Will HR live up to the challenges in Public Sector Banks?

Tuesday, December 8, 2009

News about Public Sector Banks (PSB's) has been floating extensively with the various challenges, improvements and reforms that are being pondered upon. The PSB's have long fought the battle with the private banks but are clearly losing out due to the emphasized discrepancies between the two. If a PSB employee who is exiting is asked the question "Was the separation avoidable?" He would hastily reply "No." The competitive banking sector along with shrewd offers and policies does not seem to uplift the cause either!

Gone are the days when Power & Status overruled Money & Luxury, where intangibles was held dearly rather than materialistic goods. Unfortunately the PSB's still thrive in the latter while the private sector banks wisely capture on the latter. So what are the challenges that are faced by HR department so that the PSB's atleast become part of the run if not the leader of the pack?

1) Manpower Planning & Strategy - With the hollow in the senior management cadre due to retirement, the danger of a missing management line-up is stark. The desperation to fill this gap is seeing PSB's poaching from other PSB's making the situation even more murky while the officials play merry. You can almost see the cat-fight which is tearing the insides of this sector.
With one on every eight PSB official set to retire over the next 3 years, the bank will soon be hard-pressed to fill vacancies in the senior management level. 

2) Attrition - The attrition due to the above issue is already offset, when enter the private sector banks. They offer exorbitant salaries (in comparison), better infrastructure, better technology, better brands. Would you take up the offer? I would! The attrition rate currently is close to 15-20% and to check the same banks like Dena and Allahabad banks are introducing bonds to cover some investment made on training.

3) Employee Engagement - PSB's present a miserable picture with dim lighting, haunted offices, grey-haired and uptight staff, slow technology - in other words, a demotivating environment in contrast to the aggressive, fast-paced, dynamic environment of the private banks which leaves room only for survivors. The image needs to be revised and the employees need to have a reason to unmask "Boring!"

4) Compensation - Yes! The most important of all. The salaries are unmatched due to low capital and tight budget constraints; moreover private banks leverage on the training costs spent by PSB's! Also, the perks and flexible benefit plans are customized which makes sense. If offered a platter, I would rather pick my choice of delicacies as per my taste and appeal, after all am I not entitled to my individuality?

5) Performance and Productivity - PSB's transparently lean towards seniority and loyal employees with performance ranked as a second. This does not appeal to the Impatient (Reminds of the Airtel broadband ad) youth who are here to make a difference and grow at the shortest possible time and why not? If you think you have it in you, then you sure have it in you!
The salary packages of employees of PSBs could have a performance-linked variable component from the next financial year. "We are trying to take the unions along with us..variable pay of 25-30% of salary.. as part of the next hike."

6) Mergers: If this weren't enough Mergers is another agenda on the cards whose perfect transition, operations, streamlining need to be carefully detailed so that the consolidated structure can leverage on each other's competencies rather than lead to a fall-out.
Government officials said the move would enable these banks to expand their business, which would otherwise be hampered by constraints on raising capital.

I think again - and the question in my mind is - Is there a job opening somewhere? Alas, man is a pawn born to deal with petty issues, atleast at this stage of life!



Nagaraj said...

Hi Radz,

Could not disagree with you more.

Tounge in cheek, I would like to say that your description of a PSB seems to be straight out of a Kolkata bylane- Russel Street, maybe.

PSB's have come a long way & what they do not offer in terms of salary, they do give a great deal of job security.

Most Indians, are still petrified of job loss & my guess is that if offered they would like to park themselves with a Govt undertaking.

Closer to home, I find my branch of SBI dishing out better service than my ICICI Bank.

Some of the other points that you have made make a lot of sense & I'm sure PSU would do well to look at.