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EXECUTIVE SUMMARY

Fast global & technological developments have made todays business environment highly
uncertain & even chaotic. Organizations are seeking newer ways to promote their adaptability to
the complexities of the changed scenario so as to survive & prosper. Globally organizations are
striving to realize competitive success through strategic management of human resources. Thus,
people management has never been more important than it is today. Therefore new themes have
emerged in the process, replacing some of the old ones. The new thinking in this regard is
referred to as Human Resource Management (HRM), which carries a more proactive & strategic
connotation.
The development of employee commitment through employee involvement & empowerment is
one of the key objectives of any HRM discourse. The complex business objectives in todays
business environment are difficult to realize without developing highly committed & motivated
employees who would strive to contribute to organizational goals. That is why, human resource
issues are no more the preserves of personnel specialists; rather line & general managers are
being increasingly involved in handling key HR issues & in evolving, shaping & managing
human resource strategies & policies. These developments have given a far greater recognition to
the HR function in organizational decision- making processes.
Human resource is one of the natural resources of any countrys economy. It is the wealth of the
country. In the context of banking, human resource is of greater importance. The deployment of
human resource through proper & efficient selection, training & development, is called Human
Resource Management.
The success of any bank largely depends on efficient human resource management, apart from
operations, marketing & sales, the HR department manages all the efficient people working in
operations & marketing divisions in an organization.
HYPOTHESIS
GROWTH OF BANKING SECTOR DEPENDS ON APPROPRIATE HRM POLICIES.
To analyze this hypothesis I have included a case study on STATE BANK OF INDIA in which I
have put forth the range of practices executed by the HR department. I have even interviewed
Mr. Rajiv Deka, Branch Manager of SBI & Ms. Rohini Rai, Branch Manager of HDFC Bank,
thereby representing the two major sectors of BANKS, i.e., PUBLIC SECTOR & PRIVATE
SECTOR.

SCOPE
From entry to the exit of an employee in the organization;
Scope of HRM can be described based on the following activities of HRM. Based on these
activities we can summarize the scope of HRM into 7 different categories as mentioned below
after the activities. Lets have a look at both of them
HRM Activities:-
1. HR Planning
2. Job Analysis
3. Job Design
4. Recruitment & Selection
5. Orientation & Placement
6. Training & Development
7. Performance Appraisals
8. Job Evaluation
9. Employee & Executive Remuneration
10. Motivation
11. Communication
12. Welfare
13. Safety & Health
14. Industrial Relations
7 Categories of Scope of HRM:
1. Introduction to HRM
2. Employee Hiring
3. Employee & Executive remuneration
4. Employee Motivation
5. Employee Maintenance
6. Industrial Relations
7. Prospects of HRM


SCOPE OF HRM




HUMAN
RESOURCE
MANAGEMENT
NATURE OF
HRM
EMPLOYEE
HIRING
EMPLOYEE &
EXECUTIVE
REMUNERATION
EMPLOYEE
MOTIVATION
EMPLOYEE
MAINTENANCE
INDUSTRIAL
RELATIONS
PROSPECTS
OF HRM
FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
There are 2 broad functions of HRM. They are:
I. Managerial Functions
II. Operational Functions
Managerial Functions:
Managerial functions of Personnel management include planning, organizing, directing, co-
ordinating & controlling.
Planning:
It is the charting out of programmes & changes in advance in the achievement of
organizational goals. Hence, it involves planning of human resources requirements,
recruitment, selection, training etc. It also involves forecasting of personnel needs,
changing values, attitudes & behavior of their employees & their impact on the
organization.

Organizing:
In the words of J. C. Massie, an organization is a structure & process by which co-
operative groups of human beings allocated its tasks among its members, identifies
relationships & integrates its activities towards a common objective. Given the complex
relationships that exist between specialized departments & the general departments, many
top managers seek the advice of personnel manager. In this manner, the organization
establishes relationships among the employees so that they can together contribute to the
achievement of organizational goals.

Directing:
After planning & organizing comes the execution of plan. The willing & effective
cooperation of employees towards the achievement of organizations goals has to be
brought about by proper direction. Identifying & utilizing maximum potentials of people
is possible through motivation & command. Direction, therefore, is an important
managerial function in ensuring optimum employee contribution.

Co-ordinating:
It is the task of matrixing various employees efforts to ensure successful goal
achievement. The Personnel manager co-ordinates various managers at different levels as
far as the personnel functions are concerned.

Controlling:
After planning, organizing, directing & co-ordinating, the various activities, the
performance is to be verified in order to know, at various points of time, whether the
activities are performed as per plans & directions. It involves checking, verifying &
comparing actual with the plans, identification of deviations if any & correcting the
deviations. Auditing training programmes, analyzing labour turnover, overseeing morale
surveys, conducting exit interviews are some of the controlling functions of personnel
management.

Operative Functions:
The operative functions of HRM relate to employment, development, compensation & relations.
All these are interacted by managerial functions. Also, they are to be performed in conjunction
with management functions.




Human Resource Planning
Recruitment
Selection
Induction
Placement
EMPLOYMENT
Performance Appraisal
Training
Management Development
Career Planning & Development
Organisation Change
Organisation Development
HUMAN
RESOURCE
DEVELOPMENT
Job Evaluation
Wage & Salary Administration
Fringe Benefits
COMPENSATION
MANAGEMENT
Motivation
Morale
Job Satisfaction
Communication
Grievance & Disciplinary Procedures
Quality of Work Life & Quality Circles
HUMAN
RELATIONS
ORGANISATIONAL DESIGN----JOB DESIGN----JOB ANALYSIS
Employment:
Employment function is securing & employing the people having required level of
human resources essential for achieving the organizational objectives. It involves job
analysis, human resources planning, recruitment, selection, placement, induction &
handling internal mobility.
Job Analysis:
It is the study & collection of data relating to the operations & responsibilities of a
specific job. It includes:
a. Collection of data & information & facts relating to the various aspects of jobs
including men, machines & materials.
b. Drawing up of job description, job specification, job requirements &
employee specification with which nature, level & quantum human resources
can be finalized.
c. Providing the guidelines, plans & the basis for job design & for all operative
functions of HRM.
Human Resource Planning:
This is the process which assures the organization that it will have adequate number of
qualified persons, at requisite times, performing in a way to satisfy the needs of the
organization & also provide satisfaction to the individual employee, so employed.
The process involves:
a. Estimating the present & future requirements of human resources based on
objectives & long range plans of the organization.
b. Calculation of net human resource requirements based on the present
availability of human resources.
c. Taking suitable steps to identify, mould, change & develop the strength of
existing employees so as to meet the future requirements.
d. Preparation of action plans to acquire the balance human resources from
outside the organization & to develop the existing employees.
Recruitment:
It is the process of searching for future employees (requirement) & ensuring they apply
for jobs in the organization.
It involves:
a. Identification of existing sources of candidates & developing them.
b. Seeking out & identifying new sources of applicants.
c. Motivating the right type of candidates to apply for jobs in the organization.
d. Ensuring a healthy balance between internal & external sources.
Selection:
It is the process of ascertaining the qualifications, experience, skill, knowledge, etc. of an
applicant to ascertain his/her suitability for the job applied.
This includes:
a. Developing application blanks.
b. Creating & developing valid & reliable testing techniques.
c. Formulating interviewing techniques.
d. Checking of references.
e. Setting up for medical examination policy & procedure.
f. Line Managers to be involved in the decision making.
g. Sending letters of appointment.
h. Employing the selected candidates, when he reports for duty.
Placement:
It is a process of allotting to the selected candidate the most suitable job, as per the job
requirements & employee specifications.
This function includes:
a. Counselling the concerned managers regarding the placements.
b. Overseeing the follow-up studies, employee performance appraisal to monitor
employee adjustment to the job, in the coming days.
c. Correcting wrong/misjudged placements, if any.
Induction & Orientation:
These are procedures by which a new employee is rehabilitated in the new surroundings
& introduced to the practices, procedures, policies, people, etc. of the organization.
It includes:
a. Familiarizing the employee with company philosophy, objectives, policies,
career planning & development, company product, market share, history,
culture, etc.
b. Introduce new employee to the peoplehis colleagues, supervisors &
subordinates.
c. Mould the employees by orientation methods to the new working conditions.

Human Resource Development:
This process involves improving, moulding, & developing the skills, knowledge,
creativity, attitude, aptitude, values, commitment, etc. based on the present & future job
& company requirements.


Performance Appraisal:
It is the continuous & systematic evaluation of individual employees with respect to their
performance & their potential for future development.
It includes:
a. Enunciating policies, procedures & techniques.
b.Assisting functional managers.
c. Reviewing & summarizing reports.
d.Evaluating the effectiveness of various programmes.

Training:
It is the process of transmitting the employees the technical & operating skills &
knowledge.
It includes:
a. Identification of training needs of the individuals & for the organisation.
b. Developing appropriate training programmes.
c. Assissting & advising the management in the conduct oftraining programmes.
d. Transmitting requisite job skills & job knowledge to the employees.
e. Asses the effectiveness of the training programmes.










Management Development:
It is the process of designing & conducting appropriate executive development
programmes so as to develop the managerial & human relations skills of the employees.
It includes:
a. Identification of the areas in which management development is needed.
b. Conducting development programmes.
c. Motivating executives/managers.
d. Designing special development programmes/ assessment procedures for
promotions.
e. Utilising the services of specialistsboth internal & external for development
&/or Institutional (external) development programmes.
f. Evaluating the effectiveness of executive development programmes.
Career Planning & Development:
It is the planning of ones career & implementation of career palns by means of
education, training, job search & acquiring of work experience.
It includes:
a. Internal mobilityvertical & horizontal transfers, promotions & demotion.
b. Transferprocess of placing employees in the same level jobs where they can
be utilised more effectively as per the needs of the organisation. This also
meansdeveloping transfer policies, offering assistance & guidance to
employees under transfer orders & evaluating transfer policy periodically.
c. Promotionit deals with the upward assignment of employees to occupy
higher positions (with better status & pay) in consonance with resoueces of
employees & job requirement. The department must ensure that:
i. Equitable, fair & consistent promotions are formulated & administered.
ii. Managers & employees are given assistance & guidance on the subject
of promotion.
iii. Execution of promotional policies are as per policies & procedures.
d. Demotionis the downward assignment of an employee in an organisation.
The department must ensure that:
i. Equitable, fair & consistent demotion policies are drawn up.
ii. Assisting & advising employees regarding demotions.
iii. Ensure fair implementation of demotion policies & procedures.
Organisational Development:
The planned process drawn up to improve organisational effectiveness through changes
in individual & group behaviour, culture & systems of the organisationdrawing models
from applied behavioural science.
Human Relations:
Administering various human resources policies like employment development &
compensation & interactions among the employees on one hand & employees & the
management on the other, create a sense of working relationships between workers &
management & trade unions.
Basically they are all interactions between human beings.
Human relations, is therefore, is an important area in management which integrates
people into worksituations in a way that motivates people to work together with
economic, psychological & social satisfaction thereby increasingtheir productivity. Hence
Human Resources Management functions will centre around:
a. Understanding perception, personality, learning, intra & inter personal relations, inter
& intra group relations.
b. Motivating all employees.
c. Promoting employee morale.
d. Developing communication skills.
e. Developing leadership skills.
f. Redressing satisfactorily through a well defined grievance procedure.
g. Handling disciplinary cases by established disciplinary procedures & in all fairness.
h. Providing adequate counselling to solve employees personal, work & family
problems, thereby releasing their stress & strain.















FUNCTIONS OF HRM ALONG WITH OBJECTIVES

HRM Objectives Supporting HRM Functions
Social Objectives Legal Compliance Benefits
Union Management Relations
Organisational Objectives Human Resource Planning
Employee Relations
Recruitment & Selection
Training & Development
Performance Appraisals
Placement & Orientation
Employee Assessment
Functional Objectives Performance Appraisals
Placement & Orientation
Employee Assessment
Personal Objectives Training & Development
Performance Appraisals
Placement & Orientation
Compensation
Employee Assessment










OBJECTIVES
Societal Objectives: to be ethically & socially responsible to the needs & challenges of
the society while minimising the negative impact ofsuch demands upon the organisation.

Organisational Objectives: To recognise the role of HRM in bringing about
organisational effectiveness. HRM is only means to achieve & assist the organisation
with its primary objectives.

Functional Objectives: To maintain departments contribution & level of services at a
level appropriate to the organisations needs.

Personal Objectives: To assist employees in achieving their personal goals, at least in so
far as these goals enhance the individuals contribution to the organisation. This is
necessary to maintain employee performance & satisfaction for the purpose of
maintaining, retaining & motivating the employees in the organisation.
Objectives of Personnel Management are determined by organisational objectives & individual
& social goals. The main objectives of Human Resource Management are drawn from the
organisational objectives. The other objectives of HRM are to take care of the needs, aspirations,
dignity of the individual employees & at the same time keeping in mind the socio-economic
problems of the community & the country.


The objectives of HRM are as follows:
i. To create & utilise capable & motivated workforce to achieve the basic organisational
goals.
ii. To establish & maintain proper & sound organisational structure & healthy working
relationships among all its employees.
iii. To ensure the integration of individual groups goals with those of the organisation.
iv. To create facilities for individuals & groups to develop so as to be in tune with the growth
of the organisation.
v. Proper & optimum utilisation of human resources.
vi. To ensure adequate & equitable wages, incentives & other benefits so that satisfied
individuals & groups are motivated to take on challenges.
vii. To maintain high employee morale.
viii. To continuously upgrade the skills & knowledge of the employees, by training &
development programmes.
ix. To ensure opportunity for participation in management to the extent possible.
x. To provide acceptable & effective leadership.









HUMAN RESOURCE MANAGEMENT IN BANKS
The classification of the Indian banks into broad groups such as public sector, old private sector,
new private sector, foreign, regional rural banks & cooperatives are largely on the basis of
ownership pattern. It is also well known that the business mix, delivery channels & IT strategies
of these organisations vary substantially. What is little known but of greater importance is
thateach of these banks follow very distinct HR practices which have contributed, substantially,
to the business processes.
HRM in Cooperative Banks
It is sad that the HR policies of cooperative banks are totally dominated by the Registrar of
Cooperatives. This is, perhaps, one reason why the cooperatives are unable to improve
themselves.
HRM in Regional Rural Banks (RRBs)
As regards RRBs, most of them adopt the HR policies of sponsor banks, which are not
appropriate for their special nature.
HRM in Public Sector Banks
In the recent times, the contours of HR function in public sector banks are slowly but definitely
changing. One could say that these banks are discovering the HR function & it is hoped that
these banks will fast catch up with others. It may be recalled that, in a controlled environment &
to meet with the rapid branch expansion- since 70s- Public Sector Banks(PSBs) have adopted
HRM practices similar to that of Government departments. Herein HRM did not have a direct
role in business development but was more concerned with centralized recruitment to staff &
providing them across the country.
HRM in Private Banks & Foreign Banks
The HR function as practiced by private & foreign banks is effectively involved in the
identification of specific skills that each job warrants & recruiting suitable staff by every way
possible. In these banks, recruitment is a continuous process with a strong focus on getting the
right person for the right job by offering appropriate compensation, incentives & designations.
There is a great energy spent in keeping the turnover low & offering appropriate training inputs.
Possibly there are as many pay structures as there are employees. More importantly, HRM has a
role in monitoring & mentoring the employee. There are no routine transfers. Rather people are
recruited in different geographical locations & different levels. Technology has helped in
centralizing the back office & other functions such that service can be provided from a distance.
These institutions adopt a proactive performance appraisal system but still short of 360 Degree
appraisals. Their training process is concerned with both skill building & motivating. It should,
however be said that the demand for professionals on account of growth of Indian Business is
such that the efforts of HRM have not helped it from completely staving off staff turnover in the
ranks.
HRM in Public Sector Unit Banks (PSU Banks)
In the case4 of PSU Banks the recruitment process is annual & large scale. People are recruited
at the lowest grade & promoted I due course.this makes the career path of each employee the
responsibility of the organisation. This also underlies a belief that anyone can occupy any desk.
In such a system specialisation is the loser. Recruitment at higher levels is a recent phenomenon
& more an exception than rule. Pay packets are uniform for a grade/level with annual increments
& uniform perquisites. Increments are earned automatically.
Transfers are not driven by business requirements but a matter of routine. Vacancies get created
as & when people move up. It is not uncommon to se new departments spring up just to allow
promotions. In a way such a move is justified as salary is linked to grades & not performance.
The concept of job rotation is practiced with great conviction. As regard leave it is seen that
modern business organisations, driven by work life balance issues & operational risk ensure
that certain annual leave is mandatory. In the case of PSU Banks, the compulsory leave system
has not yet taken root. In the circumstances an important task at hand is training the staff
member, who, on accont of age profile is not comfortable working in an IT environment. HRM
should also take immediate steps to improve productivity. There is a simultaneous need to
balance the demand of IT savvy youngsters joining the organisation who ask for high salaries.
PSU Banks are not able to offer market driven salary. Given that banking business & the
business of Government are distinct, there is, in the case of PSU Banks, an urgent need that
salaries are not limited by what is paid in the ministry but unshackled. Till that happens, HRM
should, innovatively tackle the issue.
Responsibilities Of The Human Resource Management Department In Banks:
Role:
The role of the Human Resource Department is to create the climate & conditions in which
management throughout the Bank will be enabled to optimise the individual & collective
contribution of all employees to the short & long-term success of the Bank.

Responsibilities:
To be the principal sponsor & guardian of HR policies in the Bank.
To propose & obtain agreement on changes to these policies from time to time & to ensure
that policies which have been agreed are being implemented throughout the Bank.
To contribute fully to the task of meeting the business challenges whichthe bank has to
face by supporting Branch/Unit Managers in continuously developingthe potential of
employees & in creating conditions in which all the employees are motivated to meet the
objectives of the Bank.
To continuously monitor the Banks strategies to ensure that HR policies are approriate &
that employee numbers & skills are fully supportive of such strategies.
To deliver a full range of personnel services in support of line management. These
services include manpower planning, recruitment/transfer, remuneration, training &
employee welfare.
To support line management in their day-to-day management of the workforce by
providing advice & consultancy on personnel & performance management issues.












EMPLOYEE RELATIONS IN BANKS
The banking sector has been characterized by apparently harmonious industrial relations & has
not suffered from the British Diseases of industrial action & demarcation issues associated
with parts of manufacturing industry (e.g. Batstone, 1984). Banks have promoted unitarism (Fox,
1966) encouraging an ethos of teamwork, shared interest & loyalty, wanting commitment beyond
the cash nexus. While banks are generally seen as having a passive approach to employee
relations, paternalism did underpin the system & particularly important was the system of
internal promotion supported by an unwritten agreement between the major UK Banks on no
poaching. The internal labour market created two categories of employees: career & non-career
which equated to a male/female divide.
Retail banking is a highly labour intensive industry with labour costs forming 70% of total
operating expenditure & involvement in fund transmissions meant that a majority of clerical
staff have not been used as a means of marketing the banks products nor directly for increasing
business but to process existing accounts. They have been regarded as an overhead rather than a
resource. Until the 1980s, competition between the Banks has been limited, banks operating as
an oligopoly& Governments concern with maintaining economic stability with limits to lending,
& control over interest rates facilitated this. The oligopoly fed through to the management of
staff as national wage bargaining minimized competition for labour. However deregulation led to
the collapse of the national system & a questioning of the old employment practices.


CURRENT CHALLENGES FACED BY BANKS IN HRM
Effective work force:
A time-consuming & hectic job is to hunt the right talent. Higher the professional value
of the vacancy, tougher is the search. Identifying the right stuff followed by negotiation is
the element which makes the job tough for the employer. Banks are keenly interested to
fill up two types of breeds of professionals.
Ones who are outstanding professionals with high job hopping attitudethese are those
who come in-work for some tome & then leave for better prospects. Others are those who
are keenly picked-up, trained & are somehow retained to be developed as future
management within the bank.
Management trainees are a growing popular phenomenon where freshly qualified
business graduates are engaged by banks & a certain percentage of these well equipped
professionals stay back within the organization to grow into the footsteps of senior
managers.
Banking jobs being apparently lucrative for many, attract a large number of candidates
against advertised vacancies in media creating a large database management problem.
This has been facilitated by specialized hiring agencies who may take up the job of hiring
in case of large number of vacancies.
Right People:
The most difficult agenda of HRM across the banking sector is to retain the right people.
Sudden growth of retail banking & other services has put pressure on HR Managers in
banks to engage more professionals within shorter span of time thereby attracting
manpower in other banks on attractive packages has made the job market very
competing.
A bank in a normal course invests time & money to hire & train the appropriate
workforce for its own operations. This readymade force is often identified &
subsequently picked-up on better terms by others.
Compensation:
How much to pay the right employee & how much to the outstanding performer. Banks
have traditionally followed pay scales with predetermined increments, salary slabs,
bonuses & time based fringe benefits like car & house advance, gratuity, pensions, etc.
The situation is not the same anymore. An increment of Rs.500-800 per annum is no
more a source of attraction for a professional anymore. A basic pay with traditional
formulas of linkage with medical & other facilities has no soothing today.
A promise of future growth, learning culture & corporate loyalty is out of dictionary &
does not mean anything to this energetic & competent performer today.
A waiting period of 3-4 years in each cadre haunts the incumbents who strongly believe
in immediate compensation. A freshly hired professional requires a brand new car or car
loan n resuming office quite contrary to his previous breed of bankers who would wait
for the job seniority to qualify for a car loan.
Job Satisfaction:
Everybody in the bank wants to work in the preferential department, preferential location,
city of his own choice & boss of his liking. An administrative deviation from any of these
results in lowered job satisfaction.

Although hiring is normally based on regional requirement matching the area of activity
with that of employees nativity yet other elements like appointment in the department of
choice & preference makes the job of HR manager quite challenging.
What the HR manager cannot afford is the dissatisfied employee who not only disrupts
the smooth working himself, but also spreads the negativity to others by his de-motivated
attitude.
Morale Boosting:
What has long been overlooked is the morale boosting of the employees by the
organizations. Human beings even if satisfied of material wellbeing need to be appraised
& encouraged constantly.
Smart banks have realized this need & have taken steps to keep their work force
motivated through proper encouragement like man of the mouth awards, repeat get-
togethers, conferences, sports events, dinners, company sponsored travel, reunions, etc.
This is the way employees create a feeling of belongingness.


















TRAINING & DEVELOPMENT

Meaning & Definition:
Training:
Organization & individual should develop & progress simultaneously for their survival &
attainment of mutual goals. So every modern management has to develop the organization
through human resource development. Employee training is the important sub-system of human
resource management. Employee training is a specialized function & is one of the fundamental
operative functions for human resources management.
After an employee is selected, placed & introduced he or she must be provided with training
facilities. Training is the act of increasing the knowledge & skill of an employee for ding a
particular job. Dale S. Beach defines the training as the organized procedure by which people
learn knowledge & skill for a definite purpose.
The training system in the banking industry has a strong structural base. However, in the past the
training activities have been more ritualistic due to absence of a strategic link between training &
human resources development. Today, it is important that the training function is made an
effective organizational intervention by establishing a clear policy of training & development
within the framework of total human resource development. The training establishments need to
be actively involved in the total training process starting from the identification of the training
needs, evaluation of training effectiveness & the benefits of training to the end-users viz. the
internal & external customers.
The need for training & development is determined by the employees performance deficiency,
computed as follows:
Training & Development Need = Standard Performance Actual Performance.
We can make a distinction among training, education & development. Training, as was started
earlier, refers to the process of imparting specific skills. Education, on the other hand, is confined
to theoretical learning in the classrooms.
Training & Education Differentiated:
TRAINING EDUCATION
Application oriented Theoretical oriented
Job experience Classroom learning
Specific tasks General concepts
Narrow perspective Broad perspective

Development:
Give a man a fish, & you give him meal. Teach man to fish, & you give him a livelihood.
This ancient Chinese proverb seems to describe the underlying rational of all raining &
development programs. No banking organization can long ignore the training & development
needs of its employees without seriously inhabiting the performance. Even the most careful
selection does not eliminate the needs for training, since people are not molded to specifications
& rarely meet the demands of their jobs adequately.
This HRM function deals with the overall development of the employees. This includes their
professional & well as their personal development. It is a part of HRM function to identify
opportunities for enhancing the skills of the resources. Promotion is regarded as one of the ways
of recognizing development undertaken by an employee. Development is also largely dependant
on training.







Generally people think that training & development are one & the same, but there are many
differences between them. They are as follows:
TRAINING DEVELOPMENT
Duration:
Training courses are designed mostly for short

It involves a broader long term education for
term. a long term.
Managerial/Operative Personnel:
Training is normally directed at operative
employees & related to technical aspects.


It is directed at managerial personnel to
acquire conceptual & theoretical knowledge.
Specific/General:
Training is more specific job related
information.

It is more general in nature, especially top
management level.
Method:
More emphasis on the on the job method.

More emphasis on the off the job method.
Cost Involved:
Imparting training is less expensive.

Development is more expensive.
Who Imparts:
Mostly the supervisors impart training.

It is undertaken by supervisors, outside
experts & self.
Frequency:
Less frequent. Mostly at induction & at every
change in job.

More frequent & continuous in nature.
Theoretical/Practical Aspects:
Emphasis is placed on practical or technical
aspects of work.

Emphasis is placed on theoretical &
conceptual aspects.




THE TRAINING PROCESS









Organizational Objectives &
Strategies
Assessment of Training
Needs
Establishment of Training
Goals
Devising Training
Programme
























METHODS & TECHNIQUES OF TRAINING
ON-THE-JOB METHOD OFF-THE-JOB METHOD
JOB ROTATION
COACHING
JOB INSRTUCTIONS
COMMITTEE
VESTIBULE TRAINING
ROLE PLAYING
LECTURE METHOD
CONFERENCE OR
DISCUSSION
PROGRAMMED
On-the-Job Training Method (OJT):
Majority of industrial training is on the job training type. OJT method is mainly adopted while
orienting new employees, introducing innovations in products and services and in special skills
training. OJT is conducted at the work site and in the context of the job. Often, it is informal, as
when an experienced worker shows a trainee how to perform the job tasks.
It includes job rotation, job coaching, job instruction or training through step-by-step and
committee assignments.
Off-the-Job Training Method:
Under this method of training, trainee is separated from the job situation and his attention is
focused upon learning the material related to his future job performance. Since the trainee is not
distracted by the job requirements, he can place his entire concentration on learning the job
rather than spending his time in performing it. There is an opportunity for freedom of expression
for trainees.

DEVELOPMENT IN BANKS
The banks must emphasis on human resource development as one of the critical areas of its
operations. It should redraw its training & development schedules to suit the requirements of the
current emerging scenario. Requisite training should be imparted to various branch level
functionaries as also administrative staff. Besides in-house training the reputed external agencies
should be utilized for human resource development with a view to updating their knowledge &
to keep them abreast of the current banking scenario for meeting the challenges ahead. The
concept of segment specialization may be resorted to in respect of the personnel selected
therefore. It is now thought expedient to plan & strengthen the squad of skilled officers in
various segments as IT, marketing management, risk management, risk based supervisors, law,
security, etc.
The lead bank must play an effective role in improving the work environment & pursuing staff
welfare measures in the form of whole range of financial assistance with reference to various
loans of sorts.
Human resource skills are other areas of challenge. Because of modernization & technological
advancement rigorous training & man power planning are required. In the market scenario
characterized by heightened competition, growing customer needs & technological up gradation,
the bank fine tunes its HT policy to meet its corporate objectives. New training systems have
been developed to impart competencies & a broad range of skills among the employees to
deliver faster & superior service that can delight the customers. The Industrial Relations in the
banks have been harmonious & cordial.


RECRUITMENT
Meaning and definition:
The human resources are the most important assets of an organization. The success or failure of
an organization is largely dependent on the caliber of the people working therein. Without
positive and creative contributions from people, organizations cannot progress and prosper. In
order to achieve the goals or the activities of an organization, therefore, they need to recruit
people with requisite skills, qualifications and experience. While doing so, they have to keep the
present as well as future requirements of the organization in mind.
Once the required number and kind of human resources are determined, the management has to
find places where the required human resources are/will be available and also find means of
attracting them towards the organization before selecting suitable candidates for jobs.
Recruitment is defined as, A process to discover the sources of man power to meet the
requirements of the staffing schedule and to employ effective measures for attracting that man
power in adequate numbers to facilitate effective selection of an efficient work force.
Objectives of recruitment
Some of the objectives of recruitment are:
To attract people with multi-dimensional skills and experiences that suits the present and
future organizational strategies
To induct outsiders with a new perspective to lead the company
To infuse fresh blood at all levels of the organization
To devise methodologies for assessing psychological traits
Factors affecting recruitment:



RECRUITMENT PROCESS











To Selection Screening
Personnel
Planning
Job Analysis Employee
Requisition
Job
Vacancies
Recruitment
Planning
Number
Type
Searching
Activation
Selling
Message
Media
Strategy
Development
Where How
When
Application
Population
Application
Pool
Potential
Hirers
Evaluation &
Control

Process of Recruitment:
Recruitment refers the process of identifying and attracting job seekers so as to build a pool of
qualifies applicants. This process comprises of five interrelated stages, viz,
Planning
Strategy development
Searching
Evaluation and control


The ideal recruitment process is the one which attracts relatively larger number of qualified
applicants who will survive the screening process and accept positions with the organization,
when offered to approach the ideal people, individuals responsible for recruitment process must
know how many types of employees are needed, where and how to look for individuals with
appropriate qualifications and interests, what inducements to use for various types of applicants
group, how to distinguish applicants who are unqualified from those who have a reasonable
chance of success, and how to evaluate their work.







SELECTION
Definition
Selection is defined as the process of differentiating applicants in order to identify and hire those
with a greater likelihood of success in a job.
The objective of selection decision is basically picking an applicant from a pool of applicants
who has the appropriate qualifications and competency to do the job.
The selection procedure cannot be effective until and unless-
Requirements of the job to be filled have been clearly specified.
Employee specifications (physical, mental, social, behavioral etc) have been clearly
specified.
Candidates for screening have been attracted.
Selection process is preferable because:
It is easier for applicant as they can send their applications to a single centralized
department/agency.
It facilitates contacts with applicants because issues pertaining to employment can be
cleared through one central location.
It helps operating managers to concentrate on their operating responsibilities. This is
helpful during peak operating period.
It can provide for better selection because hiring is done by specialist trained in staffing
techniques.
The applicant is better assured of consideration for a greater variety of jobs.
Hiring cost may be cut because duplication of efforts is minimized.

Selection Process:
The selection process consists of the following steps:
1. Application form: Many companies formulate their own style of application form
depending upon the size and nature of business carried on, type and level of the
job etc. Information is generally required on the following items in the form:
personal background, educational attainments, work experience references etc.
2. Written test: Written test is conducted for the qualified candidates after they are
screened on the basis of application form to measure the candidates ability
towards the job, his aptitude reasoning, knowledge in various disciplines, English
language etc.
3. Preliminary Interview: The next step that tag along the selection procedure is a
preliminary interview wherein the applications are scrutinized so as to eliminate
unqualified applications. Preliminary Interviews are short. This interview thus
provides information about the candidate related to the job or personal
specifications.
4. Selection Test: After passing through the interview the next stage that applicant
has to prove himself on are the selection tests. There are different types of
selection tests for different levels of the organization and that too is further
differentiated within different types of organizations. Some of the most common
and well-known tests that an applicant has to go through are;
a. Ability test
b. Aptitude test
c. Personality tests: Which is common mostly for the higher level of
management are given to measure a prospective employees motivation to
function in a particular working environment.
d. Internal test: to measure an individuals activity preferences.
e. Graphology Test: is an art wherein the individuals handwriting is seen
and accordingly his personality traits are derived by the way he writes.
f. Polygraph Test: Are designed to ensure accuracy of the information given
in the applications.
g. Medical Tests: Reveal physical fitness of the candidate.
h. Drug test: Help to ensure the presence of illegal or performance-affecting
drugs.
5. References and background checks: Many employer request names, address, and
telephone numbers or references for the purpose of verifying information and,
perhaps, gaining additional background information on an applicant.
6. Selection Decision: After collecting data from all the preceding steps, this is the
most crucial step in the entire selection process. The main difference between the
preceding stages and this is that former is used to short list the number of
candidates and later one is to make a final decision from the pool of individuals
who pass the tests, interviews and reference checks. The view of line manager
will be generally considered in the final selection because it is he/she who is
responsible for the performance of the new employee. The HR manager plays a
crucial role in the final decision.

7. Physical Examination: After the selection decision and before the job offer is
made, the candidate is required to undergo a physical fitness test. The result of the
medical fitness test is recorded in a statement and is preserved in the personal
records. The main objectives of this test are as follows:
To detect if the individual carries any infectious diseases.
To determine whether an applicant is physically fit to perform the work.
It helps to determine if there are any physical capabilities which
differentiate successful and less successful employees.
Medical check up protects applicants with health defects from
undertaking work that could be detrimental to them or might otherwise
endanger the employers property.
Last, but not the least such examination will protect the employer from
workers compensation claims that are not valid because the injuries or
illness was present when the employee was hired.
8. Job offer: The next step is selection process is Job offer for those applicants who
had passed the previous stage. Job offer is made through a letter of appointment.
Such a letter usually contains the date by which the appointee must report on
duty. Appointee must be given a reasonable time for reporting because it may be
quite possible that the appointee is employed in some other company or must be
residing in some other city and for such other reasons. Company may also want
the appointee to delay in joining the job because the job may require undergoing
some training program.
Decency demands that rejected applicants must be informed about their non-
selection. These applicants data must be used for future references.
9. Contract of employment: After the job offer is made and the candidates accept the
offer, certain documents need to be executed by the employer and the candidate.
One such document is Attestation form. This form contains vital details about the
candidate, which are authenticated and attested by him/her, which could be used
for future reference.
Another document is contract of employment. This document contains the terms
and conditions of employment like designation, perks, term of job and so on. The
information written in the contract may vary according to the level of the job.
The main drawback of the contract is that it is difficult to enforce them.
10. Concluding the selection process: The selection process will not end with
executing the employment contract. The step is reassuring the candidates who
have not been selected. Such candidates must be told that they were not selected,
not because of any serious deficiencies in their personalities, but because their
profiles did not match the requirements of the organization.
11. Evaluation of selection process: The broad test if the effectiveness of the selection
process is the quality of the personnel is hired. An organization must have
competent and committed personnel. The selection process, if properly done, will
ensure availability of such employees. Audit must be conducted by the people
who work independent of the HR department.
New methods of selection:
360 degree selection or participative selection: Normally supervisors administer the
selection test and interview. They judge the fit between the job and the candidate. But the
employee skills, knowledge and performance affect not only superiors but also
subordinates and the employees of the same level. Hence the organization started
involving the subordinates and the employees of the same level in administrating the
employment tests and interviews. This type of selection program is called 360 degree
program.
Employee leasing: The client company leases employees from a third party, not on
temporary basis but on a full time basis and for long help. An interesting feature is that
the client company need not perform personnel activities such as hiring compensation or
record keeping. Employees working elsewhere are leased. They are not directly
employed by the company where they are working. Employees not recruited by one
client are sent to another.
Selection by invitation: Management observes the performance of the key executives of
competitors. If the performance of the key executives is excellent or the key executives
are the change agents, the management invites them to join the organization by offering
attractive salary and benefits. Thus, the significant performance of the executives forms
basis for selecting them by invitation.





FUTURE OF HRM
If HRM is not to remain more in the realm of rhetoric with wide disparities between theory and
practice, several things need to take place. First, HRM needs to be diffused across industries and
the economy. For this to occur the following conditions need to be satisfied:
HRM should be an essential part of management education and training. From this, two
important consequences are likely to follow. HRM is likely to be integrated into
corporate strategies and line managers functions and decisions. This would reduce the
need for HRM specialists, except at the policy level where they will have a greater voice.
Business strategies are then likely to be built less around low cost and low wages, but
around the real sources of competitive advantage such as flexibility, quality and customer
service.
Employment policies which support employment security, without which HRM policies,
including training, would have little motivational effect. This does not mean guaranteed
employment, but a policy which treats termination as a last, rather than a first, resort.
Learning from international experiences and diffusing the information can have a
transforming effect, as was the case when American manufacturing was transformed
through in-depth studies of Japanese manufacturing in the automobile industry.
Substantial investment in people and the willingness of employers to view the benefits
from a long-term perspective - a difficult task in a system which is driven by short-term
investor pressure.


CASE STUDY
STATE BANK OF INDIA
In February 2001, India's largest public sector bank (PSB), the State Bank of India (SBI) faced
severe opposition from its employees over a VOLUNTARY RETIREMENT SCHEME
(VRS). The VRS, which was approved by SBI board in December 2000, was in response to
FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY'S (FICCI)
report on the banking industry. The report stated that the Indian banking industry was overstaffed
by 35%. In order to trim the workforce and reduce staff cost, the Government announced that it
would be reducing its manpower.
Following this, the Indian Banks Association (IBA) formulated a VRS package for the PSBs,
which was approved by the Finance Ministry.
Though SBI promoted the VRS as a Golden Handshake,' its employee unions perceived it to be
a retrenchment scheme. They said that the VRS was completely unnecessary, and that the real
problem, which plagued the bank were NPAs. The unions argued that the VRS might force the
closure of rural branches due to acute manpower shortage. This was expected to affect SBI's aim
to improve economic conditions by providing necessary financial assistance to rural areas. The
union also alleged that the VRS decision was taken without proper manpower planning.
In February 2001, the SBI issued a directive altering the eligibility criteria for VRS for the
officers by staffing that only those officers who had crossed the age of 55 would be granted
VRS.

The Protests
The SBI was shocked to see the unprecedented outcry against the VRS from its employees. The
unions claimed that the move would lead to acute shortage of manpower in the bank and that the
bank's decision was taken in haste with no proper manpower planning undertaken. They added
that the VRS would not be feasible as there was an acute shortage of officers (estimated at about
10000) in the rural and semi-urban areas where the branches were not yet computerized.
Moreover, the unions alleged that the management was compelling employees to opt for the
VRS. They said that the threat of bringing down the retirement age from 60 years to 58 years
was putting a lot of pressure on senior bank officials to opt for the scheme.
The Post VRS Days
According to reports, SBI's total staff strength was expected to come down to around 2,00,000
by March 2001 from the pre-VRS level of 2,33,000 (Refer Table II). With an average of 5000
employees retiring each year, analysts regarded VRS as an unwise move. By June 2001, SBI had
relieved over 21,000 employees through the VRS. It was reported that another 8,000 employees
were to be relieved after they attained the retirement age by the end of 2001.
Analysts felt that this would lead to a tremendous increase in the workload on the existing
workforce.
Analysts felt that SBI would have to take serious steps to reorient its HRD policy to restore
employee confidence and retain its talented personnel. SBI had many strong organizational
strengths and an excellent training system, but due to weak HR policies, it had lost its experts to
its competitors.
THE INTERVIEW
I have interviewed Mr. Rajiv Deka, Branch Manager of SBI & Ms. Rohini Rai, Branch Manager
of HDFC Bank, thereby representing the 2 major sectors of banking, i.e., Public Sector & Private
Sector. The theme of the interview was on how HRM has reacted to the various drivers of
modern banking & how to enhance performance in the fast changing banking sector. The results
of the interview threw up some interesting facets to the HR issues confronting the banks today &
how the HR departments are coping with it. Hereby showing the main highlights of the
interview.
1. HRM CHALLENGES

When interviewed the two personnel, both of them were of the opinion that the list of HRM
challenges in banks are as shown in the graph.
The biggest HRM challenge is sustaining & increasing the profits of the bank.
Following that is improvement in the operational effectiveness of the HR department.
15%
21%
11%
13%
26%
6%
4%
4%
HRM CHALLENGES
Getting into new Markets/Areas Improving operational effectiveness
Improving product & service quality Deepening gustomer base
Sustaining & increasing profits Complying with regulatory challenges
New distribution channels New products & services
The least priority on the challenge list is given to new distribution channels & on
introducing new products & services.

2. THE ROLE OF HRM IN BANKS TODAY
When asked about the role of HRM in banking, Mr. Rajiv Deka was of the opinion that HRM
drives business transformation initiatives. It is therefore not completely incorrect to conclude
that HRM participates in the decision & allocation process after the major issues are decided.
Ms. Rohini Rai however emphasized saying that In the post business decisions, HRM
participation in the business implementation & resource allocation is solicited. It is necessary
that the banks take up human resources accounting & involve HRM departments fully in the
business process changes so that the full potential of change in business processes may be
realized.
Interestingly the response about the changes within the HR Departments with reference to a
change in the business strategy revealed similar dichotomy.





3. EFFECTIVENESS OF HRD
Posting right person for the right job, retaining talents, planning for the long term needs of the
bank, dovetailing employee preferences in the deployment process, & capacity to make staff
changes that drive business changes are the corner stones of HR strategy. How effective are the
banks in performing these tasks?
The two personnel were of the opinion that:
They are effective when it is a question of ability to post staff with appropriate skills &
capabilities for the job/s.
Also these departments have enough room/flexibility with regard to their ability to make
changes in staffing pattern/position based on changes in business conditions.
As regards PSU banks, the response to the effectiveness should, be read in conjunction
with the issues on transfer & promotion policy. The posting of staff with appropriate
skills & capabilities could be well suffixed with subject to availability of suitable skills
& talents in the given location.
HRM effectiveness could also be suited with reference to be its role in staffing of each
department/unit. In an effective organization, the department will have a say in the matter &
work hand in glove with the line departments. This seems to be in vogue in private sector &
foreign banks. Invariably, in these organizations, the line departments & HRD jointly select
candidates, while HRD is involved in the head hunting, finalizing pay & related aspects. In the
case of PSBs, in the past the selection process was through advertisements for a large number of
posts.

On selection, the candidates were given an induction training & job-specific training.
Undoubtedly this has been a successful model as it has thrown up a large number of very
efficient leaders in the sector. In the recent years, however, there are apparent changes in the way
the staff are selected in PSBs. There are campus recruitments & sporadic instances of specialists
being inducted at higher levels.
Some of the banks have also started offering market related pay. Yet, as of now, it appears that in
the case of PSBs the line departments have no right in the selection of candidates. The responses
clearly show that there is a need for greater coordination between the HR & line the participant
HR functionaries have indicated that job rotation is an important aspect of employee
development. They have also indicated that most jobs are becoming specialist in nature. Indeed
the concept of job rotation is contrary to the development of specialist skills.
4. COPING WITH THE EMPLOYEE TURNOVER
If a bank does not have the staff with the required skills at the required place it would resort to
recruiting. This coupled with
I. The need for specialization & new skill sets for CBS &
II. Marketing of bank products bring us to the two issues that have gained the
attention of HR departments in the recent years, namely staff deployment
techniques & managing employee turnover.
Across the banking sector everyone is facing a high level of employee turnover in the recent
years. If till recently it was the BPO sector, which was the biggest recruiter, it is now the turn of
retail business. It is seen that bank employees are able to take up jobs in these relatively new
areas. In the view of this, it is seen that the turn over level during the current year is higher than
the previous years.
It can be said that the current period is the most challenging times for HRD, as staff-mostly
talented & experienced officers-move from public sector to private sector & within the private
sector to the greener pastures. Certain specialist areas such as treasury management, risk
management & customer relationship face acute shortage of experienced & talented staff. As
PSBs cannot offer-barring a fraction of their business-market related salaries the turn over has
been high. Another reason for loss of staff is the requirement of domain staff in the IT
companies. Transfers have also been cited as one of the reasons for turnover in the public sector.
The available avenues to manage this issue are outsourcing, re-skilling, hiring temporary staff;
reuse of retired staff, etc. it is seen from the news reports that, in making financial inclusion
happen, banks have resorted to the use of the expertise of retired staff. Some of the retired staff
has also come forward to handle training assignments. The following figure shows the
importance of HR in each strategy adopted by banks in the matter of staff deployment:

Performance Appraisal:
A related issue is the performance appraisal system that currently focused more on promotions &
not on linking performance to deployment of specialization. Performance appraisal is also more
on traits than on any qualitative or quantitative appraisal of work. In the absence of clearly
defined individual & organizational goals the appraisal has become a routine. Participants
indicated the need for a change & more business oriented appraisal & felt that appraisal systems
such as 360 Degree appraisals will be useful in future. The overwhelming feeling is that PA
system should change & react to new needs.
5. RECRUITMENT IN BANKS
Evidently the banks are waking up to many new issues. One such issue is the changing
recruitment market. What according to the HR executives attracted candidates to the banks?
What attracts candidates to your banks?
Sr. No. Particulars
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
MORE
LESS
NO CHANGE
DONT USE
1. Work & Life Balance
2. Career Growth Opportunities
3. Banks Track Record
4. Compensation Being Better Than Market
5. Good Company Values
6. Challenging Work Environment
7. Positive Corporate Reputation
8. Others
The personnels felt that the recruitment policies, in future, will be woven around the above
aspects (Table). It is an indication of changing times that the list includes items such as
performance linked incentives, fast track promotion, foreign posting education, choice of
departments, sabbatical & stock option. If turnover is high & recruitment poses challenges on
account of high salary & work life balance expectations the HR function needs to adopt many
different methods to educate/train the staff.
Employee Development Techniques
It was earlier seen that the major task before the HRD is to instill new skills with the staff. In this
connection it can be pointed out that all the banks own a large training network. They also have
access to other training establishments & seminars. Banks also send employees to B schools for
short duration courses & MDPs. The major emphasis of banks is to use their training systems &
establishments to the fullest extent. Banks were also keen on encouraging their staff to take up
new courses & correspondence courses. The schemes of reimbursements of expenses were rather
liberal.

As staff turnover & new positions are filled, knowledge management becomes important. The
rules, procedures & customers, data that have been gathered need to be made available to the
new staff such that continuity & service excellence is maintained. There is a need to curtail
expenses in reinventing wheels. The HR executives felt that the HR department can also function
as knowledge management centre. Banks have already begun knowledge management efforts.
6. SOURCES OF RECRUITMENT
The various sources of recruitment may be broadly classified into two categories, i.e., internal &
external sources. Some organizations draw their human resources internally, i.e., from within the
organization while others draw externally, i.e., from outside the organization.






0
5
10
15
20
25
30
35
40
EFFECTIVE
NOT EFFECTIVE
NOT TESTED
Sources of
Managerial
Recruitment
I
N
T
E
R
N
A
L
E
X
T
E
R
N
A
L
PROMOTION
TRANSFER
RETIREMENT
RECALLS
INTERNAL ADS
CONSULTANTS
ADVERTISEMENTS
INSTITUTES
RECOMMENDATION
DEPUTATION






CONCLUSION
The banking sector has grown from a few institutions primarily involved in deposit acceptance
and trade finance into a complex multi player where large number of commercial banks,
financial institutions and specialized banks are operating with various products and activities.
The banking has become a complex activity within the financial market linked directly and
indirectly with an over-all national growth and its impact as an integral part of regional segment
of a global banking environment.
Thus, event the high automation would require proper man behind the machine to make things
happen. This idea has been realized by top managements in progressive banks.
Like many other organized sectors, banking requires multi layer manpower for its various
requirements of professionals and support staff. The range may require reasonably educated
security guards on the one end and a highly educated and trained professional as head of
corporate finance at the other.
HRM is of great importance in banks. The training and development of employees is very much
important. Recruitment and selection must also be done very efficiently. The major challenge for
this industry is, attracting the right talent and retaining them.
To conclude the growth of banking sector in the future depends upon appropriate HRM policies
which will assist the employees in achieving their personal goals and in turn will enhance the
individuals contribution to the organization. Objectives of the employees should be met if
employees are to be maintained, retained and motivated.
ACKNOWLEGEMENT

I sincerely thank the University for introducing a degree course in B. Com for Banking &
Insurance. This has given us an opportunity to gain knowledge on the insights of the Banking &
Insurance industry. A special thanks to our esteemed coordinator Prof. A.R.Suri for guiding and
motivating me during this project. I would also like to thank the librarian of Jai Hind College
who helped me in finding out various books on the topics.
This project was highly educational and a great learning experience.












BIBLIOGRAPHY

BOOKS
Human Resource Management and Industrial Relations P. Subba Rao
Human Resource Management K. Ashwathapa
Human Resource Management P. V. Rao
The future of Human Resource Management - K. Ashwathapa
Human Resource and Personnel Management William Wrether


WEBSITES
www.hrmguide.net
www.humancapitalonline.com
www.google.com
www.hrmtoday.com
www.wikipedia.com