Article published in
Business Manager, December 2012 under Cover feature
The absence of talent in
banks today is the product of a deliberate neglect of HR related issues. The
ageing top level, problems in succession plans at various levels caused by,
among other things a ‘recruitment holiday’, since circa 1991, during which
period ‘outsourcing’ and adhocism forced distorted priorities in recruitment
and skill development are all grave issues affecting the functioning of banks.
M G WARRIER
(Former
General Manager, Reserve Bank of India)
The need of the
hour is a thorough overhaul of HR policy and practices in banks, from Board
Room to front desk. The casual approach to HR management is behind many of the
problems being faced by the financial sector today.
Thanks to the strong
legislative foundation provided through Banking regulation Act, 1949 and the
efficient regulatory supervision and guidance by the Reserve bank of India, India can feel proud about the
successful functioning of banks in the country, within the existing
constraints.
Actually, the
private-public sector divide in regard to meeting social responsibility
obligations/commitments and a discriminatory approach between the two sectors,
when it comes to government policy support is a legacy of the British Raj. Once
it is accepted that the resources of the country belong to the people and
irrespective of the nature of ownership (whether government or private
individuals/groups/families/organisations), all are handling public
funds/resources in a trusteeship sense, this divide can be bridged to a great
extent. This approach is all the more relevant for banks, as after all, their resources
come from public deposits and their major business comprises providing credit
and services to the public.
If the financial
sector has to rise to the expectations in regard to credit delivery, especially
to agriculture and service sectors, the banking infrastructure will need
structural reforms, skill development and a change in outlook on management of
human resources and related issues.
In July 2010,
Reserve Bank of India
came out with the idea of experimenting ‘executive interns’ in RBI, proposing
contract employment of candidates for short periods with a consolidated salary.
This writer responded to the report on the subject in a financial newspaper on
the following lines:
“Although on the
face of it, the proposal may seem like a normal HR initiative at infusing young
blood with expertise and enthusiasm at a lower cost, no in-depth analysis may
be needed to find that this is a short-term remedy being tried out for a long
term problem.
Sooner than
later, the RBI, government and public sector organisations will have to wake up
to the reality that their recruitment, training, placement and compensation
strategies need thorough overhaul and this they have to do taking their
existing employees into confidence. A long-term solution may have to be found
for the HR-related problems, including the inability to hire experts at
market-related compensation. The Government and public sector organisations may
have to consider how best the ‘cost-to-company' (C to C) principles can be
integrated into their existing recruitment, training, placement and career
progression policies. This may involve the following:
·
Taking the existing employees
into confidence with an assurance that the changes will only improve the
working results of the organisation and they will get an opportunity to share
the benefits and new job opportunities and so long as they are prepared to
learn new things/upgrade their skills, the infusion of ‘experts' will not eat
into their career progression opportunities.
·
Inter-mobility of executives in
all cadres among comparable organisations. For instance, a banking/financial
sector service could be evolved for institutions including those in the private
sector and regulatory bodies in the financial sector.
·
A transparent guidance for
remuneration package based on paying capacity/need for skills for different
sectors. Proposals like the present one by RBI of shifting to C to C to reduce
costs will send wrong and unhealthy signals.”
Though aware
about the oddity in quoting oneself, two and a half years down the line, the
above observations gets relevance as it is gathered that the executive interns experiment
in RBI did not meet with much success and the entire financial sector is slowly
reconciling to the idea that HR in financial sector is different from say,
managing mine workers or farm labour. RBI has recently appointed a panel to review
HR practices in the central bank. Adhoc recruitment
of Executive Interns without planning their future deployment or absorption,
succumbing to pressure on promotion policies, not being able to convince GOI on
need to implement competitive remuneration packages for recruiting and
retaining efficient officers, failure to decide on updation of retirement benefits
at least on par with GOI are just some examples where even an organisation of
the stature of RBI can go wrong when preoccupied with other priorities. When it
comes to infusing professionalism in specialized areas like supervision and
forex and debt management RBI is facing several constraints, many of them
emanating from its failure to argue with North Block as Finance Ministry shows
an attitude akin to master-servant relationship.
Now that RBI has woken up, we may expect other statutory
bodies and public sector organisations followed by GOI (we can expect like that
only) will follow suit and think of an overhaul in their Human Resources
Development and Management (HRMD) practices. The
absence of talent in banks today is the product of a deliberate neglect of HR related
issues. The ageing top level, problems in succession plans at various levels
caused by, among other things a ‘recruitment holiday’, since circa 1991, during
which period ‘outsourcing’ and adhocism forced distorted priorities in
recruitment and skill development are all grave issues affecting the
functioning of banks.
HRD at the top
across sectors should become a national priority, if professionalism is to be
restored at lower layers which directly interact with the clientele. Guidance
for an overhaul of HR practices in banks should come from GOI and RBI factoring
in, among others, the following:
i)
A long-term recruitment policy
taking into account the skill and aptitude needs for rural, urban and
metropolitan services
ii)
Job security including social
security to ensure that the employees develop a sense of belonging to the
institution
iii)
An institution-specific wage
structure up to junior management levels ensuring ‘living wage’ and incentives
for performance, service in rural areas or tough terrains etc
iv)
GOI and IBA should provide
overall guidance in HR management, but leave details to individual banks who
should be made more responsible for in-house management
v)
Ideally, from middle management
level and upwards, easier inter-organizational mobility of staff should be
thought of
vi)
An Institute for Financial
Sector Management and an Indian Financial Sector Service could take care of
further skill development needs at higher levels.
