129

Chapter 3

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Chapter 3 Reward System in ICICI Bank

3.1 Basis of rewards

3.2 Financial Components of Reward System

3.2 (a) Fixed Pay

3.2 (b) Variable Pay

3.3 Non – Financial Components of Reward System

3.3 (a) Recognition

3.3 (b) Praise

3.3 (c) Achievement

3.3 (d) Responsibility

3.3 (e) Personal growth

3.4 Compensation & Benefits

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Chapter 3 Reward System in ICICI Bank

ICICI Bank is the largest private sector bank in India. It has a huge

network of 3,595 branches and 11,162 ATMs in India and a presence in 19

countries including India. It employs around 36,000 employees. It have a

shared vision of India and the opportunities for an Indian financial services

company in the Indian and global arena. Over the years, ICICI Group has

grown with the country to establish leadership positions in retail credit,

corporate and investment banking, international banking, insurance, asset

management and private equity. Given the long-term growth outlook for

India, ICICI aim to be leverage existing structures and leverage growth

opportunities arising out of the country’s progress.

ICICI Bank follows a meritocracy based performance oriented culture

where deserving employees are given responsibilities ahead of time.

ICICI Bank provides better salary structure to employees as compared to

other Banks in the Industry . Moreover, the growth prospects with ICICI

Bank is far much superior than that of Public Sector Banks. ICICI bank

views and values human resource as a key source of competitive

advantage. Consequently the development and management of human

capital is an essential element of their strategy and an important

management activity.

ICICI Bank offers a defined growth hierarchy to it employees . The

Corporate structure is mentioned below :

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Corporate Structure

Figure. 3.1

Hierarchy Levels

Figure . 3.2

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3.1 BASIS OF REWARDS

ICICI Bank follows a conservative and comprehensive approach

towards Rewards Management. The compensation policy is approved by

the Board Governance and Ethics committee. The Bank follows the

principles of balanced scorecard in designing its performance management

system. Adequate attention is paid to the goal sheets to ensure a balance of

financial goals with non-financial goals. The non financial goals cover

relevant areas of customer service, process improvement, adherence to risk

and compliance norms and employee capability building. For senior and

middle management employees, financial goals do not exceed a weightage

of 50%. Staff engaged in all control functions including Compliance, Risk,

Finance, Audit and others do not carry business profit targets in their goal

sheets and hence are compensated independent of the business profit

achievements. Their compensation is dependent on achievement of key

results in their respective domain. Performance bonus is strongly linked

to corporate performance, business performance and individual

performance.

ICICI Bank is committed to adoption of fair employment practices and

upholds the principle that advancement is based on talent and

performance and there is a commitment to equal opportunity.

Design and Structure of Remuneration

• Compensation is aligned to both financial and non-financial

indicators of performance.

• Adequate attention is given to performance on parameters like

customer service, process improvement, adherence to risk and

compliance norms and employee capability building.

• No single business or functional leader determines the

compensation structure.

• The Bank does not encourage any kind of guaranteed bonus.

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• The Bank follows bonus distribution method based on individual

performance ratings.

• The performance ratings based bonus distribution matrix is

determined by the BG&EC and the Bank does not follow a

business wise bonus pool concept. No single individual determines

the quantity of bonus available to a person.

• The performance rating of an individual is decided by skip levels

and this determines the individual’s payout as a percentage of one’s

base salary.

The BG&EC reviews the performance and approves the rate of bonus to be

paid, the increments to be given to the Managing Director & CEO and

members of the Management Committee and bonus rates to be paid to

various levels as per the performance of the Bank, business group and

individual employee.

The BG&EC approves the threshold organizational performance gates for

bonus to be paid. The committee may also fix the annual bonus as ‘nil’ if

the data and analysis show that the performance is far below the expected

levels.

3.2 FINANCIAL COMPONENTS OF REWARD SYSTEM

The total compensation is a prudent mix of fixed pay and variable pay.

The variable pay is higher at senior levels and lower at junior levels.

• Employee compensation takes into account a balanced mix of

external market pay and internal equity.

• The compensation outlay is based on cost and income ratios of

the Bank.

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• The Bank has a judicious and prudent approach to compensation

and does not use compensation as the only lever to attract and

retain employees.

3.2 (a) Fixed Pay

A list of salaries offered to its various employees depicts how much an ICICI

employee can earn- Average salaries and Bonuses .

Salary at ICICI Bank as on 14th October 2013

Jobs Salary

Manager INR 450,000 – INR 1,200,000 (average annual

salary INR 849,048)

Manager II INR 620,000 – INR 1,500,000 (average annual

salary INR 939,200)

Assistant Manager II INR 400,000 – INR 925,000 (average annual

salary INR 658,750)

Relationship Manager INR 180,000 – INR 1,200,000 (average annual

salary INR 632,667)

Sales Officer INR 160,000 – INR 283,000 (average annual

salary INR 196,560)

Branch Banking Officer INR 180,000 – INR 250,000 (average annual

salary INR 207,800)

Privilege banker INR 300,000 – INR 420,000 (average annual

salary INR 384,714)

Teller INR 200,000 – INR 250,000 (average annual

salary INR 226,000)

Assistant Manager INR 266,000 – INR 863,000 (average annual

salary INR 459,365)

Account Manager INR 286,100 - INR 1,610,933

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Assistant Manager INR 210,309 - INR 909,884

Call Center and Customer Service

Executive INR 122,304 - INR 398,812

Bank Officer INR 153,693 - INR 672,694

Vice President INR 1,193,075 - INR 8,364,834

Financial Research Analyst INR 257,249 - INR 1,474,560

Regional Sales Manager INR 445,184 - INR 2,039,298

Retail Sales Manager INR 170,974 - INR 917,924

Personal Banker INR 176,565 - INR 618,983

Loan Officer INR 149,034 - INR 369,790

Marketing manager INR 204,585 - INR 1,360,705

Treasury Manager INR 324,054 - INR 1,491,421

Administrative Officer INR 95,868 - INR 480,242

IT Business Analyst INR 224,155 - INR 1,048,121

Chartered Accountant INR 259,963 - INR 1,387,925

Financial Adviser INR 227,589 - INR 1,257,701

Banking Operations Manager INR 211,250 - INR 733,500

Internal Auditor INR 232,599 - INR 1,312,879

Salary

Figure . 3.3

Salaries also include other benefits listed below:

•Manager- Stock bonus, cash bonus, tips and commission on sales

•Manager II- Cash bonus

•Assistant Manager II- Cash bonus

•Relationship Manager- Stock bonus, cash bonus, tips

•Sales Officer- Cash bonus and tips

•Branch banking Officer- Cash bonus and tips

•Privilege banker- Cash bonus and tips

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•Teller- Cash bonus and tips

•Assistant Manger- Cash bonuses and commissions on sales

All the salaries of the other designations mentioned, include bonuses. •ICICI

generally offers 10-15% of salary which might be hiked if an employee performs

exceptionally well. However bonus is scrapped if targets are not met.

3.2 (b) Variable Pay

The basic purpose of the Performance Based Incentive Schemes is to

motivate the employees to work more effectively and efficiently in

order to attain the organizational goals. As we know that success of any

service organization depends upon how strong that bank is in managing its

employees and retaining them over the period of time to have much better

customer and employee relationship. Management believes that it has good

relationships with its employees. Employee compensation is clearly tied to

performance and it encourages the involvement of all employees in overall

performance and profitability through profit sharing incentive schemes

based on the financial results.

• ICICI bank is more towards ESOP-Employee Stock Option Plans

and Early Retirement benefits . The variable compensation

consists of performance bonus and Employee Stock Options

(ESOS).

A. Employee Stock Options (ESOS) - At senior levels, the Bank pays

100% of the deferred variable remuneration in shares for a vesting

period spanning four years with a rear load at 20%, 20%, 30%, 30%

vesting each year after the first year of grant. Most Code Staff have

more than 50% of their variable pay deferred in share form. The

Bank’s financial year ends in March of every year. This is paid based

on compliance with performance norms both in financial and non

financial domain and does not favour inappropriate risk-taking,

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thus aligning senior management interests with those of the

shareholders. All invested options are lapsed in the event of

termination of the code staff's employment for cause.

ESOS aims at achieving twin objectives of aligning senior and middle

management compensation to long term shareholders interests and

retention of employees identified as Talent (High Potential) under the

Talent Management System. ESOS aim at aligning senior management

behavior to the long-term view of the Bank’s performance and to create

individual stake in the Bank’s success. The vesting schedule of the ESOS

is spread over a period of four years to fully realize the impact of the

decisions taken at senior management levels and the real value created for

the shareholders.

B. Performance Bonus - The Bank follows a conservative approach to

cash bonus payouts. The quantum of bonus for an employee does

not exceed 60% of base salary and is paid on an annual basis. In an

exceptional performance event if the quantum of bonus for an

employee exceeds 60% of the base salary, the bonus payout will be

deferred. Any bonus payout in excess of 60% of the base salary will be

reviewed by a committee of senior managers from (a) risk

management, (b) finance group, (c) internal audit, (d) business and (e)

human resources. A performance bonus scheme provides wide

ranging incentives to employees.

The eligibility of each employee is determined based on an evaluation

of the employee including employee’s work performance, technical

knowledge and leadership qualities. Moreover, ICICI Bank places

considerable emphasis and value on its policy of encouraging

internal communication and consultation between employees and

management.

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3.3 NON – FINANCIAL COMPONENTS OF REWARD SYSTEM

Indian banking sector, especially commercial banks, have started realizing

the need for a strong human resource orientation for their survival in the

face of the rapid changing environment, global competition and other

upcoming challenges. With attrition becoming a stark reality in the Indian

banking sector, it is increasingly being understood that employee loyalty

has to be created by organizational interventions and not something that

can develop on its own.

ICICI Bank is one of the most reputed banks of India. It has a strong

performance driven culture and leadership development programme

that builds new talent to help meet long-term objectives and

continuously perform at the best. ICICI Bank takes employee

development seriously and create an environment in which one can

perform to the best of your abilities.

A high level of performance is rewarded by a system of performance

bonus. The ratio of variable bonus to fixed salary is fairly high to attract

and retain the best talent in the Bank. Further, to ensure that the Bank does

not lose high performers and to increase the motivation levels and instill a

feeling of ownership, the Bank has introduced an Employee Stock Option

Scheme (the Scheme). These proactive HR policies have helped the Bank

to obtain higher contributions from its employees as well as achieve its

business goals. Similarly , ICICI Bank ensures satisfaction of its

employees by providing different kind of non- financial rewards to

employees from time to time .

3.3 (a) Recognition

Talent is recognized in the ever Growing Financial field. The company

ensures to follow the polices & procedures laid down by the top

management from time to time, which in result reduces absenteeism &

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increases the productivity & the employees who delivers the high

productivity will be rewarded & motivated.

• At ICICI Bank the efforts and contributions of employees are

acknowledged by Management and given Recognition from time to

time.

• The deserving employees are given the recognition for the good

work to motivate them and to ensure the steady performance all the

time.

• ICICI Bank values the human as Assets and take all necessary

initiatives to recognize their contribution for achieving profits for

the Organization.

3.3 (b) Praise

The Bank has continued to lay great emphasis on human resource

development, to make its employees attain global standards in

productivity, thereby maximizing value creation for its stakeholders .The

Bank believes that the key to success will be the ability to maintain

business efficiency and culture and motivate and expand its pool of

skilled and experienced professionals, by creating an environment that

offers growth, learning, excitement, comfortable working conditions

and competitive remuneration. The Bank has taken strides in every

sphere of activity largely due to the commitment and dedication of the

staff and the teamwork across the group companies, backed by leading-

edge technology.

• The Board places on record its sincere appreciation for the untiring

efforts made by each and every member of the staff.

• Managers praise and honor the commitment and hard work of

dedicated employees .

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• The Directors express their deep sense of appreciation to all

employees, who continue to display outstanding professionalism

and commitment, enabling the organization to achieve market

leadership in its business operations and to operate successfully as

a universal bank.

3.3 (c) Achievement

The employees form the backbone in all the initiatives undertaken by the

Bank, which remains committed to constantly upgrading their skills

through training to ensure constant improvements in performance. The

Bank has always viewed Human Resource (HR) Development as a

critical activity, as it plays a very important role in culture building

and gives an impetus to the effort put in achieving business goals more

efficiently. Bank has established clear link between business strategy and

human resource strategy.

• ICICI Bank has established development centres that focus on

people available in the organization rather than to hunt for talent

from outside. These centres evaluate strengths, assess

development needs, and provide career opportunities to

employees within the organization itself.

• Training programs of shorter duration are conducted for the

existing staff, with specific focus on product information, customer

service, cross selling of products and operational excellence.

• The promotion process has been designed on the principles of

openness and transparency.

• Career progression is based on performance of employees being

above an acceptable level with emphasize on those with high

business drive and potential. These exercises are carried out by the

Career Development Centre, which offers a comprehensive

competency building programme. This process has been followed

for the last 5 years and has been perceived as being fair and

credible by the employees.

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• The Bank has constantly strived to make the working conditions

comfortable for its employees .

• ICICI Bank is committed to adoption of fair employment

practices. It ensures diversity of workplace through efforts to

recruit, develop and retain the most talented people from a

diverse candidate pool.

• It upholds the principle that advancement is based on talent

and performance and there is a commitment to equal

opportunity.

• ICICI Group discourages conduct that implies granting or

withholding favours or opportunities as a basis for decisions

affecting an individual, in return for that individual’s compliance.

• ICICI Bank considers safety of employees as the primary concern.

ICICI Group is committed to safety of employees and expects its

businesses and employees to comply fully with appropriate laws

and internal regulations.

• ICICI Bank practices performance feedback sessions to improve

performance of their employees. During feedback, process

employees are made aware of problem areas and are made to

understand the consequences of the problem behavior.

• ICICI Bank clearly communicate the organization’s position and

strategies to its customers, investors, regulators, and employees.

This open communication brings significant confidence

building measure among stakeholders in the background of a

volatile environment and ensured stability.

• ICICI Bank also encourages cross-functional movement,

enriching employees’ knowledge and experience and giving

them a holistic view of the organization while ensuring that the

bank leverages its human capital optimally.

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3.3 (d) Responsibility

ICICI Group encourages responsible behavior of its employees and colleagues.

ICICI Bank’s constant endeavour to implement innovative human resource

practices has resulted in the creation of an exceptional pool of talent and a

performance-oriented organizational culture and has imparted agility and flexibility

to the organization . ICICI Bank believe in defining clear performance for

employees and empowering them to achieve their goals.

• ICICI Bank has specifically empowered their newly joined employees

and provided complete authority to them to handle their job roles.

• After two weeks of an orientation programme employees are given

assignments and are motivated to make decisions in the very first week

itself.

• Apart from employee participation ,ICICI Bank has started staff space on

the intranet where employees can participate in collaborative activities

such as- contributing documents, engaging in discussions and posting

or answering queries leading towards better cooperation.

• The performance management system at ICICI Bank is based on clearly

defined performance parameters and employee empowerment for

achievement of goals, reinforcing the Bank’s achievement-oriented

culture.

• ICICI Bank also has a structured process of identifying and developing

leadership potential.

3.3 (e) Personal growth

The rapidly changing business environment in banking sector and the constant

challenges it poses to organizations and businesses make it imperative to continuously

enhance and improve knowledge and skill sets across the organization. ICICI Bank

believes that building a learning organization is critical for being competitive in

products and services and meeting customer demands and achieving customer

satisfaction. Training and Development process in the ICICI bank is considered

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essential for the progress and growth of the bank. Since, inadequate training and

employee errors constitute a major operational risk for the bank. ICICI bank considers

T&D programmes very seriously. They think it to be one of the chief regions in the

success of the bank. Hence they make sure that every employee who needs training

gets it. They also ensure full employee participation and success of T&D programmes

.ICICI bank did a number of things to ensure Employee participation and success of

T&D programmes

• The Bank has built strong capabilities in training and development to

build competencies across various sectors. Training & Development was

developed by ICICI bank by keeping the need and skill analysis of the set of

employees who are going to undergo the T&D programme . Training on

products and operations is imparted through internet-based training modules.

• Special programmes on functional training and leadership development

are conducted to build knowledge as well as management ability at a

dedicated training facility.

• ICICI Bank also learns from the best available training programmes and

faculty, both international and domestic, to meet its training and

development needs and build globally benchmarked skills and

capabilities.

• A revised performance appraisal system has been implemented to assist

management in career development and succession planning .

• The company announce time to time outdoor trip and incentive and

gives good opportunity for learning growth.

• Career Development Opportunities

A. More than 10 CEO and board level positions filled only by

internal staff

B. Horizontal Growth

• Also ICICI Bank offers many training programs -

� Post Graduate Certificate in Securities Markets

ICICI Bank has partnered with National Institute of Securities Markets (NISM) to

launch Post Graduate Certificate in Securities Markets (PGCSM). The programme

145

aims to create professionals such as Treasury dealers, Fund Managers, Analysts,

Institutional Sales Professionals, and Investment Advisors in the securities markets.

This partnership is part of ICICI Group's strategy to capacitise for growth.

The duration of the programme is for one year. The programme curriculum is

aligned with the needs of the industry. The unique design of the programme focuses

on providing a high degree of industry exposure, by academic and functional experts,

from the BFSI sector. The Programme has the much-desired blend, wherein

participants undergo the industry-linked internship at ICICI Group for a period of

three-months during the one- year course duration.

� PGCSM programme in Securities Markets

The Programme is designed with the view to providing the participants with the

optimum blend of theory and practice. The course structure is as follows:

1. Term 1/2/3 (9 months) - Classroom training (at NISM).

2. Term 4 (3 months) - Internship at ICICI Group.

Stipend : During the 9 months classroom-training period the participants are paid a

stipend of 10,000 per month, to cover the incidental expenses.

During the 3 months internship phase with ICICI Bank, the participants are paid a

stipend of 50,000 per month to cover the expenses incurred.

� MBA (Finance & Banking) Programme

ICICI Business Leadership Programme is an initiative by ICICI Bank in partnership

with NIIT University to deliver Master of Business Administration (MBA - Finance

& Banking) programme with specialization in finance and banking. It aims to provide

opportunities to professionals, who demonstrate an aptitude for the banking industry,

to get identified and nurtured as future business leaders. It provides a career leap to

business leadership positions and an opportunity to serve corporate India.

The unique design of the programme focuses on providing high degree of industry

exposure, by academic and functional experts from the financial domain and banking

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industry. The programme has a desired blend, wherein students will undergo six

months module of industry linked internship at ICICI Bank twice during the 2 year

course duration.

The course structure will be as follows :

1. Term 1 & 2- Classroom programme at Neemrana Campus (Rajasthan).

2. Term 3 & 4 - Internship at ICICI Bank.

3. Term 5 & 6- On campus classroom programme in the area of specialization at

Neemrana Campus (Rajasthan).

4. Term 7 & 8- Internship in the area of specialization at ICICI Bank.

Each term comprises of 3 months duration. Specialization in wholesale banking, risk

and technology will be in second year. During the internship the weekly schedule will

consist of the students undertaking on-the-job training for 5 days. The 6th day will be

reserved for classroom engagement with the assigned faculty.

On successful completion of the MBA (Finance & Banking) Programme students are

absorbed at ICICI Bank as Manager-II grade or above based on duration of prior work

experience. The starting remuneration on Cost to Company basis for these students

will be in the range of 15 lacs and above [Per Annum].

ICICI Bank has training centers at Khandala in the state of

Maharashtra, which conduct various training programs designed to

meet the changing skill requirements of its employees. These training

programs include orientation sessions for new employees and management

development programs for mid-level and senior executives. The training

center regularly offers courses conducted by faculty, both national and

international, drawn from industry, academia and ICICI Bank’s own

organization. Training programs are also conducted for developing

functional as well as managerial skills. Products and operations training is

also conducted through web- based training modules.

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3.4 COMPENSATION & BENEFITS

• ICICI Bank employees automatically become ICICI Bank Salary

Account holders with special benefits and privileges and receive

instant salary credit. The benefits include International debit card, access

to Phone Banking and Internet Banking, Demat accounts, and a host of

other services to complement their savings account .

• In addition to basic compensation, employees of ICICI Bank are eligible

to receive loans from ICICI Bank at subsidized rates and to participate in

its provident fund and other employee benefit plans. The provident fund,

to which both ICICI Bank and its employees contribute a defined amount,

is a savings scheme, required by government regulation, under which

ICICI Bank at present is required to pay to employees a minimum 9.0%

(9.5% until fiscal 2003) annual return. If such return is not generated

internally by the fund, ICICI Bank is liable for the difference.

• ICICI Bank has also set up a superannuation fund to which it contributes

defined amounts. In addition, ICICI Bank contributes specified amounts to

a gratuity fund set up pursuant to Indian statutory requirements.

• ICICI Bank also offers an Early Retirement Option to its employees. All

employees who have completed 40 years of age and seven years of service

with ICICI Bank (including periods of service with Bank of Madura,

ICICI, ICICI Personal Financial Services and ICICI Capital Services

which were amalgamated with and into ICICI Bank) are eligible for the

Early Retirement Option which includes -

• 3 months’ salary for every completed year of service, and

• 1 month’s salary for the number of months of service left.

• Work – Life Policies & Benefits are also offered to ICICI Bank employees

.

A. Employee Salary Account Benefits

B. Family Health Insurance

C. Flexibility to Innovate

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D. Staff Retirement Benefits- Gratuity , Superannuation Fund ,

Pension , Provident Fund , Leave Encashment

149

BIBLIOGRAPHY

• 19th Annual Report and Accounts 2012-2013

• Code of Business Ethics – ICICI Bank

• Remuneration Policy Disclosures 2012-2013

• Current Employee – Reviewed Feb 13, 2013 - Great learning ,

Immense power , Great peer group

• Former Branch Manager – Reviewed Feb 13, 2013 - Great place to

learn and grow if you are interested” , Good place to learn ,

Recognition for performance , Systematic organisation

• Times of India

• Financial Express

• Business Standard

• Hindu Business Line

• India Online Pages

WEBSITES

• www.projectparadise.com

• www.hrmguide.co.uk

• www.salaryandreviews.com

• www.oppapers.com

• www.allbankingsolutions.com

• www.citehr.com

• www.allinterview.com

• www.bankbazaar.com

• www.indeed.co.in

• www.icicicareers.com

• www.icicifoundation.org

• www.naukrihub.com

• www. jobbuzz.timesjobs.com

• ww.jobsandcareer.com

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• www.peoplematters.in

• www.glassdoor.com

• www.m.paycheck.in

• www.amazon.com

• www.managementparadise.com

• www.moneycontrol.com

• www. infinity.icicibank.co.in

• www.ratekhoj.com

• www.en.wikipedia.org/wiki/ICICI_Bank

• www.rupeetimes.com

• www.wikinvest.com

• www.webotopia.org

• www. bank-timings.blogspot.in