CHAPTER-I

INTRODUCTION

1.1Background of the study:

The ultimate goal of every business organization is to increase the sale of goods
and service that it deals in and to increase profit in order to achieve its laid
down goals and objectives.
These can be achieved if organizations employ the right skilled labour on the
right job at the right time by managing their talent (Cappelli, 2009) As noted in
(Douglas & Jay 2007) most organization don’t have the required talent to
develop lucrative business opportunity and so they loss out.
Organization must ensure that employees of choice are endowed with the skills
required for the job; this will help organization perform effectively and
efficiently. Talent management is the capability to create and continuously
optimize the talent resources needed to execute a business strategy (Talent
Management Research, 2009).
Talent Management when implemented effectively result in great changes in the
performance and productivity of organization
(Capelli, 2008), Talent management is simply a matter of anticipating the need
for human capital and then setting out plan to meet it.(Capelli, 2008); Talent
Management concerns the additional management processes that are made
available to employees in the organization who are considered to be ‘‘talented’’.
This means systematically attracting, identifying, developing, engaging,
retaining, and deploying those individuals with high potentials who are of a
particular value to the organization (Blass, 2007)
Talent Management is the main duty of the Human Resource Manager but over
the years senior and line managers now engage in managing talent.
As noted by (Gunter, 2011) successful companies know that talent management
needs broad ownership.
Talent Management process include recruiting, succession planning, leadership
development and retention of key employees. The importance of talent
management has been increasing rapidly over the few past years.
The roles of talent management on organizational performance are:
1.  Organization achieve its goals
2.  Organization will meet business demands;
3.  Organization have reliable work force
4.  Organizational performance increases.
Talent Management can be effective globally using six principles as noted in
(Gunter, 2011). These six principles make talent management effective both
locally and globally. They include:
(1)Alignment with strategy (2) internal consistency (3) cultural embededness(4)
Management involvement (5) balance global and local needs (6) employer
branding through differentiation.
Conclusively, Talent Management has been seen as a tool in which organization
use in developing talent. If an organization effectively implements talent
management process, it will not only develop talents but it will also increase the
performance of the organization, invariably leading to achievement of the stated
objective.

1.2 About Industry

The banking industry is the backbone for the growth of any economy.
The banking industry is an important component of the financial sector for
proper management of financial resources across the globe (Ahmad Ashfaq et al
2010). It is reckoned as a hub and barometer of the financial system in a
country. India is an emerging economic power with a very large pool of human
and natural resources, and a growing large pool of skilled professionals. Indian
Banking Sector is most developed, organized and diversified sector. This sector
is an important tool for facilitating the development of Indian Economy.
The world economy has been facing a huge turmoil in the last few financial
years. With constant efforts some improvement was observed in the last
financial year as the world economic situation strengthened itself with a
lingering effect to subside the effects of slump and registering world gross
domestic product of 3.2 percent, the highest since 2011. The impact of world
economic growth can be clearly seen on the GDP of India. Even the IMF sees
India as the largest growing economy with a GDP of 7.4 percent even
outshining the growth of China’s GDP at 6.8 percent. This growth has presented
a challenge for the HR managers to focus more on strategic policy formulation
and utilize the growth in the right direction (Bos-Nehles & Bondarouk, 2017).
Today the organizations are dependent on their human capital to gain an upper
edge over its competitors. Every organization depends on their manpower, core
competencies, and their organizational capabilities to face their new business
challenges (Ulrich & Brockbank, 2005). The line managers’ implement HR
functions and in doing so they also influence their team and generate response
from them (Rimi, Yusliza, Walters, & Basher Rubel, 2017; Townsend,
Wilkinson, Allan, & Bamber, 2012; Valverde et al., 2001) but reallocation of
HR functions becomes a very tricky matter if there is lack of interpersonal trust
between line managers and employees (Agrawal, 2010; Feierabend & Sender,
2017; Intindola, Weisinger, Benson, & Pittz, 2017; Küper, 2015).

In this ever-changing scenario the biggest partner of any organization is

expected to be the HR services but in maximum organizations HR functions are
being performed by line managers or middle managers. HR is transforming
itself, different people are being involved and their major effort is to manage
their units effectively (Lawler & Mohrman, 2003). Line managers are more
local to the issues arising and the major reason to be the first choice of the
management to handle the issues in an effective manner (Bond & Wise,
2003; Budhwar, 2000; Crawshaw & Game, 2015; Whittaker & Marchington,
2003). However the situations are not similarly observed by line managers, they
would be forced to perform these decisions and may not be equally comfortable
and they would like to concentrate more on their business tasks (Cunningham &
Hyman 1999; Hassan, Manso, Rahman, & Kelana, 2015; Hope-Hailey, Gratton,
McGovern, Stiles, & Truss, 1997; Whittaker & Marchington, 2003) but here the
matter of concern is that the HR tasks would be neglected or the line managers
can be less attentive to HR issues which is not the situation with HR specialists
(Bond & Wise, 2003; Kulik & Perry, 2008). Another major threat that is posed
here is the erosion of expert knowledge. The line managers are not experts for
handling HR issues but because of relentless cost pressures the middle
managers or line managers are asked to perform the tasks of personnel function
(Feierabend & Sender, 2017; Intindola et al., 2017; Küper, 2015; Renwick,
2003).

Globalization, Technological change, Increased Competition has been

posing challenge to organizations globally; Indian Organizations are also
facing similar challenges. These challenges have induced the organizations to
change their way of functioning. There has been continuous development in the
functioning of the Organization. Every organization wants to distinguish itself
from the competitor to sustain in this dynamic environment. One of the way by
which an organization can make the difference through its Human resource
which is unique in every organization and essential element for sustained
organization growth and development. Due to which as expected, researches on
talent management has been fast gaining its due importance at corporate level
because of its strategic relevance in achievement of organizational strategic
objectives.
HRM from its early days have been principally focused upon
Recruitment, Training and Development, Employee Relations, Compensations
and Benefits and Compliance. The changing business environment and
perception of conviction in people competence being materialistic in achieving
organization goal and objective is realized. This increases the importance of
HRM to develop future leadership and organizational competence and
actively participates in strategic framework formulation and implementation as
a strategic business partner.

1.3 Company Profile

North east small finance bank limited is the wholly owned subsidiary of RGVN
(North east) microfinance limited. RGVN (North East) Microfinance Ltd. a
Public Limited Company, is a registered Non-Banking Finance Company
(NBFC) with a clear vision to serve the entire North Eastern region impacting 5
lakh clients by the year 2017 and facilitate better access to health, education and
livelihood opportunities.
Headquartered in Guwahati, RGVN(NE)MFL as on 30.09.2017 has a network
of 141 branches in 7 Northeastern States viz. Assam, Arunachal Pradesh,
Meghalaya, Nagaland, Tripura, West Bengal and Sikkim covering around 4.49
lakh borrowers with loan outstanding of Rs.693.31 crore and onetime
repayment of 97.86%.

Microfinance is recognized as a tool to alleviate poverty and RGVN (NE)

MFL’s efforts to convert this into a possibility in the Northeastern region has
been achieved through hand-holding of investors both Indian and overseas viz.
Small Industries Development Bank of India [SIDBI], North Eastern
Development Finance Corporation Ltd (NEDFi), Dia Vikas Capital, Nordic
Microfinance Initiative-Norway [NMI], OikoCredit-Netherlands and
Brahmaputra Community Development Trust. Apart from this, we have
partnered with leading banks and financial institutions for availing debt funds
and onlending to our clients across our branch network.
On March 31, 2017, RGVN (NE) MFL, received an in-principle approval from
the RBI to set up a Small Finance Bank and floated its wholly owned subsidiary
‘North East Small Finance Bank Limited’. The Company transferred its entire
Micro Finance business to North East Small Finance Bank Limited through
Business Transfer Agreement, dated 16.10.2017, which subsequent to the RBI
license commenced its banking operations from October 17, 2017.

After transfer of Micro Finance business, and as per RBI Licensing Conditions
RGVN(NE) MFL applied to RBI, Guwahati to register itself as a Core
Investment Company (NBFC-NDSI-CIC) with an object to carry on the
business of making investments in group company(ies) in the form of securities
and providing guarantees etc. and to carry on financial activities, whether in
India or outside, in the nature of investment in bank deposits, money market
instruments (including money market mutual funds and liquid mutual funds),
government securities, granting loans to group companies and issuing of
guarantees on behalf of group Companies and to carry on such other activities
as may be permitted and prescribed by the relevant statutory authorities for core
investment companies from time to time. However, RBI has granted the CIC
Registration to our organization with effect from 29th of May, 2019.

On September 16, 2015, Reserve Bank of India awarded the “In-principle

approval” to set up Small Finance Bank (SFB) to 10 Financial Institutions,
including RGVN (North East) Micro Finance Limited. The only institution from
North-Eastern state of India to receive this recognition to establish Small
Finance Bank. The main objective behind setting up small finance bank by RBI
was to drive the objective of financial inclusion by making provision of savings
and to provide credit to small business units, small and marginal farmers, micro
and small industries and other unorganized sector entities through high end
technology and low cost operations.
For meeting the stipulations prescribed under “In Principle Approval” and other
prescribed Guidelines issued by RBI under Small Finance Bank, a new entity
i.e. “North East Small Finance Bank Limited” having CIN-
U65100AS2016PLC017505 was incorporated on July 25, 2016 as a subsidiary
to its parent Company RGVN (North East) Micro Finance Limited.

Some of the most reputed organizations in India and abroad viz. SIDBI Venture
Capital Limited (Samirdhi Fund), M/s RNT Associates Private Limited, M/s PI
Venture LLC, Norwegian Micro finance Initiative, M/s Dia Vikas Capital and
IDBI Bank have expressed their confidence to our organization and agreed to
partnered with RGVN (North East) Microfinance Limited for the transformation
into the Banking Business of “Small Finance Bank”. 

They have designed various Asset and Liability products to meet the financial
needs of their customers who have been deprived from the formal banking and
other financial services till now. They also have kept in mind of their saving
needs and have customized products that will take care of their Small and
Regular savings as well as target based savings that are simple and easy to
understand and have the maximum benefit. Further, they shall also provide
them with the facility of Doorstep Banking.

1.4 About Study:

Before going into the discussion on Talent Management, it would be apt to

understand the word ―Talent. Talent in general terms refers to the capabilities,
skills or the art, a person possess in a particular field. It also refers to those
people who have high potential, scarce knowledge and skill or who can
successfully bring about transformation and change in the organization. Such
individuals are usually sought after in the market and their contributions to the
business add direct value to its strategic or competitive positioning.
Talent Management in an Organisation, refers to those special steps an
organization adopts to recruit, develop and retain its pool of top talent. The
steps adopted should normally be creative and should not project bureaucracy.
Talent Management also denotes a deliberate approach taken 10 up by an
organization to attract, develop and retain people with the aptitude and abilities
to meet not only the current requirements but also future organizational needs.

As business searches for new and/or better means of achieving competitive

advantage, the capacity of every functional area to improve organizational
performance is under scrutiny. As a result talent management strive to develop
and retain high potential employees, and thus provide organizations with
managerial talent source and competitive human resource advantage which
impact organization performance. The logic behind talent management is based
on the fact that businesses are run by people. Processes, technology and capital
are important but it is people who make the decisions. It‘s people who create
value by using these corporate assets to create products an organization has, the
better it will perform. This is the rationale behind talent management to attract,
develop and utilise the best brains to get superior business results.

Organizations are increasingly recognizing the need to radically change the role
of their Human Resource function. Today, there is a progressive movement to
transform the HR function and establish a Human Capital Management (HCM)
environment that truly leverages the workforce as a 13 competitive weapon.
Organizations leading the way in HR transformation are focusing less on
administrative aspects and more on strategic issues. Talent management tops the
list as a strategy for radically improving workforce productivity to drive higher
value for the organization. Today, most organizations are struggling to
understand the characteristics, enabling technologies and definition of talent
management. While they know how to administratively recruit, retain and
replace, they struggle with the strategic elements of managing talent. The
process of managing the supply and demand of talent to achieve business goals,
represents one of the greatest opportunities for organizations to not only
overcome these critical issues, but most importantly, survive and thrive for
years to come. In today‘s talent-hungry market scenario, one of the greatest
challenges that organizations are facing is to successfully attract, assess, train
and retain talented employees. Talent Management encompasses in itself the
entire process of Planning, Recruiting, Developing, Managing, and
Compensating employees throughout the organization. Organizations have
realized the need for talent management and are now focusing to develop and
retain the existing talent in their organization rather than trying to acquire a new
talent because the cost of identifying, developing and retaining the talent
internally is more cost effective instead of replacing the talent which is lost
from external market.

Talent Management is beneficial to both the organization and the employees. In

these days of highly competitive world, where change is the only constant
factor, it is important for an organization to develop the most important resource
of all - the Human Resource. In this globalized world, it is only the Human
Resource that can provide an organization the competitive edge because under
the new trade agreements, technology can be easily transferred from one
country to another and there is no dearth for sources of cheap finance. But it is
the talented workforce that is very hard to find. The biggest problem is how to
retain the present workforce and stop them from quitting?

Chapter 2

2.1 RESEARCH METHODOLOGY:

A systematic study of methods having application within a discipline for human

activity with an aim of discover interpret and revise knowledge. Research is
common parlance refers to a search for knowledge. “All progress is born of
inquiry. Doubt is often better than over-confidence, for it leads to inquiry,
and inquiry leads to invention.” Increased amount of research make progress
possible.

2.2 TITLE OF THE STUDY:

“IMPACT OF TALENT MANAGEMENT ON THE PERFORMANCE

OF EMPLOYEES OF AN ORGANISATION WITH REFERENCE TO
NORTH EAST SMALL FINANCE BANK”

2.3 STATEMENT OF THE PROBLEM:

Statement of the Research Problem Performance management system sets

expectations for employee performance and motivates employees to work hard.
It involves identifying strengths and weaknesses of employees in their
performance as it sets work standards, measure actual performance and gives
feedback to employee regarding performance. The divergence of employee
performance can only be explored through performance management systems,
though most organizations focuses only on appraisals yet performance
management system is a complete process which accounts also for appraisals.
(Lebas, 1995). Absenteeism, dissatisfaction ,poor motivation, poor working
standards are among the factors which trigger poor performance of employee,
but the use of effective performance management systems can help to harness
the repercussions of these factors(Kandula, 2006). Macky and Johnson (2000)
pressed that the importance of performance management system is on
continuously improving organization performance and this is achieved by
improving individual performance. Therefore, improving employee
performance by using performance management system is vital. In this research,
investigation was on the impact of performance management systems on
employee performance.
2.4 OBJECTIVES OF THE STUDY:

1. General Objective:
The general objective of this study was to assess the impact of
performance management systems on employee performance at NORTH
EAST SMALL FINANCE BANK
2. Specific Objectives:
Specific objectives of the study were:
i. To know how personal development influence employee
performance.
ii. ii. To find out how promotion influences employee performance.
iii. iii. To identify how employee performances influence institution
performance.
iv. iv. To know the performance management system and how it
helps in institutional development.

2.5 SCOPE OF THE STUDY

The scope of this study was limited to the study of performance management
systems and how they influence the performance of employees in an institution.
This study concentrated on the following key areas; Job satisfaction, training
and development, performance, Managing and reviewing performance and
Rewarding performance and career growth.

2.6 TYPE OF RESEARCH:

A Research design is simply the framework or plan for a study. The design may
be a specific presentation of the various steps in the process of research. For this
study descriptive research is used. Descriptive research can be explained as a
type of research as they are at present with the researcher having no control over
the variables. Descriptive research is used to study the characteristics and/or
behavior of the sample population. Descriptive research is closely associated
with observational studies. Case studies and surveys can also be specified as
popular data collection methods used with descriptive research.

2.7 REVIEW OF LITERATURE:

Introduction In this chapter the researcher analyzed the existing literature

authored by different writers. Literature review of an extensive nature was
carried out to enable an understanding of the impact of talent management
systems on employee performance.

2.8 HYPOTHESES:

For the successful completion of the study, the following research hypotheses
were formulated by the researcher; 

H0: There is no impact of talent management on organizational performance

 H1: There is impact of talent management on organizational performance

H02: There is no relationship between talent management and organizational

performance

H2: There is relationship between talent management and organizational

performance

2.9: OPERATIONAL DEFINITION:
TALENT: A Talent (or gift, or aptitude) is the skill that someone naturally has
to do something that is hard. It is an ability that someone is born with. People
say they are "born with a talent". It is a high degree of ability or of aptitude.

MANAGEMENT: Management includes the activities of setting the strategy

of an organization and coordinating the efforts of its employees (or of
volunteers) to accomplish its objectives through the application of available
resources, such as financial, natural, technological, and human resources

ORGANIZATION PERFORMANCE: Organizational

performance comprises the actual output or results of an organization as
measured against its intended outputs (or goals and objectives)

2.10 SOURCES OF DATA:

Two sources of data were used for this study- primary and secondary. The
primary data has been collected using a questionnaire. A Questionnaire has been
prepared and distributed among the employees for both executives and non-
executives. The secondary data has been obtained from company records,
journals, websites and the internet.

PRIMARY DATA

For the purpose of collection of primary data questionnaire was prepared.

Questionnaire was made for HR professionals & the employees involve with the
talent management in the organization.

2.11 QUESTIONNAIRE:

The researcher focused on a comprehensive set of workplace practices that

influence employee motivation, commitment and willingness and desire to
achieve at work. The researcher identified these practices and a deep
understanding of typical organizational programs to ensure that the
questionnaire covered the broadest spectrum of tangible and intangible aspects
of the work environment. As a result, the questionnaire included items about the
full range of rewards practices, leadership and management effectiveness,
communication, culture and attributes related to these tangible and intangible
aspects. The talent management initiative is taken by the HR professionals but
the implication of this initiative is on the employees. By this questionnaire, the
researcher tried to find out the effectiveness of such talent management
initiative as well as the satisfaction level of the employees. Personal approach,
surveys, mails, telephonic discussions and meetings with different employees of
NESFB

2.12 SAMPLE DESIGN:

Convenience sampling design was used for a sample size of 100 employees in
order to analyse and interpret the respondent’s opinions and views with respect
to the entire study.

2.13 TOOLS OF DATA COLLECTION:

The primary data is collected using the questionnaire method. A Questionnaire

has been prepared and distributed among the employees for both executives and
non-executives. The secondary data was obtained

2.14 PLAN OF ANALYSIS:

Percentage Analysis is used for analysing the data collected.

2.15 REFERENCE PERIOD:

The both qualitative and quantitative data collection and analysis of the result in
done within period of two months start from 1st of November 2021 to 31st
December 2021.

2.16 LIMITATIONS OF THE STUDY:

The researcher encounters some constrain which limited the scope of the study;

a) AVAILABILITY OF RESEARCH MATERIAL: The research material

available to the researcher is insufficient, thereby limiting the study       

b) TIME: The time frame allocated to the study does not enhance wider
coverage as the researcher has to combine other academic activities and
examinations with the study.

c) Organizational privacy: Limited Access to the selected auditing firm makes

it difficult to get all the necessary and required information concerning the
activities

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new employment principle for a new organizational era. New York
Oxford University Press.
 Ashton, C., & Morton, L. (2005). Managing talent for competitive
advantage. CRF Publishing, 4(5), 28-31.
 Berger, L. A. & Berger, D. R. (Eds.). (2004). The Talent Management
Handbook: Creating Organizational Excellence by Identifying,
Developing and Promoting Your Best People. New York: McGraw-Hill.
 Branham, F.L. (2000). Keeping the people who keep you in business: 24
ways to hang on to your most valuable talent. New York: AMACOM.
 Busi, M. & Bititci, U.S., (2006). Collaborative performance management:
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and Performance Management, 55(1/2), 7-26.

 Jha, R., & Mishra, M. K. (2015).A study of HRM and employees

performance in banking sector in India. International Journal of Advance
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