SUBMITTED IN PARTIAL FULLFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE M.

COM DEGREE OF

MASTER IN COMMERCE -1 (MANAGEMENT) SUBMITTED TO UNIVERSITY OF MUMBAI LALA LAJPAT RAI COLLEGE, MAHALAXMI, MUMBAI SUBMITTED BY

ANIL MARU Roll no: 629

SUPERVISED BY PROF. Dr. suryakant lasune Prof. Vaishali karande

14th October 2013

CERTIFICATE
I hereby certify that the work which is being presented in the M.Com internal project report entitled HUMAN RESOURCE MANAGEMENT IN BANK in partial fulfilment of the requirements for the award of the Master of Commerce and Economics, in MANAGEMENT and submitted to the LALA LAJPATRAI COLLEGE OF COMMERCE AND ECONOMICS, Mahalaxmi, Mumbai400034 is an authentic record of my own work carried out under the supervision of Prof. Janki Annanraj & Dr.j.Barucha. The matter has not been presented by me for the award of any other degree elsewhere.

SIGNATURE OF THE STUDENT:

SIGNATURE OF SUPERVISORS:

INTERNAL EXAMINER:

EXTERNAL EXAMINER:

COLLEGE STAMP

PRINCIPAL

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.

INDEX SR.NO 1 2 3 4 5 TOPICS EXECUTIVE SUMMARY Introduction of HRM Functions of HRM HRM objectives HRM in banks
-Responsibility of HRM in banks -employees relation in banks -current challenges faced by banks in hrm

PAGE NO

6 7 8 9 10 11 12

Training and development -development in banks Recruitment Selection Future scope Case study of SBI conclusion billiography

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.

INTRODUCTION The concept of human resource management is increasingly becoming a most vital function of a modern manager. Human resource management is the management of employees knowledge, abilities, talents, aptitudes, creative abilities, etc. Human resources take active role in the modern economic scenario of any country. The abundant physical resources alone cannot benefit the growth of the country without human resource component, which transforms physical resources into productive resources. In fact, the differences in the level of economic development of the countries are largely a reflection of the differences in quality of their human resources. The key element in this proposition is that the values, attitudes, general orientation and quality of people of a country that determines its economic development. People are our most valuable asset is a clich which is no member of any management team would disagree with. The concept of HRM assumes immense importance as HRM plays vital role in meeting the challenging requirements of highly skilled & component human resources due to globalization.

DEFINITION
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Human resource management is planning, organizing, directing & controlling of the procurement, development, compensation, integration, maintenance & separation of human resources to the end that individual, organizational and social objectives are accomplished.

MEANING Human resources management involves all management decisions & practices that directly affect or influence people or human resources, who work for the organization. In recent years, increased attention has been devoted to how organizations manage human resources. This increased attention comes from the realization that an organizations employees enable an organization to achieve its goals, & the management of these human resources is critical to the success of the organization. HRM is management function that helps managers to recruit, select, train & develop members for an organization. Obviously HRM is concerned with the peoples dimensions in organizations. HRM refers to set of programs, functions & activities designed & carried out. Human resource management means employing people, developing their resources,

utilizing, maintaining & compensating their services in consonance with the job & organizational requirements.

COREELEMENTSOFHRM

People: Organizations mean people. It is the people who staff & organizations.

manage

Management: HRM involves application of management functions & principles

for acquisitioning, developing, maintaining & remunerating employees in organizations.

Integration & Consistency: Decisions regarding people must be integrated &

consistent.

Influence: Decisions must influence the effectiveness of organization resulting

into betterment of services to customers in the form of high quality products supplied at reasonable costs.

Applicability: HRM principles are applicable to business as well as non- business

organizations too, such as education, health recreation & the like
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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
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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, coordinating & 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 cooperative 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.
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 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. Functions relating to the operations & responsibilities Operative: 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.

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:
a. It is the study & collection of data of a specific job. It includes: b. Collection of data & information & facts relating to the various aspects of jobs including men, machines & materials. 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
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functions of HRM. d. Human Resource Planning: e. 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.
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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
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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 purpose e. Utilising the services of specialistsboth internal & external for development &/or Institutional (external) development programmes. f. Evaluating the effectiveness of executive development programmes. special development programmes/ assessment procedures for

 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. a. 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 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. productivity.

FUNCTIONS of HRM ALONG WITH OBJECTIVES

HRM Objectives Social Objectives

Supporting HRM Functions 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 socioeconomic 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.

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. HRMinCooperativeBanks 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. HRMinRegionalRural Banks (RRBs) As regards RRBs, most of them adopt the HR policies of sponsor banks, which are not appropriate for their special nature. HRMin PublicSectorBanks

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. HRMin PrivateBanks&ForeignBanks 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. HRMin PublicSectorUnitBanks(PSUBanks) 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 which the
bank has to face by supporting Branch/Unit Managers in continuously developing the 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 attitude these 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 Application oriented Job experience EDUCATION Theoretical oriented Classroom learning

Specific tasks Narrow perspective

General concepts 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.

THETRAININGPROCESS

Organizational Objectives & Strategies

Assessment of Training Needs

Establishment of Training Goals

Devising Training Programme

Implementation of Training Programme

Evaluation of Results

METHODS & TECHNIQUES OF

ON-THE-JOB

OFF-THE-JOB

JOBROTATION COACHING JOB INSRTUCTIONS

VESTIBULE TRAININ ROLE PLAYING LECTURE METHOD

CONFERENE

On-the-JobTrainingMethod(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-JobTrainingMethod: 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 INBANKS 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. Objectivesof 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

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 unlessRequirements 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.

SelectionProcess: 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. 1. 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. 2. 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.

3. 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. 1. 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. 2. 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. 3. 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. 4. 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. Newmethodsofselection:

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.

FUTUREOFHRM 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 shortterm investor pressure.

CASESTUDY STATEBANKOFINDIA 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.

TheProtests

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. ThePostVRSDays 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. 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. 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.

The least priority on the challenge list is given to new distribution channels
& on introducing new products & services.

1. 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 2. 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. 1. 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, 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.

1. 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. 1. 2. 3. 4. 5. 6. 7. 8.

Particulars Work & Life Balance Career Growth Opportunities Banks Track Record Compensation Being Better Than Market Good Company Values Challenging Work Environment Positive Corporate Reputation Others

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 also function as management efforts. felt that the HR department can knowledge management centre. Banks have already begun knowledge

2. 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.

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.

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