case study bank z
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CASE STUDY: SERVICE INDUSTRY (Bank Z)
General Background:
Bank Z is the largest domestic private sector bank in India. Since its inceptionin 1930 till date, the bank takes a pride in serving its three million customers
through a vast domestic network of seventeen regions consisting of 336
branches and 101 extension counters spread across the length and breadth of
country. The total manpower strength of the bank stands at 5877, out of which
3780 are workmen. Financially, the bank has been doing moderately well with
increasing trend of deposits and profits level. In the face of deregulation
(Narasimham Committee Recommendations), stiff competition and volatility in
markets, the bank had to opt for reorienting its strategic framework by
introducing strategic intents like sustained profitable growth,
training/upgradation of human skills, enhanced customers’,shareholders’ and employees’ satisfaction, leverage IT andbranch network, focus on retail banking, establishment of strong customer
relationships etc to retain the leading position among the private sector banks.
These strategies were to be driven by measures such as diversification, joint
ventures, customer service, cost reduction, restructuring etc.
Assessment of Environment:
The external environment of Bank Z is undergoing a rapid transformation.
Among many of the external environment, the bank is facing the direct
implications of following three key triggers:
• Government Policy Changes: The implementation of liberalizedpolicy by the government has created favorable environment for the banking
sector. Such as deregulation of interest rate structure has given flexibility to
the banks to fix its own rate of interest. Reduction of government stake to 33
percent has led to opportunity of having more power to the management team
of the bank regarding the decision making etc.
• Intensification of Competition: The impact of liberalized governmentreform is seen in the form of intensified competition in the banking sector. The
entry of foreign banks and new private sector has increased the competition
and complexity in the domestic banking sector. As a result, an extra effort
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Strategic responses related to Process management
Its process related strategies consists of giving increased services to its
customers such as introduction of ATM, extension of business hours at Tele
Banking Counters (TBCs), Rejuvenation of customer service committee etc.Similarly it also includes marketing strategies like brand building,
advertisements, up gradation of skills etc.
It also aims at providing various information technologies like email facility to
200 locations, CMS to 50 locations, Automating Forex Services etc. It also
has a cost reduction strategy and the bank also has a quality strategy, which
includes good inspection system, adherence to customer service manual and
customer satisfaction.
Strategic responses related to Structure in the Bank
The Bank has introduced flat structure in place of its hierarchal structure and
also has introduced a profit centre concept, which means that each region is a
profit centre and is accountable for its business performances.
Identification and Assessment of HRD Responses:
The Bank has a wide array of HRD process and responses provided to its
employees which are identified as hereunder;N Compensation is according to IBA’s guidelines and also consistentwith Consumer Price Index rate. A wide range of allowance and perks has
been arranged. They are also entitled to receive soft loans, such as house
building advance, vehicle loan, various policies and holiday advance. They
also get statutory benefits like bonus, social security schemes etc.
N Working Conditions is excellent with no compromise made on any aspect.
The bank emphasize on the congenial physical environment in the bank to
attract the customers and to provide a comfortable working place.
N Family welfare Employees are well taken care of with the Family Welfare
provision The bank provides medical aid to the dependent family member.
The employees are also paid education allowance and each employee along
with the dependent family members is entitled for leave travel concession and
has also introduced a pension scheme.
N No proper written HR Policy inspite of having full-fledged HR Department:
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However it has a few booklets containing rules and regulations governing the
sanction of advances and service rules.
N Training policy yet not evolved. But it follows a custom of training every
employee a minimum of two or three days in a year and has a full-fledged
training infrastructure at Bangalore.N No written Performance Appraisal System: Even though the bank has a
performance appraisal format it has no written appraisal policy.
N Job Enrichment: The Bank does not have a specific programmes/effort
designed or implemented to enhance the job content of the staff except a kind
of job rotation system which is yet not clear.
N Career Planning: The Bank does not have any formal career planning.
N Communication: In order to make the employees aware of various important
developments, new policies and business plans, the bank publishes a monthly
newsletter. No other communication mechanism is used in Bank Z.
N Employee involvement and empowerment programmes: The bank has
started a quality circle, which has been adopted by many branches. Except
QC, no other employee participation programs are there in the organization.
Alignment:
Analyzing the present policies and practices adopted at the bank and then
comparing it to the Corporate Strategy, we can deduce that though the bank
seems to be providing wide array of employee perks, allowance and benefits,it does lack in few aspects in alignment of its HR practices to that of Corporate
Vision and Strategy.
N According to the Corporate Vision, Employee Growth is taken as a
Commitment; however the conspicuous absence of any definite specific HR
Policy inspite of having full-fledged HR Department shows the commitment is
not very serious. Similarly, the management's apathy for upgrading the skills
of clerical staff beyond a certain level in consideration of the fear that the
highly skilled workers may leave the bank after they are upgraded is nothing
but because of the lack of proper HR and Training Policy. The bank should
instead ensure that its employees are skilled and are the best in the industry
to provide the seamless service to its customers and better than its
competitors are providing.
N One should not forget that the quality service is a core competency of the
banks which is only possible when the employees, who come to direct
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contacts with the clients and customers, give high level of performance. The
quality of performance can be ensured by the regular performance appraisal.
Performance Appraisal in service sector like Bank Z is something which one
cannot afford to ignore because it helps to improve the individual, team and
group's performance by identifying the areas needed for improvement andhelp the organization as a whole to gain its objectives by improved service
and performance. But at Bank Z it seems that Performance Appraisal is done
just for the sake of doing it. No formal policy, authority or trained officer takes
charge of the process. Though the PA system is used for the purposes of
training, promotions, and placement in a particular function, due to lack of
trained authority, counseling and further improvements required are not taken
into consideration seriously.
N There is no formal career planning carried out in the bank. Though there is
a scheme to encourage staff to acquire additional qualification and provision
that employees acquiring these qualifications will be rewarded with monetary
incentive and earn extra credit points for promotion to higher posts, which is
just for short run. But no formal development needs of employee for long run
are identified.
N The HRD practices where Bank Z is good at; such as Compensation,
Working Conditions and Family Welfare can only fulfill the basic physiological
needs of an employee. Moreover, it seems that bank had these facilities only
because of unions influence to the management. The challenges at work andself actualization needs of the employees cannot be fulfilled by these mere
compensation packages. For this, job enrichment and employee participation
in decision making is required which the bank seems to be lacking. For job
enrichment, they have only job rotation program which still is not coherent.
Giving a common designation irrespective of actual job profile with less
hierarchical level may give less development ladder to the employees which
may act adversely as demotivating factor for ambitious employees. Similarly,
the bank has QC program as employee participation and empowerment
program which do help the employee to solve work related problems; yet
employees are not participated in decision making of the organization.
N Similarly, the bank lacks two way communications between management
and employee. Employees are informed only through the newsletter published
monthly. There is no way the employee can give their opinion to the
management.
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Suggestions/ Conclusion
The bank needs to have a separate HRD Vision and Strategies consistent
with the corporate strategy, vision and mission.
The bank should craft effort to make business strategy and employeeresource strategy coherent to each other.
A push for a more business-driven thrust to HRD at organisational level is
needed because HRD Strategy is something, which falls, at functional
strategy level. Though it is narrower in scope compared to overall business
strategy, it adds relevant details to the overall business game plan. Care
should be taken that the HRM Strategy must support the bank’soverall business strategy and competitive approach.
The bank should Improve HRD not only Employee Development becausethere are individuals or groups who have some relationship with an
organisation but are not in an employer-employee relationship. These external
people and institutions have a direct or indirect interest in the business and
influence the success of the business.
The bank come up with formal exhaustive HR Policy including training
policy ensuring that the employees are well trained and those on whose
training investment is done cannot leave the bank all of a sudden to join
competitors bank.
The Bank is to face a stiff competition from influx of foreign banks and theirpowerful resources and thus to ensure the retention of its highly qualified
executives from joining those foreign banks the bank could provide Employee
Stock Options to the deserving workforce of the bank.
Efforts to increase the client base and to retain the customers should be
instilled while formulating the plans and procedures by providing better
facilities and products than the competitors. One of the ways of outperforming
competitors is to increase performance of employees to give better customer
service; for which HR capital should be mobilized efficiently giving them morethan compensation in terms of job enrichment, communication and
participation at policy level.
Similarly, attempt should be made to roll out the latest in technology like
internet-banking and train the staffs and customers to use it efficiently.