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Financial System is the most importantinstitutional and functional vehicle foreconomic transformation of any country.Banking sector is reckoned as a hub andbarometer of the financial system. As a growthfacilitator of the economy, it plays apredominant role in the economicdevelopment of the country. The geographicalpervasiveness coupled with the range anddepth of banking services makes the bankingsystem an indispensable medium in every dayfinancial transactions. Although banks do notcreate new wealth, their borrowing, lendingand related activities facilitate the process ofproduction, distribution exchange andconsumption of wealth. Banks are also specialas they not only accept and deploy largeamounts of uncollateralized public funds in afiduciary capacity, but also leverage suchfunds through credit creation. Evidence fromacross the world suggests that a sound andevolved banking system is sine quo non forsustained and more inclusive economicdevelopment.

The development of a sound bankingindustry depends on the continuous flow ofinformation. The availability of timely, reliableand systemic information enables efficient andeffective decision making process of the

Participative Decision Making Process in Banks:A Case Study of Corporation Bank and Syndicate Bank

Managers and adaptability of the banking staffto the changing global scenario. Therelationship between the informational role ofmanager, viz a viz participative decisionmaking and creativity of employees affect theoverall effectiveness of banking system. Theparticipative decision making is one of themany important strategies that help effectivedecision making process in the bankingtransactions. Similarly creativity ofsubordinates is important for everyorganization to improve problem solving ingeneral and finding non standard solutions inparticular. Without appropriate information,which comes as a result of an effectiveinformation role of managers, employees inturn cannot participate in decision makingeffectively. So long as banking transactionsare handled by the people, informational roleof managers and sharing of information amongthe staff, thus, remain an important area ofmajor concern.

Rationale for the StudyThe Indian Banking industry has

traditionally remained a protected space.Regulated deposit and lending rates andrestrictions on competition have enabledcomfortable spreads. The role of informationwas limited. With liberalization and

Dr. Ashalatha K. *

* Associate Professor, JKSHIM, Nitte. The article is based on her Ph.D. Thesis submitted to Mangalore University.

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revolutionary changes in banking technology,the banks are now compelled to change theold ways of doing business. The banks arerequired to work in a more competitive andmarket driven environment. Readyaccessibility to information and knowledgewould enable the bank managers to becomebetter decision makers and lead their banks toachieve much-sought after competitive edge.Moreover, the globalization of bankingoperations has thrown several challenges tobanking sector in India. In the fast changingenvironment, information symmetry andcreativity among the managers and staff canminimize credit and operational risks andensure competitiveness and sustainableviability of the banking business. In the backdrop of emerging competitive andglobalization scenarios, informational role ofbank managers in decision making thereforeassumes greater significance.

Participative decision making is alsoconsidered as one of the important methodsof decentralized decision making. Wellinformed staff and creativity of employees areinvaluable assets for the banking system asthey provide sufficient built-in internalstrength to counter act the ill-effects of anythreats from the environment. Participativedecision making has to therefore become awidely practiced strategy in the decisionmaking process in the banking system.

The banking sector is going through majorchanges as a consequence of economicreforms. Existing products need to bedelivered in an innovative and cost effective

way by taking the full advantage of theavailable information of emergingtechnologies. In this context, the availabilityof information affects the quality ofmanagerial decision. Thus information playsa very pivotal role. The survival and thesuccess of the bank in this competitive era arebased on the various decisions taken by themanagers based on the available informationof the fast changing market scenario. Eventhough a couple of research studies of theconcepts of information, creativity andparticipative decision making are availablepertaining to the organization, no research inbanks has been done. Against this backdrop,a comprehensive study of the Impact ofInformation availability on the quality ofmanagerial decision in Banks is a unique oneand assumes greater significance.

A comprehensive review of literature oninformation, creativity, participation anddecision making in banking reveals that muchof the research in the field of banking relatesto the areas of financial performance of banks,human relations in banks, bank marketing andsocial banking with particular focus on co-operative and rural banking. No study hastouched upon the informational role of bankmanagers and its impact on the quality ofmanagerial decision.Objectives and Scope of the Study

Against this back-drop, this study aims atproviding an insight into informational roleof managers on decision making and theparticipation and the creativity of theemployees in the banking sector. The specific

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objectives of the study are:To examine the effectiveness of existinginformational role of bank managers.To know the factors determining theeffectiveness of informational role ofbank managers. The study wouldidentifying various external influences ondecision making in banks such aseconomy, technological changes, thelegal system and social and culturalinfluences.To examine the relationship betweeninformational role of the managers andparticipative decision making in banks.To examine the relationship between theinformational role of the bank managersand creativity of the employees.

Based on the empirical findings of theabove, the study would make appropriaterecommendations to improve the overallcontribution of information to the benefit ofdecision making for Managers in the bank. Atthe outset, it is important to remember thatthe study is based on the premises thatinformation and decision plays a significantrole in improving the participation andcreativity of the employees and also inenabling their development within the bank,which goes a long way towards raising theirconfidence, commitment, morale andincreasing their loyalty to the bank. However,there are a few impediments to the attainmentof optimal decision effectiveness. ASystematic and comprehensive scrutiny ofmanagers’ perception towards decisionmaking will highlight such impediments and

facilitate the formulation of strategies toobviate these obstacles and to increase theeffectiveness of the decision.

The scope of the study is restricted to twopublic sector banks viz. Corporation Bank andSyndicate Bank. 500 Managers with sampleof 250 Managers each from Corporation andSyndicate Bank in Udupi and DakshinaKannada Districts were selected based on non-probability and judgment samplingmethodology. Structured questionnaire wereused through personal interview for collectionof requisite data. The definitional explanationsof some of the key words used are given inthe Annexure.Informational and Managerial Role inBanks

The manager in bank branch is a decisionmaker and therefore plays a crucial role in theaffairs of the bank. The day-to-day bankingbusiness involves credit risks, liquidity risks,operational risks and market risks. The branchmanager and bank staff are required to be wellinformed about the clients and environment.Otherwise the bank business will be injeopardy. In the modern globalisedcompetitive era, the banks are seeking to scalegreat heights. They have to cope with extremecompetition, complexity of business orturbulence in the external environment. Insuch a situation, the quality and creativity ofits managers make a vital difference. The bankmanagers also require ensuring that all bankstaff is also well equipped with informationand knowledge of changing dimensions ofbanking business.

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Participative decision making does notmean individual decision. It includesconsensus of different ideas for a particularproblem. Sharing of information is the mostimportant factor in the participative decisionmaking. Effective informational role ofmanagers are highly addicted for theparticipative decision making and it is seenas a positive relationship between theeffectiveness of managerial informational roleand participative decision making. The valueof all available information lies solely on itsability to affect behavior, decision or outcome.

Creativity is a must for a bank to survivein a competitive environment. Thepredominant effect of change on any bankingbusiness is the necessity it creates for a bankto effect change in itself; change of productsand services, technology, business structure,employee relations or any other facets ofbanking business. Creativity and stability,which are the outcome of an effective decision,are needed in bank. An effective and efficientbank achieves a balance of the two. If thebank has no creativity, it will not rejuvenateitself with improved methods and new goals.Without stability the bank cannot put its ideasinto effect.

A rational decision maker always needscreativity and stability, where the ability liesto produce novel and useful ideas. Appropriateflow of information is essential at each stageof decision making. The availability ofrequisite information is dependent uponeffective information management.Information thus destined to occupy a

prominent role in the banks to help themanagers to take the right decision at righttime.

Profile of Managers studied There are certain key characteristics which

govern the informational role of bankmanagers and staff. They include inter aliaage, gender category, qualifications andprevious work experience. All these factorshave significant influence on the behavior ofbank managers and employees at work. Witha view to understand the profile of bankmanagers who play key role in day-to-daydecision making, an attempt is made to analyzethe survey data on these key parameters.

Age: Age is an important determinant as itreflects number of years of experience in thebank service. Table 1 sets out the comparativedata on the age profile of sample bankmanagers studied of Syndicate bank andCorporation Bank.

From the table, it is clear that the majorityof the bank managers (53 percent) belong tothe age group of 55 years and above. 36percent of the bank managers belong to theage group of 45 to 55 years and 11 percent ofthem are of 35 to 45 years. Bank-wise dataanalysis shows almost similar pattern of ageprofile of bank managers. The observeddifferences in age groups are only marginal.In Corporation Bank, out of 250 bankmanagers studied, 179 (52 percent) are in theage group of 55 and above years, while in thecase of Syndicate Bank 135 (54 percent) outof 250 belong this age group. However,comparatively, Corporation Bank has higher

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proportion of managers belonging to youngerage group than Syndicate Bank. CorporationBank has 14 percent of mangers in the agegroup of 35 to 45 years as against only 9percent in the case of Syndicate Bank.

Gender Composition: Gender is anotherkey characteristic which may have someinfluence on the behavior of the bank manager.Te gender-wise composition of the samplemangers selected for the study is shown inTable 2.

Table No.1Age Profile of Selected Bank Managers

Table No.2Gender wise classification of Managers

X2(1) = 0-168 P= 0.682(NS)

Chi-Square Tests

The analysis of data in the table shows thatmost of the bank managers are males and only12 percent of the sample managers arefemales. The gender composition of themanagers in both the banks is almost similar.Of the total 500 respondents, 439(88 percent)are males and only 61(12percent) are females.In corporation bank out of 250 respondents,218(87percent) are males and 32(13percent)are females. As against this, in SyndicateBank, 221(88 percent) out of 250 are males

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and 29(12 percent) are females. Chi-squaretest shows that there is no significantdifference between the banks with respect togender (P=0.682 NS).

Academic and ProfessionalQualification: Academic and professionalqualification matters in acquisition of skill,understanding of information and effectivedecision making process in the bankingbusiness. Academic experience enhances theability of the managers to use information asan effective tool in decision making processas well as to judge implications of the decisionscenarios in a better way. Moreover, itcontributes significantly on creativity in thedecision making process. In Table 3, anattempt is made to analyze the bank-wise dataon academic and professional qualificationsof the sample managers studied.

Majority of the bank managers (SyndicateBank – 63.6 percent and Corporation Bank –68.4 percent) are graduates in both the banks.About one-third of bank managers are post-graduates. Since CAIIB (Certified Associateof the Indian Institute of Bankers) is

Table No. 3Bank wise Academic and Professional Qualification

considered as an essential qualification forbank managers, most of them are found withprofessional qualification of CAIIB. Very fewof them have other special certifiedqualifications. Comparatively, Syndicate hashigher professionally qualified managers. Thepercentages of bank managers with postgraduation and other professionalqualifications are higher in the case ofSyndicate Bank compared to CorporationBank. Syndicate Bank has 36 percent ofmanagers with post-graduation and 58 percentwith CAIIB as against 32 percent and 52percent respectively in the case of CorporationBank. Similarly, 15 percent of Syndicate Bankmanagers have other professionalqualifications compared to only 9 percent inthe case of Corporation Bank.

Skills and Knowledge of Managers inBanking Operations:

The opinion survey was also carried out toexamine the skills and knowledge of the bankmanagers in banking operations. The objectiveof this is to gauge the extent of effectivetransfer of learning to the work situation. Skill

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and knowledge in banking operations isacquired mainly through job-oriented trainingand learning by doing experience. Table 4provides the findings of the survey results asregards the skill and knowledge of managersin banking operations.

Since most of the managers have numberof years experience in the various operationsof banking and undergone job-orientedtraining, it was observed that almost allmanagers in the sample studied in both thebanks have requisite knowledge and skill inbanking operations. Out of sample of 250studied, only 7 in the case of Corporation Bankand 3 in the case of Syndicate Bank havereported that they have no requisite trainingand skill in the jobs they are doing. Chi squaretest shows that there is no significantdifference between the banks as regards the

Source : Survey results X2(1) =2.0333 P=0.154 (NS)

knowledge and skills of managers in bankingoperations (P=0.154NS).

Contribution of Information in DecisionMaking

Information plays crucial role in variousdimensions of banking decision makingprocess. It benefits the bank in various ways.Unless the managers and the banking staff arewell informed in the various operations of thebanking business as well as newdevelopments, the effective and efficientbanking functions cannot take place. With aview to ascertain the contribution ofinformation in the decision making to thebenefit of banking, an attempt is made toidentify areas which will be affected andbenefitted as a result of effective informationin the decision making process of bankmanagers. Though there are number of

Table No. 4Skills and Knowledge in Banking Operation

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banking areas which benefit from effectiveinformation in decision making, the studyfocuses on seven key areas viz. reduce numberof staff, decrease cost of operations, increasestaff satisfaction, increase user satisfaction,provision of valid information, accurateinformation and extensive information.Though, the relative importance of these areasfrom the banking point of view also varieswidely, for the study purpose, they areconsidered as of equal importance for thebank. To compile data in the field study,respondents were asked whether they stronglydisagree, disagree, moderate, agree andstrongly agree with respect to contribution ofinformation on these key areas. The findingsof the field study are summarized in Table 5.

Note: A-Reduce number of staff, B-Decrease cost of production, C-Increase staff satisfaction,D- Increase user satisfaction, E-Valid Information, F-Accurate information and G- Extensive information.

Table No 5Benefits of Information to Decision Making in Banks.

ANOVA: F(6,2994) = 337.69, p=0.000,HS

The majority of the managers of both thebanks (54 percent) do not agree on the benefitof information on decision making to reducethe staff. Even out of 46 percent ofrespondents who agreed, only 4 percentmentioned strong agreement on the benefitsof information in staff reduction decisionmaking process. Nearly 25 percent ofrespondents reported strong disagreement onthe benefit of information of staff reduction.Against this, interestingly, 92 percent of therespondents reported agreement on the benefitof information in cost reduction decisionmaking process. While nearly 23 percent ofthem indicated their strong agreement, 24percent have reported moderate agreement.Only 8 percent of the bank managers studied

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reported disagreement in this regard. Asregards increase in staff satisfaction, out of 500bank managers studied, 481 (96 percent) havegiven positive response and only 9 bankmanagers (4 percent) have given negativeresponse. Even in this case, 30 percent havereported strong agreement on the benefit ofthis parameter on cost reduction decisionmaking process. Surprisingly, similar patternof response was found in the case ofcontribution of information in increase in usersatisfaction. 96 percent of the respondents inthe sample have reported the benefit ofinformation in increasing user satisfaction inbank’s decision making process. Similarly, thebenefit of information on other three areas viz.valid information, accurate information andextensive information is found to besignificant. Only less than 2 percent of thebank managers studied have reported negativeimpact. The majority have reported positiveimpact in these areas.

Factors of Information contributing toDecision Making

The contribution of information for thebenefit of the banking business can be realizedonly by strengthening the key factors causingthe same. The factors contributing to theinformation flow in the banking are numerousand their degree of importance also varieswidely. In view of the critical importance ofthe factors channeling information to benefitthe banking business transactions, an attemptis made to compile the responses of the bankmanagers of both the banks on the same. At

the outset, it should be noted that no attempthas been made in this study to quantify andevaluate the relative importance of the variousfactors identified. The factors considered forthe study are explained below:

A. They are well informed about theorganizational objectives, ways andmeans to achieve objectives

B. Employees are encouraged for findingnew Information relating toorganizational effectiveness

C. The leaders receive information in timeregularly

D. The leader in their unit is capable ofdealing with diverse information in agiven situation

E. Superior in their unit sends themupdated information

F. The culture in the unit fostersinformation sharing

G. Effective information sharing inutilization of systems and procedures

H. Managers always support and areavailable in dealing with outsideagencies

I. Managers are well aware of the businessin the organization

J. Managers are well aware of the skillsand capabilities of the subordinates

Table 6 presents the analysis of responsesof the sample bank managers on factorscontributing to information in decision makingprocess in two banks studied.

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From the analysis of data in the table, it isclear that majority of the managers in both thebanks agree that the factors like well informedorganizational objectives, encouragement ofemployees for finding new information, timelyreceipt of information, capability of leadersto deal with diverse information,Dissemination of updated information by thesuperiors, fostering information sharingculture, effective information sharing insystems and procedure, managers’ support and

availability to deal with outside agencies, andawareness of managers of skills andcapabilities of the subordinates are all crucialin obtaining optimum benefit of informationfor effective banking business transactions.The analyses of variance denotes that thefactors of information contributing to decisionmaking are h

Since the factors identified are inter-related,correlation analysis was carried out in Table7.

Table No. 6Factors of information contributing to Decision Making

Source : Survey Results ANOVA: F (9, 4473) = 6.705, p=0.000, HS

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.702 .000 sig

.538 .000 sig

.618 .000 sig

.669 .000 sig

.658 .000 sig

.606 .000 sig

.662 .000 sig

.689 .000 sig

.640 .000 sig

.700 .000 sig

.713 .000 sig

.516 .000 sig

.600 .000 sig

.659 .000 sig

.661 .000 sig

.593 .000 sig

.668 .000 sig

.684 .000 sig

.659 .000 sig

.729 .000 sig

Well informed about the organizationalobjectives, ways and means to achieveobjectivesEmployees are encouraged for findingnew information relating to organizationaleffectivenessLeaders are receive information in timeLeader is capable of dealing with diverseinformation in a given situationSuperior sends updated informationCulture in the unit fosters informationsharingThe systems and procedure in the unitensure effective information sharingManagers always support and available indealing with outside agenciesManagers are well aware of the businessin an organizationManagers are well aware of the skills andcapabilities of the subordinateWell informed about the organizationalobjectives, ways and means to achieveobjectivesEmployees are encouraged for findingnew information relating to organizationaleffectivenessLeaders are receive information in timeLeader is capable of dealing with diverseinformation in a given situationSuperior sends updated informationCulture in the unit fosters informationsharingThe systems and procedure in the unitensure effective information sharingManagers always support and available indealing with outside agenciesManagers are well aware of the businessin an organizationManagers are well aware of the skills andcapabilities of the subordinate

Bank

Corporation Bank

Syndicate Bank

PearsonCorrelation p value

Decision

Table 7: Correlation Analysis

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If correlation coefficient is 0.7 and above,the relationship of a factor of information ondecision making is considered as strong. If thevalue is greater than 0.6 and lesser than 0.7,the correlation is considered good. If the valueis more than 0.4 and less than 0.6, it is amoderate correlation. When the value is lessthan 0.4, it is a weak correlation. In both thebanks, two factors viz. well informed aboutthe organizational objectives and ways andmeans to achieve these objectives, and if themanagers well aware of the skills andcapabilities of subordinates have correlationcoefficient o.7 and above reflecting strongcorrelation. Except one factor viz. employeesare encouraged to find new informationrelating organizational effectiveness, all otherfactors are found to have correlationcoefficients above 0.6 and below 0.7 showinggood correlations. Surprisingly, there are nowide differences in the correlation coefficientsobserved in case of both banks.

Effects of various Factors ofInformational Role

With a view to identify the effects ofvarious factors of informational role ondecision making, regression analysis wascarried out. In the regression analysis, thefactors of information are the independentvariables and the decision factors are

dependent variable.Results of the Regression Analysis

demonstrate that 65 percent of the decision inCorporation Bank is influenced by the factorsof information identified. Further in SyndicateBank 66 percent of decisions are influencedby the factors of information. This signifiesthe importance of the factors in decisionmaking in the banking system.

Summary of FindingsThe major finding of the empirical study

based on primary data compiled forCorporation Bank and Syndicate Bank can besummarized as follows:

Majority of the managers of the bankbranches as revealed in the sample study, fallin the age group of 55 years and above.

The gender composition shows thatmajority of the branch managers are males.

Though majority of the managers areGraduates, nearly twenty percent were foundto have post-graduation and almost all haveprofessional CAIIB qualification.

Most of the managers have number ofyears banking experience and have worked invarious departments under various capacitiesin their career in the bank.

Information benefits the decision-making mainly by reducing the cost of

Table No.8Summary of Regression Analysis

.807 .652 .637

.818 .669 .655

Model11

BankCorporation BankSyndicate Bank

R R SquareAdjustedR Square

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operation, resulting in the increase of staff’ssatisfaction and user’s satisfaction.

Managers are well informed about theorganisational objectives and employees areencouraged to find new information relatingto organisational effectiveness

It is found out that the superiors in theunit send the updated information and there isa culture of information sharing. Systems andprocedures in the unit ensure effectiveinformation sharing.

Well awareness of the organizationalobjectives, ways and means to achieve thesame and the bank business operations andskills and capabilities of their subordinates goa long way in effective decision makingprocess for successful operation of the bank.

The study has evidently shown that thereare no wide differences between the bankswith regard to knowledge, skill andcapabilities of bank managers. The bankingindustry is now facing newer challenges in

terms of narrowing spreads, new bankingproducts and players and mergers andacquisitions. Adoption of risk managementtools and new information technology is nomore a choice but a business compulsion.Technology product innovation, sophisticatedrisk management systems, generation of newincome streams, building business volumesand cost efficiency will be the key to successof the banks in the new era. In the presentenvironment where change is invisible, it isnot enough if bank change with the change,but they have to change before the change.They should perceive what customer want andaccordingly structure their product andservices. In this context, the availability ofinformation affects the quality of managerialdecision. Regular information update plays avery pivotal role. The survival and the successof the bank in this competitive era ultimatelydepend on effective decision taken by themanagers at the branch level.

Chester I Barnard, “The functions of the executive”, HarvardUniversity Press, Cambridge, Mass, 1938, p14.

Choo, Chun Wei(1996) The Knowing Organization: how organizationsuse information to construct meaning, create knowledge and makedecisions, International Journal of Information management,16(5),23-40.

Choo, Chun Wei(1996) “The Knowing Organization: howorganizations use information to construct meaning, createknowledge and make decisions”, International Journal of Informationmanagement, 16(5),23-40. – Inc, Irvin – Dorsey Limited;Ontario,1981,pp117

Goodman, Susan K.(1993), “ Information needs for ManagementDecision Making” , Records Management Quarterly, October,21-22.

Goodman, Susan K.(1993), “ Information needs for ManagementDecision Making” , Records Management Quarterly, October,21-22.

Hamel.G., and Prahalad C.K.,1994, “ Competing for the FutureBottom”, MA, Harvard Business School Press.

Henry Mintzberg, Duru palsin Ghani and Andre Theoret, “TheStructure of Unstructured Decision processes”, Administrativescience Quarterly, June 1976, pp.246-275.

Herbert A Simon, “The New Science of Management Decision”,Harper, New York,1960,p2.

Pai, D T “Indian banking Changing Scenario”, IBA Bulletin, XXIII(3),March 2001,20-23.

Richard D Irwin Daft , Richard .L. and Lengel, Robert .H. (1984) “Information richness: a new approach to managerial behaviorand organization design”, Research in OrganizationalBehavior,6,191-233.

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