hrm policies, practices and trends in selected commercial banks
TRANSCRIPT
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CHAPTER-5
HRM POLICIES, PRACTICES AND TRENDS IN SELECTED
COMMERCIAL BANKS
The tremendous growth of the Indian banking industry has changed its face with a
decreasing emphasis on human interventions. Many commercial banks are positioning
themselves as a single-stop shop of financial service provider with a fairly exhaustive range of
products, including deposit products, loans, credit cards, debit cards, depository services,
investment advice, bill payments, ATMs, phone banking, internet banking and mobile banking
and various transactional services. In addition, the banks have also entered into the business of
selling third-party products such as mutual funds and insurance to the retail customers. These
days improved technologies are being followed by the banks for upgrading their work methods,
work norms, technical and managerial skills, and employees‟ motivation to face the fast
emerging challenges, both in the manufacturing and service sectors. Technology has become one
of the biggest drivers of change as it has been transforming today‟s banking into 24 hours a day
banking, all seven days in a week and a reality in facilitating the highest service levels. Now,
there is a shift from 'Brick and Mortar' branches to 'Click and Portal' banking. And in order to
provide their customers more flexible and convenient services as well as to reduce servicing
costs, banks have been investing huge amounts to computerize their branches and installing new
delivery channels. At the same time, the banks are putting greater emphasis on the management
of their human resources. The need for sound and effective HRM policies and practices for the
sake of organizations as well as personal development is being felt strongly at every level.
5.1 HUMAN RESOURCE MANAGEMENT IN SELECTED INDIAN
COMMERCIAL BANKS
To study the HRM policies and practices in the selected public and private sector commercial
banks mainly secondary data has been used. The policies and practices with respect to recruitment,
selection and promotion, compensation, training and development have been examined here in this
chapter. The data has been gathered from available sources like the published documents, such as annual
reports of the selected commercial banks, manuals, annual reports, office records of different Training
Institutes, divisional offices and their head offices. The other data sources include The Indian Bankers,
The annual and monthly publications of the Indian Banks‟ Association, Bombay (IBA), and RBI Bulletin
and supplements to RBI Bulletin, various journals related to the banking industry, websites, etc.
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The HRM policies and practices have been discussed here separately for the selected
public and private sector commercial banks under the following heads:
1. Selection and Recruitment
2. Promotions
3. Compensation
4. Training and development.
A comparative analysis of HRM policies and practices of the selected four public and
private sector commercial banks has been done through „content analysis‟. In all, 29 different
HRM areas with respect to recruitment, selection and promotion, compensation, training and
development policies have been identified. The scope of the present study has been restricted to a
sample of four banks, namely, HDFC Bank and AXIS Bank in the private sector; and State Bank
of Patiala and Punjab National Bank in the public sector in order to facilitate the present
research. These banks have been assumed to be the true representatives of the other private and
public sector commercial banks in India. A brief profile of the selected banks is given below. An
in-depth analysis of their human resource management policies, practices and trends has also
been made.
5.2 PUNJAB NATIONAL BANK (PNB)
PNB was registered on May 19, 1894 under the Indian Companies Act with its office in
Anarkali Bazaar, Lahore. The Bank is the second largest government-owned commercial bank in
India with about 5669 branches across 800 cities as on 31-03-2012. It serves over 37 million
customers. The bank has been ranked 248th
biggest bank in the world by Bankers Almanac,
London. PNB has a banking subsidiary in the UK as well as branches in Hong Kong and Kabul;
and representative offices in Almaty, Shanghai and Dubai.
PNB commenced its operations in Lahore in 1895. It has the distinction of being the first
Indian bank to have been started solely with Indian capital that has survived to the present. Its
founders included several leaders of the Swadeshi Movement such as Dyal Singh Majithia, Lala
Harkishen Lal, Lala Lalchand, Sri Kali Prosanna Roy, Shri E.C. Jessawala, Shri Prabhu Dayal,
Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was actively associated with its
management in the early years. In 1904, it established branches in Karachi and Peshawar and
absorbed Bhagwan Dass Bank, a scheduled bank located in Delhi circle in 1940. And in 1951, it
acquired the 39 branches of Bharat Bank (Established in 1942); Bharat Bank became Bharat
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Nidhi Ltd., and subsequently acquired Universal Bank of India in 1961. During 1960s, PNB
amalgamated Indo Commercial Bank (Established in 1933) as a rescue step. The Government of
India nationalized PNB and 13 other major commercial banks on July 19, 1969. Punjab National
Bank was ranked 1243rd in the Forbes Global 2000.
At present, the brand PNB commands respect and confidence in the eyes of the public
and its shareholders. The bank with its sound and strong fundamentals remained unscathed by
the economic slowdown and global financial crisis of 2008-09. It not only maintained its leading
position among the Nationalized Banks in the above turbulent period, but is once again poised to
excel in its business as the economy shows signs of improvement. The image and perception of
PNB in the Government, industry and public is aptly reflected in the awards and accolades it has
bagged recently. The bank was declared the “Best Public Sector Bank” by a survey conducted by
The Financial Express and Ernst and Young. PNB was ranked 26th amongst India‟s top 500
listed companies by “ET 500”. Globally, the “The Banker Magazine” (London) placed PNB at
239th position amongst the top 1000 Global Banks, while Forbes‟ ranking of 2000 global giants
placed it at 695th position. The Bank was conferred with the “Best Corporate Social
Responsibility Practice” award by the Bombay Stock Exchange. The Bank was also declared the
winner of the Gold trophy of SCOPE Meritorious Award for Excellence in Corporate
Governance 2009 by Standing Conference of Public Enterprises amongst the Public Sector
Enterprises, a coveted award received by the Bank from the hands of the Hon‟ble President of
India. The Bank also received the Golden Peacock Award for Excellence in Corporate
Governance for 2009 from the Institute of Directors.
PNB is committed to build business through long-term sustained relationships with its
customers. It has been recognized as the bank offering highest level of customer satisfaction in
Delhi and Chennai. It has international presence in 9 countries. It constantly innovates and
reorients strategies, and realigns business processes with advanced technology to serve its
customers better to earn strong brand loyalty and recall value.
5.2.1 Human Resources Management
With the objective to give due attention at the macro-level human resource management
issues, a new human resource organization structure has already been established by the bank at
all levels, by carving out the routine administrative functions and delegating them to a separate
Personnel Administration Division (PAD). This has enabled the Human Resources Development
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Division (HRDD) to focus on strategic thinking necessary for meeting human resource
challenges. The Personnel Administration Division (PAD) looks after administration and
implementation issues such as Payroll, Transfers and Postings, Promotions, Disciplinary Actions,
Industrial Relations, etc., while the Human Resource Development Department (HRDD) deals
with the broader Human Resource Policy (HRP) framework, manpower planning and
development and welfare issues. The Bank has also constituted a sub-Committee on human
resource comprising of some of the Top Management Bank officers for deliberating on various
human resource issues and for piloting organization-wide human resource interventions.
5.2.2. Trends
Table 5.1 portrays the data describing the importance of human factor in PNB. Various
indictors showing the bank‟s growth relating to its human resources have been discussed in terms
of branch network, staff strength, business per employee, profit per employee, deposits per
employee, advances per employee, cost per employee and establishment expenses per employee
over the period of study. The data has been analysed by calculating mean, standard deviation,
variance and compound average growth rate.
Table 5.1
Indicators Showing Punjab National Bank’s Growth with right to its Human Resources
(From 2002-03 to 2011-12)
(Amount in Rs. Crore) Year
Business
per
Employee
Profits
per
Employee
Staff
Strength
(Number)
Number of
Branches
Deposits
per
Employee
Advances
per
Employee
Cost per
Employee
Establishment
Expenses per
Employee
2002-03 1.95 1.43 58981 4037 1.28 0.68 0.03 1476.00
2003-04 2.28 1.88 58839 4022 1.49 0.8 0.04 1654.00
2004-05 2.76 2.42 58329 4043 1.76 1.03 0.05 2121.00
2005-06 3.30 2.48 58047 4065 2.06 1.28 0.05 2114.97
2006-07 4.07 2.68 57316 4117 2.44 1.68 0.05 2352.45
2007-08 5.04 3.66 56025 4264 2.97 2.13 0.20 2461.54
2008-09 6.54 5.64 54780 4668 3.82 2.82 0.07 2924.38
2009-10 8.08 7.31 53417 5002 4.66 3.49 0.08 3121.14
2010-11 10.18 8.35 53114 5166 5.89 4.55 0.11 4461.10
2011-12 11.31 8.42 57997 5669 6.54 5.06 0.12 4723.48
Mean 5.55 4.43 56685 4505 3.29 2.35 0.08 2741.01
SD 3.35 2.75 2213 590 1.87 1.57 0.05 1098.19
Variance 11.22 7.56 4898345 348153 3.49 2.48 0.00 1206031
CAGR 17.33 17.49 -0.15 3.13 15.98 20.02 13.43 11.15 Source: Data compiled from Annual Publications of IBA, Bombay; Performance Highlights of Public Sector Banks
and Performance Highlights of Private Sector Banks, 2002-03 to 2011-12.
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The table given above indicates the important changes that took place in PNB during the
study period in the areas such as business, profits, deposits, advances, cost and establishment
expenses (per employee).These are described as under:
Increase in Business and Profits per Employee: The statistical data calculated on the basis of
the one given by Indian Banks Association (IBA) publications regarding business and profits per
employee reflects the efficiency of PNB employees. It can be inferred from the data that business
of the Bank surged gradually during the study period.
Staff Strength: The staff strength of the bank has been constantly decreasing during the whole
period of study except the year 2011-12.
Staff Efficiency: A comparative analysis of the data regarding the number of employees, and
increase in business and profits per employee reveals that efficiency of PNB employees has
increased over the years.
Market Coverage: The number of branches has increased substantially during the period 2002-
03 to 2011-12 which speaks about the high volume of market coverage made by PNB. There has
been a record increase of 404 branches in 2008-09 over the years 2007-08.
Increase in Deposits and Advances per Employee: No doubt, there has been a constant
increase in the deposits per employee and advances per employee during the whole period of
study. However, if we calculate the ratio of advances to deposits which is 53.13 per cent in 2002-
03 and 77.37 per cent in 2011-12, it reflects that this Bank has failed to perform efficiently
during the period under study.
Minimum Cost as an Indicator of Efficiency: While considering the inflationary trends
prevailing in the Indian economy, it can be observed from the available data that cost per
employee incurred by PNB is under control. For the financial year 2008 the cost per employee
has been recorded at the maximum level of Rs. 0.20 as compared to Rs.0.03 for the year 2003.
Establishment Expenses: Establishment expenses include expenses incurred on employees‟
induction, and their training and development programmes. Growing establishment expenses
indicate towards banks‟ better HR policies as these expenses are ultimately connected to staff
welfare.
Cost to Profit Ratio: The cost to profit ratio declined from 2.04 per cent in 2002-03 to 1.425
per cent in 2011-12 which implies that PNB earned maximum profit at minimum cost.
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Statistical Infrences:
A. Average or Mean Value: Higher mean values of business per employee and profits per
employee against the lesser mean value of cost per employee are an indicator of efficient
working.
B. Standard Deviation: In the above table, higher standard deviation indicates unreliability
of data and lower SD indicates nearness to mean value (reliability).
C. Growth Rate: Growth rate taking 2002-03 as the base year remained at the higher side in
the case of profits (per employee). Higher Compound Annual Growth Rate (CAGR) in
the case of business, profits and deposits (per employee) and lower CAGR in cost and
establishment expenses indicate towards a good working culture in the Bank.
On the basis of the above analysis it can be said that although the Bank is fetching a
good business, yet its advances to deposits ratio is a matter of grave concern which can be
tackled by way of opening more branches. The Bank recognizes its employees as the most vital
and valuable asset. The strength of employees including those in the subsidiaries at the end of
March 2012 stood at 57997 as compared to 53144 on 31-03-2011 and 53417 as on March 31,
2010. Women employees constituted nearly 16 per cent to 17 per cent of the total workforce.
5.2.3 Human Resource Management Policies and Practices:
Recruitment
Over a period of two years, i.e. 2009-11, ending on 31March, the Bank initiated its
recruitment process including campus recruitment from institutes through which 1335 Officers in
various Grades and Scales were recruited. Out of these, 945 were Specialist Officers in various
streams such as Marketing, Law, HRD, etc. Further, 1178 Clerical staff and 1062 Subordinate
staff were inducted during the year. Table 5.2 displays the cadre-wise staff strength of the bank
for the financial year ending 31 March 2010 and 2011.
Table 5.2
Cadre-wise Staff Strength of Punjab National Bank
Cadre 31 March 2010 31 March 2011
Number % Number %
Officers 19869 34.90 20711 36.32
Clerical 24285 42.66 23065 40.45
Sub Staff(incl.PTS) 12774 22.44 13244 23.23
Total 56928 100 57020 100 Source: Annual Publications of Punjab National Bank 2010-11.
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Talent Retention
The attrition rate during the year 2010-11 remained negligible at 0.83 per cent as
compared to 0.31 per cent for the year 2009-10. This low attrition rate has been due to
continuous investment in learning and development programmes for employees, creating
congenial work environment, staff welfare measures and performance-linked incentives.
Career Path
The Bank has been implementing various changes in its Promotion Policy from time to
time to provide fast-track career growth opportunities to its employees.
Technology-Based HRMS
The Bank has a well-knitted Human Resources Management System (HRMS) called
„PNB Parivaar‟. The Bank provides a People Soft Package containing an exhaustive database of
all the employees, which has enabled it to effectively utilize technology for implementing all
employee related tasks such as compensation, staff welfare benefits, various reimbursements,
transfers and postings, terminal benefits, leave rules, etc. HRMS has also been utilized by
employees to exercise their option for pension as well as for centralized credit of pension to
retired employees.
Industrial Relations
Industrial relations in the Bank continued to be cordial. Various meetings were held
between the bank management and the representatives of the majority Officers‟ Association and
Workmen Union over the past many years.
Reservation Policy
The Bank follows the reservation policy for SCs, STs and OBCs as prescribed by the
Government of India from time to time. The cadre-wise distribution of SC, ST and OBC staff
strength has been shown in Table 5.3.
Table 5.3
Staff Strength of SC, ST and OBC Employees as on 31st March, 2010 and 2011
Cadre March 2010 March 2011
SC ST OBC SC ST OBC
Officers 3117 1159 580 3394 1255 757
Clerical 4786 800 857 4422 722 1022
Sub-staff
(Incl.PTS) 5002 697 1222 5335 749 1689
Total 12905 2656 2659 13151 2726 3468 Source: Annual Publications of Punjab National Bank 2010-11.
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Staff Welfare
Over the past few years, the Bank implemented many Staff Welfare Schemes with an
objective to meet the aspirations of the employees. Significant among them was the Scheme for
payment of financial assistance to the employees having mentally retarded children. The limit for
Interest-free Festival Advance facility being offered to the employees was increased
substantially. The Bank also recognized the efforts made by its staff towards excelling in areas of
their personal interest. A „2020 Program‟ has been initiated for grooming officers in the Senior
Management who are due to retire after 2020, so that they can assume leadership roles in the
Bank.
PNB Samadhaan
The Scheme offers an opportunity to an employee to represent case of any work-related
grievance directly before the Chairman and Managing Director of the Bank. During the year
2010-11, as many as 37 cases under this Scheme were suitably resolved.
Training and Development
In the light of large scale human resource gaps which the Bank is likely to face in the
next few years that there is a need for Succession Policy. The Training and Development
Policy envisages mapping of the 'existing pool' against the 'future requirements' from the
projected business figure to ensure that an adequate number of officials are available in the pool
and also to foresee the surplus or deficit in the pool for ascertaining the requirement of
succession for a particular period.
The Training System of the bank endeavours to enrich Knowledge, Skill and Attitude
(KSA) of staff at all levels in line with the organizational objective. The Bank has established a
three-tier training set up comprising of Central Staff College (CSC) at Delhi, catering to training
needs of the Top , Senior and Middle Management Grade officers; three Regional Staff Colleges
(RSCs) located at Belapur-Navi Mumbai, Lucknow and Panchkula catering to training needs of
Middle and Junior Management officers as well as Workmen Staff; and seven Zonal Training
Centres (ZTCs) at Dehradun, New Delhi, Jaipur, Kolkata, Kozhikode, Ludhiana and Patna look
after the training needs of Junior Management Grade officers and Workmen Staff. IT Training
Centre located at Faridabad caters to the training needs of officers exclusively in the areas of
Information Technology.
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In addition, an autonomous Institute (PNB IIT) has also been established by the Bank at
Lucknow, which conducts advanced IT courses and special training programmes on IT on CBS
for the employees of the Bank as well as other Financial Institutions. The Bank also imparts
training to its officers in different Grades in specialized areas through outside training
institutions of repute both in India and abroad, viz. IIM, Ahemedabad; IIM, Lucknow; NIBM,
Pune; CAB (RBI), Pune; ASCI, Hyderabad; MDI, Gurgaon; Kellogg School of Management,
USA; APRACA, Manila, etc. Over the past few years, the training activities in the Bank
remained focused on areas like credit, agriculture, Small and Medium Enterprises (SMEs) and
Micro credit, foreign exchange, information technology, NPA management, risk management
and soft skill development, etc.
Training Policy of the bank envisages a training reach of 50 per cent of employees every
year. During 2010-11, the Bank imparted 1,34,913 man-days training to 44,713 employees
through in-house training institutions. In addition, 1550 officers attended specialized trainings at
reputed outside institutes in India and abroad. The bank also encourages utilization of the trained
staff as agents of knowledge dissemination through the concept of "Each one to teach one". In
recognition of its efforts in training, the Bank has been awarded „Golden Peacock Award for
Training‟ by Institute of Directors (IOD) for the year 2011. The Bank also received the 6th BML
Munjal Award for Excellence in Learning and Knowledge Development-2010 by Hero
Mindmine Institute.
E-learning
Training system of the Bank makes extensive use of technology for facilitating
knowledge dissemination to its employees. The Bank has created an exclusive Knowledge
Centre website, comprising e-circulars of all HO Divisions, which is a knowledge repository of
the latest banking and economic updates. It has also launched an exclusive e-learning platform,
i.e., ‘PNB Gyan Uday‟, accessible 24 x 7 to all the employees across the country and abroad. In
the interactive model of learning, topics on various areas, viz. credit, foreign exchange, retail
banking, CBS/IT, soft skills, marketing, risk management, resolution of NPAs, etc. are provided.
5.3. STATE BANK OF PATIALA (SBOP)
The rich heritage of State Bank of Patiala dates back to the year 1917, when it was
founded by Late His Highness Bhupinder Singh, the Maharaja of erstwhile Patiala state, on
Diwali day with one branch by the name of 'Chowk Fort, Patiala' to begin with. The Bank, then
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known as the 'Patiala State Bank' was state owned and setup for the explicit purpose of fostering
growth of agriculture, trade and industry. The constitution, scope and operations of the Bank
underwent a sea change with the formation of the Patiala and east Punjab States Union (PEPSU)
in 1948.The Bank was then reorganized and brought under the control of the Reserve Bank of
India.
It became a subsidiary of the State Bank of India under the State Bank of India
(Subsidiary Banks) Act, 1959 and was renamed as State Bank of Patiala on April 1, 1960 and
since then it has grown significantly both in size and volume of business. During these glorious
years, the bank has been playing an important role in banking sphere. The core area of operation
of the bank is Punjab, Haryana, Himachal Pradesh, Chandigarh and Delhi. From a small network
of 47 branches with business level of merely Rs.15 crore in December 1960, the SBOP has
grown to a network of 1060 branches and 25 Extension Counters spread over all the States and
1 Union Territories, and total business of more than Rs. 1,45,000 crore as on 30th
June, 2012.
The Bank offers personal banking, agricultural and rural banking, SME and corporate
banking, internet banking, NRI services, etc. It facilitates its clients to pay their taxes through its
branches. State Bank of Patiala supports Malwa Gramin Bank. It also provides car loans,
education loans, two-wheeler loans, consumer durable loans, loans against term deposits, gold
ornaments and personal loans. On 24th January, 2003 State Bank of Patiala became the first fully
computerised public sector bank in the country. The Bank added a golden chapter to its history
by fully networking all its branches on Core Banking Solutions on 08.08.2005 and became the
first fully networked public sector bank in the country.
5.3.1 Human Resource Management:
The Vision of the State Bank of Patiala for the Human Resources Management is
essentially to facilitate it to carry out central banking activities, i.e. (i) To create an enabling
environment to enhance the efficiency of the bank; (ii) To draw out of the staff the very best by
adopting a system of proper placements, incentives for its employees; and (iii) To create an
atmosphere of trust, a certain security of expectations and a feeling that the bank cares about the
well-being and personal aspirations of its staff. This is aimed at helping align personal
aspirations with professional goals and to enhance efficiency of its employees. The mission of
the bank‟s HRM is to create a facilitating environment to enhance the efficiency of the Bank; to
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empower its staff so as to draw out the latent potential; and to catalyze conditions for a more
wholesome quality of life on the work as well as personal front.
5.3.2 Trends:
Table 5.4 describes the importance of human factor in the SBOP and the different
indictors showing the growth of the bank relating to its human resources which have been
discussed in terms of business per employee, profit per employee, deposits per employee,
advances per employee, cost per employee and establishment expenses per employee along with
branch network and staff strength over the period of study. The data has been analysed by
calculating mean, standard deviation, variance and compound average growth rate.
Table 5.4
Indicators Showing the Growth of State Bank of Patiala from 2002-03 to 2011-12
(Amount in rupees crore) Year
Business
per
Employee
Profits
per
Employee
Staff
Strength
(Number)
Number
of
Branches
Deposits
Per
Employee
Advances
per
Employee
Cost per
Employee
Establishment
Expenses per
Employee
2002-03 2.46 2.76 11654 738 1.53 0.92 0.03 262.00
2003-04 3.05 3.69 11674 743 1.92 1.12 0.03 281.00
2004-05 3.61 2.48 11535 750 2.28 1.32 0.04 294.00
2005-06 4.93 2.66 10954 758 2.97 1.95 0.05 372.08
2006-07 5.99 3.24 11329 766 3.45 2.53 0.05 400.02
2007-08 7.59 3.70 11175 798 4.34 3.25 0.04 384.49
2008-09 9.10 4.68 11365 846 5.27 3.83 0.06 443.92
2009-10 8.95 4.45 12409 886 5.20 3.73 0.07 500.57
2010-11 9.56 5.20 12559 1008 5.41 4.09 0.10 880.98
2011-12 10.56 5.87 13573 1055 5.85 4.63 0.09 829.96
Mean 6.58 3.87 11823 835 3.82 2.74 0.09 464.90
SD 2.96 1.15 797 115 1.60 1.35 0.11 218.98
Variance 8.78 1.32 634462 13134 2.56 1.83 0.01 47954.34
CAGR 14.16 7.10 1.40 3.30 12.97 15.82 10.50 11.05 Source: Data compiled from Annual Publications of IBA, Bombay ; Performance Highlights of Public Sector Banks
and Performance Highlights of Private Sector Banks, 2002-03 to 2011-12.
The data shown in the table reveals that during the year 2002-03, SBOP had 738 branches
and this number has constantly increased over the years to reach at 1055 in 2011-12. With an
increase in the number of branches, the number of employees has also increased. The staff
strength of this Bank was 11654 in 2002-03 which rose to 13573 at the end of financial year
2011-12. The man power remained at a lower level during the period 2004-05, 2005-06, 2006-07
and 2007-08 recording staff strength of 11595, 11350, 11329 and 11175 respectively. However,
the number of employees increased to11365 in the year 2008-09 and this increasing trend was
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observed till 2011-2012.The business per employee also grew from Rs.2.46 crore 2002-03 to Rs.
9.10 crore in 2008-09. However, it came down to Rs. 8.95 crore in 2009-10, and again moved up
to Rs.9.56 crore in 2010-11. A fluctuating trend was observed in the profit per employee of the
Bank during the study period. It fluctuated between Rs.2.48 crore in 2004-05 and Rs. 5.87 crore
in 2011-12. The following details emerge from the data shown in the above table:
Level of Business and Profits (Per Employee): The business per employee and profits per
employee have grown till 2003-04, but there has been no match between growth rate of profits
per employee and growth rate of business per employee.
Staff Strength: Number of employees has increased with a compound annual growth rate of
1.40 per cent over the given period of 10 years.
Branches: During the period of study, the number of branches has increased to 1055 in 2011-12
from 738 in 2002-03 indicating fast expanding market coverage.
Growth of Advances and Deposits (Per Employee): Although, both the deposits per employee
and advances per employee have grown over the period under study but the growth rate of
deposits per employee remained much higher than the growth rate of advances per employee.
Cost to Profit Ratio: In 2002-03, cost to profit ratio is 1.523 per cent (.03/2.76*100), while it is
1.081 per cent (0.04/3.70*100) and 1.533 per cent (.09/5.20*100) in the years 2007-08 and 2011-
12 respectively. In 2007-08 cost incurred (per employee) remained at the maximum. Higher cost
to profit ratio means the costly business operations as compared to financial efficiency.
Increase in Establishment Expenses: Over the period of study, establishment expenses have
constantly increased except for the years 2007-08 and 2011-12.
Statistical Inferences:
A. Average or Mean Value: Lesser mean value in case of profits per employee as
compared to business per employee indicates lower profitability.
B. Standard Deviation: Lower standard deviation indicates reliability of data; and higher
standard deviation shows spread of data (unreliability).
C. Growth Rate: Conclusions regarding growth rate can be drawn by comparing actual rate
with expected rate. However, maximum growth rate in the case of profits per employee
speaks about the efficiency of the banking system. CAGR is maximum in case of both
business per employee and advances per employee. Higher level of CAGR indicates
higher growth rate compounded annually.
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5.3.3 Human Resource Management Policies and Practices
Human resource management in State Bank of Patiala strives to evolve various human
resource policies on recruitment, selection, placement and training, compensation, etc. in the bank. HRM
practices in the bank have been continuously undertaken as a movement and direction to enable
every individual as a member of an effective team of the banking community to realize and
activate his potential so as to contribute towards all the achievement of goals set by the bank and
derive satisfaction thereof. The HRM policy aims at creating a facilitating environment for
overall development of people and thereby enabling them to translate their potentials into role
related competencies. The bank recognizes the value of the contributions of the individuals in
achieving the corporate objectives. All human resource management related interventions are
based on the philosophy of individual and organizational development. The interventions aim at
achieving professional excellence in the individual and fostering team work. Some of the human
resource management policies of the bank as well as areas of concern where the policies are
constantly reviewed by the Bank from time to time are highlighted in Table 5.5.
Table 5.5
Human Resource Policy Aspects of State Bank of Patiala
A. Main Policy Aspects B. Other Policy Aspects
Recruitment
Placement
Promotion and Career Progression :
Out of Turn Promotions and Increments to
Sportspersons
Industrial Relations
Deputation
Retirement and Voluntary Retirement
Motivation
Training Establishments
Mobility (Transfer and Rotation)
Remuneration and Reward Mechanism
Staff Welfare
Communication
Organisational Development
Training and Skills Upgradation (Policy
and Implementation)
Interface with other institutions, government,
central banks, etc. on HRD issues.
To maintain up to date database on human resources
in the bank and undertake analytical studies and
ongoing research on different
manpower related issues.
To make ongoing review of the appraisal system in
order to make it an effective tool for HRD policy
management.
To instal and implement an effective
counselling system.
To design career and succession plans.
To review and revitalize the training
functions.
Summer Placement. Formulate and administer
the Staff Suggestion Scheme.
Source: Compiled from the Annual Reports of State Bank of Patiala, 2002-03 to 2011-12.
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Human Resource Management Practices:
Manpower Planning: Manpower planning of State Bank of Patiala is meant to improve the
innovative and creative abilities of its employees through promoting a conducive climate,
enhancing the human touch and improving interpersonal relations. Manpower requirements are
assessed at the micro level even though overall decisions are made within the frame work of
government guidelines and corporate perspectives. Branch activity analysis and productivity
norms are the basis upon which the assessments are made. Manpower planning in the bank has
been kept subordinate to the guidelines issued by the Govt. of India and RBI.
Recruitment and Selection: Recruitment is made generally through the mode of advertisement.
Advertisements generate a wide range of pool of applicants. There exists a centralized form of
recruitment. Criteria for educational qualification varies according to the posts. Two stages are
involved in the selection process. Aptitude test and personal interviews are mainly used for
selection. Reference checks are done. Reservation of seats according to the caste factor plays an
important role. Marketing and recovery officers are recruited on contractual basis and later made
permanent based on their performance. Dependants of ex-servicemen killed in action, ex-
servicemen and physically challenged people to get an opportunity to work in SBOP.
Applications are invited online through the website of State Bank of India (SBI). Age concession
and application fee too varies according to the class and caste factor. The advertisements contain
a well-designed job description.
Training and Development: Training system of the SBOP enables the employees to take up
their assignments and perform tasks with a higher level of confidence and perfection. Training
system not only addresses the needs in the areas of knowledge and skills but also looks at the
need for change in the attitude of employees. The training programmes are aligned to the Bank‟s
business, goals and objectives. These endeavour to build up competency in the staff to achieve
the declared objectives of the bank. While exclusive programmes on customer service are held in
the training system, all training programmes have the customer as the central theme. Eminent
specialists in different fields of management, banking, finance, HRM, etc. are invited for
delivering guest lectures to make the programmes more efficient. Training is a key variable in
human resource development strategy of the Bank. The bank has constituted “advisory council”
comprising management experts, academicians and the Bank‟s senior executives. The advisory
council aims at improving the training effectiveness.
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Quality Circles: Quality circle is a small group in which people who works in the first line work
place, continually improve and maintain the quality of products, services, job and so on. This
small group promotes the activity in such a way as to autonomously administer it, utilize the
quality circle concept and technique, display creativity and make self-development and mutual
development.
Compensation: Pay scales in SBOP are fixed through Bipartite Settlements. Pay scales are
revised every 4 years. Last Bipartite agreement was signed in the year 2010 covering the 4 year
period from 1.11.2008 to 31.10.2012. Now fresh wage revision is due from 1.11.2012. The pay
scales and other matters are settled through bipartite talks between the United Forum of Bank
Unions (UFBU) which comprises representatives from various unions of Workmen staff and
Officers and Indian Banks Association (IBA). Pay scales and other allowances and facilities for
Workmen and Officer Staff have been decided as per last Bipartite Settlements. Indian Banks
Association signed 9th Bipartite Settlement with Workmen Unions on 27.04.2010. Amongst the
other things, some of the earlier provisions relating to Leave Fare Concession have undergone
certain changes. The State Bank of Patiala issues the details through departmental Circulars after
taking permission from the Board of Directors. Indian Banks Association issued Corrigendum to
Memorandum of Settlement. The various provisions of this Settlement take effect from the dates
specified hereunder, unless provided to the contrary and the financial benefits emanating
settlement.
1. Scales of Pay
2. Stagnation Increment including 7th stagnation increment, Dearness Allowance,
professional Qualification Pay/ Graduation Pay, House Rent Allowance,
Provident Fund, Gratuity, Fixed Personal Pay, Transport Allowance, Annual
Medical Aid, Special Area Allowance, Hill and Fuel Allowance, Split Duty
Allowance, Cycle Allowance, Project Area Allowance: 1st November 2007.
3. Special Pay
4. Halting Allowance and Washing Allowance
5. Leave Fair Concession (LFC), Hospitalisation, Definition of Family, Special
Leave for Hysterectomy, Road Mileage.
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(ii) Salary Revision For officers
Indian Banks Association, Mumbai in consultation with the Government of India has
finalised salary revision for officers in the banks. The details of revision in various components
of salary and other allowances are as under:
1) Scales of Pay
Scale I - 14500 600 18700 700 20100 800 25700
Scale II - 19400 700 20100 800 28100
Scale III - 25700 800 29700 900 31500
Scale IV - 30600 900 34200 1000 36200
Scale V - 36200 1000 38200 1100 40400
Scale VI - 42000 1200 46800
Scale VII - 46800 1300 52000
2) Allowances
On and from 1.11.2007, Dearness Allowance shall be payable for every rise or fall of
four points over 2836 points in the quarterly average of the All India Average Working Class
Consumer Price Index (General) Base 1960=100 at 0.15% of Pay along with other Allowances,
such as professional Qualification Pay/ Graduation Pay, House Rent Allowance, Provident
Fund, Gratuity, Fixed Personal Pay, Transport Allowance, Annual Medical Aid, Special Area
Allowance, Hill and Fuel Allowance, Split Duty Allowance, Cycle Allowance, Project Area
Allowance.
Job Rotation: Developing functional versatility among employees is a must and it is possible
only through job rotation. In SBOP, the process of job rotation was started from the year 1989,
and along with job rotation, job analysis occupies a central position in the design of HRD
activities in the bank. The bank has a well-designed transfer, promotion, and placement policy.
The career system in SBOP includes various elements like career surveys, career information,
career monitoring, and several career support systems like human resource planning, potential
appraisal and career planning are its inputs.
Employee Welfare: The SBOP has introduced a number of welfare schemes to improve the
quality of work-life of the employees. These schemes include canteen facilities, education
scholarship to children of employees, consumer cooperative stores, housing loans, SBI
employees‟ mutual welfare scheme, festival advances, conveyance loans, etc.
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Human Resource Information System (HRIM): Varied aspects of information about
individual employees regarding their biographical, cultural traits, performance records,
promotions obtained, potential for higher positions, critical incidents, placements enjoyed, etc.
are well-managed in SBOP. The State Bank Institute Of Information And Communication
Management conducts a series of computer based human resource information system courses
for various categories of employees. HRD policies of the bank seem to be of the ideal order to
win competitive battles in the globalized environment.
5.4 HDFC BANK
The HDFC Bank was promoted by the Housing Development Finance Corporation, a
premier housing finance company of India (setup in 1977) with an initial share capital of Rs. 100
million. At present HDFC Bank has over 2500 branches and over 3000 ATMs in over 550 cities
in India; and all branches of the bank are linked on an online real-time basis. Initially, Housing
Development Finance Corporation Limited or HDFC was founded in 1977 by Ravi Maurya and
Hasmukhbhai Parekh. It is an Indian Non-Banking Finance Corporation (NBFC) focusing on
home mortgages. HDFC's distribution network spans 243 outlets that include 49 offices of
HDFC's distribution company, HDFC Sales Private Limited. To cater to non-resident Indians,
HDFC has an office each in London and Dubai; and service associates in Kuwait, Oman, Qatar,
Sharjah, Abu Dhabi, Al Khobar, Jeddah and Riyadh in Saudi Arabia.
Over the past few years the bank grew its business by 40-50 per cent every year. There
has been a moderate growth in the current year.
5.4.1 Human Resource Management:
The bank believes in empowering its employees and constantly takes various measures to
achieve this. The Human Resources (HR) agenda of the bank aims to create a team of
empowered employees-oriented for the realization of bank's vision. During its life span, the key
human resource issues that were addressed related to learning and skill development,
management of performance, ensuring an enhanced work- life balance and attrition management.
The employee engagement initiatives of the bank are focused on providing opportunities to staff
to seek as operational roles through internal job postings and periodic job rotations, making the
compensation structure more competitive, streamlining the performance-linked rewards and
incentives, and generally sending a clear message of meritocracy.
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5.4.2 Trends:
Table 5.6 highlights the data showing the importance of human factor in HDFC Bank.
Various indicators showing the growth of the bank relating to its human resources have been
discussed in terms of branch network, staff strength, business per employee, profit per employee,
deposits per employee, advances per employee, cost per employee and establishment expenses
per employee over the period of study. The data has been analysed by calculating mean, standard
deviation, variance and compound average growth rate.
Table 5.6
Indicators Showing the Growth of HDFC Bank from 2002-03 to 2011-12
(Amount in rupees crore) Year
Business
per
Employee
Profits
per
Employee
Staff
Strength
( Number)
Number
of
Branches
Deposits
per
Employee
Advances
per
Employee
Cost
per
Employee
Establishment
Expenses per
Employee
2002-03 8.65 10.09 4791 231 4.67 2.45 0.12 152
2003-04 8.66 9.39 5673 312 5.36 3.12 0.14 204
2004-05 8.06 8.80 9030 467 4.02 2.83 0.12 277
2005-06 7.58 7.39 14878 535 3.75 2.35 0.11 486.82
2006-07 6.07 6.13 21477 684 3.18 2.18 0.11 776.86
2007-08 5.06 4.97 37836 761 2.66 1.69 0.09 1301.35
2008-09 4.46 4.18 52687 1413 2.71 1.87 0.10 2238.2
2009-10 5.90 5.98 51888 1726 3.22 2.42 0.11 2289.18
2010-11 6.53 7.37 55752 1986 3.74 2.86 0.12 2836.04
2011-12 6.54 8.12 66076 2544 3.73 2.95 0.13 3399.91
Mean 6.751 7.242 32009 1066 3.704 2.472 0.115 1396.136
SD 1.45 1.92 23447 798 0.84 0.47 0.01 1203.51
Variance 2.12 3.70 549759093 636927 0.71 0.22 0.00 1448434
CAGR -2.51 -1.96 26.94 24.37 -2.02 1.70 0.73 32.65
Source: Data compiled from Annual Publications of IBA, Bombay; Performance Highlights of Public Sector Banks
and Performance Highlights of Private Sector Banks, 2002-03 to 2011-12
The following details emerge from the data analysis shown in the above table:
Business per Employee: The table reveals that till 2003-04 business per employee has increased
continuously, but after 2003-04 a fluctuating trend has been observed. It fluctuated between
Rs.4.46 crore in 2008-09 and 8.66 crore in 2003-04. It may have been due to the factors such as
employees‟ inefficiency, competitor‟s better business strategies, quality of products, schemes
and services offered, etc.
Profits per Employee: The profits per employee have also not been good over the period under
study. These have decreased with the passage of time. The profits per employee decreased
regularly from Rs. 10.09 crore in 2002-03 to Rs. 4.18 crore in 2008-09 reflecting inefficiency of
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employees. However, profits per employee showed an increase in 2011-12 with the figure at Rs.
8.12 crore.
Staff Strength: There has been a tremendous growth in the strength of employees over the
period of ten years which is an indication of bank‟s overall growth and expansion of business.
The staff strength increased from 4791 in 2002-03 to 66076 in 2011-12.
Expansion of Branch Network: There has been an increase in branch network of the bank over
the study period. In 2002-03, there were 231 branches only which increased to 1413 in 2008-09,
and further to 2544 branches in the year 2012 showing a compound average growth rate of 24.37
per cent . It shows a large market coverage of HDFC Bank over the period of study.
Deposits and Advances per Employee: The deposits and advances per employee have been
quite fluctuating during the study period. The deposits per employee were to the tune of Rs.4.67
crore in 2003 which reduced to Rs.2.66 crore in 2007-08, and again increased to Rs.3.73 crore in
the year 2012. Similarly, the advances per employee were Rs.2.45 crore in 2002-03 which
declined to Rs. 1.69 crore in 2007-08, and again rose to Rs.2.95 crore in the year 2011-12.
Negative CAGR of -2.02 for the deposit per employee and lower compound average growth rate
of 1.70 for advances per employee show that the bank failed to achieve its business targets.
Cost per Employee- Data regarding cost per employee depicts stability or control on cost (per
employee) over the period of study in view of prevailing inflationary trends in the Indian
economy. Cost per employee was Rs. 0.11crore in 2002-03 which increased to Rs.0.13 crore in
2012, reflecting a compound average growth rate of 0.73 per cent over the period under study.
Establishment Expenses (Per Employee): Increase in the establishment expenses over the
period of study exhibits the adoption of better HR policies in the bank, because such expenses
include expenditure incurred on employees while dealing with the banking operations. In 2002-
03, expenses per employee were recorded at Rs.1.52 crore which increased to Rs.3.39 crore in
2012 with a CAGR of 32.65 per cent.
Statistical Inferences:
A. Average or Mean Value: As compared to other variables average value is higher as to
profits per employee, which has been recorded at Rs. 7.24 against the staff strength of
32009.
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B. Standard Deviation: Lower value of standard deviation indicates reliability of data as in
the case of cost per employee which is 0.01 and higher at 1.92 regarding profits per
employee.
C. Growth Rate: Compounded annual growth rate speaks about the success of the concern.
Higher compounded annual growth rate is an indicator of bank‟s success and vice versa.
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team
determined to accomplish the vision of becoming a world-class Indian bank. With its business
philosophy based on four core values: Customer Focus, Operational Excellence, Product
Leadership and People, the bank is growing very fast aiming at exceptional quality of its
manpower and their extraordinary efforts. For this reason, the bank is committed to hiring,
developing, motivating and retaining the best people in the industry.
5.4.3 Human Resource Management Policies and Practices
HDFC Bank uses a comprehensive human resources policy framework to respond to
changing human resources requirements. Rapid growth in a burgeoning new market should be
the cause for celebration, unless the organization that's growing can't keep up with the demands
of an expanding workforce or simplify the management of multiple databases. But Mumbai
based HDFC Bank did not let that happen. Initially, the premier bank in the corporate sector,
HDFC Bank began its expansion into the retail market in 1995 and has added thousands of new
customers each day and managed dramatic increases in its retail loan portfolio. The bank faced
the challenges that came with rapid success. HDFC Bank has established itself as a leader in
eliminating the inefficiency traditionally associated with resource planning and management, and
bank management knew just what to do. Due to significant growth in the number of its
employees over the past few years, the bank could no longer handle its human capital
management on Microsoft Excel spreadsheets and homegrown reports. In addition, the
management well understood that high growth rates might have jeopardized its capacities and
servicing quality, while tension about relative compensation levels between the sales personnel
in the branch and operations could have threatened HDFC Bank's culture.
The bank has also implemented Oracle Human Resources applications so that human
resource planning and tracking could be handled more efficiently. The bank had already
compiled large amounts of data about its employees, but it lacked a workable way to store other
kinds of information, such as data about family members and career paths at HDFC Bank. The
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bank can now capture everything, which gives senior management better data for performance
evaluations and helps them do better career planning. The solution also allows the bank to
compensate on the basis of performance and provide targeted career development, which raises
credibility with employees and helps the bank attract and retain top candidates. HDFC Bank has
also implemented Oracle's applications for human resources analysis and reporting across the
enterprise, providing management with the ability to drill down into performance and cost on an
exceedingly granular level. This gave the bank the flexibility to tailor-made employee record-
keeping while maintaining regular compliance with labour laws. In addition to the automation of
actions such as warnings, e-mail notifications, and vacation hour balances gives the bank a
complete profile for each employee. The existing comprehensive reporting capabilities save a lot
of staff time and allow the bank to handle profiles, skill sets, and training and integrate them with
the payroll system.
Low Operating Cost Key to Success
A large segment of the bank's outstanding performance and profitability is tied to its low
cost of operations driven by automation and reduced employee costs. The total automation of
human resources processes has reduced errors and the introduction of best-practices approach
encourages employees to perform well and allows them to reap the rewards of their good
performance. Building a successful organisation and high commitment to the human resource
management in the bank has been indicating that these are really keys to its success. These kinds
of changes can be extremely destabilizing if not managed appropriately, but the bank embraced
the right formula, and the right applications for successful employee management and tracking.
HDFC Bank while implemented Oracle Balanced Scorecard for its human resource function to
evaluate the effectiveness of its Human Resource Management, it acted in this direction with a
vision. Through this approach, the bank is able to measure and improve the effectiveness of
support functions and quantify non-financial measures to better track those functions. It has also
transformed its Human Resource Department from a purely administrative organization to one
that has significant input in recruitment, development, and strategic planning. Today the bank
has been able to track the effect of management systems on shareholder influence, flows,
rewards, and work systems.
The Bank's Performance Management System, where recognition is directly related to
performance and a 360 degree feedback process has been in use as a part of leadership
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development process in the Bank. On the talent acquisition front, the Bank has emerged as a
strong employer brand in the financial services sector and especially on the campuses of the
premier business schools of the country. Through the fulfilment of its human resources agenda,
the bank has been continuing to strive towards realisation of the ultimate goal of being the
preferred financial service provider excelling in customer delivery through insight, empowered
employees and smart use of the applied technology.
Training and Development
The HDFC Bank has regularly been focusing on the training of its employees, both on-
the-job as well as through training programmes conducted by internal and external faculty. The
bank lists and recognizes its human resources as one of its stated core values. The Bank has built
a strong training infrastructure, which seeks to upgrade skill levels across grades and functions
through a combination of in-house and external programmes. The flagship in-house programmes
include the Induction Programmes for new entrants and Credit and Foreign Exchange
Programmes for building up a pool of specialists in the respective domains. External
Programmes encompass value-added programmes on Team Building and Leadership,
Organizational Development, Management Development Programmes, People Management
Programmes; all conducted by premier institutes like the IIMs, Administrative Staff College of
India (ASCI) and ISB Hyderabad. Senior functionaries have also been deputed overseas to attend
specialized programmes intended to keep them updated on developments in the world economy.
The bank also has a comprehensive e-learning module conceptualized and developed in-
house and administered through the intranet. Keeping pace with the growth in the diversity of
products on the one hand and manpower on the other, the training man-day shave increased from
57,317 in 2008-09 to 65,378 during the year 2009-10 , registering a growth of 14% over the
years.
Compensation
The policies related to remuneration paid to each of bank‟s officers and employees
including the system of compensations have been defined well. The salaries are paid as per the
Bipartite Settlement and joint agreement between Indian Banks Association and different unions
and employees‟ associations and these are paid by crediting to respective accounts of the
employees. The current pay scales of various categories of employees are presented in Table
5.7.
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Table 5.7
Pay Scales of all the Employee of HDFC Bank
In HDFC Bank the undiscounted amount of short-term employee benefits, such as medical
benefits, casual leave etc., which are expected to be paid in exchange for the services rendered by
employees are recognised during the period when the employee renders the service, are paid
accordingly.
Provident Fund Scheme
The Bank operates a Provident Fund scheme and all the eligible employees are entitled to
receive benefits under the Bank‟s Provident Fund scheme. The Bank contributes monthly at the
determined rate (currently 10 per cent of an employee‟s basic pay plus eligible allowance). These
contributions are remitted to a trust established for this purpose and are charged to Profit and Loss
Account every year.
Gratuity
The HDFC Bank provides gratuity to all its employees. The benefit is in the form of
lump sum payments to vested employees on resignation, retirement, death while in
Officers Pay Scales
Scale-I 14500-600-18700-700-20100-800-257001
Scale- II 19400-700-20100-800-28100
Scale-III 25700-800-29700-900-31500
Scale- IV 30600-900-34200-1000-36200
Scale- V 36200-1000-38200-1100-40400
Scale- VI 42000-1200-46800
Scale-VII 46800-1300-52000
Clerical Staff
7200-400-8400-500-9900-600-
12300-700
17200-1300-18500-800-19300 (20 years)
Subordinate Staff
5850-200-6650-250-7900-300-
9100-350
10150-400-11350 (20 years)
131
employment or on termination of employment of an amount equivalent to 15 days basic salary
payable for each completed year of service. Vesting occurs upon completion of five years of
service.
Superannuation
The Bank employees, above a prescribed grade, are entitled to receive retirement
benefits under the Bank‟s Superannuation Fund. The Bank contributes a sum equivalent to
13% of the employee‟s eligible annual basic salary (15% for the Managing Director, Bank
officer Directors and for certain eligible erstwhile Centurion Bank of Punjab staff) to the
insurance companies which administer the fund. There is no outstanding liability for future
employee‟s superannuation fund benefits other than its contribution, and the bank recognises
such contributions as an expense in the year incurred, as such contributions are in the nature of
defined contributions.
Pension
The bank makes provisions for pension to all eligible employees. The benefits are given
in the form of monthly payments as per rules and regular payments to vested employees on
retirement, on death while in employment, or on termination of employment. Vesting occurs
at different stages as per rules.
Other Benefits
In HDFC Bank, the undiscounted amount of short-term employee benefits, such as
medical benefits, casual leave, etc. which are expected to be paid in exchange for the services
rendered by employees are recognised during the period when the employee renders the service.
5.5 AXIS BANK
Axis Bank, established in 1993, was the first of the new private banks to have begun
operations in 1994 after the Government of India allowed new private banks to be established.
The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit
Trust of India (UTI-I), Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC) and other four Public Sector insurance companies, i.e., National
Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance
Company Ltd. and United India Insurance Company Limited.
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Initially, the bank was incorporated with a capital of Rs. 115 crore, with UTI contributing
Rs. 100 crore, LIC contributing Rs. 7.5 crore, and GIC and its four subsidiaries contributing Rs.
1.5 crore each. The Bank's Registered Office is at Ahmedabad; and its Central Office is located
at Mumbai. The bank has a very wide network of more than 1620 branches as on 31st March,
2012 and with a workforce of 31738 employees. The bank has been operating with one of the
largest ATM networks in the country of 6270 ATMs (as on 31st March, 2011) for providing 24
hours a day banking convenience to its customers.
The Bank has strengths in both retail and corporate banking and is committed to adopting
the best industry practices internationally in order to achieve excellence. Axis Bank entered a
deal in November 2010 to buy the investment banking and equities units of Enam Securities for
$456 million. Axis Securities, the equities arm of Axis Bank, will merge with the investment
banking business of Enam Securities. As per the deal, Enam Securities was to demerge its
investment banking, institutional equities, retail equities and distribution of financial products,
and non-banking finance businesses and merge them with Axis Securities.
5.5.1 Human Resource Management
Axis Bank as a young and vibrant organisation recognises its employees as its greatest
assets. Consequently, the employee satisfaction level in the bank is, possibly, amongst the
highest in the industry, and does not stem from the compensation package alone. Comprising of
people drawn from different specialisations and divergent backgrounds, the employees merge
into a highly homogeneous working group, catalysed by the informal and transparent HRD
policies pursued by the bank. In addition to an attractive compensation structure, the bank also
offers leased housing facilities, medical and health insurance and loan options.
5.5.2. Trends:
Table 5.8 highlights the data showing the importance of human factor in the AXIS Bank.
Various indicators showing the growth of the bank relating to its human resources have been
discussed in terms of branch network, staff strength, business per employee, profit per employee,
deposits per employee, advances per employee, cost per employee and establishment expenses
per employee over the period of study. The data has been analysed by calculating mean, standard
deviation, variance and compound average growth rate.
133
Table 5.8
Indicators Showing Growth of AXIS Bank from 2002-03 to 2011-12
(Amount in Rs. Crore)
Year
Business
per
Employee
Profits
per
Employee
Staff
Strength
( Number)
Number
of
Branches
Deposits
per
Employee
Advances
per
Employee
Cost per
Employee
Establishment
Expenses per
Employee
2002-03 9.26 8.22 2338 140 7.25 3.07 0.13 85.00
2003-04 8.08 8.07 3447 182 6.07 2.71 0.12 121.00
2004-05 8.95 7.03 4761 247 6.66 3.27 0.12 177.00
2005-06 10.20 8.69 6553 355 6.12 3.40 0.12 240.20
2006-07 10.24 7.59 9980 508 5.89 3.69 0.12 381.35
2007-08 11.17 8.39 14739 654 5.94 4.04 0.14 670.25
2008-09 10.60 10.02 20624 838 5.69 3.95 0.13 997.66
2009-10 11.11 12.00 21640 1038 6.52 4.82 0.17 1255.82
2010-11 13.66 14.00 26435 1393 7.18 5.40 0.18 1613.90
2011-12 12.76 14.00 31738 1620 6.93 5.34 0.18 2080.17
Mean 10.603 9.801 14226 698 6.425 3.969 0.141 762.235
SD 1.69 2.61 10413 517 0.56 0.94 0.03 699.18
Variance 2.86 6.83 108432872 267224 0.32 0.88 0.00 488857.97
CAGR 2.96 4.96 26.76 24.93 -0.41 5.16 3.00 33.73
Source: Data compiled from Annual Publications of IBA, Bombay; Performance Highlights of Public Sector Banks
and Performance Highlights of Private Sector Banks, 2002-03 to 2011-12.
The following details emerge from the data analysis shown in the above table:
Business per Employee: It is evident from the table that there has been a considerable change in
the business generated by each employee in Axis Bank. In 2002-03, it was Rs.9.26 crore; it
reached to the level of Rs.11.17 crore in 2007-08; and finally, it touched Rs.12.17 crore in 2011-
12, thus, registering an overall positive trend over the study period.
Profits per Employee: In the financial year 2002-03, profit per employee was Rs. 8.22 crore. It
kept on increasing till 2003-04. However, it came down to Rs.7.03 crore in 2004-05 and finally,
in 2011-12 it touched the highest level of Rs. 14 crore.
Staff Strength: There has been a constant growth in the staff strength of the bank. In 2002-03,
the staff strength was 2338; and it increased to 14739 in 2007-08. Finally, it touched the highest
level of 31738 in 2011-12 registering a rapid increase in the employment opportunities created
by Axis Bank.
Branches: There was a constant increase in the number of branches over the period. In 2002-03, there
were 140 branches of Axis Bank which increased to 1620 in 2011-12 showing vast market coverage.
134
Deposits per Employee: Deposits per employee recorded an overall negative trend as the figure came
down to Rs. 6.93 crore in 2011-12 from 7.25 in 2002-03. It reflects inefficiency of the staff.
Advances per Employee: A fluctuating trend has been witnessed as to advances per employee.
It fluctuated between Rs. 2.71 crore in 2003-04 and Rs.5.40 crore in 2010-11.
Cost per Employee: Cost incurred per employee by Axis Bank is under control, if we consider
the prevailing inflationary practices.
Establishment Expenses: There has been a rapid increase in the establishment expenses over
the study period of ten years indicating the adoption of efficient HR policies because expenses
are made over training, induction and development programmes of the employees. The amount
of establishment expenses was just Rs.85.00 crore in 2002-03 which touched the highest figure
of Rs. 2080.17 crore in 2011-12.
Statistical Infrences
A. Average or Mean Value: Mean values are maximum in the case of business per
employee and profits per employee as compared to the other variables which indicates
the positive working of the bank.
B. Standard Deviation: Lower Standard Deviation indicates nearness to expected value and
vice versa.
C. Growth Rate: Negative growth rate in case of deposits per employee which is -2.81 is
depicting inefficient working. Higher value of CAGR as has been observed in case of
staff strength, number of branches and establishment expenses per employee, reflects
social responsibility of the Bank.
The Human Resources Management agenda of the Bank aims to create a team of
empowered employees oriented to realization of the Bank's vision. During the year, the key HR
issues that were addressed related to learning and skill development, management of
performance, ensuring an enhanced work- life balance and attrition management.
5.5.3 Human Resource Management Practices
Manpower Planning
On the talent acquisition front, the Bank has emerged as a strong employer brand in the
financial services sector and especially on the campuses of the premier business schools of the
135
country. The strength of the workforce at the year-end 2010 was 21,640 as compared to 20,624
in the previous year i.e., 2009. The Bank has a young force with an average age of 29 years.
Performance Management System
The Bank's Performance Management System, where recognition is directly related to
performance, has been further streamlined during the year with a view to encouraging dialogue
on performance and developmental feedback between the appraisee and appraiser. Competency
clusters were defined for employees at different levels of the hierarchy to promote desired
behaviour and to facilitate an objective assessment. Sessions were conducted across the Bank to
educate supervisors on the revised process. Apart from it, a 360 degree feedback process has
been used for the first time as a part of leadership development process in the Bank.
Through the fulfilment of its HR agenda, the Bank will continue to strive 66 per cent
towards realisation of the ultimate goal of being the preferred financial service provider excelling
in customer delivery through insight, empowered employees and smart use of technology. Axis
Bank's staff strength of 32000 has always been under pressure of the management which
introduced provisions to terminate employment for non-performance and tie promotions to
output. The Bank has overhauled the human resources policies to align with the management
philosophy.
Compensation
The cash portion of emoluments is expected to rise and stock options to fall to avoid
displeasure at the time of sinking markets and in changing preference of younger staff. Coaching
programme or changes in job profiles have been planned for the under or non-performer
employees and even despite all this if they fail to perform, there is an enabling provision for
termination of services.
Training and Development
The Bank has also built training infrastructure, which seeks to upgrade skill levels across
grades and functions through a combination of in-house and external programmes. The flagship
in-house programmes include the Induction Programme for new entrants, and Credit and Foreign
Exchange Programmes for building up a pool of specialists in the respective domains. External
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Programmes encompass value-added programmes on Team Building and Leadership,
Organizational Development, Management Development Programmes, People Management
Programmes; all conducted by premier institutes like the IIMs; Administrative Staff College of India
(ASCI); and ISB, Hyderabad. Senior functionaries have also been deputed overseas to attend
specialized programmes intended to keep them updated on developments in the world economy.
E-learning
The Bank also has a comprehensive e-learning module conceptualized and developed in-
house and administered through the intranet. Keeping pace with the growth in the diversity of
products on the one hand and manpower on the other, the training man-days share increased from
57,317 last year to 65,378 during the year ending March 2011 registering a growth of 14 per cent.
Job Rotations
The employee engagement initiatives focused on providing opportunities to staff to seek
inspirational roles through internal job postings and periodic job rotations, making the
compensation structure more competitive, streamlining the performance-linked rewards and
incentives, and generally sending a clear message of meritocracy. Through the fulfilment of its
HR agenda, the Bank will continue to strive 66 per cent towards realisation of the ultimate goal
of being the preferred financial service provider excelling in customer delivery through insight,
empowered employees and smart use of technology.
5.6 COMPARATIVE ANALYSIS OF HRM POLICIES AND PRACTICES
Table 5.9, as given below, provides a comparative analysis of HRM policies and practices
of four sample banks based on the documentary evidences and observations shared by different
level employees and officers of all these banks. The following results have been compiled on the
basis of respondents‟ response to the given statements on Human Resource Management policies
and practices obtained through the interview method. A study of HRM policies and practices of
four sample banks has also been done through „content anlaysis‟. The twenty-nine different
HRM areas have been identified with respect to recruitment, selection and promotion,
compensation, training and development policies and practices, and compared through „content
analysis‟.
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Table 5.9
Comparative Analysis of HRM Policies and Practices of Four Sample Banks
S. No. HRM Areas Punjab
National
Bank
State
Bank of
Patiala
HDFC
Bank
Axis Bank
1. HRM practices are standardized Yes Yes Yes Yes
2. Staff Strength Adequacy Partial Partial Yes Yes
A. Recruitment and Selection:
3. Well-defined recruitment and selection
policies
Yes Yes Yes Partial
4. Recruitment and selection policies: Well-
practised
Yes Yes Yes Partial
5. Analysis of positions and requirements
before recruitment process starts
Yes Yes Partial Partial
6. Mode of recruitment Defined Yes Yes No Partial
7. Recruitment and selection system Defined Yes Yes Partial Partial
8. Line managers and HR managers participate
in recruitment and selection Process
Yes Yes Yes Yes
9. Valid and standardized tests are used in the
selection process
Partial Partial No Partial
10. Bank uses comprehensive selection process
before rendering a decision
Yes Yes Partial Partial
11. Bank uses interviewing techniques for
employee selection
Yes Yes Partial Partial
B. Promotion Policy
12. Well-defined Partial Partial Yes Yes
13. Well-practised Partial Partial Partial Partial
C. Salary and Remuneration Policy
14. Compensation offered matches with other
sectors
No No Yes Partial
15. Other benefits are comparable to the market Partial Partial Partial Partial
16. The compensation for all employees is
directly linked to their performance
Partial Partial Yes Yes
17. The compensation plan is revised
accordingly with the economic situation
Partial Partial partial Partial
18. Pay incentives such as bonus or profit
sharing are an important part of the
compensation strategy
Partial Partial Yes Yes
19. Pay policies recognize that long-term results
are more important than short-term results.
Partial Partial Partial Partial
D. Training and Development Policy
20. Well-defined Training and Development
policy
Yes Yes Yes Yes
21. Training needs Assessment Mechanism Yes Yes No Partial
22. Policy for Selection of trainees Partial Partial Yes Yes
23. Pre-Training Practices Yes Yes Partial Partial
24. Training programme planning Yes Yes Yes Yes
25. Awareness campaign for Employees about
Training Objectives
Yes Yes Yes Partial
26. Training systems and Job requirements Yes Yes Yes Partial
27. Training programme contents Yes Yes Partial Partial
28. Continuity of training programs Yes Yes Yes Yes
29. Training Evaluation Methods Partial Partial Partial Partial
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SUMMARY
The Punjab National Bank and the State Bank of Patiala emphasized on such HRM
policies which aim at creating facilitating environment for the overall development of employees
and thereby enabling them to translate their potentials into role related competencies. Both the
public sector banks recognize the value of the contributions of their human resources in
achieving the corporate objectives. All human resource management related interventions are
based on the philosophy of individual and organizational development. In the light of large scale
gaps, both the public sector banks are likely to face challenges in the next few years, need long
run and practically viable recruitment and selection, rewards or compensation along with
promotions and transfer policies. The training and development policies and practices in both
the banks are very effective and the PNB has been working as a role model amongst the
public sector banks.
As far as the Axis Bank is concerned, it has adopted a human resource policy that is not
only robust and flexible, but also aims to create and nurture a committed, motivated and
knowledgeable pool of talent. With a view to promote rural talents, it recruits aspirants from
Tier-II business schools as well. Continuous training, the opportunity to work on challenging
tasks, and job rotation are part of the Bank‟s talent retention strategy. Training is an area of
continuing focus for the Bank in order to ensure that its professional skills are equipped to
maintain high standards of customer service and are also aware of the latest developments in
their specializations by focusing on upgrading the professional skills of each individual. The
bank has a well- structured performance-linked scheme of variable pay and employee stock
options for all the employees across grades and functions.
The HDFC Bank focuses on training of its employees on a continuous basis, both on the
job and through training programmes conducted by internal and external faculty. The Bank has
consistently believed that broader employee ownership of its share has a positive impact on its
performance and employee motivation.
Thus, the emerging HRM environment poses both opportunities and threats for the public
and private sector commercial banks, as well as the human resource in the changing economic
and business environment. The primary emphasis needs to be on integrating the human resource
strategies with the business strategy, above the aspects of recruitment, placement, performance
management, rewards, and training and development; a radical transformation of the existing
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human resource management policies and practices in the selected public and private sector
commercial banks. Prioritizing seniority over performance is not a good practice for attracting
the best talent in a competitive environment. However, recruitment practices as well as on-the-
job training and redeployment are considered as one of those many improvements of HR in the
Indian banks.
In nutshell, it can be said that HRM policies and practices of all the selected commercial
banks in the above background concentrated on recruiting, promoting and placing,
compensating, training and developing, and motivating employees to work for ensuring that
these policies are properly designed and implemented, thereby helping the workers to set and
achieve individual and organisational goals.
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