investment and select deposit products. CSRs have had their offerings expand to include insurance. High performing banks put on 152 new accounts per employee versus the average bank's 139 new accounts. When banks examine the incentives that are paid to CSRs there are a couple of telling characteristics to look for. Not every bank has experienced the same success in terms of this change translating directly to the bottom line. The following is from the 2003 Nolan Efficiency Ratio Benchmarking Study retail branch data. an increase of 9. high-performing banks open only 25 percent of new deposits to the total deposit account balances with their efforts as opposed to 32 percent for the average bank. it has literally transformed the retail banks from "order takers" to "business development" engines.Human Resource Management When we examine the details of high-performing banks versus average performers. In some cases. meaning banks are paying for every new account regardless of how it was sold. When we further dissect the information. or the CSR could have sold the account 41 . not the need.35 percent. Many banks base incentives on the first sale. The emphasis on developing a sales culture has made a dramatic impact on many banks. It can be difficult to train CSRs in the relative benefits of each vehicle and often the weight of the incentive to the product drives them. These measures support the conclusion that the high performing banks do not need to open as much in new deposit balances since they retain their existing deposits better than the average banks. The customer could have been inclined to set up the account prior to walking into the branch. we discover additional detail on what drives branch performance. we see the new non-time deposit account balances as a percentage of total non-time deposit balances was 14 percent in top-tier banks versus 20 percent on average. What are the underlying factors that might support this outcome? They are likely the focus on new business in average performing banks versus the focus on net new business in high-performing banks. Looking deeper into the data.

banks may prevent the attrition of their customer base. In many of the campaigns and programs. Applying science and analytics to the data suggests that the most pertinent information will lead to selling new products to existing customers. Successful banks establish both branch and individual sales thresholds before incentives are earned. they may miss a targeted marketing opportunity. The development of excellent market data has greatly assisted the banks who understand where to place their sales and service emphasis. Segmentation of the market is significant since it is not so much a measure of the actual effort as where the effort is extended. Today over 400 CRM models are on the market. The subliminal message is that servicing existing customers is not as important to achieving individual or bank goals leading to service time spent on difficulties booking new business correctly and not primarily servicing existing customers. A second element to consider is what the bank is strategically trying to achieve-net new business. The reason may be due to the specific product offering which may not convert to an interest in other product offerings. Banks that see a gap in their product offering often rush to put together a campaign before understanding the potential customer acceptance and impact on existing work processes. Often this happens 42 . This analysis also applies to the possible loss of customers. and the tools are more affordable with greater applications. In this way. Not every bank or branch location has the same potential for growth in their marketplace. not what it has achieved in terms of net bottom line. Often the marketing teams concentrate on a specific use and not on developing market intelligence. Deployment is as much a part of the success of the tools as it is with any technology. booked new business is the only criteria. the data may help banks to determine which customers have a product. For example. so they should model each location on its individual characteristics and opportunity for growth. but unless they understand why the customer has that product.Human Resource Management based on its features.

it is common that 65 percent to 80 percent of new sales are due to existing customers. very little science has been applied to the CSR position in banks. For instance. but rather have a series of largely manual steps. it requires multiple inputs of the same information. separate boarding documents get the loan booked on the accounting system. a separate incentive form or screen may need to be completed. In many cases. Banks should utilize the proper information to determine how many CSRs are deployed. but ironically. A significant portion of CSR effectiveness is in the details of the process. loan and deposit account needs with an entirely separate input form and screen. processes are not structured to take advantage of that information in an automated way. Unfortunately. but without integration. It is common to find that the input form or screen for credit differs from the loan application. Often banks profess to have their process integrated. This is an example of short-term application with a potentially long-term strategic tool. and this is where the sales service face is presented to the customer and potential customer base. When the loan is approved. Every step in the process may be thought of as employing technology. As mentioned earlier. there is a separate input form or screen for document preparation. with too many unconnected information inputs. The work processes are as significant to the overall time success as any factor in the performance equation. Lastly. The staffing and scheduling element has as much to do with success in CSR effectiveness as with teller effectiveness.Human Resource Management with HELOC campaigns and the CSRs cannot meet customer service expectations. After the loan is approved. Many new business processes are burdened at the point of the CSR. the CSR needs to prepare a separate document to show that they have properly completed an assessment of the customer's full investment. and see that they have the right tools and products to be successful. thus requiring a separate input. 43 . they take an application for a retail loan and submit it for credit approval.

Apparently future recruitment will be clearly driven by the number of persons needs at different levels. It is seen that the recruitment process in the banking industry is changing. 44 .Human Resource Management CONCLUSION: Already there are indicators that the above issues have started weighing with the HRM.

Another thing that will change is policy of transferring people across the country. INTERVIEW ANALYSIS For better understanding of this project I have were visited I met VEERASHAIVA CO-OPERATIVE BANK LTD. There is a need for an active dialogue with the academic institutions such that candidates are job. Retail.ready. it is hoped that the ever expanding IT inventions could be more effectively used in reaching training across the geography rather than run huge in house infrastructures. In such a situation packet should be market driven and adequate. post them across geography. train them and nurture them internally. It is also hopped that the market will offer ready to use candidates who have. talents will be recruited locally and nurtured. Those who like the challenges and salary will apply for the jobs in different locations. On the contrary. Continuity and responsibility towards customer could be more if people are recruited for different geographical locations. Finance and other specializations and good level of banking knowledge. training could be outsourced and blended with learning. 45 . Banks will also used to the word attrition and learn to manage this aspect. in addition to IT. As more and more new skills are wanted by the banking sector.Human Resource Management The routine skills and functions will be to a large extend outsourced and banking will be more to recruit a large number of person with different qualifications. Finally.

Is it very costly or expensive? Ans: NO. We have performance appraisal for the employees and after every six months we give performance appraisal to our employees to achieve the goal and expectations of the bank and also to know the strength and weakness of the employees.Kharkar (Manager). What aspects do you consider while recruiting the employees? Ans: We consider aspects like Education Background of employees their computer literacy and aptitude for banking work. It is a routine exercise.S.S. What are the challenges faced by your HRM department? Ans: The challenges of the HR department are that the employees should achieve internal goals and target of the bank. 46 .N. I asked in certain set of questions to know his views and thought on this segments here I have tried to share with you all his experience that he share with me. 4.Human Resource Management Mr. 3. What changes do you make periodically to upgrade your Human Resource Management? Ans: We periodically review our system and upgrade them. Do you list you vacancies on websites or give advertisement in newspaper? Ans: We give advertisement in newspaper. The Questions was asked by me and reply were given by the Manager Mr. 5.Kharkar which was as follows: 1. 2.N.

Lenient problems of each and every employee is studied. 8. 11. Do you give training to each and every employee? Ans: Yes. 10. Does Human Resource Management help to improve the skills of the employees? Ans: Yes. All employees should know everything.Human Resource Management 6. Is it important for every bank or a firm to have a human resource management department? Ans: According to me. What do you do to solve the problems of the employees? Ans: Our institution is Human approach . Genuine problems of the employees are considered only and solved accordingly so that employee should not be under depression and they should be satisfied. ANNEXURES 47 . What steps are to smooth functioning of your HRM department? Ans: We upgrade our systems continuously for the smooth functioning and we take periodical suggestions from the customers and accordingly we make changes. 9. It helps to improve the skills of the employees. Human resource concept should be their in every bank but HRM department is not necessary. How many employees do you have in your HR department? Ans: 21 Employees. Rotational training is given to all employees so that no one is dependent on other. 7.

Human Resource Management BIBLOGRAPHY WEBSITES: 48 . www.Human Resource Management www.BANK QUEST ON HUMAN RESOURCE MANAGEMENT 49 . MAZAGINE: .

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