Issues related to high levels of NPA and capital raising by public sector banks may be hogging the limelight but there is another issue plaguing banks — HR and leadership.
Bankers are very concerned about the prevailing HR policies. The fact that some PSU banks have been headless for some time now calls for urgent attention. At the recent Gyan Sangam in Pune, HR issues were discussed elaborately.
Indian PSBs along with the SBI have approximately 50,000 branches and about 8 lakh employees spread across the country. They have played a pivotal role in shaping the country’s economy and the industry. Most priority sector lending comes from PSU banks.
PSB employment two decades ago was characterised by secure jobs, status in society and reasonable pay packages, and was a preferred option despite slow promotions. Today, private banks offer better pay packages, fast track promotions and multiple career options.
The present state of PSBs is primarily because of faulty HR policies. The industry has witnessed frequent changes in policy in the last two decades. The eligibility criteria for promotion has been tweaked numerous times, thus demoralising employees. Lack of succession planning and an ambiguous career path compounded with long and tardy vigilance clearance has cut short the careers of many bank employees. In the public sector space, accountability to external agencies has created a sense of trepidation.
It is time to revisit the functioning of the vigilance department. Vigilance cases take time to be disposed of. In many instances, employees have missed promotion opportunities because of the delay. In many cases, employees have been cleared of charges after the promotion process was completed.
It is important that vigilance officers distinguish between business failures, procedural lapses and malafide intent. There should be a proper mechanism for selection of vigilance officers and their training. Preventive vigilance needs to be strengthened so as to prevent frauds. Bankers must share information with the vigilance department to establish accountability.
Lack of leadershipThe top management plays a major role in steering the bank and providing vision to the institution. In the last few years there has been a leadership crisis primarily because of faulty HR policies. Board level experience is essential to harness leadership qualities.
The tenure of CMDs in has been contentious — it has been either very long or extremely brief, whether appointed from other banks or chosen internally. This anomaly should be corrected as soon as possible.
Postings also demand attention. Employees get moved to far flung places despite good performance. Postings should be such that employees get all-round experience.
Another area of concern is training. Employees should have branch level experience, apart from experience in operational areas such as financial inclusion, treasury and practical training in IT. Refresher courses should be mandatory every five years so that employees are abreast of latest trends.
Moving forward, in order to make our banks globally competitive, some essential steps need to be taken. CMDs should have a longer tenure, say 3 to 4 years. One ED/CMD should be from the parent bank. All-round training to executivesshould be a sustained and continues process. The selection process of the CMD/ED should be consistent and rigorous. The CVO should be pro-business and pragmatic. Compensation packages should have incentives and should be market-driven. A clear distinction must be made between performers and non-performers.
The banking industry is set to undergo lot of changes in the coming years, considering that banking, insurance, pension and financial markets will converge and will require specialised as well as soft skills. This means the landscape of banking should undergo dynamic changes; a proactive HR policy will be the defining factor for this.
The writer is the managing partner at RRCA & Associates. The views are personal