Indian banking sector, especially commercial banks, have started realizing the need for a strong human resource orientation for their survival in the face of the rapid changing environment, global competition and other upcoming challenges. With attrition becoming a stark reality in the Indian banking sector, it is increasingly being understood that employee loyalty has to be created by organizational interventions and not something that can develop on its own.
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It is in this backdrop, it is an important topic to consider shaping your HR policies and practices around the workforce.
Indian Banking Industry
The banking sector in India is an integral part of country’s financial services industry. The banking index has grown has grown at a compounded annual rate of over 51 per cent since April 2001.
The strong banking structure has been able to fuel continued growth, which has prospered long-term economic growth. Market cap of Indian banking industry 7500 Billion contributing to 7. 7 % of GDP
Human Resource Management Practices in India
Indian banking sector is making efforts to adopt international best standards in HRM with the local customs and sensibilities.
HRM function in a bank is being increasingly recognized as a strategic business partner with responsibility of managing key corporate resources.
It is expected that HR Function must:
Help the organization to be more agile by adopting practices that allows it not only to adapt to changes in the external environment but also to benefit from the same.
Ensuring that the company is able to sustain its operation over a period of time.
Ensure efficiency in the use of HR resources in the organization in an integrated manner with all other corporate resources.
The success of any business depends as much on appropriate, effective, well-communicated, HR and business practices as it depends on meeting the requirements of mandated laws and regulations. In fact, good planning and the development of effective practices make regulatory compliance much easier.
HR practices helps in increasing the productivity and quality, and to gain the competitive advantage of a workforce strategically aligned with the organization’s goals and objectives. Organizations are becoming increasingly aware about the impact of generation gaps in the interaction between the various parts of its workforce. With increasing globalization, the diversity (both geographical as well ethnic) is on the rise in the organizations operating on a global scale. At the same time, the composition of the workforce itself is changing and different generation groups, with differing viewpoints on the same subject, are required to work together. This requires adjustments to be made by all categories. Organization must facilitate such adjustments by creating enabling environments so that the needs of all generation groups are satisfied, simultaneously with the achievement of the organizational goals. At minimum, the organizations must be aware about the diversity of generation groups within its ranks and tailor their personnel practices accordingly.
1. 3 Key Performance Indicators for HR Practices
Some of the key performance indicators for Human Resources include but are not limited to the following.
– Employees’ clarity on HR policies
– Employees’ clarity on roles, responsibilities and expectations
– Development of qualitative staff
– Number of HR issues arising for which there are no clear policies and guidelines
– Competitiveness of compensation structure relative to industry benchmark
– Usefulness and accuracy of compensation survey
– Lead time to respond to staff welfare issues
based on your requirements 311 professionals
– Employees’ assessment of promotion criteria and process (clarity, fairness)
– Measurement of HR policy violation
– Average time required to fill vacancies
– Proportion of training programs resulting in productivity improvement
– Staff attrition rate
– Understanding / Clarity of the Organizational philosophy
– Outline internal capabilities and identify gaps on skills-competencies-behavioural aspects
In response to the change in the business environment, the competencies required by HRM present in any Indian or MNC banks are necessary to be studied.
Objective of Study
HRM department depends upon the HR practices of the organization. HRM is done according to HR practices.
HR Practices differentiate the organization from its competitors by effective and efficient HR Management. By following this, the organization does its whole work process. HR Practices increase productivity and quality, and help gain the competitive advantage of a workforce strategically aligned with the organization’s goals and objectives.
In addition to aforesaid goals following are our additional objectives:
Various online journals on HR practices were referred. Along with it articles on different banks were also referred for the purpose of this project.
Secondary data from books and internet resources were used for reference to write this report
Analysis and discussion
HR practices differ from one organization to the other. Even though the concept remains same its implementation differs from each because of the difference in its policies. Hence the analysis on the concept of HR practices and its implementation is carried out for three main multinational banks which include ICICI, Citi bank and HSBC. Their HR practices along with its approach towards HR, the different ways of implementation and innovative changes brought about by them in its policies are discussed for each of these banks mentioned above in detail.
Hong Kong Shanghai Banking Corporation Holdings
HSBC Holdings, a British financial holding company with origins in Hong Kong and Shanghai, where offices were opened in 1865 under a special charter which allowed Hong Kong rather than London as a headquarter location ( 2003). HSBC was in intense competition all over Asia with Chase Manhattan which showed interest in a small bank in India and Malaysia. HSBC pre-empted by purchasing the bank in 1959 (1991). Diversification had taken a beating although it was only in 2000 when acquisitions in Asia became topical again, in a small way. Two of them were part of the private banking drive, PCIB Savings Bank in the Manila area and Taiwan’s leading asset manager China Securities Investment Trust Corp. in 2001, to be followed by an 8 per cent stake in the Bank of Shanghai. HSBC had returned to its roots. Afterwards many more events unfolded including the turnover of Hong Kong to china this prompted HSBC to transfer headquarters to United Kingdom (2003). HSBC sees the Internet as one of several exciting new media, to be incorporated as an integral part of its working. The bank has concluded that e-commerce will change the fabric of the financial services sector and sees it as a way of finding new customers all over the world and improving its services to existing customers.
The company’s current approach to HRM
HSBC has over 260, 000 employees at present. The company employs and manages diverse kinds of people all around the world. Such is done by the company because they believe that these people can give them a balanced and well-rounded organization. This also makes the company adaptable to different kinds of situation. The company wants to reach out to all parts of employment for maximum productivity and value. The company believes that a company’s difference with its competitors can be seen in the way it serves it consumers and the way they treat their employees. The company makes sure that they treat the employees with outmost respect for their rights and it makes certain that the company is given the treatment they deserve. The company’s personnel policies are geared to attract motivate and develop people who are perceptive, respectful, fair, progressive and responsive. The company aims to make itself a place people would like to work to. In the future the company can steer the goal of its HRM to making the personnel the most competent people in the industry. The company can initiate activities that will make the personnel more competent without ruining their good relationship.
HSBC claims that they are the World’s local bank. Their tagline also applies to their work culture. They believe in the fact that no matter how diverse the work force may be, the ultimate aim of the bank is to have a work culture which is “ Global” in nature. But at the same time they do give regional considerations in order to have synergies with the employees who are from the local population of a particular city/country. This in turn helps the corporation in becoming an ’employer by choice’.
“ Respecting individuals of all types inspires loyalty in both employees and customers, which has a direct line of sight in achieving business goals” is their HR department’s logo.
The strategy is based on the premise that the most important competitive differentiators are the quality of individual service provided to our customers and the way we treat our employees. It connects with Managing for Growth, the brand and the people strategy.
What is Diversity?
Definition: According to HSBC, diversity is a source of opportunity, whether in employment or the customer markets. Appreciation of this diverse culture fuels group dynamics and helps in creating an environment where teams can perform to their fullest potential. Competitive edge can be gained from the variety present in their workforce and customer base, and specific attention to market variation.
Example: In today’s global environment, Banking corporations give finance to foreign companies. Now let’s say that a company from USA wants to invest in emerging country like India in the field of agricultural technologies and approaches HSBC’s New York branch for a loan to fund their new project. Now HSBC on its part would have to study various factors pertaining to the feasibility of the business plan submitted by the borrower. In order to decide whether they should grant a loan to the US company, HSBC will take a long time to collect data about the Indian agriculture prospects, the growth witnessed for the last 5 years, government policies, trade restrictions etc. This process will take a long time.
However, now let’s consider that this project is assigned to a handful of employees from India or from Indian origin in HSBC’s New York branch. These employees by the virtue of being familiar with the country in question (India) would be very much familiar (there is a chance) with the aspects like agriculture in India, government policies pertaining to agriculture, trade etc. And hence, they would be able to prepare a report considerably faster than the employees who are not of Indian origin. This would considerably reduce HSBC’s labour hours and would help them in coming up a quicker decision. This would thus make HSBC more competitive against a bank which does not have a diverse workforce.
Recruitment and Selection
HSBC’s recruitment and selection policies are scripted in accordance with the organization’s “ Equal Opportunities Policy.”
HSBC ensures that each stage of the recruitment procedure is conveyed out in a methodical manner and is based on pre-agreed criteria. They strive to eradicate individual bias that can influence the conclusion producing process.
They ensure that all conclusion points are completely documented to aid followed by monitoring.
HSBC’s intentions are to make the entire hiring procedure as open as possible, and to double check that all candidates realize why conclusions have been taken and, where they desire, to get significant feedback.
Demonstrate robust, clear methods and hence supply a cornerstone for appropriate defence in the event of a challenge.
There are seven major phases to the procedure in the recruitment process in HSBC:
Placing advertisements and considering with investigations and applicants
Interviewing and selection
The following are the directing values for recruitment and on-boarding process.
Attracting and employing suitable employees is one of the most significant undertakings of the association
Merit will be the most significant factor in the recruitment process.
Diversity of gender and ethnicity is to be achieved by with the assistance of recruitment vendors and the referral program.
While abilities play an important role, they will charter persons who are group players and have the right mind-set most applicable to the heritage of the organization. Attitude is as significant as aptitude.
They focus on hiring people who can push the organization to greater heights.
They believe in allowing their employees to fulfil their vocational paths.
They try and fill vacancies with internal candidates before assessing external candidates.
They believe that each nominee consulted becomes an ally of the organization, irrespective of whether she/he is chosen. They treat all the candidates with the utmost respect and are open and equitable in connection with them
They will relentlessly consider, recognize and cultivate strategic gifts for universities, administration schools, and community forums to address their long period needs.
All recruitment undertakings will be founded on the chartering design as accepted by the Business Head, HR Head & the CEO.
For each position, a chartering requisition will be needed prior to initiation of any recruitment activity.
If the chartering is not encompassed in the designed allowance, it will also need acceptance from the CEO founded on a recommendation from the Head HR and the CFO.
Recruitment total cost and expenditure should be budgeted and pre-approved by the HR Head.
The chartering supervisor along with the Human Resource Department would conclude the source to use founded on the environment of the recruitment. The next causes of recruitment may be considered:
Whenever any vacancy arises, the likelihood of fulfilling the obligation internally via reassignment and relocation, re-allocation of the responsibilities or interior advancement will be discovered by the chartering function along with the HR Department.
HSBC will boost workers to mention apt candidates for open positions.
Other external causes include:
External job postings
College / campus requirement
Employment of Relatives
The association uses, solely on merit, the relations of employees as long as it does not bring about a conflict of interest.
To decrease the possibilities of favouritism – the following guidelines should be followed:
Relatives are not allotted to a place where he/she has the opening to ascertain, method, and reconsider, accept, review or else sway the work of the individuals cited and above.
If an employee is aware of a position that seems to be an opening for people to indulge in favouritism towards relations, one should communicate to the Department Head or Human Resources Department.
Employees will not be part of the chartering method of their relations.
HSBC supplies internship possibilities to students. Such internships will result in young students producing genuine assistance to the company.
HSBC will pursue the process as follows:
HR will coordinate with enterprise assemblies to recognize possibilities for intern hiring.
Internship demands could be obtained either from the students directly or as nominations from the informative institute.
HR and chartering supervisor tele-interview the candidates and later conduct individual meetings in the office.
Based on the illustrated capability, the intern will be appointed to work in multiple agencies to gain a broader enterprise comprehension.
Probation is a test that is mutual opening for the worker and HSBC to affirm suitability for proceeded employment.
The probation time span is to set up based on capabilities, anticipations and training required.
The worker should illustrate suitability for proceeded employment.
An evaluation will be conducted on components associated with work presentation, work customs, productivity, mind-set and compatibility, attendance and punctuality, and any other issue that is connected to the job profile.
All new charters will be put on probation for a time span of 6 months from the designated day.
HR will dispatch an appraisal pattern to the direct supervisor before culmination of the probationary period. The appraisal pattern is required to be accepted by the supervisor’s leadership.
All notes of confirmation or extension of probation will be marked by the HR head and will be retained in worker records.
HR practices in Citibank
The different steps in which Citibank implements HR practices are given below:
I Staff Meetings:
Staff Meeting aims at group synergy, team building, open culture, family feeling and talent recognition which individually and cumulatively benefit the organizations.
Goals/Targets set for the unit/Bank is discussed in the monthly Staff Meetings conducted at all branches/units and action plan is drawn in achieving them.
The forum is being effectively utilized for harmonious functioning of all the branches and administrative units through greater involvement and collective contribution of all staff members.
II Brain Storming Sessions
This is a technique for generating ideas and suggestions on topics of relevance and also to provide alternate solutions to problems by simulative thinking and imaginative power of cross section of employees.
Corporate Topics are selected for each quarter and BSS are conducted in administrative offices/ braches on the topic during every quarter.
Worthy implement able suggestions emanated are circulated for necessary action.
III Study Circle:
Concept of Study Circle aims at self – development of employees by kindling the desire to acquire/update knowledge, information and experience.
Guest lectures/ Power Point Presentation / Group Discussions, etc. are arranged on topics of general interest by inviting experts in the field.
Study Circle Meeting are conducted once in two months in administrative offices and once in a quarter in branches
IV Quality Circles
It is a time tested tool of Total Quality Management (TQM) which promotes team spirit, cohesive quality work culture, commitment and involvement of employees.
Challenges faced by Citibank:
The real challenge of that Citibank faced while entering India first time was adopting its HR strategy according to the Indian culture.
As most part of the jobs in the banks are monotonous/repetitive and routine, the HRD Department has to empower, engage and energies employees to create effectiveness & efficiency through motivation organizational structures, systems & procedures are facilitators of these, and there is a need to focus greater attention on these aspects by the industry.
However, the emergence of a core and peripheral workforce in many organization has presented new challenges for HR managers public & private sector organizations are fast becoming diverse communities for core workers, flexibly employed casual and part-time workers, consultants, contractors & business partners.
Certain rigidities have also developed in HRD within Citibank’s banking system itself because this industry is still largely in the public sector.
Following suggestions are very essential to adhere for effective Banking Administration in Citibank:
HR functions to be linked to corporate goals.
Shift from Industrial relations manager to Business manager or Commercial manager.
Team work is another important and essential soft skill that is necessary in this industry.
The HR Professionals have to introduce &improve the adaptability of their structure that will be able to absorb, draw and retain the best.
As people are primary asset, it is essential not only to invest in them, but also to ensure that the supporting elements for this asset are such that it can provide the maximum value on a sustainable basis.
HRD is to be regularly reviewed against business outcomes as part of strategic and operational planning.
To overcome the public sector’s hierarchical structure, which gives preference to seniority over performance, is not the best environment to attract the best talent from among the young.
ICICI Bank’s HR Practices
As per ICICI Bank’s research and in-depth study, following competencies are required to succeed in ICICI Bank:
Compliance with conscience
In order to assess the same a set of tools are used –
a. Aptitude Tests (for applicants with 0-2 years of work experience)
The tests are designed to assess basic aptitude of candidates including numerical comprehension, verbal comprehension, logical reasoning and basic checking abilities. These are important skills for the role of an entry-level manager and people who do well in these tests tend to do well in their jobs at ICICI Bank. The total time taken in this exercise is 55 minutes.
b. Occupational Personality Questionnaire
Applicants are also required to complete the Occupational Personality Questionnaire (OPQ) before they appear for the selection, the results of which are integrated into our selection process.
As a rapidly growing organization the bank looks to induct post-graduate management talent from various business schools across the country. Enthusiastic and talented youth form the backbone of their banking operations. The bank offers a wide range of careers in all functions including – Finance, Marketing, Operations, Information Technology and Human Resources.
According to Ramkumar (Group Chief Human Resources Officer of ICICI Bank in 2005), 4, 000 of the recruits are freshers (2, 500 MBAs from different management schools and about 1, 500 graduates from various colleges). The bank’s growth in the retail segment is the driver for sharp hike in headcount of the bank. There is need of recruits to serve the fast growing small and medium enterprise, rural/agriculture, private banking and wealth management segments. There’s also a concurrent need for technical, back-office operations and quality assurance personnel. The bank recruits about 75 students from IIMs and another 100 from the next tier such as SP Jain, NMIMS, Symbiosis, Bajaj, etc., every year.
It recruits only some persons from other banks. About 7. 5 lakh persons working in the public sector bank generally don’t change jobs and rather prefer job security. As a result, the remaining one lakh in private sector is a limited supply pool for a growing banking sector. So, the bank looks out for other companies in aviation and hospitality sector so that persons who like to serve customers are recruited. The group has some 50, 000 employees on its direct payroll and another 1, 00, 000 are indirectly employed as insurance agents and people working under service providers. The bank gets 4 lakh CVs each year. This benefits the bank and it does not face any hiring problem as there is plenty to choose from. While most of the hiring happens directly, consultancy firms are used for some of the higher level recruitments. The plans are to hire more people for insurance and securities broking businesses as these sectors are growing very fast.
The bank has tied up with local colleges. With this, it is easy for them to create a local supply and also consume locally. Also, it would be able to gain the respect of the community and create loyalty. The recruits would be able to speak the local language. The motive is partially social and also makes good business sense.
Also in a bid to control recruitment costs and raise productivity of its HR personnel, the bank has collaborated with Internet service providers such as Reliance Infocomm for providing interview cubicles with audio-visual recording and tele-conferencing facilities. By this process it would be convenient for candidates to attend interviews at centres nearest to their homes, instead of travelling to Mumbai, where interviews generally take place. The interview centres are expected to improve productivity of the bank’s human resources personnel by about 30%. It will also reduce the time invested by HR heads as they have to spend a lot of time traveling to tier-II cities to interview candidates.
These interview centres would remain open 24 hours a day. This is a boon for working candidates who can find time only after office hours. Online application forms and an in-bound call desk are other initiatives the bank is taking to support recruitment.
Bringing a Change
The professional work culture, high salary and faster growth prospects make the group a preferred destination for top business school students. The senior bank officials have also met representatives of the country’s top 20 B-schools to discuss changes to their curricula so as to make them reflect the changing business dynamics. As per the current industry trends, retail and rural banking are emerging as big areas. So, the bank has suggested B-schools to forge them in the curriculum. Also, the nature of internships for B-school students should be changed from those involving mere summer training and data collection to the ones undertaken by doctors and lawyers. Research should be India centric and Indian case studies should be prepared for students. According to him, the group is not worried about getting skilled people as it has the infrastructure to train the well educated people.
ICICI Bank, which boasts an extremely high proportion of women by industry standards (32, 000 women or one-third of their headcount), has been running a campaign on campuses for last two years to bust notions regarding career options for women. There are some male stereotypes about certain kinds of job profiles and that is a misplaced notion which the bank is trying to correct. The average age of an employee at ICICI bank is 30 year. And 70% of these employees have additional qualifications – they are CAs, MBAs or have diplomas in business management.
The bank’s HR Head believes that it is up to organizations to train the fresh talent so as to be able to retain them in the future. ICICI Bank spends 1. 5% of its profits on training and has nine training centres across the country today. It employs 30, 000 people and recruits 15, 000 people annually. The training sessions are customized to enable employees to handle an irate customer without being aggressive or defensive; instead reassure him/her and work towards a solution in the right attitude. It also helps the employee handle difficult situations such as 5 customers appearing at the counter at one time.
Training sessions are more or less on grooming, etiquette and more on presenting one’s company, product and oneself, identification of customer needs, listening, and so on. To add to it, the senior managers of ICICI Bank take regular classes at B-schools and this provides an opportunity for interface with the institutes as well as help supplement the theoretical inputs with practical cases. The organization is tech-savvy, non-hierarchical, where early responsibility and independent decision-making enable each employee to reach their potential. Coupled with this is a strong performance management system that has built a meritocracy where high performing-high potential individuals are duly rewarded. Understandably, it’s a good time for bankers. Few years back, branch managers in private sector banks were getting Rs. 6 lakh a year. Now, they are being offered salaries as high as Rs. 25 lakh by MNC banks.
ICICI Bank views its human capital as a key source of competitive advantage. Consequently the development and management of human capital is an essential element of our strategy and a key management activity. Human resources management in fiscal year 2002 focused on smooth integration of the employees and human resource management systems in the context of the merger, as well as on continuous improvement of recruitment, training and performance management processes.
The process of integration involved defining the organizational structure of the merged entity, people placement in various positions across the business and corporate groups, and integration of the grade and remuneration structure for the employees of the four entities. The organizational structure was announced in February 2002 and became effective on May 3, 2002. The people placement process was based on appropriate competency profiling tools and matching employee profiles to job specifications. The grade integration process has also been successfully completed, using job evaluation techniques. The recruitment process has been streamlined and a uniform recruitment policy and process implemented across the merged organization. Robust ability-testing and competency-profiling tools are being used to strengthen the campus recruitment process and match the profiles of employees to the needs of the organization.
ICICI Bank continues to be a preferred employer at leading business schools and higher education institutions across the country, offering a wide range of career opportunities across the entire spectrum of financial services. In addition to campus recruitment, ICICI Bank also undertakes lateral recruitment to bring new skills, competencies and experience into the organization and meet the requirements of rapidly growing businesses. A Six Sigma initiative has been undertaken for the lateral recruitment process to improve capabilities in this area. ICICI Bank encourages cross-functional movement, enriching employees’ knowledge and experience and giving them a holistic view of the organization while ensuring that the bank leverages its human capital optimally.
The rapidly changing business environment and the constant challenges it poses to organizations and businesses make it imperative to continuously enhance knowledge and skill sets across the organization. ICICI Bank believes that building a learning organization is critical for being competitive in products and services and meeting customer expectations. ICICI Bank has built strong capabilities in training and development to build competencies. Training on products and operations is imparted through web-based training modules. Special programs on functional training and leadership development to build knowledge as well as management ability are conducted at a dedicated training facility.
ICICI Bank also draws from the best available training programs and faculty, both international and domestic; to meet its training and development needs and build globally benchmarked skills and capabilities. ICICI Bank seeks to build in all its employees a total commitment towards exceptional standards of performance and productivity, adaptability to changing organizational needs and the demands of the business environment and a willingness to learn and acqu